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_______________________________________________

_______________________________________________

(Exact name of registrant as specified in its charter)

(Registrant’s telephone number, including area code)

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

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:

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.

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.

			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

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.

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.

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.

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.

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.

The following table provides a summary of revenue recognized:

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

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.

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.

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.

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

The following table summarizes the contract maturities of the Company’s marketable debt securities as of March 31, 2025:

The Company did not record any impairment losses on its marketable debt securities during the three months ended March 31, 2025 and 2024.

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

Net unrealized gains on marketable equity securities, recognized in other income (expense) in the consolidated statements of operations, were $0.9 million and $2.3 million for the three months ended March 31, 2025 and 2024, respectively.

No impairment losses on marketable equity securities were recognized for the three months ended March 31, 2025. An impairment loss of $20.7 million was recorded for the three months ended March 31, 2024, based on an analysis performed under the measurement alternative for a security without a readily determinable fair value.

4. Fair Value of Measurements

The Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The Company’s valuation techniques and inputs used to measure fair value and the definition of the three levels (Level 1, Level 2, and Level 3) of the fair value hierarchy are disclosed in Note 1 - Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements of Part II, “Item 8. Consolidated Financial Statements and Supplementary Data” of its Annual Report on Form 10-K for the year ended December 31, 2024.

The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2, or from Level 2 to Level 3. The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused the transfer. As of March 31, 2025 and December 31, 2024, the Company did not have any financial assets or financial liabilities based on Level 3 measurements.

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation techniques utilized by the Company:

The following table summarizes the Company’s major classes of property and equipment:

Depreciation and amortization expense for property and equipment for the three months ended March 31, 2025 and 2024 was $2.4 million and $2.7 million, respectively.

The following table summarizes the Company’s patents, licenses, and other intangible assets:

Patents, licenses and other intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives. Amortization expense was $0.3 million for each of the three months ended March 31, 2025 and 2024. None of these assets with definite useful lives are anticipated to have a residual value.

Patents, licenses and other intangible assets are reviewed annually for impairment and more frequently if potential impairment indicators exist. The Company recorded the asset impairment charges of $4.9 million during the three months ended March 31, 2025, related to its decision in the first quarter of 2025 to pause further development of certain programs and prioritize resources toward advancing other pipeline programs. As a result, associated patents related to the paused programs were impaired. No such charges were recorded during the same period in 2024.

The following table presents the estimated future amortization expense related to definite-lived assets as of March 31, 2025:

Accrued expenses consist of the following:

On November 3, 2023, the Company and OMERS entered into the Ultomiris Royalty Sale Agreement. Pursuant to the Ultomiris Royalty Sale Agreement, OMERS acquired the rights to a portion of royalties and milestones earned after July 1, 2023 associated with the existing license relating to Ultomiris® (ravulizumab-cwvz) in exchange for an upfront payment of $192.5 million. Pursuant to the Ultomiris Royalty Sale Agreement and subject to the Company’s existing license with Alexion, OMERS acquired the right to receive: (i) 100% of royalties payable on past and future sales related to Ultomiris that occur from July 1, 2023 through December 31, 2025; (ii) up to $35.0 million annually in royalties on future sales related to Ultomiris that occur from January 1, 2026 through December 31, 2028, with any royalties in excess of $35.0 million reverting to the Company; (iii) up to $12.0 million annually in royalties on future sales related to Ultomiris that occur from and after January 1, 2029, with any royalties in excess of $12.0 million reverting to the Company; and (iv) $18.0 million of a certain future sales based milestone payment pursuant to the existing license with Alexion.

On November 3, 2023, the Company and OMERS entered into the Monjuvi Royalty Sale Agreement. Pursuant to the Monjuvi Royalty Sale Agreement, OMERS acquired the rights to a portion of royalties earned after July 1, 2023 associated with the existing license relating to Monjuvi®/Minjuvi® (tafasitamab-cxix) in exchange for an upfront payment of $22.5 million. Pursuant to the Monjuvi Royalty Sale Agreement and subject to the Company’s existing license with Incyte, OMERS acquired the right to receive up to $29.3 million in royalties earned after July 1, 2023 related to sales of Monjuvi/Minjuvi, with any royalties in excess of $29.3 million paid to OMERS reverting to the Company.

