Core Viewpoint - Xencor (XNCR) shares experienced a significant increase of 7.3% in the last trading session, closing at $9.25, driven by strong trading volume and investor optimism regarding its engineered antibodies for cancer and autoimmune diseases [1] Company Summary - Xencor is projected to report a quarterly loss of $0.72 per share, reflecting a year-over-year change of -1.4% [2] - Expected revenues for Xencor are $25.66 million, which represents a substantial increase of 139.6% compared to the same quarter last year [2] - The consensus EPS estimate for Xencor has remained unchanged over the past 30 days, indicating a lack of recent earnings estimate revisions [4] Industry Summary - Xencor is part of the Zacks Medical - Drugs industry, where another company, Aclaris Therapeutics (ACRS), saw a decline of 1.6% in its last trading session, closing at $1.81 [5] - Aclaris is expected to report an EPS estimate of -$0.13, which is a change of -18.2% from the previous year [6]

Core Viewpoint - Barclays has initiated coverage of Xencor Inc. with an Underweight rating and a price target of $6.00, reflecting concerns over the company's internal pipeline despite its history of innovation in antibody technology and successful partnerships [1][2] Company Overview - Xencor Inc. is recognized for its innovative contributions to antibody technology and has established royalty-generating partnerships with companies like AstraZeneca and Incyte, which have provided a steady revenue stream and a robust balance sheet [1] Pipeline and Future Prospects - Analysts have expressed disappointment regarding Xencor's internal pipeline, indicating it has not produced sufficient valuation upside beyond its existing royalty base [2] - The company is expected to release early dose-escalation data for its lead oncology program, XmAb819, later this year, but these results are anticipated to be too preliminary to significantly impact the stock [2]

Summary of Zencore Conference Call Company Overview - **Company**: Zencore - **Event**: Cantor Global Healthcare Conference - **Date**: September 04, 2025 Key Points Current State and Strategy - Zencore is focused on developing drugs for severe diseases using its XmAb Protein Engineering Platform, targeting unmet needs in both oncology and autoimmune diseases [3][4] - The company is advancing into immunology indications, building on its core oncology expertise [2][3] Bispecific T Cell Engager Program - The XmAb819 bispecific T cell engager targets ENPP3, a protein expressed in renal cell carcinoma (RCC) and other solid tumors [6][10] - Initial data from the dose escalation phase is expected to be presented at the AACR NCI EORTC meeting in October 2025 [10][18] - The program aims to provide a differentiated treatment option in a complex therapeutic landscape for RCC, where existing therapies have limitations [13][14] Clinical Landscape for RCC - Current first-line treatments for advanced clear cell RCC include PD-1 inhibitors and VEGF TKIs, with a lack of effective options for patients who progress beyond second-line therapy [13][14] - Belzutafan, a recently approved therapy, has shown a 25% response rate in heavily pretreated patients, indicating a need for more effective treatments [15][16] TL1A Asset Development - Zencore is developing TL1A as a potential best-in-class molecule for inflammatory bowel disease (IBD) and other indications [22][23] - The company is initiating a Phase 2b study in ulcerative colitis, with plans to explore additional indications like Crohn's disease [24][28] - The TL1A program is positioned to capitalize on the limitations of existing therapies, aiming for improved efficacy and patient outcomes [27][28] Bispecific Antibody Approach - Zencore is exploring bispecific antibodies targeting TL1A and IL-23, with potential applications in IBD and other autoimmune diseases [29][30] - The bispecific approach is expected to offer a safer profile and improved dosing flexibility compared to existing therapies [29][34] Future Outlook - Zencore plans to continue leveraging its engineering tools to develop novel drug candidates while focusing on clinical data generation [51][52] - The company is optimistic about the potential of its current pipeline, particularly in the context of unmet medical needs in oncology and autoimmune diseases [18][52] Additional Insights - The company acknowledges the challenges in modeling drug exposure in the gut for IBD therapies, emphasizing the need for high drug exposure to achieve desired clinical outcomes [39][42] - Zencore is committed to exploring the therapeutic potential of B cell depletion in autoimmune diseases, drawing parallels with successful oncology therapies [45][48] Conclusion - Zencore is strategically positioned to advance its innovative therapies in oncology and immunology, with a strong focus on addressing unmet medical needs through its proprietary engineering platform and clinical development programs [51][52]

