xncr-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________________

FORM 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2025


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

For the transition period from ________ to ________

_______________________________________________

Commission file number: 001-36182

Xencor, Inc.

(Exact name of registrant as specified in its charter)


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)

(626) 305-5900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

XNCR

The Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class						Outstanding at May 2, 2025
Common stock, par value $0.01 per share						71,170,754

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TABLE OF CONTENTS


		Page

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		2

PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations and Comprehensive Loss	4
	Consolidated Statements of Stockholders’ Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION	29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
I tem 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
I tem 3.	Default upon Senior Securities	30
I tem 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31

SIGNATURE		32

In this report, unless otherwise stated or the context otherwise indicates, references to “Xencor,” “the Company,” “we,” “us,” “our” and similar references refer to Xencor, Inc. The Xencor logo is a registered trademark of Xencor, Inc. This report also contains registered marks, trademarks, and trade names of other companies. All other trademarks, registered marks and trade names appearing in this report are the property of their respective holders.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend that such forward-looking statements be subject to the safe harbors created thereby. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology.

These forward-looking statements should, therefore, be considered in light of various important factors, including but not limited to, the following:

•the effects of inflation on our financial condition, results of operations, cash flows and performance;

•our ability to execute on our plans to research, develop and commercialize our product candidates;

•the success of our ongoing and planned clinical trials;

•the timing of and our ability to obtain and maintain regulatory approvals for our product candidates;

•our ability to identify additional products or product candidates with significant commercial potential that are consistent with our business objectives;

•our ability to receive research funding and achieve anticipated milestones under our collaborations;

•our partners’ abilities to advance drug candidates into, and successfully complete, clinical trials;

•our ability to attract collaborators with development, regulatory, and commercialization expertise;

•our ability to protect our intellectual property position;

•the rate and degree of market acceptance and clinical utility of our products;

•costs of compliance and our failure to comply with new and existing governmental regulations;

•the capabilities and strategy of our suppliers and vendors including key manufacturers of our clinical drug supplies;

•significant competition in our industry;

•the potential loss or retirement of key members of management;

•our failure to successfully execute our growth strategy including any delays in our planned future growth;

•our failure to maintain effective internal controls, which led to the restatement of our financial statements, and the risk that we may experience additional material weaknesses; and

•our ability to accurately estimate expenses, future revenues, capital requirements and needs for additional financing.

These forward-looking statements reflect management’s current views with respect to future events and with respect to our business and future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those described under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Other sections of this Quarterly Report on Form 10-Q may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all risk factors, nor can we assess the impact of all risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You are advised, however, to consult any further disclosure we make in our reports filed with the Securities and Exchange Commission.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Xencor, Inc.

Consolidated Balance Sheets

(in thousands, except per share amounts)


	March 31, 2025		December 31, 2024
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	39,675	$	40,875
Marketable debt securities	381,021		408,971
Marketable equity securities	48,870		47,929
Accounts receivable	37,785		60,849
Prepaid expenses and other current assets	13,920		18,977
Total current assets	521,271		577,601
Property and equipment, net	58,808		59,800
Patents, licenses, and other intangible assets, net	13,363		18,485
Restricted cash	284		387
Marketable debt securities - long term	272,815		256,833


Right-of-use asset	37,650		38,341
Other assets	498		498
Total assets	$	904,689	$	951,945
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	16,191	$	16,759
Accrued expenses	16,063		19,217

Lease liabilities	3,640		3,009


Liabilities related to the sales of future royalties	52,542		48,447
Total current liabilities	88,436		87,432
Uncertain tax position payable	10,358		9,990
Lease liabilities, net of current portion	64,184		65,338

Liabilities related to the sales of future royalties, net of current portion	101,837		115,159
Total liabilities	264,815		277,919
Commitments and contingencies
Noncontrolling interest and stockholders’ equity

Common stock, $0.01 par value: Authorized 200,000 shares Issued and outstanding 71,136 and 70,256 shares at March 31, 2025 and December 31, 2024, respectively.	712		703
Additional paid-in capital	1,391,261		1,381,607
Accumulated other comprehensive income (loss)	355		(663)
Accumulated deficit	(752,454)		(704,036)
Total stockholders’ equity attributable to Xencor, Inc.	639,874		677,611
Noncontrolling interest	—		(3,585)
Total noncontrolling interest and stockholders’ equity	639,874		674,026
Total liabilities and stockholders’ equity	$	904,689	$	951,945

