Xencor (XNCR) 10-Q 4 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 28, 2015
Document and Entity Information
Entity Registrant Name	Xencor Inc
Entity Central Index Key	1,326,732
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		40,477,003
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

Balance Sheets

Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets
Cash	$ 57,738	$ 54,649
Marketable securities	70,206
Accounts receivable	408	2,966
Interest receivable	659
Prepaid expenses and other current assets	865	134
Total current assets	129,876	57,749
Property and equipment
Computers, software and equipment	5,275	4,270
Furniture and fixtures	102	97
Leasehold improvements	3,612	3,086
Less accumulated depreciation and amortization	(6,696)	(6,554)
Property and equipment, net	2,293	899
Other assets
Patents, licenses, and other intangible assets, net	9,617	9,116
Marketable securities - long term	69,632
Other assets	63	59
Total other assets	79,312	9,175
Total assets	211,481	67,823
Current liabilities
Accounts payable	5,107	1,691
Accrued expenses	3,817	2,251
Current portion of deferred revenue	47,652	2,254
Total current liabilities	56,576	6,196
Deferred rent, less current portion	659
Deferred revenue, less current portion	931	2,337
Total liabilities	$ 58,166	$ 8,533
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value: 200,000,000 authorized shares at September 30, 2015 and December 31, 2014; 40,477,003 issued and outstanding at September 30, 2015 and 31,434,272 issued and outstanding at December 31, 2014	$ 405	$ 314
Additional paid-in capital	422,258	302,969
Accumulated other comprehensive loss	(6)
Accumulated deficit	(269,342)	(243,993)
Total stockholders' equity	153,315	59,290
Total liabilities and stockholders' equity	$ 211,481	$ 67,823

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Condensed Balance Sheets
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized	200,000,000	200,000,000
Common Stock, shares issued	40,477,003	31,434,272
Common Stock, shares outstanding	40,477,003	31,434,272

Statements of Comprehensive Los

Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenue
Collaborations, licenses and milestones	$ 3,503	$ 848	$ 6,008	$ 3,856
Operating expenses
Research and development	10,582	4,953	23,263	13,464
General and administrative	3,233	2,182	8,521	5,499
Total operating expenses	13,815	7,135	31,784	18,963
Loss from operations	(10,312)	(6,287)	(25,776)	(15,107)
Other income (expenses)
Interest income	676	2	1,067	31
Interest expense	(4)	(2)	(11)	(7)
Other income (expenses)	(397)	9	(629)	10
Total other income (expense), net	275	9	427	34
Net loss	(10,037)	(6,278)	(25,349)	(15,073)
Other comprehensive loss
Net unrealized gain (loss) on marketable securities available-for-sale	84		(6)
Comprehensive loss	$ (9,953)	$ (6,278)	$ (25,355)	$ (15,073)
Basic and diluted net loss per common share (in dollars per share)	$ (0.25)	$ (0.20)	$ (0.66)	$ (0.48)
Weighted-average common shares outstanding used in computing basic and diluted net loss (in shares)	40,473,520	31,395,626	38,514,179	31,376,502

Statement of Stockholders_ Equi

Statement of Stockholders’ Equity - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
Balance at Dec. 31, 2014	$ 314	$ 302,969		$ (243,993)	$ 59,290
Balance (in shares) at Dec. 31, 2014	31,434,272
Increase (Decrease) in Stockholders' Equity
Sale of common stock, net of issuance cost of $7.7 million	$ 86	115,118			115,204
Sale of common stock, net of issuance cost of $7.7 million (in shares)	8,625,000
Issuance of common stock upon exercise and vesting of stock awards	$ 4	539			543
Issuance of common stock upon exercise and vesting of stock awards (in shares)	369,743
Issuance of common stock under the employee stock purchase plan	$ 1	246			247
Issuance of common stock under the employee stock purchase plan (in shares)	47,988
Comprehensive loss			$ (6)	(25,349)	(25,355)
Stock-based compensation expense		3,386			3,386
Balance at Sep. 30, 2015	$ 405	$ 422,258	$ (6)	$ (269,342)	$ 153,315
Balance (in shares) at Sep. 30, 2015	40,477,003