The Company has evaluated the terms of both Ultomiris and Monjuvi Royalty Sale Agreements and concluded, in accordance with the relevant accounting guidance, that the Company accounted for both transactions as debt and the proceeds recorded as liabilities related to the sale of future royalties on its consolidated balance sheets.

The Company records the obligations at their carrying value using the effective interest method. In order to amortize the liabilities related to the sale of future royalties, the Company utilizes the prospective method to estimate the future royalties to be paid by the Company to the counterparty over the life of the arrangement. Under the prospective method, a new effective interest rate is determined based on the revised estimate of remaining cash flows. The new rate is the discount rate that equates the present value of the revised estimate of remaining cash flows with the carrying amount of the debt, and it will be used to recognize non-cash interest expense for the remaining periods. The Company periodically assesses the amount and the timing of expected royalty payments using a combination of internal projections and forecasts from external sources.

The estimates of future net product sales (and resulting royalty payments) are based on key assumptions such as future sales forecasts and other significant events. To the extent such payments are greater or less than the Company’s initial estimates or the timing of such payments is different than its original estimates, the Company will prospectively adjust the amortization of the royalty financing obligations and the effective interest rate. As of March 31, 2025, the estimated effective interest rates were 23.0% and 17.5% for Ultomiris and Monjuvi Royalty Sale Agreements, respectively.

The following table presents the activities with respect to the liabilities related to the sales of future royalties:

From time to time, the Company may be subject to claims and legal proceedings arising in the ordinary course of business. The Company evaluates each matter and assesses its potential financial exposure. If the potential loss from a legal proceeding is considered probable and the amount can be reasonably estimated, the Company records an accrual for the estimated loss. Because the outcome of legal proceedings is inherently uncertain, significant judgment is required in assessing the likelihood of a loss and whether the amount is reasonably estimable. The Company’s assessments and any recorded accruals are based on information available at the time of evaluation. As additional information becomes available, the Company re-evaluates its estimates and may adjust recorded liabilities accordingly.

The Company is currently a party to an action initiated by Merus N.V. (“Merus”) in the District of Delaware alleging that the Company’s manufacture, use, offer for sale, sale and/or importation of common light chain antibodies and heterodimeric antibodies infringes certain claims of three Merus patents. Merus filed its complaint against the Company on August 5, 2024. Merus asserted claims of U.S. Patent Nos. 9,944,695, 9,358,286 and 11,926,859 (collectively, the Asserted Patents). Merus seeks a judgment of patent infringement, an order enjoining the Company from infringing the Asserted Patents, a damages award (together with interest), a declaration of willful infringement, and a finding that this case is exceptional. On October 10, 2024, the Company filed a motion to dismiss the Merus complaint with prejudice under Rule 12(b)(6), in which the Company argued that all of the activities accused of infringement are covered by the 35 U.S.C.§ 271(e)(1) safe harbor. Merus filed its response to the Company’s motion on October 31, 2024, and the Company replied to Merus’ response on November 14, 2024. Both Merus and the Company requested a hearing for the motion to dismiss. On February 11, 2025, the Company filed for inter partes review of Merus’ U.S. Patent Nos. 9,358,286 and 11,926,859 before the U.S. Patent and Trademark Appeal Board seeking a finding that certain claims of those patents are unpatentable. The Company believes it has strong defenses to Merus’ claims, including defenses of invalidity and/or non-infringement, but there is no guarantee that the Company will prevail.

The Company is party to certain license agreements that obligate it to make future payments to third parties, which may include sublicense fees, royalties and milestone payments contingent upon the achievement of specified development and commercialization events. Because the occurrence, timing and amounts of these potential payments are not currently probable or reasonably estimable, they have not been recorded on the Company’s balance sheets as of March 31, 2025 and December 31, 2024.

