Xencor(US:XNCR)2020-05-07 21:54Special Note Regarding Forward-Looking Statements Forward-looking statements are subject to risks and uncertainties, including COVID-19 impacts, and the company disclaims any obligation to update them - Forward-looking statements are based on current expectations and projections, subject to risks and uncertainties that could cause actual results to differ materially10 - Key risk factors include the effects of the COVID-19 pandemic, plans for product candidate development and commercialization, timing of regulatory approvals, estimates for expenses and revenue, competition, and intellectual property position10 - The company does not undertake any obligation to update or revise forward-looking statements12 Part I. Financial Information This part presents Xencor's unaudited interim financial statements, management's discussion, market risk, and controls, detailing financial performance and COVID-19 considerations Item 1. Financial Statements This section provides unaudited interim financial statements, including Balance Sheets, Statements of Comprehensive Income (Loss), Statement of Stockholders' Equity, Statements of Cash Flows, and detailed notes Balance Sheets Cash and current marketable securities increased, leading to a rise in total current assets, while total assets slightly decreased and liabilities remained stable | Asset/Liability Category | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | Change (in thousands) | | :----------------------- | :---------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $73,808 | $50,312 | $23,496 | | Marketable securities (current) | $497,841 | $479,470 | $18,371 | | Total current assets | $588,107 | $558,405 | $29,702 | | Total assets | $666,963 | $670,250 | $(3,287) | | Total current liabilities | $65,917 | $66,558 | $(641) | | Total liabilities | $73,958 | $77,049 | $(3,091) | | Total stockholders' equity | $593,005 | $593,201 | $(196) | Statements of Comprehensive Income (Loss) Revenue significantly decreased year-over-year, shifting from net income to a net loss, primarily due to a non-recurring licensing payment in Q1 2019 and increased operating expenses | Metric (in thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | Change (YoY) | | :-------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Revenue | $32,385 | $111,939 | $(79,554) | | R&D Expenses | $33,943 | $28,183 | $5,760 | | G&A Expenses | $7,219 | $5,512 | $1,707 | | Total Operating Expenses | $41,162 | $33,695 | $7,467 | | Income (loss) from operations | $(8,777) | $78,244 | $(87,021) | | Net income (loss) | $(8,074) | $80,045 | $(88,119) | | Basic EPS | $(0.14) | $1.42 | $(1.56) | | Diluted EPS | $(0.14) | $1.38 | $(1.52) | Statement of Stockholders' Equity Total stockholders' equity saw a minor decrease, influenced by a comprehensive loss, while additional paid-in capital increased due to stock award exercises and stock-based compensation | Stockholders' Equity Item (in thousands) | December 31, 2019 | March 31, 2020 | Change | | :--------------------------------------- | :---------------- | :------------- | :----- | | Common Stock (shares) | 56,902,301 | 57,001,253 | 98,952 | | Common Stock (amount) | $569 | $570 | $1 | | Additional Paid-in Capital | $887,873 | $895,855 | $7,982 | | Accumulated Other Comprehensive Income (Loss) | $1,161 | $1,056 | $(105) | | Accumulated Deficit | $(296,402) | $(304,476) | $(8,074) | | Total Stockholders' Equity | $593,201 | $593,005 | $(196) | Statements of Cash Flows Cash flow from operating activities significantly improved, shifting from a net use of $18.7 million in Q1 2019 to a net provision of $9.5 million in Q1 2020, primarily driven by upfront and milestone payments from collaborations, leading to a substantial net increase in cash and cash equivalents | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | Change (YoY) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Operating Activities | $9,460 | $(18,728) | $28,188 | | Investing Activities | $12,565 | $13,673 | $(1,108) | | Financing Activities | $1,471 | $667 | $804 | | Net Increase (Decrease) in Cash | $23,496 | $(4,388) | $27,884 | | Cash and cash equivalents, end of period | $73,808 | $21,858 | $51,950 | Notes to Financial Statements This section details accounting policies, fair value measurements, stock-based compensation, lease obligations, and collaboration agreements, noting no material impact from new accounting standards and the effect of the CARES Act on income taxes - The financial statements are prepared in accordance with U.S. GAAP for interim financial information, including normal recurring adjustments and management estimates26 - The company adopted several new accounting pronouncements effective January 1, 2020, none of which had a significant impact on the financial statements353637 Fair Value Hierarchy | Fair Value Hierarchy (in thousands) | March 31, 2020 Total Fair Value | March 31, 2020 Level 1 | March 31, 2020 Level 2 | December 31, 2019 Total Fair Value | December 31, 2019 Level 1 | December 31, 2019 Level 2 | | :---------------------------------- | :------------------------------ | :--------------------- | :--------------------- | :--------------------------------- | :------------------------ | :------------------------ | | Money Market Funds | $49,800 | $49,800 | $— | $32,009 | $32,009 | $— | | Corporate Securities | $332,691 | $— | $332,691 | $281,751 | $— | $281,751 | | Government Securities | $203,382 | $— | $203,382 | $269,245 | $— | $269,245 | | Equity Securities | $2,253 | $2,253 | $— | $— | $— | $— | | Total | $588,126 | $52,053 | $536,073 | $583,005 | $32,009 | $550,996 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%