Financial Data and Key Metrics Changes - The company is at a clinical inflection point with a focus on oncology and autoimmune disease programs, indicating a strategic reset and a shift towards higher probability success programs [4][5] - The Phase 2b study for the monospecific TL1a program in ulcerative colitis has commenced, with expectations for significant data generation in the coming years [6][7] Business Line Data and Key Metrics Changes - The company has three therapeutic verticals: oncology, autoimmune diseases, and a focus on protein engineering to enhance drug modalities [6][7] - XmAb942, targeting TL1a, has shown a greater than seventy-one day half-life, allowing for a Q12 week dosing schedule, which is a significant improvement over first-generation drugs [12][18] Market Data and Key Metrics Changes - The company is targeting advanced clear cell renal cell carcinoma with XmAb819, which has a high unmet need for innovative treatments [36][40] - The competitive landscape includes other companies developing TL1a and IL-23 inhibitors, with the company aiming to differentiate its products through superior potency and dosing schedules [13][21] Company Strategy and Development Direction - The company aims to leverage its protein engineering platform to create differentiated therapies that maximize patient benefits and advance the standard of care [6][7] - A strategic reset in September 2024 has set the stage for clinical data generation and regulatory approvals, with a focus on bringing the story together for investors [46][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the clinical development pipeline and the potential for differentiated clinical profiles that could lead to successful commercialization [19][41] - The company is focused on efficient study designs to expedite the transition to pivotal studies and commercialization [19][33] Other Important Information - The company has initiated multiple clinical studies, including the bispecific TL1A and IL-23 program, with first-in-human studies expected in 2026 [22][24] - The company is also ramping up studies for plamotamab and XmAb657, with regulatory authorizations in progress [26][27] Q&A Session Summary Question: Can you discuss the rationale for targeting ENPP3 in CCRC patients? - The company chose ENPP3 based on internal data and third-party validation, allowing for a faster study design without preselecting patients [36][38] Question: What are the advantages of the bispecific design over combining an anti-TL1A with an IL-23? - The bispecific design allows for a synergistic effect between TL1A and IL-23, potentially leading to better clinical outcomes with a single drug delivery [21][22] Question: What is the expected timeline for initial data readout for plamotamab? - Initial data is expected towards the end of this year or early next year as the study ramps up [33] Question: How does the company plan to differentiate XmAb541 from other therapies? - The company aims to achieve a favorable safety profile and effective dosing regimen to differentiate XmAb541 from existing therapies targeting CLDN6 [44][45]

Company Performance - Xencor reported a quarterly loss of $0.41 per share, which is better than the Zacks Consensus Estimate of a loss of $0.78, and an improvement from a loss of $1.07 per share a year ago [1] - The quarterly report represents an earnings surprise of +47.44%, having surpassed consensus EPS estimates three times over the last four quarters [2] - The company posted revenues of $43.61 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 116.92%, compared to revenues of $16.96 million a year ago [3] Stock Performance - Xencor shares have declined approximately 65.4% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [4] - The current consensus EPS estimate for the upcoming quarter is -$0.77 on revenues of $20.95 million, and -$3.08 on revenues of $96.4 million for the current fiscal year [8] Industry Outlook - The Medical - Drugs industry, to which Xencor belongs, is currently ranked in the top 34% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [9] - Another company in the same industry, Plus Therapeutics, is expected to report a quarterly loss of $0.09 per share, reflecting a year-over-year change of +87.3%, with revenues projected at $1.7 million, up 32.8% from the previous year [10]