In addition, the Company has entered into agreements with various third-party vendors for research, development and manufacturing services. These agreements generally provide for future payments contingent upon the vendors’ delivery of goods or performance of services. Such commitments are not recorded until the related goods or services are received.

The following table summarizes the Company’s shares of common stock and preferred stock:

On February 27, 2023, the Company filed an automatic universal shelf registration statement on Form S-3 (File No. 333-270030) as a well-known seasoned issuer as defined in Rule 405 under the Securities Act of 1933, as amended, which became effective upon filing (the "Shelf Registration Statement"). The Shelf Registration Statement allows the Company to offer an indeterminate amount of securities, including equity securities, debt securities, warrants, rights, units and depositary shares, from time to time as described in the Shelf Registration Statement. The specific terms of any offering under the Shelf Registration Statement will be established at the time of such offering. The Shelf Registration Statement will expire on February 27, 2026.

On February 27, 2023, the Company entered into a sales agreement (the “Sales Agreement”) with SVB Securities LLC (the “Agent”), pursuant to which the Company may offer and sell, from time to time through the Agent (the “ATM Offering”), shares of its common stock having an aggregate offering price of up to $200.0 million (the “ATM Shares”). Any ATM Shares offered and sold in the ATM Offering will be issued pursuant to the Company’s Shelf Registration Statement and the prospectus supplement filed pursuant to Rule 424(b) relating to the ATM Offering, dated February 27, 2023. As of March 31, 2025, no shares have been issued under the Sales Agreement.

On September 12, 2024, the Company completed an underwritten public offering pursuant to the Company’s Shelf Registration Statement. In the offering, the Company sold pre-funded warrants to purchase up to 3,088,888 shares of common stock at a purchase price of $17.99 per pre-funded warrant, for an aggregate value of approximately $55.6 million. The outstanding pre-funded warrants are exercisable at any time and do not have an expiration date.

Monrovia, California: The Company leases office and laboratory space in Monrovia, California, which lease expires in December 2025. The lease contains an option to renew for one additional five-year term. The Company has assessed that it is unlikely to exercise this option to renew and therefore, it is not included in right-of-use assets and liabilities as of March 31, 2025.

Pasadena, California: In June 2021, the Company entered into a lease agreement for laboratory and office space in Pasadena, California, with a lease term through July 2035 and no renewal option. The lease includes two phases: Phase 1 commenced on August 1, 2022, and Phase 2 commenced on December 1, 2022.

The lease provides tenant improvement allowances of up to $17.0 million for Phase 1 and $3.3 million for Phase 2. In August 2022, the lease was amended to provide an additional $5.0 million in Phase 1 improvement allowance in exchange for an increase in rent.

San Diego, California: In August 2023, the Company entered into a sublease agreement for office space in San Diego, California, with a lease term from September 2023 through December 2027. As part of the sublease, the Company issued a $0.4 million letter of credit to the landlord, secured by a cash collateral account classified as restricted cash on the consolidated balance sheets. The amount of the letter of credit will decrease over the lease term.

The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. The components of lease assets and liabilities along with their classification on the Company’s consolidated balance sheets were as follows:

The following table presents maturities of operating lease liabilities on an undiscounted basis as of March 31, 2025:

The following table presents lease costs, supplemental cash flow and other information:

In June 2023, the Company’s Board of Directors (the “Board”) and stockholders approved the 2023 Equity Incentive Plan (the “2023 Plan”), which became effective on June 14, 2023, and replaced the 2013 Equity Incentive Plan (the “2013 Plan”). No additional awards may be granted under the 2013 Plan.

The 2023 Plan reserves 3,000,000 shares of common stock, plus any remaining shares available under the 2013 Plan as of the effective date. In addition, shares subject to outstanding awards under the 2013 Plan that expire, are forfeited, or otherwise terminate without being issued after June 14, 2023, will be added to the 2023 Plan share reserve. The 2023 Plan does not include an automatic annual share increase (an evergreen provision). As of March 31, 2025, the total number of shares of common stock reserved for issuance under the 2023 Plan is 17,486,579.

