Abstract Background: Innate immune cells, such as macrophages and myeloid-derived suppressor cells (MDSCs), dominate the immune landscape within "cold" solid tumors, which typically exhibit poor responses to immune checkpoint inhibitors (ICIs). The dearth of tumor-infiltrating T cells and the prevailing immunosuppressive microenvironment contribute to this ineffectiveness. To bolster immunotherapy against such tumors, we developed SM2248, a bispecific VHH antibody. SM2248 simultaneously obstructs the CD47-SIRPα phagocytosis checkpoint pathway and conditionally activates CD40 on tumor-infiltrating innate immune cells. CD47/SIRPa blockade enhances macrophage and dendritic cell (DC) phagocytosis and cross-presentation of antigens to cytotoxic T cells. CD40 activation fosters DC licensing, reprograms macrophages, and guides MDSC differentiation towards DCs and macrophages. The combined action of CD47 blockade and CD40 stimulation remodels the tumor microenvironment, fostering T cells infiltration and activation. Methods: SM2248 was developed by fusing a highly selective CD47-blocking VHH module - minimizing binding to human erythrocytes and platelets, with a conditional CD40 agonistic VHH module - selectively activating immune cells upon CD47 engagement, incorporated into an inactivated IgG1 Fc backbone. The specificity and affinity of SM2248 binding to human CD47 and CD40 were assessed via ELISA and flow cytometry assays. CD47 and SIRPα interaction blockade was confirmed through a competitive ligand binding assay. Target-dependent CD40 activation was evaluated via a CD40-NFκB-Luc reporter assay. In vivo anti-tumor efficacy was determined using a syngeneic transplantation model of MC38-hCD47 cancer cells in B-hCD40 humanized mice. Binding to erythrocytes and platelets, compared with magrolimab, was assessed using flow cytometry. Hemolysis toxicity was evaluated through an in vitro erythrocyte lysis assay. Results: SM2248 effectively inhibits cell surface CD47-SIRPα interaction at nanomolar concentrations and activates CD40-NF-κB-luciferase reporters at picomolar concentrations in a target-dependent manner. In contrast to the CD47 monoclonal antibody magrolimab, SM2248 does not bind to human erythrocytes or platelets and does not induce hemolysis. In murine syngeneic tumor models, SM2248 completely halts the growth of MC38-hCD47 tumors in humanized B-hCD40 mice and does not induce dose-dependent hepatotoxicity at doses up to 10 mg/kg. Conclusions: SM2248, a humanized bispecific tetravalent VHH antibody targeting CD47 and CD40, exhibits promising in vivo efficacy and a favorable safety profile in preclinical studies, offering the potential for enhancing immunotherapy in solid tumors. Citation Format: Xiaodan Liu, Hong Zhou, Shihao Lu, Huiqin Geng, Wenjing Song, Siyao Xie, Yi Wei, Xing Zhang, Simin Yang, Sheila Zhou, Yanbin Liang. Preclinical characterization of SM2248: A dual-action bispecific antibody enhancing immunotherapy for solid tumors [abstract]. In: Proceedings of the American Association for Cancer Research Annual Meeting 2024; Part 1 (Regular Abstracts); 2024 Apr 5-10; San Diego, CA. Philadelphia (PA): AACR; Cancer Res 2024;84(6_Suppl):Abstract nr 2715.