[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section provides cautionary statements regarding future expectations and potential risks that may cause actual results to differ [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) Forward-looking statements in the 10-Q are subject to safe harbors; actual results may differ due to various factors - The report contains forward-looking statements, identifiable by specific terminology, which are subject to safe harbors under the Securities Act of 1933 and the Securities Exchange Act of 1934[8](index=8&type=chunk) - Actual results may differ materially from current expectations due to known and unknown risks, uncertainties, and other factors, including those described under Part II, 'Item 1A. Risk Factors'[9](index=9&type=chunk) - The company does not assume any obligation to update or revise these forward-looking statements, even if new information becomes available, except as required by law[9](index=9&type=chunk) [Key Factors Affecting Future Results](index=3&type=section&id=Key%20Factors%20Affecting%20Future%20Results) Key factors affecting future results include inflation, product development, clinical trials, regulatory approvals, IP, and financing - The effects of inflation on financial condition, results of operations, cash flows, and performance[10](index=10&type=chunk) - Ability to execute plans for research, development, and commercialization of product candidates[10](index=10&type=chunk) - Success of ongoing and planned clinical trials and timing/ability to obtain regulatory approvals[10](index=10&type=chunk) - Ability to identify additional products or product candidates with significant commercial potential[10](index=10&type=chunk) - Ability to receive research funding and achieve anticipated milestones under collaborations[10](index=10&type=chunk) - Partners' abilities to advance drug candidates into, and successfully complete, clinical trials[10](index=10&type=chunk) - Ability to attract collaborators with development, regulatory, and commercialization expertise[10](index=10&type=chunk) - Ability to protect intellectual property position[10](index=10&type=chunk) - Rate and degree of market acceptance and clinical utility of products[10](index=10&type=chunk) - Costs of compliance and failure to comply with new and existing governmental regulations[10](index=10&type=chunk) - Capabilities and strategy of suppliers and vendors, including key manufacturers of clinical drug supplies[10](index=10&type=chunk) - Significant competition in the industry[10](index=10&type=chunk) - Potential loss or retirement of key members of management[10](index=10&type=chunk) - Failure to successfully execute growth strategy, including delays in planned future growth[10](index=10&type=chunk) - Failure to maintain effective internal controls, which led to restatement of financial statements, and risk of additional material weaknesses[10](index=10&type=chunk) - Ability to accurately estimate expenses, future revenues, capital requirements, and needs for additional financing[10](index=10&type=chunk) [Part I. Financial Information](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Xencor's unaudited consolidated financial statements, management's discussion, market risk, and internal controls [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Xencor's unaudited consolidated financial statements and detailed notes on accounting policies and agreements [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets and stockholders' equity from December 2024 to June 2025 Consolidated Balance Sheet Highlights (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | **Assets** | | | | Total current assets | $513,150 | $577,601 | | Total assets | $879,424 | $951,945 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $96,083 | $87,432 | | Total liabilities | $259,073 | $277,919 | | Total stockholders' equity attributable to Xencor, Inc. | $620,351 | $677,611 | | Total liabilities and stockholders' equity | $879,424 | $951,945 | - Total assets decreased from **$951,945 thousand** at December 31, 2024, to **$879,424 thousand** at June 30, 2025, primarily driven by a decrease in marketable debt and equity securities and accounts receivable[13](index=13&type=chunk) - Total stockholders' equity attributable to Xencor, Inc. decreased from **$677,611 thousand** to **$620,351 thousand** over the same period, largely due to accumulated deficit[13](index=13&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Revenue increased significantly, leading to reduced operating and net losses for the three and six months ended June 30, 2025 Consolidated Statements of Operations and Comprehensive Loss Highlights (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue (Collaborations, milestones, and royalties) | $43,608 | $23,907 | $76,340 | $39,904 | | Total operating expenses | $76,780 | $79,277 | $152,695 | $149,937 | | Operating loss | $(33,172) | $(55,370) | $(76,355) | $(110,033) | | Total other income (expense) | $2,097 | $(13,412) | $(2,985) | $(32,865) | | Net loss attributable to Xencor, Inc. | $(30,825) | $(67,337) | $(79,243) | $(140,777) | | Net loss per share (basic and diluted) | $(0.41) | $(1.09) | $(1.07) | $(2.29) | - Revenue increased significantly for both the three-month period (**82.4%**) and six-month period (**91.3%**) ended June 30, 2025, compared to 2024, primarily due to higher collaboration, milestone, and royalty payments[16](index=16&type=chunk) - Operating loss decreased for both periods, indicating improved operational performance, with a **40.1%** reduction for the three months and a **30.6%** reduction for the six months[16](index=16&type=chunk) - Net loss attributable to Xencor, Inc. decreased by **54.2%** for the three months and **43.8%** for the six months ended June 30, 2025, compared to the prior year, driven by increased revenue and improved other income/expense[16](index=16&type=chunk) [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders%20Equity) Total stockholders' equity decreased to **$620,351 thousand** by June 30, 2025, primarily due to net loss, partially offset by stock-based compensation - Total stockholders' equity decreased from **$674,026 thousand** at December 31, 2024, to **$620,351 thousand** at June 30, 2025, primarily due to net loss of **$79,243 thousand** for the six months ended June 30, 2025, partially offset by stock-based compensation and exercise of stock options[19](index=19&type=chunk) Changes in Stockholders' Equity (in thousands) - Six Months Ended June 30, 2025 | Item | Amount | | :------------------------------------ | :----- | | Balance at December 31, 2024 | $674,026 | | Stock-based compensation | $22,950 | | Exercise of stock options | $2,974 | | Issuance of common stock under ESPP | $662 | | Purchase of noncontrolling interest | $(1,725) | | Net unrealized gain on marketable debt securities | $921 | | Net loss | $(79,243) | | Balance at June 30, 2025 | $620,351 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly decreased, leading to a net increase in cash for the six months ended June 30, 2025 Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(52,589) | $(124,209) | | Net cash provided by investing activities | $54,144 | $98,334 | | Net cash provided by financing activities | $1,911 | $2,857 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $3,466 | $(23,018) | | Cash, cash equivalents, and restricted cash, end of period | $44,728 | $31,152 | - Net cash used in operating activities significantly decreased from **$(12

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) [CEO Statement & Strategic Focus](index=1&type=section&id=CEO%20Statement%20%26%20Strategic%20Focus) Xencor is actively executing clinical studies for four wholly-owned XmAb® drug candidates across oncology and autoimmune diseases, with key programs progressing through dose-escalation and new Phase 2b studies initiated - Focus on execution of clinical studies for **four wholly-owned XmAb® drug candidates** in cancer and advanced autoimmune-driven diseases[2](index=2&type=chunk) - Oncology programs XmAb819 (ccRCC) and XmAb541 (CLDN6 solid tumors) are progressing through dose-escalation studies[2](index=2&type=chunk) - Initiated **Phase 2b XENITH-UC study** for XmAb942 (TL1A for IBD) and received regulatory authorization for plamotamab (CD20 B-cell depleting TCE) in rheumatoid arthritis[2](index=2&type=chunk) [Clinical Program Updates](index=1&type=section&id=Clinical%20Program%20Updates) [Oncology Programs](index=1&type=section&id=Oncology%20Programs) Xencor's oncology pipeline includes two T-cell engager bispecific antibodies, XmAb819 for clear cell renal cell carcinoma and XmAb541 for CLDN6-expressing solid tumors, both advancing through Phase 1 dose-escalation studies - XmAb819 (ENPP3 x CD3) is a first-in-class, tumor-targeted T-cell engager for advanced clear cell renal cell carcinoma (ccRCC). Initial dose-escalation data is planned for presentation in **Q4 2025**[3](index=3&type=chunk) - XmAb541 (CLDN6 x CD3) is a first-in-class, tumor-targeted T-cell engager for advanced solid tumors expressing CLDN6, with a Phase 1 dose-escalation study ongoing and target dose level characterization anticipated in **2025**[3](index=3&type=chunk) [Autoimmune & Inflammatory Disease Programs](index=2&type=section&id=Autoimmune%20%26%20Inflammatory%20Disease%20Programs) In autoimmune and inflammatory diseases, Xencor is advancing plamotamab for rheumatoid arthritis and XmAb942 for inflammatory bowel disease, with new study initiations and promising half-life data for XmAb942 - Plamotamab (CD20 