In addition, the Company’s Board and stockholders approved the Employee Stock Purchase Plan (the “ESPP”), which became effective on December 5, 2013. As of March 31, 2025, the total number of shares of common stock available for issuance under the ESPP is 945,106.

The following table presents a summary of awards outstanding:

The following table summarizes stock-based compensation expenses included in operating expenses:

The following table presents a summary of the stock option activity for the three months ended March 31, 2025:

The aggregate intrinsic values represent the amount by which the market price of the underlying stock exceeds the exercise price of the option. The total intrinsic value of the options exercised during the three months ended March 31, 2025 and 2024 was $0.5 million and $1.3 million, respectively.

As of March 31, 2025, the pre-tax compensation expense for all outstanding unvested stock options in the amount of $50.9 million will be recognized in the Company’s results of operations over a weighted average period of 2.6 years.

The following table provides the assumptions used in the calculation of grant date fair values of these stock options based on the Black-Scholes option pricing model:

(1) The computation of expected term was determined based on the option holders’ past exercise patterns.

Restricted Stock Units (“RSUs”)

The following table summarizes the activity of the Company’s RSUs:

The fair value of RSUs was determined based on the closing price of the Company’s common stock on the grant date, with consideration given to the probability of achieving service and/or performance conditions for awards.

As of March 31, 2025, there was $34.9 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 2.2 years.

The following table provides the assumptions used in the calculation of grant date fair values of these shares issued under the Company’s ESPP based on the Black-Scholes option pricing model:

As of March 31, 2025, the pre-tax compensation expense for all outstanding shares issued under the Company’s ESPP in the amount of $0.7 million will be recognized in the Company’s results of operations over a weighted average period of 0.7 years.

The following table presents the computation of basic and diluted net loss per share.

The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive.

The Company operates as a single reportable segment focused on discovering and developing engineered antibody therapeutics to treat patients with cancer and autoimmune diseases who have unmet medical needs. Segment profit or loss is measured as the net loss reported in the Company’s consolidated statements of operations and comprehensive loss. Segment revenue consists of royalties and milestone payments derived from collaboration and licensing agreements. See Note 2. Segment assets is represented by total assets as reported on the Company’s consolidated balance sheets.

The Company’s Chief Executive Officer serves as the Chief Operating Decision Maker (CODM). The CODM evaluates performance, allocates resources and conducts planning and forecasting using financial information as presented in the consolidated statements of operations. In addition, the CODM reviews research and development expenses by program.

The table below details the Company’s revenues and expenses and reconciles those amounts to the Company’s consolidated net loss as computed under U.S. GAAP in the consolidated statements of operations and comprehensive loss:

We are a clinical-stage biopharmaceutical company focused on discovering and developing engineered antibody therapeutics to treat patients with cancer and other serious diseases, who have unmet medical needs. We use our protein engineering capabilities to design new technologies and XmAb® drug candidates with improved properties. We advance these candidates into clinical-stage development, where we are conducting Phase 1 studies for a broad portfolio of programs, to determine which programs we advance into later stages of development and potentially commercialization, which programs we partner to access complementary resources to optimize development, and which programs we discontinue.

Our approach to protein design includes engineering Fc domains, the parts of antibodies that interact with multiple segments of the immune system and control antibody structure. The Fc domain is constant and interchangeable among antibodies, and our engineered Fc domains can be readily substituted for natural Fc domains.

We and our partners develop XmAb antibodies and other types of biotherapeutic drug candidates with improved properties and functionality, which can provide innovative approaches to potentially treating disease and clinical benefits over other treatment options. Applications of our protein engineering technologies include multi-specific antibodies that bind two or more different targets simultaneously, creating entirely new biological mechanisms of anti-disease activity, or enhancement of antibody performance by increasing immune inhibitory activity, improving cytotoxicity, extending circulating half-life and stabilizing novel protein structures. Three marketed XmAb medicines have been developed with our protein engineering technologies.

Refer to Part I, Item 1, “XmAb Bispecific Fc Domain and Multi-Specific Antibody Formats” and “Other XmAb Fc Domains” in the description of our business included in our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of our core Fc technology platforms.

