Xencor (NASDAQ: XNCR) posts deeper Q1 2026 loss amid royalty dispute and Zenas write-down
Filing Impact
Filing Sentiment
Form Type
10-Q
Xencor reported a sharply wider loss for the quarter ended March 31, 2026 as collaboration revenues fell and investment values declined. Total revenue dropped to $4.5 million from $32.7 million, mainly because prior-year Incyte milestones did not repeat and Ultomiris royalties were reduced.
Net loss attributable to Xencor increased to $128.9 million, or $1.71 per share, from $48.4 million. The company recorded a $51.9 million unrealized loss on its equity stake in Zenas BioPharma and reversed $6.6 million of previously recorded Ultomiris U.S. royalty revenue after Alexion disputed further U.S. payments.
Research and development expenses rose to $64.7 million as Xencor advanced multiple oncology and autoimmune programs, while general and administrative costs were stable. Cash, cash equivalents and marketable debt securities totaled $541.8 million, and management believes this will fund operations into 2028.
Positive
- None.
Negative
- Sharp increase in net loss: Net loss attributable to Xencor, Inc. rose to $128.9 million (loss of $1.71 per share) from $48.4 million (loss of $0.66 per share), reflecting a much larger operating loss and adverse investment results.
- Collapse in collaboration and royalty revenue: Total revenue declined to $4.5 million from $32.7 million, as prior Incyte milestone payments were absent and non-cash Ultomiris royalty revenue fell to $1.5 million from $15.5 million.
- Large unrealized loss on equity investment: Xencor recorded a $51.9 million unrealized loss on its marketable equity securities, primarily due to a lower fair value of its Zenas BioPharma, Inc. investment.
- Alexion royalty dispute introduces uncertainty: Alexion informed Xencor it does not intend to pay additional U.S. Ultomiris royalties; Xencor reversed $6.6 million of previously recorded royalty revenue and constrained disputed U.S. royalties to zero until the matter is resolved.
Insights
Results show higher cash burn, royalty risk, and marketable equity volatility.
Xencor’s quarterly revenue fell to $4.5 million from $32.7 million, largely because 2025 Incyte milestones did not recur and Ultomiris non-cash royalties were reduced. Research and development spending increased to $64.7 million as several clinical programs advanced.
The net loss widened to $128.9 million, driven by operating loss and a $51.9 million unrealized loss on the Zenas BioPharma stake. Management also reversed $6.6 million of previously recorded U.S. Ultomiris royalties after Alexion disputed further payments, highlighting contractual and revenue uncertainty.
Despite a $40.0 million decline in cash, cash equivalents and restricted cash during the quarter, Xencor still held $541.8 million in cash, cash equivalents and marketable debt securities and expects this to fund operations into 2028. Future results will depend heavily on resolving the Ultomiris royalty dispute and on progress in XmAb819, XmAb942, XmAb541 and other pipeline programs.
Key Figures
Total revenue: $4.5 million
Total revenue prior year: $32.7 million
Net loss attributable to Xencor, Inc.: $128.9 million
+5 more
8 metrics
Total revenue
$4.5 million
Three months ended March 31, 2026
Total revenue prior year
$32.7 million
Three months ended March 31, 2025
Net loss attributable to Xencor, Inc.
$128.9 million
Three months ended March 31, 2026
Unrealized loss on marketable equity securities
$51.9 million
Primarily Zenas BioPharma, Q1 2026
Non-cash Ultomiris royalty revenue
$1.5 million
Three months ended March 31, 2026, after $6.6M reduction
Cash, cash equivalents and marketable debt securities
$541.8 million
As of March 31, 2026
Research and development expenses
$64.7 million
Three months ended March 31, 2026
Liabilities related to sales of future royalties
$108.5 million
Ultomiris and Monjuvi royalty sale agreements, March 31, 2026
Key Terms
variable consideration constraint, sales‑ and usage‑based royalty guidance, royalty sale agreement, inter partes review, +2 more
6 terms
variable consideration constraint financial
"the Company evaluated the effect of Alexion’s notice, including the variable consideration constraint and the sales‑ and usage‑based royalty guidance"
sales‑ and usage‑based royalty guidance financial
"Recognition of undisputed ex‑U.S. royalties was unaffected and continues in accordance with Accounting Standards Codification (“ASC”) Topic 606’s sales‑ and usage‑based royalty guidance."
royalty sale agreement financial
"the Company entered into a royalty sale agreement (the “Ultomiris Royalty Sale Agreement”) with OCM Life Sciences Portfolio LP (“OMERS”)"
inter partes review regulatory
"the Company filed for inter partes review of Merus’ U.S. Patent Nos. 9,358,286 and 11,926,859"
An inter partes review is a formal proceeding at the U.S. Patent Office where a third party asks a panel to re-examine and possibly cancel all or part of an issued patent based on earlier public information. Investors care because the outcome can remove or uphold a company’s exclusive rights, directly affecting product exclusivity, potential revenue, legal exposure and the valuation of businesses that rely on that patent—like asking a neutral referee to re-check a key call in a game.
well-known seasoned issuer regulatory
"filed an automatic universal shelf registration statement on Form S-3 ... as a well-known seasoned issuer as defined in Rule 405 under the Securities Act of 1933"
A well-known seasoned issuer (WKSI) is a large, established public company that meets regulatory size and reporting tests and is granted special, faster options to sell new securities to raise money. Think of it like a trusted borrower with a standing credit line: investors and markets see it as more familiar and the company can access capital quickly with less paperwork, which can affect share supply and investor returns.
XmAb 2+1 bispecific antibody technical
"XmAb819 is a novel, potential first-in-class, tumor-targeted, T-cell engaging XmAb 2+1 bispecific antibody in development"
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended March 31, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from ________ to ________
_______________________________________________
Commission file number: 001-36182
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
(626 ) 305-5900
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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 o Accelerated filer x Non-accelerated filer o Smaller reporting company o Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
| Class | Outstanding at May 1, 2026 | |||||||
| Common stock, par value $0.01 per share | ||||||||
Table of Contents
TABLE OF CONTENTS
| Page | ||||||||
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 2 | |||||||
PART I. | FINANCIAL INFORMATION | 3 | ||||||
Item 1. | Financial Statements | 3 | ||||||
Consolidated Balance Sheets | 3 | |||||||
Consolidated Statements of Operations and Comprehensive Loss | 4 | |||||||
Consolidated Statements of Stockholders’ Equity | 5 | |||||||
Consolidated Statements of Cash Flows | 6 | |||||||
Notes to Consolidated Financial Statements | 7 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 27 | ||||||
Item 4. | Controls and Procedures | 27 | ||||||
PART II. | OTHER INFORMATION | 28 | ||||||
Item 1. | Legal Proceedings | 28 | ||||||
Item 1A. | Risk Factors | 28 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 28 | ||||||
Item 3. | Default upon Senior Securities | 28 | ||||||
Item 4. | Mine Safety Disclosures | 28 | ||||||
Item 5. | Other Information | 29 | ||||||
Item 6. | Exhibits | 29 | ||||||
SIGNATURE | 30 | |||||||
In this report, unless otherwise stated or the context otherwise indicates, references to “Xencor,” the “Company,” “we,” “us,” “our” and similar references refer to Xencor, Inc. The Xencor logo is a registered trademark of Xencor, Inc. This report also contains registered marks, trademarks, and trade names of other companies. All other trademarks, registered marks and trade names appearing in this report are the property of their respective holders.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain 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. Any statements contained in this Quarterly Report on Form 10-Q except for historical information, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “might,” “will,” “expect,” “believe,” “anticipate,” “goal,” “endeavor,” “strive,” “intend,” “plan,” “project,” “could,” “estimate,” “target,” “forecast,” or “continue” or the negative of these words or other variations thereof or comparable terminology are intended to identify forward-looking statements.