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Xencor, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except per share amounts)


	Three Months Ended March 31,
	2025		2024
Revenue
Collaborations, milestones, and royalties	$	32,732	$	15,997
Operating expenses:
Research and development	58,578		56,873
General and administrative	17,337		13,787
Total operating expenses	75,915		70,660
Operating loss	(43,183)		(54,663)

Other income (expense):
Interest income	7,538		8,548
Interest expense	(8,665)		(9,676)
Gains on equity securities, net	941		2,325
Asset impairment charges	(4,865)		(20,650)
Other, net	(31)		—
Total other expense	(5,082)		(19,453)

Loss before income tax expense and noncontrolling interest	(48,265)		(74,116)
Income tax expense	367		—
Net loss including noncontrolling interest	(48,632)		(74,116)
Net loss attributable to noncontrolling interest	(214)		(676)
Net loss attributable to Xencor, Inc.	$	(48,418)	$	(73,440)

Net loss per share attributable to Xencor, Inc. (basic and diluted)	$	(0.66)	$	(1.20)

Weighted-average shares used in calculating (basic and diluted)	73,667		61,212

Other comprehensive loss, net of tax:
Net unrealized gains (losses) on marketable debt securities	1,018		(1,445)
Comprehensive loss	$	(47,614)	$	(75,561)
Less: comprehensive loss attributable to the noncontrolling interest	(214)		(676)
Comprehensive loss attributable to Xencor, Inc.	$	(47,400)	$	(74,885)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Xencor, Inc.

Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Noncontrolling Interest		Total
	Shares	Amount
Balance at December 31, 2024	70,256	$	703	$	1,381,607	$	(663)	$	(704,036)	$	(3,585)	$	674,026
Stock-based compensation	—	—		12,213		—		—		—		12,213
Exercise of stock options	189	2		2,972		—		—		—		2,974
Issuance of restricted stock units	691	7		(7)		—		—		—		—
Net unrealized gain on marketable debt securities	—	—		—		1,018		—		—		1,018
Purchase of noncontrolling interest	—	—		(5,524)		—		—		3,799		(1,725)
Net loss	—	—		—		—		(48,418)		(214)		(48,632)
Balance at March 31, 2025	71,136	$	712	$	1,391,261	$	355	$	(752,454)	$	—	$	639,874


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Noncontrolling Interest		Total
	Shares	Amount
Balance at December 31, 2023	60,998	$	611	$	1,131,266	$	1,291	$	(471,418)	$	337	$	662,087
Stock-based compensation	—	—		11,421		—		—		—		11,421
Exercise of stock options	153	1		1,786		—		—		—		1,787
Issuance of restricted stock units	484	5		(5)		—		—		—		—
Net unrealized losses on marketable debt securities	—	—		—		(1,445)		—		—		(1,445)
Net loss	—	—		—		—		(73,440)		(676)		(74,116)
Balance at March 31, 2024	61,635	$	617	$	1,144,468	$	(154)	$	(544,858)	$	(339)	$	599,734

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Xencor, Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities
Net loss	$	(48,632)	$	(74,116)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,693		3,035
Accretion of discount on marketable debt securities	(2,126)		(6,911)
Stock-based compensation	12,213		11,421

Gain on sale of marketable debt securities	—		(3)
Change in fair value of equity securities	(941)		(2,325)
Asset impairment charges	4,865		20,650
Non-cash royalty revenue	(18,232)		(15,468)
Non-cash interest expense on liability related to the sale of future royalties	8,664		9,665
Loss on disposal of assets	—		6
Changes in operating assets and liabilities:
Accounts receivable	23,405		2,976
Prepaid expenses and other assets	5,057		1,974
Accounts payable	(568)		2,097
Accrued expenses	(3,154)		(10,073)
Operating lease, net	168		213

Others	368		—
Net cash used in operating activities	(16,220)		(56,859)

Cash flows from investing activities
Purchase of marketable securities	(103,873)		(136,532)


Purchase of patents	—		(929)
Purchase of property and equipment	(1,444)		(132)
Proceeds from maturities of marketable securities	118,985		159,942
Proceeds from sale of marketable securities	—		9,969
Net cash provided by investing activities	13,668		32,318

Cash flows from financing activities


Proceeds from the exercises of stock options	2,974		1,787

Cash paid to acquire noncontrolling interest	(1,725)		—
Net cash provided by financing activities	1,249		1,787

Net decrease in cash, cash equivalents, and restricted cash	(1,303)		(22,754)
Cash, cash equivalents, and restricted cash, beginning of period	41,262		54,170
Cash, cash equivalents, and restricted cash, end of period	$	39,959	$	31,416

Supplemental disclosure of cash flow information
Interest paid	$	1	$	11

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Xencor, Inc.