Our modular XmAb bispecific technology and protein engineering capabilities enable us to rapidly advance multiple drug candidates into clinical development. We are currently enrolling Phase 1 clinical studies for three wholly owned candidates to treat patients with many different types of serious diseases: XmAb819, XmAb541 and XmAb942. Two additional drug candidates are planned to enter clinical development in 2025: plamotamab and XmAb657.

XmAb819 (ENPP3 x CD3): XmAb819 is a potential first-in-class, tumor-targeted, T-cell engaging XmAb 2+1 bispecific antibody in development for patients with clear cell renal cell carcinoma (ccRCC). XmAb819 is designed to engage the immune system and activate T cells for highly potent and targeted lysis of tumor cells expressing ENPP3, an antigen highly expressed on kidney cancers. ENPP3 is a differentially expressed target, with high level expression in RCC and low level expression on normal tissues. With two tumor-antigen binding domains and one T-cell binding domain, our XmAb 2+1 format is designed to enable antibodies to bind more avidly and selectively kill tumor cells with higher antigen density, potentially sparing normal cells.

We are conducting a Phase 1 study to evaluate XmAb819 in patients with advanced ccRCC. We previously announced that initial evidence of anti-tumor activity had been observed in dose-escalation cohorts in the ongoing Phase 1 study, including RECIST responses, and the duration of treatment for several patients in earlier dose cohorts had extended beyond one year. Cytokine release syndrome remained manageable, and the tolerability profile from recent dose cohorts, including no maximum tolerated dose being reached, supported continued dose escalation toward target dose levels.

XmAb541 (CLDN6 x CD3): XmAb541 is a potential first-in-class, tumor-targeted, T-cell engaging XmAb 2+1 bispecific antibody in development for patients with CLDN6 expressing tumor types including ovarian cancer. XmAb541 targets CLDN6, a tumor-associated antigen in ovarian cancer and other solid tumors, and CD3. The XmAb 2+1 multivalent format used in XmAb541 enables greater selectivity for CLDN6 over similar Claudin family members, such as CLDN9, CLDN3 and CLDN4. We are conducting a Phase 1 dose-escalation study, with characterization of target dose levels anticipated to begin during 2025.

XmAb808 (B7-H3 x CD28): XmAb808 is a tumor-selective, co-stimulatory CD28 bispecific antibody that binds to the broadly expressed tumor antigen B7-H3 and is constructed with the XmAb 2+1 multivalent format. Co-stimulation is required for T cells to achieve full activation, and targeted CD28 bispecific antibodies may provide conditional co-stimulation of T cells when the antibodies are bound to tumor cells. Enrollment in the final cohort of a Phase 1 dose-escalation study of XmAb808 in combination with pembrolizumab, an anti-PD1 antibody, is complete. Data from the study are expected to inform future development decisions for the program. Potential combination with CD3 T-cell engaging bispecific antibodies is being evaluated.

XmAb942 (Xtend TL1A): XmAb942 is a high-potency, extended half-life, investigational anti-TL1A antibody in clinical development for patients with inflammatory bowel disease (IBD), such as ulcerative colitis (UC) and Crohn’s disease (CD). The first generation of anti-TL1A antibodies, designed to block the interaction between the DR3 receptor and its ligand TL1A, have reduced disease activity in patients with UC and CD in multiple clinical studies. We announced interim results from a Phase 1 dose-escalation study in healthy volunteers in April 2025.

The results indicate that XmAb942 was well tolerated at single and multiple doses. Pharmacokinetic analysis of the single dose cohorts estimated a human half-life of greater than 71 days, which supports a 12-week dosing interval during maintenance treatment. We expect to start a Phase 2b study of XmAb942 in UC, the XENITH-UC Study, in the second half of 2025. XENITH-UC will be a randomized, double-blind, placebo-controlled trial in patients with moderate-to-severe UC, whose disease has progressed after at least one conventional or advanced therapy.