Statements of Cash Flows

Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities
Net loss	$ (25,349)	$ (15,073)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization	768	621
Amortization of premium on marketable securities	642
Stock-based compensation	3,386	1,110
Abandonment of capitalized intangible assets	280	496
Gain on disposal of assets	(9)	(1)
Gain on sale of marketable securities available-for-sale	(4)
Changes in operating assets and liabilities:
Accounts receivable	2,558	40
Interest receivable	(659)
Prepaid expenses and other assets	(715)	(62)
Accounts payable	3,417	(536)
Accrued expenses	1,608	372
Deferred rent	595
Deferred revenue	43,993	(2,454)
Net cash provided by (used in) operating activities	30,511	(15,487)
Cash flows from investing activities
Purchase of marketable securities	(168,489)
Purchase of intangible assets	(1,220)	(1,137)
Purchase of property and equipment	(1,724)	(560)
Proceeds from sale of marketable securities available-for-sale	28,008
Proceeds from sale of property and equipment	9	1
Net cash used in investing activities	(143,416)	(1,696)
Cash flows from financing activities
Proceeds from issuance of common stock	122,906
Proceeds from issuance of common stock upon exercise of stock awards	543	8
Proceeds from issuance of common stock under the Employee Stock Purchase Plan	247	130
Common stock issuance cost	(7,702)
Payments on capital lease obligations		(7)
Net cash provided by financing activities	115,994	131
Net increase (decrease) in cash and cash equivalents	3,089	(17,052)
Cash and cash equivalents, beginning of period	54,649	77,975
Cash and cash equivalents, end of period	57,738	$ 60,923
Supplemental disclosures of non-cash investing activities
Net unrealized loss on marketable securities available for sale	$ 6

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2015
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	1. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited interim financial statements for Xencor, Inc. (the Company) have been prepared in accordance with U.S. generally a ccepted accounting principles ( GAAP) for interim financial information. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the management of the Company believes are necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of the results expected for the full fiscal year or for any subsequent interim period. The accompanying unaudited interim financial statements and related notes should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 23, 2015, as amended. Marketable Securities The Company has an investment policy that includes guidelines on acceptable investment securities, minimum credit quality, maturity parameters and concentration and diversification. The Company invests its excess cash primarily in marketable securities issued by investment grade institutions. The Company considers its marketable securities to be “available-for-sale”, as defined by authoritative guidance issued by the Financi al Accounting Standards Board ( FASB). These assets are carried at fair value and the unrealized gains and losses are included in accumulated other comprehensive income (loss). If a decline in the value of a marketable security in the Company’s investment portfolio is deemed to be other-than-temporary, the Company writes down the security to its current fair value and recognizes a loss as a charge against income. The Company reviews its portfolio of marketable securities, using both quantitative and qualitative factors, to determine if declines in fair value below cost are other-than-temporary. There have been no other material changes to the significant accounting policies previously disclosed in the Company’s 2014 Annual Report on Form 10-K, as amended. Sale of Additional Common Stock In March 2015, we completed the sale of 8,625,000 shares of common stock which included shares we issued pursuant to our underwriters’ exercise of their over-allotment option pursuant to a follow-on offering. We received net proceeds of $115.2 million, after underwriting discounts, commissions and estimated offering expenses. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which establishes principles for reporting revenue and cash flows arising from an entity’s contracts with customers. This new revenue recognition standard will replace most of the recognition guidance within the United States GAAP. In July 2015, the FASB announced that the new pronouncement will be effective for reporting periods beginning after December 15, 2017. The new pronouncement permits the use of either the retroactive or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its financial statements and related disclosures.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	9 Months Ended
	Sep. 30, 2015
Fair Value of Financial Instruments
Fair Value of Financial Instruments	2. Fair Value of Financial Instruments The fair values of the financial instruments included in the financial statements, which include cash equivalents, money markets, US government and corporate securities approximate their carrying values at September 30, 2015 due to their short term maturities. Our financial instruments also include accounts receivable, accounts payable and accrued expenses. Marketable securities and cash equivalents are carried at fair value. The Company accounts for recurring and non-recurring fair value measurements in accordance with FASB Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures (ASC 820). ASC 820 defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and requires expanded disclosure about fair value measurements. The ASC 820 hierarchy ranks the quality of reliable inputs, or assumptions, used in the determination of fair value and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories: Level 1— Fair Value is determined by using unadjusted quoted prices that are available in active markets for identical assets or liabilities. Level 2— Fair Value is determined by using inputs other than Level 1 quoted prices that are directly or indirectly observable. Inputs can include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active. Related inputs can also include those used in valuation or other pricing models, such as interest rates and yield curves that can be corroborated by observable market data. Level 3— Fair value is determined by inputs that are unobservable and not corroborated by market data. Use of these inputs involves significant and subjective judgments to be made by the reporting entity –e.g. determining an appropriate discount factor for illiquidity associated with a given security. The Company measures the fair value of financial assets using the highest level of inputs that are reasonably available as of the measurement date. The assets recorded at fair value are classified within the hierarchy as follows for the periods reported (in thousands): September 30, Total Fair Value Level 1 Level 2 Money Market Funds $ $ $ — Corporate Securities — Government Securities — $ $ $ Our policy is to record transfers of assets between Level 1 and Level 2 at their fair values as of the end of each reporting period, consistent with the date of the determination of fair value. During the three months and nine months ended September 30, 2015, there were no transfers between Level 1 and Level 2. The Company does not have any Level 3 assets or liabilities.

