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On May 3, 2024, Zenas closed on a Series C financing transaction. We expect the financing will result in an impairment in the fair value of our investment in Zenas of approximately $20.6 million, using the difference between the carrying value of our investment and the share price in the financing transaction. We have recorded the amount as an impairment charge on equity securities in our statement of loss. We are evaluating the magnitude of this impairment, including an assessment of the liquidation preferences of the various classes of Zenas securities, which will be reflected in our next Quarterly Report on Form 10-Q.

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			x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Delaware			20-1622502
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

465 North Halstead Street, Suite 200, Pasadena, CA			91107
(Address of principal executive offices)			(Zip Code)


Class						Outstanding at May 2, 2024
Common stock, par value $0.01 per share						61,662,550


		Page

	SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	3
PART I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements	5
	Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023	5
	Consolidated Statements of Loss for the Three Months Ended March 31, 2024 and 2023 (unaudited)	6
	Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2024 and 2023 (unaudited)	7
	Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited)	8
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)	9
	Notes to Consolidated Financial Statements (unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II.	OTHER INFORMATION	35
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35

Item 6.	Exhibits	36

Signatures		37


	March 31, 2024		December 31, 2023
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	31,034	$	53,790
Marketable debt securities	460,367		497,725
Marketable equity securities	44,535		42,210
Accounts receivable	9,580		11,290
Prepaid expenses and other current assets	16,736		18,145
Total current assets	562,252		623,160
Property and equipment, net	63,540		66,124
Patents, licenses, and other intangible assets, net	18,852		18,663
Restricted cash	382		380
Marketable debt securities - long term	154,960		145,512
Marketable equity securities - long term	43,560		64,210

Right of use (ROU) asset	40,211		33,995
Other assets	498		648
Total assets	$	884,255	$	952,692
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	16,011	$	13,914
Accrued expenses	13,491		23,564
Income tax payable	5,782		5,782
Lease liabilities	2,079		3,435

Deferred income	34,088		31,682
Debt	7,951		6,332
Total current liabilities	79,402		84,709
Lease liabilities, net of current portion	66,810		59,025
Deferred income, net of current portion	113,367		125,183
Debt, net of current portion	12,489		14,642
Total liabilities	272,068		283,559
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value: 10,000,000 authorized shares; -0- issued and outstanding shares at March 31, 2024 and December 31, 2023	—		—
Common stock, $0.01 par value: 200,000,000 authorized shares at March 31, 2024 and December 31, 2023; 61,634,685 issued and outstanding at March 31, 2024 and 60,998,191 issued and outstanding at December 31, 2023	617		611
Additional paid-in capital	1,144,468		1,131,266
Accumulated other comprehensive (loss) income	(154)		1,291
Accumulated deficit	(532,405)		(464,372)
Total stockholders’ equity attributable to Xencor, Inc.	612,526		668,796
Non-controlling interest	(339)		337
Total stockholders’ equity	612,187		669,133
Total liabilities and stockholders’ equity	$	884,255	$	952,692


	Three Months Ended March 31,
	2024		2023

Revenue
Collaborations, milestones, and royalties	$	12,805	$	18,962
Operating expenses
Research and development	56,873		65,552
General and administrative	13,787		14,154
Total operating expenses	70,660		79,706
Loss from operations	(57,855)		(60,744)

Other income (expenses)
Interest income, net	7,471		2,892
Other expense, net	—		(13)
Impairment on equity securities	(20,650)		—
Gain (loss) on equity securities, net	2,325		(2,898)
Total other expense, net	(10,854)		(19)



Net loss	(68,709)		(60,763)

Net loss attributable to non-controlling interest	(676)		—
Net loss attributable to Xencor, Inc.	$	(68,033)	$	(60,763)

Basic and diluted net loss per common share attributable to Xencor, Inc.	$	(1.11)	$	(1.02)


Basic and diluted weighted average common shares outstanding	61,212,324		59,771,674


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Non-Controlling Interest		Total Stockholders’ Equity
Stockholders’ Equity	Shares	Amount
Balance, December 31, 2023	60,998,191	$	611	$	1,131,266	$	1,291	$	(464,372)	$	337	$	669,133
Issuance of common stock upon exercise of stock awards	152,682	1		1,786		—		—		—		1,787
Issuance of restricted stock units	483,812	5		(5)		—		—		—		—
Comprehensive loss	—	—		—		(1,445)		(68,033)		(676)		(70,154)
Stock-based compensation	—	—		11,421		—		—		—		11,421
Balance, March 31, 2024 (unaudited)	61,634,685	$	617	$	1,144,468	$	(154)	$	(532,405)	$	(339)	$	612,187


	March 31, 2024 (unaudited)						December 31, 2023
	Total Fair Value		Level 1		Level 2		Total Fair Value		Level 1		Level 2
Money Market Funds	$	3,447	$	3,447	$	—	$	25,520	$	25,520	$	—
Corporate Securities	264,629		—		264,629		228,723		—		228,723
Government Securities	350,698		—		350,698		414,514		—		414,514
	$	618,774	$	3,447	$	615,327	$	668,757	$	25,520	$	643,237


March 31, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Money Market Funds	$	3,447	$	—	$	—	$	3,447
Corporate Securities	264,706		69		(146)		264,629
Government Securities	350,764		141		(207)		350,698
	$	618,917	$	210	$	(353)	$	618,774

Reported as
Cash and cash equivalents							$	3,447
Marketable securities							615,327
Total investments							$	618,774


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities
Net loss	$	(68,709)	$	(60,763)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,035		2,245
Accretion of discount on marketable debt securities	(5,601)		(1,661)
Stock-based compensation	11,421		12,599
Abandonment of capitalized intangible assets	415		321
Gain on sale of marketable debt securities	(3)		—
Change in fair value of equity securities	(2,325)		2,898
Impairment on equity securities	20,650		—
Non-cash interest expense	1,067		—
Loss on disposal of assets	6		1,379
Changes in operating assets and liabilities:
Accounts receivable and contract asset	1,710		9,135
Interest receivable from marketable debt securities	(1,310)		248
Prepaid expenses and other assets	1,559		1,204
Accounts payable	2,097		5,254
Accrued expenses	(10,073)		(3,588)

Lease liabilities and ROU assets	213		331
Deferred revenue	—		(216)
Deferred income	(9,410)		—
Net cash used in operating activities	(55,258)		(30,614)
Cash flows from investing activities
Purchase of marketable securities	(136,532)		(95,228)


Purchase of intangible assets	(929)		(407)
Purchase of property and equipment	(132)		(10,783)
Proceeds from maturities of marketable securities	159,942		154,562
Proceeds from sale of marketable securities	9,969		—
Net cash provided by investing activities	32,318		48,144
Cash flows from financing activities
Proceeds from issuance of common stock upon exercise of stock awards	1,787		922

Repayment of liability for sale of future royalties	(1,601)		—
Net cash provided by financing activities	186		922


March 31, 2024	Amortized Cost		Estimated Fair Value
(in thousands)
Mature in one year or less	$	460,336	$	460,367
Mature within two years	155,134		154,960
	$	615,470	$	615,327


	Less than 12 months				12 months or greater
March 31, 2024	Fair value		Unrealized losses		Fair value		Unrealized losses
(in thousands)
Corporate Securities	$	51,230	$	(42)	$	53,122	$	(104)
Government Securities	110,170		(35)		36,427		(172)
	$	161,400	$	(77)	$	89,549	$	(276)


	Carrying Value		Carrying Value
	March 31, 2024		December 31, 2023

Zenas Preferred Stock	$	43,560	$	64,210

SEC Form 10-Q filed by Xencor Inc.