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 previously 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.
The forward-looking statements included herein are based on current expectations of the Company’s management based on available information and involve a number of risks and uncertainties, all of which are difficult or impossible to predict accurately, and many of which are beyond its control. As such, the Company’s actual results and timing of certain events may differ materially from the results discussed, projected, anticipated or indicated in any forward-looking statements. Forward-looking statements are not guarantees of future performance and the Company’s actual results of operations, financial condition and cash flows may differ materially. Factors that may cause or contribute to such differences include, but are not limited to, those discussed in more detail in Item 1A. “Risk Factors” of Part II of this Quarterly Report on Form 10-Q. Readers should carefully review these risks, as well as the additional risks described in other documents the Company files from time to time with the Securities and Exchange Commission (the “SEC”). In light of the significant risks and uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking information. Statements made herein are as of the date of the filing of this Quarterly Report on Form 10-Q with the SEC and should not be relied upon as of any subsequent date. Except as may be required by law, the Company disclaims any intent to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Xencor, Inc.
Consolidated Balance Sheets
(in thousands, except per share amounts)
| March 31, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Marketable debt securities | |||||||||||
| Marketable equity securities | |||||||||||
| Accounts receivable | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
Restricted cash | |||||||||||
| Marketable debt securities - long term | |||||||||||
| Property and equipment, net | |||||||||||
| Right-of-use assets | |||||||||||
| Patents, licenses, and other intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses | |||||||||||
| Income tax payable | |||||||||||
| Lease liabilities | |||||||||||
| Liabilities related to the sales of future royalties | |||||||||||
| Total current liabilities | |||||||||||
| Long-term tax liabilities | |||||||||||
| Lease liabilities, net of current portion | |||||||||||
| Liabilities related to the sales of future royalties, net of current portion | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Noncontrolling interest and stockholders’ equity | |||||||||||
Common stock, $ Issued and outstanding | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive income | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders’ equity attributable to Xencor, Inc. | |||||||||||
| Noncontrolling interest | |||||||||||
| Total noncontrolling interest and stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Xencor, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
(in thousands, except per share amounts)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||
| Collaborations, milestones, and royalties | $ | $ | |||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||||||||||||||
| Operating loss | ( | ( | |||||||||||||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | |||||||||||||||||||||||||||||||||
| (Losses) gains on equity securities, net | ( | ||||||||||||||||||||||||||||||||||
| Asset impairment charges | ( | ||||||||||||||||||||||||||||||||||
| Other, net | ( | ||||||||||||||||||||||||||||||||||
| Total other expense | ( | ( | |||||||||||||||||||||||||||||||||
| Loss before income tax expense and noncontrolling interest | ( | ( | |||||||||||||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||||||||||||||
| Net loss including noncontrolling interest | ( | ( | |||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interest | ( | ||||||||||||||||||||||||||||||||||
| Net loss attributable to Xencor, Inc. | $ | ( | $ | ( | |||||||||||||||||||||||||||||||
| Net loss per share attributable to Xencor, Inc. (basic and diluted) | $ | ( | $ | ( | |||||||||||||||||||||||||||||||
| Weighted-average shares used in calculating net loss per share (basic and diluted) | |||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||||||||||||||
| Net unrealized (loss) gain on marketable debt securities | ( | ||||||||||||||||||||||||||||||||||
| Comprehensive loss | $ | ( | $ | ( | |||||||||||||||||||||||||||||||
| Less: comprehensive loss attributable to the noncontrolling interest | ( | ||||||||||||||||||||||||||||||||||
| Comprehensive loss attributable to Xencor, Inc. | $ | ( | $ | ( | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Xencor, Inc.
Consolidated Statements of Stockholders’ Equity
(unaudited)
(in thousands)
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock units | ( | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Exercise of pre-funded warrants | ( | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Net unrealized loss on marketable debt securities | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock units | ( | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Net unrealized gain on marketable debt securities | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Purchase of non-controlling interest | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Xencor, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Accretion of discount on marketable debt securities, net | ( | ( | |||||||||
| Stock-based compensation | |||||||||||
| Change in fair value of marketable equity securities | ( | ||||||||||
| Asset impairment charges | |||||||||||
| Non-cash royalty revenue related to the sale of future royalties | ( | ( | |||||||||
| Non-cash interest expense on liabilities related to the sale of future royalties | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | |||||||||||
| Prepaid expenses and other assets | ( | ||||||||||
| Accounts payable | ( | ( | |||||||||
| Accrued expenses | ( | ( | |||||||||
| Operating lease, net | ( | ||||||||||
| Other assets and liabilities, net | ( | ||||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Cash flows from investing activities | |||||||||||
| Purchase of marketable debt securities | ( | ( | |||||||||
| Purchase of property and equipment | ( | ( | |||||||||
| Proceeds from maturities of marketable debt securities | |||||||||||
| Net cash provided by investing activities | |||||||||||
| Cash flows from financing activities | |||||||||||
| Proceeds from the exercises of stock options | |||||||||||
| Cash paid to acquire noncontrolling interest | ( | ||||||||||
| Net cash provided by financing activities | |||||||||||
| Net decrease in cash, cash equivalents, and restricted cash | ( | ( | |||||||||
Cash, cash equivalents, and restricted cash, beginning of period | |||||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | $ | |||||||||
| Supplemental disclosure of cash flow information | |||||||||||
| Interest paid | $ | $ | |||||||||
| Income taxes paid: | |||||||||||
| Federal | $ | $ | |||||||||
| State | |||||||||||
| Foreign | |||||||||||
| Total | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Xencor, Inc.
Notes to Consolidated Financial Statements
(unaudited)
1. Organization and Summary of Significant Accounting Policies
Organization
Xencor, Inc. (the “Company”) was incorporated in California in 1997 and reincorporated in Delaware in September 2004. The Company is a clinical-stage biopharmaceutical company focused on discovering and developing engineered antibody therapeutics to treat patients with cancer and autoimmune diseases, who have unmet medical needs. The Company uses its protein engineering capabilities to design new technologies and XmAb® drug candidates with improved properties. The Company advances these candidates into clinical-stage development, where the Company is conducting Phase 1 and Phase 2 studies for a broad portfolio of programs. Based on the results of these studies, the Company determines which programs to advance into later stages of development and potentially commercialization, which to partner in order to access complementary resources to optimize development, and which to discontinue.
Consolidation and Basis of Presentation
The interim consolidated financial statements of Xencor, Inc. are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applicable to interim periods. In the opinion of management, all material adjustments of a normal recurring nature have been made to present fairly the Company’s financial position, the results of operations and cash flows for the periods presented. All intercompany transactions and balances have been eliminated.
Certain note disclosures that are normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted as they are not required for interim reporting purposes. Readers are urged to review the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for more complete descriptions and discussions. Operating results and cash flows for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2026.
Gale Therapeutics Inc. (“Gale”)
The interim consolidated financial statements for the three months ended March 31, 2025 included the accounts of Xencor, Inc. and Gale, a variable interest entity for which the Company was 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. Effective January 20, 2025, the Company obtained 100% of the economic interests in Gale and no longer recognized a noncontrolling interest in its consolidated financial statements.