Net Loss Per Share

Net Loss Per Share	9 Months Ended
	Sep. 30, 2015
Net Loss Per Share
Net Loss Per Share	3. Net Loss Per Share We compute net loss per common share by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Potentially dilutive securities consisting of stock issuable under options and our 2013 Employee Stock Purchase Plan (ESPP) are not included in the diluted net loss per common share calculation where the inclusion of such shares would have had an antidilutive effect. Basic and diluted (loss) per common share is computed as follows (in thousands except share and per share data) Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in thousands, except per share data) Basic numerator: Net loss attributable to common stockholders $ $ $ $ Denominator: Weighted-average common shares outstanding used in computing basic and diluted net loss Basic net loss per common share $ $ $ $ The following shares of outstanding potentially dilutive securities have been excluded from the calculation of diluted net loss per common share as the effect of including such securities would have been antidilutive. Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in thousands) (in thousands) Employee stock purchase plan shares Options to purchase common stock In March 2015, the Company issued 8,625,000 shares of common stock in a follow-on stock offering. The issuance of these shares resulted in a significant increase in the Company’s weighted average shares outstanding for the three months and nine months ended September 30, 2015 when compared to the comparable prior year period and is expected to continue to impact the year-over-year comparability of the Company’s income (loss) per share calculations for the remainder of 2015.

Comprehensive loss

Comprehensive loss	9 Months Ended
	Sep. 30, 2015
Comprehensive Loss
Comprehensive Loss	4. Comprehensive loss Comprehensive loss is comprised of net loss and other comprehensive loss. For the three months and nine months ended September 30, 2015, the only component of other comprehensive loss is net unrealized gains and losses on marketable securities. There were no material reclassifications out of accumulated other comprehensive loss during the three months and nine months ended September 30, 2015.

Marketable Securities

Marketable Securities	9 Months Ended
	Sep. 30, 2015
Marketable Securities
Marketable Securities	5. Marketable Securities The Company’s marketable securities held as of September 30, 2015 are summarized below: Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value (in thousands) Money Market Funds $ $ — $ — $ Corporate Securities Government Securities $ $ $ $ Reported as Cash and cash equivalents $ Marketable securities Total investments $ The maturities of the Company’s marketable securities are as follows: Amortized Estimated Cost Fair Value (in thousands) Mature in one year or less $ $ Mature after one year through five years $ $