x CD3), a B-cell depleting bispecific T-cell engager, received regulatory authorization in **June 2025** to proceed with a **Phase 1b/2a proof-of-concept study** for rheumatoid arthritis[7](index=7&type=chunk) - XmAb942 (Xtend™ anti-TL1A), an extended half-life antibody for inflammatory bowel disease, showed a **greater than 71-day half-life** in Phase 1, supporting **every 12-week dosing**. The global **Phase 2b XENITH-UC Study** for ulcerative colitis was recently initiated[7](index=7&type=chunk) - A proof-of-concept study for XmAb657 (CD19 B-cell depleting TCE) for autoimmune disease is on track to start **later in the year**[2](index=2&type=chunk) [Partnership & Corporate Developments](index=2&type=section&id=Partnership%20%26%20Corporate%20Developments) [Recent Partnership Developments](index=2&type=section&id=Recent%20Partnership%20Developments) Xencor received a $25 million regulatory milestone payment from Incyte following FDA approval of Monjuvi for relapsed or refractory follicular lymphoma, in addition to non-cash royalty revenue - Incyte announced FDA approval of Monjuvi for relapsed or refractory follicular lymphoma in **June 2025**[5](index=5&type=chunk) Milestone Payment (Q2 2025) | Item | Amount ($) | | :--- | :--- | | Regulatory Milestone Payment from Incyte | $25 million | - Xencor also earned non-cash royalty revenue from sales of Monjuvi®/Minjuvi® for **Q2 2025**[5](index=5&type=chunk) [Additional Corporate Updates](index=2&type=section&id=Additional%20Corporate%20Updates) Xencor appointed Dr. Raymond Deshaies to its board of directors, bringing extensive biotechnology and drug development experience. The company also provided financial guidance, projecting sufficient cash to fund operations into 2028 - Raymond Deshaies, Ph.D., a pioneering biochemist and cell biologist with over **25 years of experience**, was appointed to Xencor's board of directors in **July**[6](index=6&type=chunk) Financial Guidance (End of 2025) | Metric | Projected Amount ($ Millions) | | :--- | :--- | | Cash, cash equivalents and marketable debt securities | $555 million - $585 million | - Xencor expects to have cash to fund research and development programs and operations into **2028**[6](index=6&type=chunk) [Financial Results for the Second Quarter Ended June 30, 2025](index=2&type=section&id=Financial%20Results%20for%20the%20Second%20Quarter%20Ended%20June%2030%2C%202025) [Key Financial Highlights (Q2 2025)](index=2&type=section&id=Key%20Financial%20Highlights%20%28Q2%202025%29) Xencor reported a significant increase in revenue for Q2 2025, primarily driven by milestone payments, while managing R&D expenses and reducing G&A costs. The net loss decreased substantially compared to the prior year, partly due to unrealized gains from marketable equity securities Cash, Cash Equivalents and Marketable Debt Securities | Date | Amount ($ Millions) | | :--- | :--- | | June 30, 2025 | $663.8 | | December 31, 2024 | $706.7 | Revenue (Three Months Ended June 30) | Year | Amount ($ Millions) | | :--- | :--- | | 2025 | $43.6 | | 2024 | $23.9 | | **Change (YoY)** | **+82.4%** | Key Financials (Three Months Ended June 30) | Metric | Q2 2025 ($ Millions) | Q2 2024 ($ Millions) | Change (YoY) | | :--- | :--- | :--- | :--- | | Research and development expenses | $61.7 | $61.5 | +0.3% | | General and administrative expenses | $15.1 | $17.7 | -14.7% | | Other income (expense), net | $2.1 | $(13.4) | N/A (gain vs. loss) | | Net loss attributable to Xencor, Inc. | $(30.8) | $(67.3) | -54.2% | | Net loss per share (diluted) | $(0.41) | $(1.09) | -62.4% | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) [Selected Consolidated Balance Sheet Data](index=5&type=section&id=Selected%20Consolidated%20Balance%20Sheet%20Data) The selected consolidated balance sheet data shows a decrease in total assets and stockholders' equity from December 31, 2024, to June 30, 2025, while total liabilities also decreased Selected Consolidated Balance Sheet Data (in thousands) | | June 30, 2025 (unaudited) ($ Thousands) | December 31, 2024 ($ Thousands) | | :--- | :--- | :--- | | Cash, cash equivalents and marketable debt securities - current | $403,426 | $449,846 | | Other current assets | 109,724 | 127,755 | | Marketable debt securities - long term | 260,399 | 256,833 | | Other long-term assets | 105,875 | 117,511 | | **Total assets** | **$879,424** | **$951,945** | | Total current liabilities | $96,083 | $87,432 | | Liabilities related to the sales of future royalties - long term | 94,736 | 115,159 | | Other long term liabilities | 68,254 | 75,328 | | **Total liabilities** | **259,073** | **277,919** | | **Total stockholders' equity** | **620,351** | **674,026** | | **Total liabilities and