Effective April 29, 2025, Gale was merged into the Company in a transaction between entities under common control. The Company completed a common-control transfer of assets and liabilities with Gale. The assets and liabilities were recognized at historical carrying amounts; no fair value measurement was applied. This transaction did not result in a change in reporting entity and was accounted for prospectively, with no adjustments to prior periods.
Income Tax
The Company recorded $0.3 million and $0.4 million of income tax expense for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company’s deferred income tax assets, consisting primarily of capitalized R&D under IRC Section 174, net operating loss and research and development tax credit carryforwards, have been fully offset by a valuation allowance.
Summary of Significant Accounting Policies
There have been no changes to the significant accounting policies disclosed in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Recent Accounting Pronouncements
The Company does not expect any recently issued accounting standards, other than those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025, to have a material impact on its financial results.
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2. Collaboration and Licensing Agreements
The following table provides a summary of revenue recognized:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Alexion | $ | $ | |||||||||||||||||||||
| Incyte | |||||||||||||||||||||||
| Vir Bio | |||||||||||||||||||||||
Other (2) | |||||||||||||||||||||||
Total (1) | $ | $ | |||||||||||||||||||||
(1) As of March 31, 2026, there was no deferred revenue related to the agreements the Company entered into with the parties listed above.
(2) On February 26, 2026, the Company entered into a Fourth Amendment to its License Agreement with INmune Bio, Inc. (“INmune”), under which INmune agreed to pay a one-time, non-refundable, non-creditable fee of $0.1 million for an extension of its diligence obligations. The Company received the fee in the first quarter of 2026.
The following table presents a disaggregation of revenue recognized during the periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| License | $ | $ | |||||||||||||||||||||
| Milestone | |||||||||||||||||||||||
| Royalties | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
The following table summarizes the balance of receivables and contract liabilities related to the Company’s collaboration and license agreements:
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
Receivables included in accounts receivable | $ | $ | |||||||||
Contract liabilities included in deferred revenue | $ | $ | |||||||||
Alexion Pharmaceuticals, Inc. (“Alexion”)
In January 2013, the Company entered into an Option and License Agreement (the “Alexion Agreement”) with Alexion, which was acquired by AstraZeneca in 2021. 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 in the low single digits based on a percentage of net sales of Ultomiris sold by Alexion, its affiliates or its sublicensees. Alexion’s royalty obligations apply on a product-by-product and country-by-country basis and continue until the expiration of the last-to-expire valid licensed patent covering the applicable product in such country.
On December 9, 2025, a patent term extension related to the Xtend™ Fc domain for antibodies targeting C5 was announced, extending the expected royalty term for Ultomiris® net sales into December 2028 in the United States. On March 4, 2026, Alexion informed the Company that it had taken the position that it does not owe additional royalties for U.S. sales of Ultomiris and does not intend to make future payments for sales in the U.S. under the parties’ agreement. The Company disputes this position and is evaluating its options.
In the first quarter of 2026, the Company evaluated the effect of Alexion’s notice, including the variable consideration constraint and the sales‑ and usage‑based royalty guidance applicable to licenses of intellectual property. The
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Company concluded that royalties on disputed U.S. sales should be constrained to zero until the uncertainty is resolved. Accordingly, the Company recorded a reduction of $6.6
The Company will recognize royalty revenue related to disputed U.S. sales upon resolution of the uncertainty, when it is probable that a significant reversal will not occur, or upon receipt of payments that are not subject to refund. The ultimate outcome and timing of resolution are uncertain, and the Company cannot reasonably estimate the amount or timing of any recovery, if any, as of March 31, 2026.
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 non-cash royalty revenue of $1.5 million and $15.5 million during the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company recorded $8.1 million in accounts receivable based on estimated royalties due under the arrangement. Payment of this receivable will be made directly to OMERS. See Note 6.
Incyte Corporation (“Incyte”)
In June 2010, the Company entered into a Collaboration and License Agreement (the “MorphoSys Agreement”) with MorphoSys AG (“MorphoSys”). Under the MorphoSys Agreement, the Company granted MorphoSys an exclusive worldwide license to its patents and know-how to research, develop and commercialize the XmAb5574 product candidate (subsequently renamed MOR208 and tafasitamab) with the right to sublicense under certain conditions. In February 2024, Incyte assumed all of MorphoSys’ right, title and interest in the MorphoSys Agreement and acquired exclusive global development and commercialization rights to tafasitamab. If certain developmental, regulatory and sales milestones are achieved, the Company is eligible to receive future milestone payments and royalties from Incyte.
In February 2025, the United States Food and Drug Administration (“FDA”) accepted Incyte’s submission of a supplemental biologics license application (“BLA”), triggering a $12.5 million milestone payment to the Company, and approved the application in June 2025, triggering an additional $25.0 million milestone payment to the Company. Both milestone payments were received by the Company in 2025. In addition, Incyte dosed two patients in a Phase 2 study on December 29, 2025, one patient with immune thrombocytopenia and one patient with autoimmune hemolytic anemia, triggering a $4.0 million milestone payment to the Company, which was recognized as revenue in 2025 and collected in January 2026.
Under the MorphoSys Agreement, the Company is eligible to receive up to $195.0 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. The $41.5 million of milestone payments the Company recognized in 2025 is not subject to the Monjuvi Royalty Sale Agreement.
Under the MorphoSys Agreement, the Company recognized non-cash royalty revenue of $2.9 million and $2.8 million during the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company recorded $3.9 million in accounts receivable based on estimated royalties due under the arrangement. Payment of this receivable will be made directly to OMERS. See Note 6.
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, including tobevibart. In March 2025, Vir Bio initiated a Phase 3 study for tobevibart, triggering a $2.0 million milestone payment to the Company, which was paid in the second quarter of 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. In
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March 2022, the FDA deauthorized sotrovimab’s use in all U.S. regions due to increases in the proportion of COVID-19 cases caused by the Omicron BA.2 subvariant.
The Company did not 65.0 million in developmental, regulatory and sales milestones, as well as royalties on net sales, subject to the terms and conditions of the agreement.
3. Marketable Debt and Equity Securities
Marketable Debt Securities
The Company’s marketable debt securities consisted of the following:
| As of March 31, 2026 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Money market funds | $ | $ | — | $ | — | $ | |||||||||||||||||
Government securities | ( | ||||||||||||||||||||||
| $ | $ | $ | ( | $ | |||||||||||||||||||
| Reported as | |||||||||||||||||||||||
Cash equivalents | $ | ||||||||||||||||||||||
Marketable debt securities | |||||||||||||||||||||||
Total | $ | ||||||||||||||||||||||
| As of December 31, 2025 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Money market funds | $ | $ | — | $ | — | $ | |||||||||||||||||
Corporate securities | |||||||||||||||||||||||
Government securities | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| Reported as | |||||||||||||||||||||||
Cash equivalents | $ | ||||||||||||||||||||||
Marketable debt securities | |||||||||||||||||||||||
Total | $ | ||||||||||||||||||||||
The following table summarizes the contract maturities of the Company’s marketable debt securities as of March 31, 2026:
| Amortized Cost | Estimated Fair Value | ||||||||||
| (in thousands) | |||||||||||
| Mature in one year or less | $ | $ | |||||||||
| Mature within two years | |||||||||||
Total | $ | $ | |||||||||
The Company did no
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Marketable Equity Securities
The Company’s marketable equity securities consisted of the following:
| March 31, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | |||||||||||
| Zenas BioPharma, Inc. | $ | $ | |||||||||
| $ | $ | ||||||||||
Net realized and unrealized (losses) gains on marketable equity securities, recognized in other income (expense) in the consolidated statements of operations and comprehensive loss, were as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Total (losses) gains recorded on marketable equity securities | $ | ( | $ | ||||||||||||||||||||
| Less: gains (losses) recorded on sale of marketable equity securities | |||||||||||||||||||||||
| Unrealized (losses) gains on securities held at the reporting date | $ | ( | $ | ||||||||||||||||||||
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, Organization and 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, 2025.