Notes to Consolidated Financial Statements

(unaudited)

1. Organization and Summary of Significant Accounting Policies

Organization

Xencor, Inc. (the “Company”) was incorporated in California in 1997 and reincorporated in Delaware in September 2004. The Company is a clinical-stage biopharmaceutical company focused on discovering and developing engineered antibody therapeutics to treat patients with cancer and autoimmune diseases, who have unmet medical needs. The Company leverages its protein engineering capabilities to design new technologies and XmAb® drug candidates with improved properties. These candidates are advanced into clinical-stage development, where the Company is conducting Phase 1 studies across a broad portfolio of programs. Based on the results of these studies, the Company determines which programs to advance into later-stage development and potential commercialization, which to partner in order to access complementary resources, and which to discontinue.

Consolidation and Basis of Presentation

The interim consolidated financial statements of Xencor, Inc. are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applicable to interim periods. In the opinion of management, all material adjustments of a normal recurring nature have been made to present fairly the Company’s financial position, the results of operations and cash flows for the periods presented. All intercompany transactions and balances have been eliminated.

Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted from the accompanying interim consolidated financial statements and related notes. Readers are urged to review the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for more complete descriptions and discussions. Operating results and cash flows for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2025.

The interim consolidated financial statements include the accounts of Xencor, Inc. and Gale Therapeutics Inc. (“Gale”), a variable interest entity for which the Company is the primary beneficiary. Up through January 20, 2025, the Company owned or was exposed to less than 100% of the economics and accordingly, the Company recorded net loss attributable to noncontrolling interests in its consolidated statements of operations and comprehensive loss equal to the percentage of the economic or ownership interests retained in such entity by the respective noncontrolling party. On January 20, 2025, the Company obtained 100% of the economic interests in Gale and no longer recognizes a noncontrolling interest in its consolidated financial statements as of March 31, 2025. Effective April 29, 2025, Gale was merged into the Company, and as a result, the Company assumed all of Gale’s liabilities and obligations.

Income Tax

The Company recorded $0.4 million of income tax expense for the three months ended March 31, 2025. There is no income tax provision for the three months ended March 31, 2024. As of March 31, 2025, the Company’s deferred income tax assets, consisting primarily of capitalized R&D under IRC Section 174, net operating loss and research and development tax credit carryforwards, have been fully offset by a valuation allowance.

Summary of Significant Accounting Policies

There have been no changes to the significant accounting policies disclosed in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Recent Accounting Pronouncements

The Company does not expect any recently issued accounting standards, other than those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024, to have a material impact on its financial results.

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2. Collaboration and Licensing Agreements

The following table provides a summary of revenue recognized:


	Three Months Ended March 31,
	2025		2024
	(in thousands)
Alexion	$	15,469	$	12,601





Incyte	15,263		2,867


Vega	—		500
Vir Bio	2,000		29



Total	$	32,732	$	15,997

The following table presents a disaggregation of revenue recognized during the periods indicated:


	Three Months Ended March 31,
	2025		2024
	(in thousands)


Milestone	$	14,500	$	500
Royalties	18,232		15,497
Total	$	32,732	$	15,997

Alexion Pharmaceuticals, Inc. (“Alexion”)

In January 2013, the Company entered into an Option and License Agreement (the “Alexion Agreement”) with Alexion. Under the terms of the Alexion Agreement, the Company granted to Alexion an exclusive research license, with limited sublicensing rights, to make and use the Company’s Xtend technology to evaluate and advance compounds. Alexion exercised its rights to one target program, ALXN1210, which is now marketed as Ultomiris®.

Under the Alexion Agreement, no further milestone payments are expected. The Company is entitled to receive royalties based on a percentage of net sales of Ultomiris sold by Alexion, its affiliates or its sublicensees, which percentage is in the low single digits. Alexion’s royalty obligations continue on a product-by-product and country-by-country basis until the expiration of the last-to-expire valid claim in a licensed patent covering the applicable product in such country.