Plamotamab (CD20 x CD3): Plamotamab is a B-cell depleting bispecific T-cell engager that targets CD20, a target receptor on B cells, and CD3. We plan to initiate a Phase 1b/2a proof-of-concept study for plamotamab in rheumatoid arthritis (RA) in the first half of 2025. The Phase 1b portion of the study will select a priming and step-up dose regimen based on the regimen established in oncology, and will assess the initial safety, efficacy and biomarkers of plamotamab in patients with RA. The selected dose regimen will then be evaluated in the randomized Phase 2a portion, with efficacy determined at week 12. Results from the previously conducted Phase 1 study in hematologic cancers showed favorable tolerability and comparable preliminary efficacy data, when cross compared to results from studies of a competitor molecule within the class, with similar patient baseline characteristics. Data demonstrating deep peripheral B-cell depletion observed in patients with lymphoma were presented at a medical meeting in December 2024. Based on these clinical outcomes, significant B-cell depletion, and the emergent biology supportive of B-cell targeted T-cell engagers for the treatment of patients with autoimmune diseases, we plan to evaluate plamotamab in RA, in which patients progressed through prior standard of care treatment.

XmAb657 (CD19 x CD3): We have leveraged our XmAb protein engineering platforms to create XmAb657, a potent, potentially long-acting CD19 x CD3 bispecific antibody, utilizing the XmAb 2+1 bispecific antibody format and Xtend Fc technology. In non-human primate studies, a single dose of XmAb657 deeply reduced B cells by over 99.98% in the peripheral compartment, bone marrow and lymph nodes, which was sustained for at least 28 days. Half-life was estimated to be 15 days, which indicates a potential for durable B-cell depletion in clinical studies. XmAb657 was well tolerated preclinically, with no clinical signs of cytokine release syndrome. We plan to initiate a first-in-human study during the second half of 2025.

XmAb TL1A x IL-23: We are conducting lead selection studies and have begun good manufacturing practice (GMP) production campaigns for a TL1A x IL-23p19 bispecific antibody, which targets two important inflammatory pathways for autoimmune and inflammatory disease, while avoiding the complexities of dosing and formulary access for two separate TL1A and IL23 targeted drugs. In vitro studies show that several lead candidates match the target inhibition potency of monospecific antibodies to these targets, but in a bispecific format. We anticipate initiating first-in-human studies during 2026.

A key part of our business strategy is to leverage our protein engineering capabilities, XmAb Fc domains and drug candidates with partnerships, collaborations and licenses. Through these arrangements we generate revenues in the form of upfront payments, milestone payments and royalties. For partnerships for our drug candidates, we aim to retain a major economic interest in the form of keeping major geographic commercial rights; profit-sharing; co-development options; and the right to conduct studies with drug candidates developed in the collaboration. The types of arrangements that we have entered into with partners include product licenses, novel bispecific antibody collaborations, technology licensing agreements and strategic collaborations.

Product licenses are arrangements in which we have internally developed drug candidates and, based on a strategic review, licensed partial or full rights to third parties to continue development and potential commercialization. We seek partners that can provide infrastructure and resources to successfully develop our drug candidates, have a track record of successfully developing and commercializing medicines, or have a portfolio of development-stage candidates and commercialized medicines that could potentially be developed in rational combinations with our drug candidates.

The FDA approved Monjuvi® (tafasitamab-cxix) under accelerated approval in July 2020. Monjuvi is a CD19-directed cytolytic antibody indicated in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) not otherwise specified, including DLBCL arising from low grade lymphoma, and who are not eligible for autologous stem cell transplant (ASCT). This indication is approved under accelerated approval based on overall response rate. Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial(s). In August 2021, the European Commission granted conditional marketing authorization for Minjuvi® (tafasitamab) in combination with lenalidomide, followed by tafasitamab monotherapy, for the treatment of adult patients with DLBCL who are not eligible for ASCT. In December 2024, Incyte announced positive full results from the pivotal study of tafasitamab in combination with lenalidomide and rituximab in relapsed or refractory follicular lymphoma and submitted a supplemental Biologics License Application, which was accepted in February 2025.