stockholders' equity** | **$879,424** | **$951,945** | [Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The consolidated statements of operations show a significant reduction in net loss for both the three and six months ended June 30, 2025, compared to the prior year, driven by increased revenue and improved other income (expense) Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share data) | | Three Months Ended June 30, | | Six Months Ended June 30, | | :--- | :--- | :--- | :--- | | | 2025 (Unaudited) ($ Thousands) | 2024 ($ Thousands) | 2025 (Unaudited) ($ Thousands) | 2024 ($ Thousands) | | Revenue: Collaborations, milestones, and royalties | $43,608 | $23,907 | $76,340 | $39,904 | | Operating expenses: | | | | | | Research and development | 61,665 | 61,531 | 120,243 | 118,404 | | General and administrative | 15,115 | 17,746 | 32,452 | 31,533 | | **Total operating expenses** | **76,780** | **79,277** | **152,695** | **149,937** | | **Operating loss** | **(33,172)** | **(55,370)** | **(76,355)** | **(110,033)** | | Total other income (expense) | 2,097 | (13,412) | (2,985) | (32,865) | | Loss before income tax (benefit) expense and noncontrolling interest | (31,075) | (68,782) | (79,340) | (142,898) | | Income tax (benefit) expense | (250) | — | 117 | — | | Net loss including noncontrolling interest | (30,825) | (68,782) | (79,457) | (142,898) | | Net loss attributable to noncontrolling interest | — | (1,445) | (214) | (2,121) | | **Net loss attributable to Xencor, Inc.** | **$(30,825)** | **$(67,337)** | **$(79,243)** | **$(140,777)** | | Net loss per share attributable to Xencor, Inc. (basic and diluted) | $(0.41) | $(1.09) | $(1.07) | $(2.29) | | Weighted-average shares used in calculating (basic and diluted) | 74,278,872 | 61,676,444 | 73,974,715 | 61,444,384 | | Other comprehensive income (loss): | | | | | | Net unrealized (loss) gain on marketable debt securities | (97) | (498) | 921 | (1,942) | | Comprehensive loss | (30,922) | (69,280) | (78,536) | (144,840) | | Less: comprehensive loss attributable to the noncontrolling interest | — | (1,445) | (214) | (2,121) | | **Comprehensive loss attributable to Xencor, Inc.** | **$(30,922)** | **$(67,835)** | **$(78,322)** | **$(142,719)** | [Company Overview & Legal Disclosures](index=3&type=section&id=Company%20Overview%20%26%20Legal%20Disclosures) [About Xencor](index=3&type=section&id=About%20Xencor) Xencor is a clinical-stage biopharmaceutical company focused on developing engineered antibodies for cancer and autoimmune diseases, utilizing its proprietary XmAb® technology, with over 20 candidates in clinical development - Xencor is a clinical-stage biopharmaceutical company developing engineered antibodies for cancer and autoimmune diseases[13](index=13&type=chunk) - More than **20 candidates** engineered with Xencor's XmAb® technology are in clinical development, and multiple XmAb medicines are marketed by partners[13](index=13&type=chunk) - XmAb engineering technology enables small changes to a protein's structure, resulting in new mechanisms of therapeutic action[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section serves as a cautionary statement, highlighting that certain statements in the press release are forward-looking and subject to significant risks and uncertainties inherent in drug discovery, development, manufacturing, and commercialization, and should not be considered guarantees of future performance - Statements regarding clinical progress, data presentations, new candidates, clinical trials, and financial guidance are forward-looking[14](index=14&type=chunk) - Such statements are subject to significant known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[14](index=14&type=chunk) - Risks include those associated with drug development, regulatory approval, loss of key management, and factors described in SEC filings. Xencor undertakes no obligation to revise or update these statements[15](index=15&type=chunk) [Contact Information](index=6&type=section&id=Contact%20Information) [Investor and Media Contacts](index=6&type=section&id=Investor%20and%20Media%20Contacts) Contact information is provided for investor relations and media inquiries - Investor Contact: Charles Liles, cliles@xencor.com, **(626) 737-8118**[20](index=20&type=chunk) - Media Contact: Cassidy McClain, Inizio Evoke, cassidy.mcclain@inizioevoke.com, **(619) 694-6291**[20](index=20&type=chunk)