On November 3, 2023, the Company entered into a royalty sale agreement (the “Ultomiris Royalty Sale Agreement”) with OCM Life Sciences Portfolio LP (“OMERS”), under which OMERS acquired the rights to certain royalties associated with the existing license relating to Ultomiris.

Under the Alexion Agreement, the Company recognized $15.5 million and $12.6 million of non-cash royalty revenue during the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, the Company recorded $15.9 million in accounts receivable based on estimated royalties due under the arrangement and no deferred revenue. Payment of this receivable will be made directly to OMERS. See Note 6.

Incyte Corporation (“Incyte”)

In June 2010, the Company entered into a Collaboration and License Agreement (the “MorphoSys Agreement”) with MorphoSys AG (“MorphoSys”). Under the MorphoSys Agreement, the Company granted MorphoSys an exclusive worldwide license to its patents and know-how to research, develop and commercialize the XmAb5574 product candidate (subsequently renamed MOR208 and tafasitamab) with the right to sublicense under certain conditions. In February 2024, Incyte assumed all of MorphoSys’ right, title and interest in the MorphoSys Agreement and acquired exclusive global development and commercialization rights to tafasitamab. If certain developmental, regulatory and sales milestones are achieved, the Company is eligible to receive future milestone payments and royalties from Incyte.

The United States Food and Drug Administration (FDA) accepted Incyte’s submission of a supplemental biologics license application in February 2025, triggering a $12.5 million milestone payment to the Company which was paid in the second quarter of 2025. There was no deferred revenue related to this agreement as of March 31, 2025.

Under the MorphoSys Agreement, the Company is eligible to receive up to $123.0 million in developmental, regulatory and sales milestones, as well as royalties on net sales, subject to the terms and conditions of the agreement.

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On November 3, 2023, the Company entered into a royalty sale agreement (the “Monjuvi Royalty Sale Agreement”) with OMERS, under which OMERS acquired the rights to certain royalties associated with the existing license relating to Incyte.

Under the MorphoSys Agreement, the Company recognized $2.8 million and $2.9 million of non-cash royalty revenue during the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, the Company recorded $2.6 million in accounts receivable based on estimated royalties due under the arrangement and no deferred revenue. Payment of this receivable will be made directly to OMERS. See Note 6.

Vega Therapeutics, Inc. (“Vega”)

In October 2021, the Company entered into a Technology License Agreement (the “Vega Agreement”) with Vega, granting Vega a non-exclusive license to its Xtend Fc technology. In March 2024, Vega initiated a Phase 1 study, triggering a $0.5 million milestone payment, which was recognized as revenue.

No revenue was recognized under the Vega Agreement for the three months ended March 31, 2025.

Under the Vega Agreement, the Company is eligible to receive up to $30.0 million in developmental, regulatory and sales milestones, as well as royalties on net sales, subject to the terms and conditions of the agreement.

Vir Biotechnology, Inc. (“Vir Bio”)

In 2019, the Company entered into a Patent License Agreement (the “Vir Bio Agreement”) with Vir Bio, granting a non-exclusive license to its Xtend technology for up to two targets. In March 2025, Vir Bio initiated a Phase 3 study for tobevibart, triggering a $2.0 million milestone payment to the Company, which was recorded as a receivable as of March 31, 2025.

In March 2020, the Company entered into a second Patent License Agreement (the “Second Vir Bio Agreement”) with Vir Bio, granting a non-exclusive license to its Xtend technology to extend the half-life of novel antibodies Vir Bio developed as potential treatments for patients with COVID-19, including sotrovimab. Under the terms of the Second Vir Bio Agreement, Vir Bio is responsible for all research, development, regulatory and commercial activities for the antibodies, and the Company is eligible to receive royalties on the net sales of approved products in the mid-single digit percentage range. Vir Bio and its marketing partner, GSK, began recording sales for sotrovimab beginning in June 2021.

The Company recognized nominal amounts of royalty revenue for the three months ended March 31, 2024, and there is no deferred revenue related to the Vir Bio or Second Vir Bio Agreements.

Under the Vir Bio Agreement, the Company is eligible to receive up to $152.0 million in developmental, regulatory and sales milestones, as well as royalties on net sales, subject to the terms and conditions of the agreement.

3. Marketable Debt and Equity Securities

Marketable Debt Securities

The Company’s marketable debt securities consisted of the following:


	As of March 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Money market funds	$	26,601	$	—	$	—	$	26,601
Corporate securities	67,957

SEC Form 10-Q filed by Xencor Inc.