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, 2026 and December 31, 2025, 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:
| March 31, 2026 | |||||||||||||||||||||||
| Total Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | |||||||||||||||||||
Marketable debt securities: | |||||||||||||||||||||||
Government securities | |||||||||||||||||||||||
Marketable equity securities | $ | $ | |||||||||||||||||||||
| Total financial assets | $ | $ | $ | $ | |||||||||||||||||||
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| December 31, 2025 | |||||||||||||||||||||||
| Total Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | |||||||||||||||||||
Marketable debt securities: | |||||||||||||||||||||||
Corporate securities | |||||||||||||||||||||||
Government securities | |||||||||||||||||||||||
Marketable equity securities | $ | $ | $ | ||||||||||||||||||||
| Total financial assets | $ | $ | $ | $ | |||||||||||||||||||
5. Balance Sheet Accounts
Property and Equipment
The following table summarizes the Company’s major classes of property and equipment:
| March 31, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | |||||||||||
| Lab equipment | $ | $ | |||||||||
| Computer, software and office equipment | |||||||||||
| Furniture and fixtures | |||||||||||
| Leasehold improvements | |||||||||||
| Construction in progress | |||||||||||
| Total gross carrying amount | |||||||||||
| Less: accumulated depreciation and amortization | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
Depreciation and amortization expense for property and equipment was $2.4
Patents, Licenses, and Other Intangible Assets
The following table summarizes the Company’s patents, licenses, and other intangible assets:
| March 31, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | |||||||||||
| Patents | $ | $ | |||||||||
| Licenses and other intangible assets | |||||||||||
| Total finite-lived assets | |||||||||||
| Indefinite-lived assets | |||||||||||
| Total gross carrying amount | |||||||||||
| Accumulated amortization | ( | ( | |||||||||
| Total patents, licenses, and other intangible assets, net | $ | $ | |||||||||
Patents, licenses and other intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives. Amortization expense was $0.2 million and $0.3 million for the three months ended March 31, 2026 and 2025, respectively. 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 or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. During the three months ended March 31, 2025, the Company recorded asset impairment charges of $4.9 million related to its decision to pause
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development of certain programs and prioritize other pipeline assets, resulting in a write-down of the associated patents to their estimated fair value. No additional impairment charges were recorded for continuing programs during the three months ended March 31, 2026.
The following table presents the estimated future amortization expense related to definite-lived assets as of March 31, 2026:
Amortization Expense | |||||
| Year ending December 31, | (in thousands) | ||||
| For the remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 and thereafter | |||||
| Total | $ | ||||
Accrued Expense
Accrued expenses consist of the following:
| March 31, 2026 | December 31, 2025 | ||||||||||
(in thousands) | |||||||||||
| Accrued R&D expenses | $ | $ | |||||||||
| Accrued payroll and benefits | |||||||||||
Other | |||||||||||
Total accrued expenses | $ | $ | |||||||||
6. Liabilities Related to the Sales of Future Royalties
Ultomiris Royalty Sale Agreement
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 occurred 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, which was paid in the fourth quarter of 2023.
As discussed in Note 2, in March 2026, Alexion notified the Company that it does not believe additional U.S. royalties are owed and does not intend to make future payments for U.S. sales. The Company has applied the variable consideration constraint under ASC 606 and constrained U.S. royalty revenue to zero pending resolution of the dispute.
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Monjuvi Royalty Sale Agreement
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, 2026, the estimated effective interest rates were 16.8 % and 15.6 % 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:
| March 31, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | |||||||||||
| Beginning balance | $ | $ | |||||||||
| Royalties paid to OMERS | ( | ( | |||||||||
| Non-cash interest expense recognized | |||||||||||
| Ending balance | $ | $ | |||||||||
| Current liabilities | $ | $ | |||||||||
| Long-term liabilities | |||||||||||
| Total | $ | $ | |||||||||
7. Commitments and Contingencies
Litigation
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 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. Merus sought a judgment of patent infringement, an order enjoining the Company from infringing those 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
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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. On September 30, 2025, the Court granted the motion to dismiss Merus’ complaint, but permitted Merus to file an amended complaint. On November 11, 2025, Merus filed a first amended complaint, and asserted claims of U.S. Patent Nos. 9,944,695, 9,358,286, 11,926,859, and 12,123,043. On December 16, 2025, the Company filed a motion to dismiss the first amended complaint on the same grounds previously asserted. Briefing on the motion to dismiss is ongoing, and the Court held a hearing on the motion to dismiss on February 17, 2026. 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 Office’s Patent and Trial Appeal Board (“PTAB”) seeking a finding that certain claims of those patents are unpatentable. On September 26, 2025, the U.S. Patent and Trademark Appeal Board granted institution of the inter partes review. A schedule for the inter partes review has been set, and oral argument is scheduled for June 24, 2026. The Company believes it has strong defenses to Merus’ claims, including defenses of invalidity and/or non-infringement—some of which have already been accepted by the district court and preliminarily accepted by the PTAB, but there is no guarantee that the Company will ultimately prevail.
Commitments
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 consolidated balance sheets as of March 31, 2026 and December 31, 2025.
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.
8. Stockholders’ Equity
The following table summarizes the Company’s shares of common stock and preferred stock:
Shares | |||||||||||||||||
| Par Value | Authorized | Issued | Outstanding | ||||||||||||||
| As of March 31, 2026 | |||||||||||||||||
| Common Stock | $ | ||||||||||||||||
Preferred Stock | $ | ||||||||||||||||
| As of December 31, 2025 | |||||||||||||||||
| Common Stock | $ | ||||||||||||||||
| Preferred Stock | $ | ||||||||||||||||
On February 25, 2026, 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 therein. 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 25, 2029.
On February 27, 2023, the Company entered into a sales agreement (the “Sales Agreement”) with Leerink Partners LLC (formerly, 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 would be issued pursuant to a prospectus supplement, which the Company would have to file before it can sell any ATM Shares in the ATM Offering. As of March 31, 2026, no shares have been issued under the Sales Agreement.
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9. Leases
Monrovia, California: The Company leases office and laboratory space in Monrovia, California. The lease term was set to expire in December 2025 and provided an option to renew the entire premises for an additional five-year term, which the Company elected not to exercise. Instead, on August 8, 2025, the Company entered into a seventh amendment to the lease agreement to extend the term for one year, effective January 1, 2026 through December 31, 2026.
The total lease expense associated with this lease is approximately $0.9 million.
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.
On December 18, 2025, the Company entered into a sublease agreement to sublease a portion of its space to a third party. The sublease term commenced on February 1, 2026 and expires on January 31, 2031. Sublease income is recognized on a straight-line basis over the sublease term and is recorded as other income in the consolidated statements of operations and comprehensive loss. The Company recognized sublease income of $0.4 million during the three months ended March 31, 2026.
