Xencor stock skyrockets 26% overnight after breakthrough in cancer research

Xencor, Inc., a clinical-stage biopharmaceutical company specializing in engineered antibodies for cancer treatment, saw its stock rise by 26% to $20.39 on Monday following substantial updates on its research and development (R&D) efforts and promising results from a Phase 1 dose-escalation study. Despite the recent surge, the stock remains down about 5% for the year, reflecting a volatile market response to ongoing developments.

Key updates driving Xencor’s stock surge

The dramatic rise in Xencor’s stock is driven by encouraging updates from its clinical programs, particularly positive data from a Phase 1 study involving XmAb104, a bispecific antibody designed to target advanced solid tumors. The study, which is part of Xencor’s broader strategy to develop innovative cancer therapies, has shown significant promise in both safety and efficacy.

XmAb104 shows promise in Phase 1 study

Xencor’s XmAb104, a PD-1 x ICOS bispecific antibody, is undergoing an ongoing Phase 1 trial aimed at determining its maximum tolerated dose (MTD) and assessing its safety profile in patients with advanced solid tumors. The study revealed that XmAb104 was well-tolerated across all dose levels tested, with no dose-limiting toxicities, allowing the research to proceed without significant setbacks. The recommended dose for continued studies is set at 10 mg/kg.

Clinical activity observed in the trial includes partial responses in patients with difficult-to-treat cancers such as undifferentiated pleomorphic sarcoma and clear cell renal cell carcinoma. Additionally, patients with colorectal cancer exhibited durable stable disease, indicating that XmAb104 could be a viable treatment option for these challenging conditions.

Vudalimab and other pipeline highlights

In addition to XmAb104, Xencor also provided updates on its other pipeline assets, including Vudalimab, a PD-1 x CTLA-4 bispecific antibody currently in multiple clinical studies. This candidate, targeting metastatic castration-resistant prostate cancer and non-small cell lung cancer, is expected to move into more advanced stages of development by mid-2025, depending on upcoming trial results.

Xencor has also regained exclusive worldwide rights to plamotamab, a bispecific T-cell engager targeting CD20 and CD3. This candidate is poised to enter Phase 2 trials and has the potential to address significant unmet medical needs in cancer therapy.

Financial snapshot and future prospects

While the recent R&D successes have propelled Xencor’s stock upwards, the company’s financial performance has shown some challenges. For the second quarter of 2024, Xencor reported revenues of $17.0 million, a sharp decline from $45.5 million in the same period in 2023. The drop in revenue is mainly attributed to a shift away from research and milestone payments, with a greater focus now on non-cash royalty income.

Research and development expenses for the quarter were $61.5 million, reflecting increased investment in early-stage programs and ongoing clinical trials. The company closed the quarter with $585 million in cash reserves, projecting that it has sufficient funds to continue its R&D efforts through 2027.

Expert opinion: a calculated bet on innovation

Industry analysts view Xencor’s recent stock surge as a calculated bet on the company’s innovative approach to developing bispecific antibodies. The promising early data from the XmAb104 study suggests a strong potential for clinical success, although analysts caution that the biopharmaceutical sector remains inherently risky due to the unpredictable nature of clinical trials and regulatory approvals.

Experts believe that Xencor’s focus on advancing multiple candidates through the pipeline, combined with its robust cash position, positions the company well for future growth. If Xencor continues to produce positive clinical results and secures partnerships or regulatory approvals, it could significantly enhance its market valuation.

Future outlook and potential catalysts

The primary catalysts for Xencor’s future stock performance will be further updates on its clinical trials, particularly the advancement of XmAb104 and Vudalimab into later-stage studies. As the company progresses, continued positive clinical outcomes and strategic partnerships could drive additional stock gains and solidify Xencor’s position in the competitive biopharmaceutical market.