XmAb® Fc Domain Technology - Xencor's XmAb® Fc domains augment native immune functions, preserve half-life, stability and production of antibodies[4] - XmAb® Fc domains are 99.5% identical to natural antibodies and can be easily substituted into any antibody[9] - Xencor has over 500 issued and pending patents worldwide related to XmAb® Fc domains[4] Bispecific Antibody Pipeline - Xencor has 6 XmAb bispecific antibodies in Phase 1 clinical studies[4] - XmAb23104 (PD-1 x ICOS) entered Phase 1 in May 2019, and XmAb22841 (CTLA-4 x LAG-3) initiation was anticipated in Q2 2019[4,39] - Novartis has a co-development and ex-U.S license for XmAb14045 (CD123 x CD3)[4] - Amgen's AMG 424 (CD38 x CD3) is in Phase 1 study in myeloma, and AMG 509 (Undisclosed x CD3) is advancing in prostate cancer[4,11,44] IL-15 Cytokine Program - Genentech has a co-development collaboration with Xencor for novel IL-15 cytokines[4] - The collaboration includes $120 million upfront and up to $160 million in XmAb24306 development milestone payments, and up to $180 million for each new IL-15 program[42] - The first IND submission for XmAb24306 is planned for H2 2019[4,42] Clinical Programs and Partnerships - Xencor has 13 XmAb clinical programs ongoing internally or with partners, including tafasitamab/MOR208 (Morphosys) in Phase 3 and Ultomiris™ (Alexion) approved in the U.S for the treatment of adult patients with PNH[4,11] - In a Phase 1 study of XmAb14045 in relapsed/refractory AML, 28% of evaluable patients achieved either complete remission (CR) or CR with incomplete hematologic recovery (CRi) at 2 highest initial doses (1.3 and 2.3 mcg/kg weekly)[29,34] Financial Status - Xencor had $650.5 million in cash at March 31, 2019, providing runway beyond 2024[46]

Core Viewpoint - Xencor reported a quarterly loss of $0.66 per share, slightly worse than the Zacks Consensus Estimate of a loss of $0.63, but an improvement from a loss of $1.11 per share a year ago [1][2] Financial Performance - The company posted revenues of $32.73 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 48.38% and significantly up from $12.81 million in the same quarter last year [3] - Xencor has surpassed consensus revenue estimates three times over the last four quarters [3] Stock Performance - Xencor shares have declined approximately 63.2% since the beginning of the year, contrasting with the S&P 500's decline of 4.7% [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.67 on revenues of $18.77 million, and for the current fiscal year, it is -$2.92 on revenues of $81.09 million [8] - The trend of estimate revisions for Xencor is mixed, which could change following the recent earnings report [7] Industry Context - The Medical - Drugs industry, to which Xencor belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9]

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Xencor reported Q1 2025 revenues of $32.7 million and a net loss of $48.4 million, a significant improvement from the prior year, with total assets at $904.7 million [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $904.7 million as of March 31, 2025, primarily due to reduced marketable debt securities, while liabilities and equity also declined Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $39,675 | $40,875 | | Marketable debt securities (current & long-term) | $653,836 | $665,804 | | Total assets | $904,689 | $951,945 | | **Liabilities & Equity** | | | | Total liabilities | $264,815 | $277,919 | | Liabilities related to sales of future royalties | $154,379 | $163,606 | | Total stockholders' equity | $639,874 | $677,611 | [Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q1 2025 revenues more than doubled to $32.7 million, narrowing the operating loss to $43.2 million and significantly improving net loss to $48.4 million Q1 2025 vs Q1 2024 Performance (in thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Total Revenue** | **$32,732** | **$15,997** | | Research and development | $58,578 | $56,873 | | General and administrative | $17,337 | $13,787 | | **Operating Loss** | **($43,183)** | **($54,663)** | | Asset impairment charges | ($4,865) | ($20,650) | | **Net Loss Attributable to Xencor** | **($48,418)** | **($73,440)** | | Net Loss Per Share (basic and diluted) | ($0.66) | ($1.20) | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly decreased to $16.2 million in Q1 2025, resulting in a net decrease in cash of $1.3 million for the quarter Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($16,220) | ($56,859) | | Net cash provided by investing activities | $13,668 | $32,318 | | Net cash provided by financing activities | $1,249 | $1,787 | | **Net decrease in cash** | **($1,303)** | **($22,754)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail revenue recognition from collaborations, a $4.9 million asset impairment, the $154.4 million royalty liability, and ongoing patent litigation Q1 2025 Revenue by Partner (in thousands) | Partner | Revenue | Notes | | :--- | :--- | :--- | | Alexion | $15,469 | Non-cash royalty revenue for