The Company continues to account for the head lease as an operating lease and remains primarily obligated under the original lease agreement. Future minimum sublease receipts as of March 31, 2026 are as follows:
| Year | Amounts | |||||||
| (in thousands) | ||||||||
| For the remainder of 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 and thereafter | ||||||||
| Total | $ | |||||||
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:
Lease Assets and Liabilities | Classification | March 31, 2026 | December 31, 2025 | ||||||||||||||
(in thousands) | |||||||||||||||||
Operating lease assets | Right-of-use assets | $ | $ | ||||||||||||||
Current operating lease liabilities | Lease liabilities | $ | $ | ||||||||||||||
Non-current operating lease liabilities | Lease liabilities, net of current portion | $ | $ | ||||||||||||||
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The following table presents maturities of operating lease liabilities on an undiscounted basis as of March 31, 2026:
| Year | Amounts | |||||||
| (in thousands) | ||||||||
| For the remainder of 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 and thereafter | ||||||||
| Total | ||||||||
| Less: Imputed interest | ( | |||||||
| Total operating lease liabilities (includes current portion) | $ | |||||||
The following table presents lease costs, supplemental cash flow and other information:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Operating lease cost | $ | $ | |||||||||||||||||||||
| Variable lease cost | |||||||||||||||||||||||
| Total lease costs | $ | $ | |||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | $ | |||||||||||||||||||||
March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
Weighted-average remaining lease term (in years) | |||||||||||||||||||||||
Weighted-average discount rate (%) | % | % | |||||||||||||||||||||
10. Stock-Based Compensation
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). On June 12, 2025, the Company’s stockholders approved the amendment and restatement of the 2023 Plan to increase the number of authorized shares reserved for issuance thereunder by 3,000,000 shares. As of March 31, 2026, the total number of shares of common stock reserved for issuance under the 2023 Plan is 19,074,256 .
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, 2026, the total number of shares of common stock available for issuance under the ESPP is 817,666 .
The following table presents a summary of awards outstanding:
| March 31, 2026 | |||||||||||||||||
| 2013 Plan | 2023 Plan | Total | |||||||||||||||
| Stock options | |||||||||||||||||
RSUs | |||||||||||||||||
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The following table summarizes stock-based compensation expenses included in operating expenses:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| General and administrative | $ | $ | |||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Stock options | $ | $ | |||||||||||||||||||||
| RSUs | |||||||||||||||||||||||
| ESPP | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
Stock Option Awards
The following table presents a summary of the stock option activity for the three months ended March 31, 2026:
| Number of Shares Subject to Outstanding Options | Weighted Average Exercise Price (per share) | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
| Outstanding at December 31, 2025 | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Exercised | ( | ||||||||||||||||||||||
| Forfeited | ( | ||||||||||||||||||||||
| Outstanding at March 31, 2026 | $ | $ | |||||||||||||||||||||
| Exercisable at March 31, 2026 | $ | $ | |||||||||||||||||||||
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, 2026 and 2025 were $0.1 million and $0.5 million, respectively.
As of March 31, 2026, the pre-tax compensation expense for all outstanding unvested stock options in the amount of $42.9 million will be recognized in the Company’s results of operations over a weighted average period of 2.7 years.
The per share weighted average grant date fair values of the stock options granted in the period are $7.02 and $7.72 for the three months ended March 31, 2026 and 2025, respectively. The following table provides the weighted-average assumptions used in the calculation of grant date per share fair values of these stock options based on the Black-Scholes option pricing model:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
Expected term (in years) (1) | |||||||||||||||||||||||
Expected volatility (2) | % | % | |||||||||||||||||||||
Risk-free interest rate (3) | % | % | |||||||||||||||||||||
Expected dividend yield (4) | % | % | |||||||||||||||||||||
| Underlying stock price | $ | $ | |||||||||||||||||||||
(1) The computation of expected term was determined based on the option holders’ past exercise patterns.
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(2) Volatility is estimated based on volatility average of the Company’s common stock price.
(3) The risk-free interest rate is based on that of the U.S. Treasury yields with equivalent terms in effect at the time of the grant.
(4) The dividend yield is zero as the Company currently does not pay a dividend.
Restricted Stock Units (“RSUs”)
The following table summarizes the activity of the Company’s RSUs:
| Restricted Stock Units | Weighted Average Grant Date Fair Value (Per unit) | ||||||||||
| Outstanding as of December 31, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding as of March 31, 2026 | $ | ||||||||||
The fair value of RSUs was determined based on the closing price of the Company’s common stock on the grant date.
As of March 31, 2026, there was $29.5 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 2.3 years.
Employee Stock Purchase Plan
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:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Expected term (in years) | |||||||||||||||||||||||
| Expected volatility | % | ||||||||||||||||||||||
| Risk-free interest rate | % | ||||||||||||||||||||||
| Expected dividend yield | % | % | |||||||||||||||||||||
As of March 31, 2026, the pre-tax compensation expense for all outstanding shares issued under the Company’s ESPP in the amount of $0.3 million will be recognized in the Company’s results of operations over a weighted average period of 3 months.
11. Net Loss Per Share
The following table presents the computation of basic and diluted net loss per share.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net loss attributable to Xencor, Inc. | $ | ( | $ | ( | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average basic shares outstanding | |||||||||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||||||||
| Weighted-average diluted shares outstanding | |||||||||||||||||||||||
| Basic and diluted net loss per share | $ | ( | $ | ( | |||||||||||||||||||
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All outstanding options and RSUs as of March 31, 2026 and 2025 were excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive. The following table sets forth the potentially dilutive securities calculated as if the Company was in a net income position for the periods presented.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
Options | |||||||||||||||||||||||
Restricted stock units | |||||||||||||||||||||||
Total | |||||||||||||||||||||||
12. Segment Reporting
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.
The Company’s Chief Executive Officer (“CEO”) serves as the Chief Operating Decision Maker (“CODM”). The CODM evaluates performance, allocates resources, and conducts planning and forecasting on a consolidated basis using financial information as presented in the Company’s consolidated statements of operations and comprehensive loss. In addition, the CODM reviews research and development expenses by program. Managing and allocating resources at the corporate level enables the Company’s CEO to assess the overall level of resources available and to deploy those resources in alignment with the Company’s long-term, corporate-wide strategic objectives.
The table below details the Company’s revenues and expenses and reconciles those amounts to the Company’s consolidated net loss including noncontrolling interest as computed under U.S. GAAP in the consolidated statements of operations and comprehensive loss:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| License | $ | $ | |||||||||||||||||||||
| Milestone | |||||||||||||||||||||||
| Royalties | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
Less: | |||||||||||||||||||||||
| Research and development: | |||||||||||||||||||||||
| XmAb819 (ENPP3 x CD3) | ( | ( | |||||||||||||||||||||
| XmAb942 (Xtend TL1A) | ( | ( | |||||||||||||||||||||
| XmAb412 (TL1A x IL-23p19) | ( | ||||||||||||||||||||||
| XmAb541 (CLDN6 x CD3) | ( | ( | |||||||||||||||||||||
| XmAb657 (CD19 x CD3) | ( | ( | |||||||||||||||||||||
| Plamotamab (CD20 x CD3) | ( | ( | |||||||||||||||||||||
| XmAb808 (B7-H3 x CD28) | ( | ||||||||||||||||||||||
| Other programs including research and early stage | ( | ( | |||||||||||||||||||||
| Wind down costs of terminated programs | ( | ( | |||||||||||||||||||||
| Internal research and development expenses | ( | ( | |||||||||||||||||||||
| Research and development stock based compensation | ( | ( | |||||||||||||||||||||
| General and administrative | ( | ( | |||||||||||||||||||||
Other income (expense), net (1) | ( | ( | |||||||||||||||||||||
| Income tax expense | ( | ( | |||||||||||||||||||||
| Net loss including noncontrolling interest | $ | ( | $ | ( | |||||||||||||||||||
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For the three months ended March 31, 2026 and 2025, the Company’s total revenues were derived from collaboration and licensing agreements and were reported within the Company’s single operating segment. Revenues are attributed to geographic areas based on the location of the Company’s customers. For the three months ended March 31, 2026 and 2025, substantially all of the Company’s revenues were generated from customers located in the United States, and substantially all of the Company’s long-lived assets were located in the United States. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and the consolidated financial statements and accompanying notes thereto for the fiscal year ended December 31, 2025 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2025. See also “Special Note Regarding Forward-Looking Statements” included in this Quarterly Report on Form 10-Q.