Tafasitamab was created and initially developed by us. Tafasitamab is marketed by Incyte under the brand name Monjuvi in the U.S. and under the brand name Minjuvi in Europe and Canada. Incyte has exclusive commercialization rights to tafasitamab outside the U.S. In February 2024, Incyte acquired exclusive global development and commercialization rights to tafasitamab from MorphoSys AG. We earned a $12.5 million regulatory milestone payment and $2.8 million in estimated non-cash royalties from Incyte for the three months ended March 31, 2025.

We enter into technology licensing agreements in which we license access to one or more of our XmAb Fc domains on a restricted basis, typically to an XmAb Cytotoxic Fc Domain and/or the Xtend Fc Domain. Our partners are responsible for all research, development and commercialization activities of the drug candidates. The plug-and-play nature of XmAb technologies allows us to license access to our platforms with limited or no internal research and development activities.

Alexion’s Ultomiris® uses Xtend Fc technology for longer half-life. Ultomiris has received marketing authorizations in global markets for the treatment of patients with paroxysmal nocturnal hemoglobinuria (PNH), for certain patients with atypical hemolytic uremic syndrome (aHUS), for certain patients with generalized myasthenia gravis (gMG) and for certain patients with neuromyelitis optica spectrum disorder (NMOSD). Alexion is also evaluating Ultomiris in a broad development program across additional hematology, nephrology and neurology indications. We earned a total of $15.5 million in estimated non-cash royalties from Alexion for the three months ended March 31, 2025.

In August 2019, we entered into an agreement with Vir Biotechnology, Inc., in which we provided Vir Bio a non-exclusive license to our Xtend technology for two targets in infectious disease. Tobevibart is currently in clinical development for the treatment of patients with chronic hepatitis delta (CHD) and patients with chronic hepatitis B. Vir Bio initiated a Phase 3 study of tobevibart in combination with a small interfering ribonucleic acid (siRNA) in people living with CHD in March 2025. We earned a $2.0 million development milestone payment from Vir Bio for the three months ended March 31, 2025.

Refer to Part I, Item 1, Note 2, Collaboration and Licensing Agreements, of the Notes to consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of the key terms of our arrangements.

Vudalimab (PD-1 x CTLA-4): Vudalimab is a bispecific antibody that targets PD-1 and CTLA-4, two immune checkpoint receptors, to selectively activate the tumor microenvironment. In the fourth quarter of 2024, we completed enrollment in two studies of vudalimab in patients with metastatic castration-resistant prostate cancer and in Part 1 of a study in patients with locally advanced or metastatic non-small cell lung cancer. We have previously disclosed that further development of vudalimab has been paused.

Our patent estate, on a worldwide basis, includes issued patents and pending patent applications, with claims directed to XmAb Fc domains, all of our clinical and preclinical stage product candidates and our computational protein design methods and platforms.

Since we commenced active operations in 1998, we have devoted substantially all our resources to staffing our Company, business planning, raising capital, developing our technology platforms, identifying potential product candidates, undertaking preclinical and Investigational New Drug (IND)-enabling studies, and conducting clinical trials. We have no internally developed products approved for commercial sale and have not generated any revenues from our own product sales, and we continue to incur significant research and development expenses and other expenses related to our ongoing operations. To date, we have funded our operations primarily through the sale of stock and from payments generated from our product development partnerships and licensing arrangements.

As of March 31, 2025, we had an accumulated deficit of $752.5 million. Substantially all of the operating losses that we have incurred resulted from expenses incurred in connection with our product candidate development programs, our research activities and general and administrative costs associated with our operations.

The following table summarizes our results of operations for the following periods indicated:

			Three Months Ended March 31,
			2025						2024						Change
			(in thousands)
Revenues:
Milestone			$	14,500					$	500					$	14,000
Royalties			18,232						15,497						2,735
Total revenues			$	32,732					$	15,997					$	16,735
Operating expenses:
Research and development			$	58,578					$	56,873					$	1,705
General and administrative			17,337						13,787						3,550
Total operating expenses			$	75,915					$	70,660					$	5,255
Operating loss			$	(43,183)					$	(54,663)					$	11,480
Net loss attributable to Xencor, Inc.			$	(48,418)					$	(73,440)					$	25,022

Total revenue for the three months ended March 31, 2025 and 2024 was $32.7 million and $16.0 million, respectively, and was primarily driven by the revenue recognition associated with Alexion and Incyte license agreements as discussed below. See Note 2 — Collaboration and Licensing Agreements of the Notes to Consolidated Financial Statements of Part I, “Item 1. Financial Statements” for more information on revenue recognized under the collaboration and license agreements.

