Xencor(XNCR) - 2025 Q2 - Quarterly Report

Special Note Regarding Forward-Looking Statements This section provides cautionary statements regarding future expectations and potential risks that may cause actual results to differ Forward-Looking Statements Disclosure 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] - 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] - 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] Key Factors Affecting Future Results 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] - Ability to execute plans for research, development, and commercialization of product candidates[10] - Success of ongoing and planned clinical trials and timing/ability to obtain regulatory approvals[10] - Ability to identify additional products or product candidates with significant commercial potential[10] - Ability to receive research funding and achieve anticipated milestones under collaborations[10] - Partners' abilities to advance drug candidates into, and successfully complete, clinical trials[10] - Ability to attract collaborators with development, regulatory, and commercialization expertise[10] - Ability to protect intellectual property position[10] - Rate and degree of market acceptance and clinical utility of products[10] - Costs of compliance and failure to comply with new and existing governmental regulations[10] - Capabilities and strategy of suppliers and vendors, including key manufacturers of clinical drug supplies[10] - Significant competition in the industry[10] - Potential loss or retirement of key members of management[10] - Failure to successfully execute growth strategy, including delays in planned future growth[10] - Failure to maintain effective internal controls, which led to restatement of financial statements, and risk of additional material weaknesses[10] - Ability to accurately estimate expenses, future revenues, capital requirements, and needs for additional financing[10] Part I. Financial Information This section presents Xencor's unaudited consolidated financial statements, management's discussion, market risk, and internal controls Item 1. Financial Statements This section presents Xencor's unaudited consolidated financial statements and detailed notes on accounting policies and agreements Consolidated Balance Sheets 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] - 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] Consolidated Statements of Operations and Comprehensive Loss 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] - 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] - 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] Consolidated Statements of Stockholders' Equity 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] 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 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