OVERVIEW
We are 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. Leveraging our XmAb® protein engineering platforms, we rapidly design, engineer and advance purpose-built drug candidates with novel mechanisms of action and improved therapeutic potential.
We advance selected candidates through clinical development, while also partnering with programs to access complementary development and commercialization capabilities. Our portfolio spans early- and mid-stage clinical programs, and our strategic approach emphasizes disciplined portfolio management, including advancing, partnering, or discontinuing programs based on clinical data and development priorities. Three marketed medicines have been developed using our XmAb technologies.
Refer to Part I, “Item 1. Business” in our Annual Report on Form 10-K for the year ended December 31, 2025 for a more detailed discussion of our business, technology platforms, pipeline, and key developments.
Wholly Owned Clinical-Stage XmAb Drug Candidates
We are currently enrolling five clinical studies to evaluate our XmAb drug candidates for patients with many different types of serious diseases.
Oncology Programs
XmAb819 (ENPP3 x CD3): XmAb819 is a novel, 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, and the study includes additional cohorts that are enrolling patients with other ENPP3-expressing tumor types, including colorectal cancer (CRC), non-small cell lung cancer (NSCLC) and papillary renal cell carcinoma (pRCC).
XmAb541 (CLDN6 x CD3): XmAb541 is a novel, 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 is designed to engage the immune system and activate T cells for highly potent and targeted lysis of tumor cells expressing CLDN6, a tumor-associated antigen in ovarian cancer, germ cell tumors and other solid tumors. 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 to evaluate XmAb541 in patients with advanced gynecologic and germ cell tumors.
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. Data from completed cohorts in a Phase 1 dose-escalation study of XmAb808 in combination with pembrolizumab, an anti-PD1 antibody, are expected to inform future development decisions for the program. Potential combination with CD3 T-cell engaging bispecific antibodies is being
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evaluated. We presented a poster characterizing preclinical combinations of XmAb808 with multiple CD3 T cell engaging bispecific antibodies, including XmAb541, at the American Association for Cancer Research Annual Meeting in April 2026.
Autoimmune Disease Programs
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 final results from a Phase 1 dose-escalation study in healthy participants in May 2026. The results indicate that XmAb942 was well tolerated. Pharmacokinetic analysis of the single dose cohorts estimated a human half-life of 74.1 days, which supports a 12-week dosing interval during maintenance treatment. We initiated a Phase 2b study of XmAb942 in UC, the XENITH-UC Study, in the third quarter of 2025. XENITH-UC is 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. Based on clinical outcomes from a prior Phase 1 study in hematologic cancers, 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 are evaluating plamotamab in a Phase 1b study for patients with rheumatoid arthritis (RA) who have progressed through prior standard of care treatment.
XmAb657 (CD19 x CD3): XmAb657 is 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 42 days. Half-life in non-human primates was estimated to be 15 days, which indicates a potential for durable B-cell depletion in human clinical studies. XmAb657 was well tolerated preclinically, with no clinical signs of cytokine release syndrome. XmAb657 is in development for patients with idiopathic inflammatory myopathies (IIM). We initiated a first-in-human, Phase 1 study in the fourth quarter of 2025. We are conducting a first-in-human, Phase 1 study to evaluate XmAb657 in healthy volunteers and patients with IIM.
Collaborations, Partnerships and Licensing Arrangements for Approved or Authorized Medicines and Clinical-Stage Programs Engineered with XmAb Fc Domains
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
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.
Incyte: The FDA approved Monjuvi® (tafasitamab-cxix) under accelerated approval in July 2020. Monjuvi is a CD19-directed cytolytic antibody containing an XmAb Fc domain for improved cytotoxic potency and indicated in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL), 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 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 (FL) and submitted a supplemental Biologics License Application (“sBLA”), which was accepted in February 2025. In June 2025, the FDA approved Monjuvi in combination with rituximab and lenalidomide for the treatment of adult patients with relapsed or refractory FL. In January 2026, Incyte announced positive topline results from a pivotal study of Monjuvi as a first-line treatment for DLBCL and that they expect to file a sBLA for the first-line treatment of adults with newly diagnosed DLBCL in the first half of 2026.
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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. Monjuvi® and Minjuvi® are registered trademarks of Incyte.
Zenas: Zenas BioPharma, Inc. (“Zenas”) is advancing obexelimab, an antibody that targets CD19 with its variable domain, for the treatment of patients with autoimmune diseases. Obexelimab uses an XmAb Fc domain that was designed to inhibit the function of B cells, an important component of the immune system. Obexelimab was created and initially developed by us and was licensed to Zenas in November 2021. Zenas’ partner, Bristol Myers Squibb, holds exclusive development and commercialization rights for obexelimab in Japan, South Korea, Taiwan, Hong Kong, Singapore, and Australia.
In January 2026, Zenas announced positive results from the Phase 3 INDIGO trial of obexelimab in patients with immunoglobulin G4-related disease (IgG4-RD), in which the primary endpoint was met. Zenas announced that it anticipates submitting a BLA to the FDA for the treatment of IgG4-RD in the second quarter of 2026 and a Marketing Authorization Application to the European Medicines Agency in the second half of 2026. Zenas is also conducting a Phase 2 study of obexelimab in patients with systemic lupus erythematosus and has reported positive results from the Phase 2 MoonStone trial of obexelimab in patients with relapsing multiple sclerosis, in which the primary endpoint was met. As of March 31, 2026, we own 3,098,380 shares of common stock in Zenas.
Technology License Agreements
We enter into technology licensing agreements in which we license access to one or more of our XmAb Fc domains on a restricted basis. 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: Alexion’s Ultomiris® uses Xtend Fc technology to enhance the half-life of Ultomiris to allow for a longer duration of action, less frequent dosing and reduced patient burden of therapy compared to the previous generation therapy, Soliris®. 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. In April 2026, Alexion announced positive high-level results from a prespecified interim analysis of the I CAN Phase 3 study in adults with immunoglobulin A nephropathy (IgAN) who are at risk of disease progression and that they will seek accelerated approval in key markets. Ultomiris and Soliris are registered trademarks of Alexion Pharmaceuticals, Inc.
We are eligible to receive a low-single-digit percentage royalty on net sales of Ultomiris.
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.