Alexion: In January 2013, we entered into an Option and License Agreement (the “Alexion Agreement”) with Alexion. Under the terms of the Alexion Agreement, we granted to Alexion an exclusive research license, with limited sublicensing rights, to make and use our 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, we recognized $15.5 million and $12.6 million of non-cash royalty revenue during the three months ended March 31, 2025 and 2024, respectively.

Incyte: In June 2010, we entered into a Collaboration and License Agreement with MorphoSys AG, which was subsequently amended in March 2012, 2020 and 2024 (as amended, the Morphosys Agreement). The MorphoSys Agreement provides MorphoSys AG with an exclusive worldwide license to our patents and know-how to research, develop, and commercialize our XmAb5574 product candidate (subsequently renamed MOR208 and tafasitamab) with the right to sublicense under certain conditions. If certain developmental, regulatory and sales milestones are achieved, we are eligible to receive future milestone payments and royalties. In February 2024, Incyte assumed all of MorphoSys AG’s right, title and interest under the MorphoSys Agreement. Under this agreement, originally executed in June 2010, we entered into a Collaboration and License Agreement in June 2010 with MorphoSys AG and acquired exclusive global development and commercialization rights to tafasitamab.

In February 2025, the FDA accepted Incyte’s submission of a supplemental biologics license application, triggering a $12.5 million milestone payment to us, which was paid in the second quarter of 2025.

Under the MorphoSys Agreement, we recognized $2.8 million and $2.9 million of non-cash royalty revenue during the three months ended March 31, 2025 and 2024, respectively.

R&D expenses are related to our research and development efforts and related candidate costs, which are comprised primarily of outsourced costs related to the manufacturing of clinical supplies, toxicity/efficacy studies and clinical trial expenses. Internal costs primarily relate to drug discovery and development operations at our research facilities in California, including facility costs and laboratory-related expenses.

The following tables summarize our research and development expenses for the three months ended March 31, 2025 and 2024:

			Three Months Ended March 31,
			2025						2024
			(in thousands)
External R&D expenses per program:
XmAb819 (ENPP3 x CD3)			$	4,810					$	2,949
XmAb808 (B7-H3 x CD28)			2,196						2,391
XmAb541 (CLDN6 x CD3)			2,141						—
Plamotamab (CD20 x CD3)*			1,546						—
XmAb942 (Xtend TL1A)			2,402						2,901
XmAb657 (CD19 x CD3)			4,399						—
Other programs including research and early stage			2,092						6,809
Wind down costs of terminated programs			7,655						10,684
Total external R&D expenses			$	27,241					$	25,734
Internal R&D expenses and stock based compensation			31,337						$	31,139
Total research and development expenses			$	58,578					$	56,873

R&D expenses increased by $1.7 million for the three months ended March 31, 2025 over the same period in 2024. The increase was primarily driven by higher spending on our programs, including XmAb819, XmAb657, and XmAb541, partially offset by reduced spending on other programs and wind-down costs associated with terminated programs.

The following table summarizes our general and administrative expenses for the three months ended March 31, 2025 and 2024:

			Three Months Ended March 31,
			2025						2024						Change
			(in thousands)
General and administrative			$	17,337					$	13,787					$	3,550

General and administrative expenses increased by $3.6 million for the three months ended March 31, 2025 over the same period in 2024 primarily due to higher spending on professional fees.

Other expense primarily consists of interest income and expense, as well as asset impairment charges. Other expense was $5.1 million and $19.5 million for the three months ended March 31, 2025 and 2024, respectively. The change was primarily due to $20.7 million in impairment charges recognized in the first quarter of 2024 related to an equity interest in a private biotechnology company.