Ultomiris® | | Incyte | $15,263 | Includes $12.5M milestone and non-cash royalties for Monjuvi® | | Vir Bio | $2,000 | Milestone payment for tobevibart | | **Total** | **$32,732** | | - The company recorded a **$4.9 million** asset impairment charge in Q1 2025 related to its decision to pause further development of certain programs and reallocate resources[56](index=56&type=chunk) - In November 2023, the company sold rights to future royalties for Ultomiris and Monjuvi to OMERS. This transaction is accounted for as debt, with a remaining liability of **$154.4 million** as of March 31, 2025[59](index=59&type=chunk)[60](index=60&type=chunk)[64](index=64&type=chunk) - Xencor is a party to a patent infringement lawsuit initiated by Merus N.V. in August 2024. The company believes it has strong defenses but cannot guarantee a favorable outcome[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's clinical pipeline, significant Q1 2025 revenue increase driven by milestones, rising R&D expenses, and a strong liquidity position expected to fund operations into 2028 - The company's clinical pipeline is focused on advancing multiple drug candidates, including XmAb819 (renal cell carcinoma), XmAb541 (ovarian cancer), and XmAb942 (inflammatory bowel disease)[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk) Q1 2025 vs Q1 2024 Operating Results (in thousands) | Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $32,732 | $15,997 | $16,735 | | R&D Expenses | $58,578 | $56,873 | $1,705 | | G&A Expenses | $17,337 | $13,787 | $3,550 | | Operating Loss | ($43,183) | ($54,663) | $11,480 | - The increase in revenue for Q1 2025 was primarily due to a **$12.5 million** milestone from Incyte and a **$2.0 million** milestone from Vir Bio[112](index=112&type=chunk)[115](index=115&type=chunk)[126](index=126&type=chunk) - As of March 31, 2025, the company had **$693.5 million** in cash, cash equivalents, and marketable debt securities and believes these resources will fund operations into 2028[134](index=134&type=chunk)[140](index=140&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in the company's exposure to market risk have occurred since the prior fiscal year-end - There have been no material changes in the Company's exposure to market risk from the end of the previous fiscal year[143](index=143&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of March 31, 2025, due to material weaknesses in accounting for royalties and tax legislation, with a remediation plan underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2025[145](index=145&type=chunk) - The ineffectiveness was due to material weaknesses in controls related to accounting for the sale of future royalties (a non-routine transaction) and the evaluation of tax legislation[145](index=145&type=chunk) - Management has implemented a remediation plan that includes engaging third-party advisors for complex transactions and enhancing internal review processes[146](index=146&type=chunk)[147](index=147&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) Xencor is involved in a patent infringement lawsuit initiated by Merus N.V., asserting strong defenses against the allegations - Xencor is being sued by Merus N.V. for alleged patent infringement related to its antibody technologies[153](index=153&type=chunk) - Xencor has responded by filing a motion to dismiss and challenging the validity of the patents in question before the U.S. Patent and Trademark Appeal Board[153](index=153&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) The company faces increased risks from unfavorable global economic and political conditions, supply chain disruptions, and potential delays from government agency disruptions - The company's business is susceptible to unfavorable global economic conditions, political disruptions, and changes in international trade policy, which could strain suppliers and weaken demand[155](index=155&type=chunk)[156](index=156&type=chunk) - Disruptions at the FDA and other government agencies, caused by factors like budget issues or personnel shortages, could delay the review and approval of new products, negatively impacting the business[158](index=158&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section is not applicable for the current reporting period - Not applicable[159](index=159&type=chunk) [Other Information](index=31&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated Rule 10b5-1 or other trading arrangements during the quarter[162](index=162&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents and officer certifications - Lists all exhibits filed with the report, including officer certifications (31.1, 31.2, 32.1) and iXBRL data files (101, 104)[163](index=163&type=chunk)