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RESULTS OF OPERATIONS
The following table summarizes our results of operations for the following periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| License | $ | 100 | $ | — | $ | 100 | |||||||||||||||||||||||||||||
Milestone | — | 14,500 | (14,500) | ||||||||||||||||||||||||||||||||
| Royalties | 4,416 | 18,232 | (13,816) | ||||||||||||||||||||||||||||||||
| Total revenues | 4,516 | 32,732 | (28,216) | ||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Research and development | 64,669 | 58,578 | 6,091 | ||||||||||||||||||||||||||||||||
General and administrative | 17,709 | 17,337 | 372 | ||||||||||||||||||||||||||||||||
| Total operating expenses | 82,378 | 75,915 | 6,463 | ||||||||||||||||||||||||||||||||
| Operating loss | (77,862) | (43,183) | (34,679) | ||||||||||||||||||||||||||||||||
Other income (expense), net(1) | (50,774) | (5,082) | (45,692) | ||||||||||||||||||||||||||||||||
| Loss before income tax expense and noncontrolling interest | $ | (128,636) | $ | (48,265) | $ | (80,371) | |||||||||||||||||||||||||||||
(1) Other income (expense), net, included interest income, interest expense, gain/loss on marketable equity securities and asset impairment charges.
Revenues
Total revenue for the three months ended March 31, 2026 decreased by $28.2 million from the same period in 2025. The change 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®.
On December 9, 2025, a patent term extension related to the Xtend™ Fc domain for antibodies targeting C5 was announced, extending the expected royalty term for Ultomiris® net sales into December 2028 in the United States. On March 4, 2026, Alexion informed us that it had taken the position that it does not owe additional royalties for U.S. sales of Ultomiris and does not intend to make future payments for sales in the U.S. under the parties’ agreement. We dispute this position and are evaluating our options.
In the first quarter of 2026, we evaluated the effect of Alexion’s notice, including the variable consideration constraint and the sales‑ and usage‑based royalty guidance applicable to licenses of intellectual property. We concluded that royalties on disputed U.S. sales should be constrained to zero until the uncertainty is resolved. Accordingly, we recorded a reduction of $6.6 million to royalty revenue recorded in 2025 and a corresponding reduction to the related receivable in the quarter ended March 31, 2026. There was no cash impact from this entry in the period. Recognition of undisputed ex‑U.S. royalties was unaffected and continues in accordance with ASC Topic 606’s sales‑ and usage‑based royalty guidance.
We will recognize royalty revenue related to disputed U.S. sales upon resolution of the uncertainty, when it is probable that a significant reversal will not occur, or upon receipt of payments that are not subject to refund. The ultimate outcome and timing of resolution are uncertain, and we cannot reasonably estimate the amount or timing of any recovery, if any, as of March 31, 2026.
Under the Alexion Agreement, we recognized $1.5 million (net of $6.6 million reduction) and $15.5 million of non-cash royalty revenue during the three months ended March 31, 2026 and 2025, respectively.
Incyte: In June 2010, we entered into a Collaboration and License Agreement with MorphoSys AG, which was subsequently amended in 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
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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.
In February 2025, the FDA accepted Incyte’s submission of a supplemental biologics license application, triggering a $12.5 million milestone payment to us, and approved the application in June 2025, triggering an additional $25.0 million milestone payment to us. Both milestone payments were received by us in 2025. In addition, Incyte dosed two patients in a Phase 2 study on December 29, 2025, one patient with immune thrombocytopenia and one patient with autoimmune hemolytic anemia, triggering a $4.0 million milestone payment to us, which was recognized as revenue in 2025 and collected in January 2026.
In addition, under the MorphoSys Agreement, we recognized $2.9 million and $2.8 million of non-cash royalty revenue during the three months ended March 31, 2026 and 2025, respectively.
Research and Development (R&D) Expenses
R&D expenses include both external and internal costs related to discovering and developing product candidates and new technologies. External costs primarily consist of preclinical studies, clinical trials, and payments to CROs and CMOs for services such as trial management, manufacturing, toxicology studies, and drug formulation, while internal costs include personnel expenses, supplies, and allocated overhead like facilities. These expenses can fluctuate based on factors such as trial stage, patient enrollment, and program activity, and are expected to increase as programs advance. Although R&D activities are largely managed internally, many execution components are outsourced, with external costs tracked by program (except in early discovery stages), while internal costs are managed on an aggregate basis.
The following tables summarize our research and development expenses for the following periods indicated:
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||
| External R&D expenses per program: | |||||||||||||||||||||||||||||
| XmAb819 (ENPP3 x CD3) | $ | 8,856 | $ | 4,810 | $ | 4,046 | |||||||||||||||||||||||
| XmAb942 (Xtend TL1A) | 7,411 | 2,402 | 5,009 | ||||||||||||||||||||||||||
| XmAb412 (TL1A x IL-23p19) | 7,138 | — | 7,138 | ||||||||||||||||||||||||||
| XmAb541 (CLDN6 x CD3) | 3,296 | 2,141 | 1,155 | ||||||||||||||||||||||||||
| XmAb657 (CD19 x CD3) | 869 | 4,399 | (3,530) | ||||||||||||||||||||||||||
| Plamotamab (CD20 x CD3) | 317 | 1,546 | (1,229) | ||||||||||||||||||||||||||
| XmAb808 (B7-H3 x CD28) | (546) | 2,196 | (2,742) | ||||||||||||||||||||||||||
| Other programs including research and early stage | 5,086 | 2,092 | 2,994 | ||||||||||||||||||||||||||
| Wind down costs of terminated programs | 1,145 | 7,655 | (6,510) | ||||||||||||||||||||||||||
| Total external R&D expenses | $ | 33,572 | $ | 27,241 | $ | 6,331 | |||||||||||||||||||||||
| Internal research and development expenses | 26,019 | 24,055 | 1,964 | ||||||||||||||||||||||||||
| Stock based compensation | 5,078 | 7,282 | (2,204) | ||||||||||||||||||||||||||
| Total R&D expenses | $ | 64,669 | $ | 58,578 | $ | 6,091 | |||||||||||||||||||||||
R&D expenses increased by $6.1 million for the three months ended March 31, 2026 over the same period in 2025. The increase was primarily driven by higher external and internal costs incurred associated with the programs listed above, which are aligned with our strategic research and development priorities, partially offset by lower stock-based compensation expense in the current period. R&D expenses may fluctuate from period to period depending on the timing, progress, and level of activity of each program.
General and Administrative Expenses
General and administrative expenses consist of salaries, stock compensation, professional services related to legal, audit, consulting, patent filings, business insurance and technology expenses, facilities, and depreciation and amortization.
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General and administrative expenses for the three months ended March 31, 2026 remained relatively consistent with the same period in 2025.
Other Income (Expense)
Other income (expense) primarily consists of interest income and expense, gains and losses on marketable equity securities, and asset impairment charges. Other expense increased by $45.7 million for the three months ended March 31, 2026 compared to the same period in 2025.
The change for the three months ended March 31, 2026 was primarily driven by unrealized loss from the marketable equity security related to Zenas.
LIQUIDITY AND CAPITAL RESOURCES
We have historically financed our operations through payments received from product development partnerships and licensing arrangements, private placements of equity securities, and public offerings of common stock. Research and development activities have required significant capital investment since our inception and are expected to continue to require significant cash expenditure as our pipeline continues to expand.
On February 25, 2026, we 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 us to offer an indeterminate amount of securities, including equity securities, debt securities, warrants, rights, units and depositary shares, from time to time as described therein. 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 25, 2029.
As of March 31, 2026, we had $541.8 million of cash, cash equivalents, and marketable debt securities compared to $610.8 million as of December 31, 2025.
We expect to continue receiving payments from our collaborators for potential additional milestone, opt-ins, contingent payments, royalties, and research and development services rendered, if any. The receipt of future milestone and contingent payments is dependent on the achievement of certain research and development milestones by us or our partners and, as such, remains uncertain at this time.
We believe our current financial resources are sufficient to fund our operations through at least the next twelve months from the date of the issuance of these unaudited consolidated financial statements.
Funding Requirements
We have not generated any revenue from the sale of products developed by us to date and do not expect to do so until we obtain regulatory approval of and commercialize one or more of our internal product development candidates. As we are currently in the clinical stage of development, it will be some time before we expect to achieve this, and it is uncertain that we will ever commercialize one or more of our internal product development candidates. We expect that we will continue to increase our operating expenses in connection with ongoing and additional clinical and preclinical development of product candidates in our pipeline and candidates that we are co-developing with our partners.
Although it is difficult to predict our funding requirements, based upon our current operating plan, we expect that our existing cash, cash equivalents, marketable securities and certain potential milestone payments will fund our operating expenses and capital expenditure requirements into 2028. We have based these estimates on assumptions that may prove to be wrong which would cause us to use our capital resources sooner than we currently expect.
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Cash Flows
The following table sets forth the primary sources and uses of cash for each of the periods presented below:
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Cash Flow from: | |||||||||||||||||
| Operating activities | $ | (67,628) | $ | (16,220) | $ | (51,408) | |||||||||||
| Investing activities | 26,677 | 13,668 | 13,009 | ||||||||||||||
| Financing activities | 950 | 1,249 | (299) | ||||||||||||||
| Net decrease in cash, cash equivalents, and restricted cash | $ | (40,001) | $ | (1,303) | $ | (38,698) | |||||||||||
During the three months ended March 31, 2026, cash flow used in operating activities was $67.6 million, which was primarily due to the ongoing expenses related to our research and development programs and general and administrative expenses. The change was primarily driven by lower milestone receipts in 2026, as the prior year period included higher milestone collections, as well as higher operating expenditures in 2026 related to ongoing business activities. Cash provided by investing activities amounted to $26.7 million, primarily reflecting proceeds of $100.0 million from maturities of marketable securities, offset by purchases of marketable securities totaling $72.7 million. Cash provided by financing activities of $1.0 million was primarily related to cash received from stock option exercises.
During the three months ended March 31, 2025, cash flow used in operating activities was $16.2 million, which was primarily due to the ongoing expenses related to our research and development programs and general and administrative expenses. Cash provided by investing activities amounted to $13.7 million, primarily reflecting proceeds of $119.0 million from maturities of marketable securities, offset by purchases of marketable securities totaling $103.9 million. Cash provided by financing activities of $1.2 million was primarily related to cash received from stock option exercises, offset by payment to acquire non-controlling interest.
Contractual Obligations and Commitments
There were no material changes outside of the ordinary course of business to our specific contractual obligations during the three months ended March 31, 2026.
Critical Accounting Policies
There has been no material change in the Company’s critical accounting policies that the Company disclosed in Note 1, Organization and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of its Annual Report on Form 10-K for the year ended December 31, 2025.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There has been no material change in the Company’s exposure to market risk from that described in Part II, “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of its Annual Report on Form 10-K for the year ended December 31, 2025.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13(a)- 15(e) and 15(d)- 15(e) under the Securities Exchange Act of 1934, as amended), as of March 31, 2026, the end of the period covered by this Quarterly Report on Form 10-Q.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
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Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company regularly evaluates its controls and procedures and makes improvements in the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Legal Proceedings are set forth in the Company’s financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q and are incorporated herein by reference. See Note 7 - Commitments and Contingencies of Notes to Consolidated Financial Statements of Part I, “Item 1. Financial Statements.”
Item 1A. Risk Factors
Investing in our securities involves a high degree of risk. You should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial position, or future results of operations. See also “Special Note Regarding Forward-Looking Statements” included in this Quarterly Report on Form 10-Q. There have been no material changes from the risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Other Information
(c) Rule 10b5-1 Plans
During the fiscal quarter ended March 31, 2026, no director or officer (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted or terminated
| Name | Title | Adoption Date | Duration(1) | Aggregate Number of Shares of Common Stock to be Sold Pursuant to Trading Arrangement | ||||||||||
(1) The trading arrangement permits transactions through and including the earlier to occur of (a) the date that all shares subject to the trading arrangement have been sold and (b) the date listed in the table.
Item 6. Exhibits
| Exhibit Number | Description of Document | |||||||
| 3.1 | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 11, 2013). | |||||||
| 3.2 | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K, filed with the SEC on February 27, 2023). | |||||||
| 4.1 | Form of Common Stock Certificate of the Company (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1, as amended (File No. 333-191689), originally filed with the SEC on October 25, 2013). | |||||||
| 4.2 | Form of Pre-Funded Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed with the SEC on September 12, 2024). | |||||||
| 31.1* | Rule 13a-14(a) Certification of Principal Executive Officer. | |||||||
| 31.2* | Rule 13a-14(a) Certification of Principal Financial Officer. | |||||||
| 32.1** | Section 1350 Certification of Principal Executive Officer and Principal Financial Officer. | |||||||
| 101* | The following financial statements from the Company’s 10-Q for the fiscal quarter ended March 31, 2026, formatted in iXBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Loss, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, (v) Notes to Consolidated Financial Statements | |||||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
———————
*Filed herewith.
**Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| XENCOR, INC. | ||||||||
Dated: May 6, 2026 | BY: | /s/ BASSIL I. DAHIYAT | ||||||
| Bassil I. Dahiyat, Ph.D. | ||||||||
| President and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
Dated: May 6, 2026 | BY: | /s/ BART JAN CORNELISSEN | ||||||
Bart Jan Cornelissen | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
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FAQ
How did Xencor (XNCR) perform financially in the quarter ended March 31, 2026?
Xencor reported revenue of $4.5 million and a net loss attributable to the company of $128.9 million, or $1.71 per share. Results reflected lower collaboration and royalty revenue and a significant unrealized loss on its Zenas BioPharma equity investment.
What is happening with Xencor’s Ultomiris royalties from Alexion?
On March 4, 2026, Alexion told Xencor it believes no additional U.S. Ultomiris royalties are owed and does not intend to make future U.S. payments. Xencor disputes this, reversed $6.6 million of previously recorded royalty revenue, and is constraining disputed U.S. royalties to zero pending resolution.
Why did Xencor record a large loss on Zenas BioPharma in Q1 2026?
Xencor holds marketable equity securities in Zenas BioPharma, Inc.. In the quarter, it recognized an unrealized loss of $51.9 million as the fair value of this investment declined. This non-cash loss contributed meaningfully to total other expense and the wider net loss.
What is Xencor’s cash position and funding outlook as of March 31, 2026?
Xencor had $541.8 million in cash, cash equivalents and marketable debt securities at quarter end, down from $610.8 million at year-end 2025. Management states these resources, plus potential milestones, should fund operating and capital needs into 2028 under its current plan.
Which key clinical programs is Xencor (XNCR) advancing?
Xencor is advancing oncology bispecifics XmAb819, XmAb541 and XmAb808, and autoimmune programs XmAb942, plamotamab and XmAb657. XmAb942 recently completed a Phase 1 study, and a Phase 2b ulcerative colitis trial, XENITH-UC, began in 2025.
How did research and development spending change for Xencor in Q1 2026?
Research and development expenses rose to $64.7 million from $58.6 million year over year. The increase was driven by higher external and internal costs for priority programs such as XmAb819, XmAb942 and XmAb412, partly offset by lower stock-based compensation.