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 2015
Stock-Based Compensation
Stock-Based Compensation	6. Stock Based Compensation Our Board of Directors and the requisite stockholders previously approved the Amended and Restated 2000 Stock Incentive Plan (the 2000 Plan), and the 2010 Equity Incentive Plan (the 2010 Plan, and collectively with the 2000 Plan the Prior Plans). The 2000 Plan terminated August 2010 and no further awards may be issued under the plan. In October 2013, our Board of Directors approved the 2013 Equity Incentive plan (the 2013 Plan) and in November 2013 our stockholders approved the 2013 Plan. The 2013 Plan became effective as of December 3, 2013, the date of the Company’s Initial Public Offering ( IPO). As of December 2, 2013, we suspended the 2010 Plan and no additional awards may be granted under the 2010 Plan. Any shares of common stock covered by awards granted under the Prior Plans that terminate after December 2, 2013 by expiration, forfeiture, cancellation or other means without the issuance of such shares will be added to the 2013 Plan reserve. As of September 30, 2015 the total number of shares of common stock available for issuance under the 2013 Plan is 6,335,940 , which includes 2,684,456 of common stock that were available for issuance under the Prior Plans as of the effective date of the 2013 Plan. Unless otherwise determined by the Board, beginning January 1, 2014, and continuing until the expiration of the 2013 Plan, the total number of shares of common stock available for issuance under the 2013 Plan will automatically increase annually on January 1 of each year by 4% of the total number of issued and outstanding shares of common stock as of December 31 of the immediate preceding year. As of September 30, 2015 a total of 1,994,750 options had been issued under the 2013 Plan. In November 2013, our Board of Directors and stockholders approved the 2013 Employee Stock Purchase Plan (ESPP), which became effective as of December 5, 2013. As of September 30, 2015, a total of 581,286 shares of common stock have been reserved for issuance under the ESPP. Unless otherwise determined by our Board, beginning on January 1, 2014, and continuing until the expiration of the ESPP, the total number of shares of common stock available for issuance under the ESPP will automatically increase annually on January 1 by the lesser of (i) 1% of the total number of issued and outstanding shares of common stock as of December 31 of the immediately preceding year, or (ii) 621,814 shares of common stock. As of September 30, 2015, we have issued a total of 111,852 shares of common stock under the ESPP. Total employee, director and non-employee stock-based compensation expense recognized for the three months and nine months ended September 30, 2015 and 2014 are as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 General and administrative $ $ $ $ Research and development $ $ $ $ The following table summarizes option activity under our stock plans and related information: Weighted Weighted Average Average Number of Exercise Remaining Aggregate Shares subject Price Contractual Intrinsic to outstanding (Per Term Value options Share) (in years) (in thousands) Balances at December 31, 2014 $ Options granted $ Options forfeited $ Options exercised $ Balance at September 30, 2015 $ $ Exercisable $ $ We calculate the intrinsic value as the difference between the exercise price of the options and the closing price of common stock of $ 12.23 per share as of September 30, 2015. Weighted average fair value of options granted during the nine-month period ended September 30, 2015 and 2014 was $ 10.73 and $7. 11 per share, respectively. There were 1,019,021 options granted during the period ended September 30, 2014. We estimated the fair value of each stock option using the Black-Scholes option-pricing model based on the date of grant of such stock option with the following weighted average assumptions for the three months and nine months ended September 30, 2015 and 2014: Options Options Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Expected term (years) Expected volatility % % % % Risk-free interest rate % % % % Expected dividend yield — % — % — % — % ESPP ESPP Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Expected term (years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Expected volatility 70.6 - 82.9 % % 70.6 - 82.9 % % Risk-free interest rate .06% - .46 % .06% - .46 % .06% - .46 % .06% - .46 % Expected dividend yield — % — % — % — % At September 30, 2015, the Company had $ 11.3 million of total unrecognized compensation expense, net of estimated forfeitures, related to outstanding stock options and shares issued under our ESPP that will be recognized over the next 3.0 years.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2015
Commitments and Contingencies
Commitments and Contingencies	7. Commitments and Contingencies Operating Leases The Company leases office and laboratory space in Monrovia, CA. In January 2015, we entered into a new lease agreement for the property. The new lease replaces the previous lease and extends our lease term to June 2020 with an option to renew for an additional five years. The new lease is a non-cancelable operating lease. The Company also leases office space in San Diego, CA. In February 2015, we entered into an amended lease agreement for the San Diego property. The amended lease replaces the previous lease and provides for additional space in a building located in the same multi-building development. The amended lease expires in April 2018 and includes an option to renew for a period of one year . Future minimum payments under the non-cancelable operating leases consist of the following (in thousands): Operating Years ending December 31, Leases For the remainder of the fiscal year $ 2016 2017 2018 2019 Thereafter Net rent expense for the nine months ended September 30, 2015 and 2014 was $ 415,000 and $441,800 respectively. Contingencies From time to time, the Company may be subject to various litigation and related matters arising in the ordinary course of business. The Company does not believe it is currently subject to any material matters where there is at least a reasonable possibility that a material loss may be incurred. On March 3, 2015, a verified class action complaint, captioned DePinto v. John S. Stafford, et al., C.A. No. 10742, was filed in the Court of Chancery of the State of Delaware against certain of the Company’s current and former directors alleging cause of action for Breach of Fiduciary Duty and Invalidity of Director and Stockholder Consents. In general, the complaint alleged that the plaintiff and the class he seeks to represent were shareholders of the Company during the recapitalization and certain related transactions that the Company underwent in 2013 and that the defendants breached their fiduciary duties in the course of approving that series of transactions. It also challenged as invalid certain corporate acts taken in the 2013 time period. On June 10, 2015, the Company filed a Verified Petition for Relief under Del. C. Section 205 (the 205 Petition) related to the corporate acts challenged in the complaint. The defendants filed an answer to the class action complaint on June 22, 2015. On July 9, 2015, the Court consolidated the 205 Petition with the class action, joined the Company as a defendant and ordered it to file the claims in the 205 Petition as counter-claims in the class action, which the Company has done. On August 11, 2015, the Company filed a Motion for Leave to File an Amended Counter-Claim, along with the proposed Amended Counter-Claim and related documents. On October 5, the parties filed a Stipulation of Partial Settlement and related documents disclosing a settlement of the invalidity claims addressed in the complaint, the counter-claim and the proposed amended counter-claim including a request by plaintiff’s counsel for reimbursement of legal fees up to $950,000 . On October 7, 2015, Xencor filed the Amended Counter-Claim and related documents. A settlement hearing is scheduled for December 10, 2015. The Company intends to vigorously defend against the request to pay legal fees . Based on the nature of the claim, the Company believes that it is not possible to estimate a potential loss related to the claim ; accordingly, no amount for any loss has been accrued at September 30, 2015 .

Collaboration and Licensing Agr

Collaboration and Licensing Agreements	9 Months Ended
	Sep. 30, 2015
Collaboration and Licensing Agreements
Collaboration and Licensing Agreements	8. Collaboration and Licensing Agreements Following is a summary description of the arrangements that generated revenue in the nine months ended September 30, 2015 and 2014. Amgen, Inc. 2015 Agreement In September 2015, the Company entered into a resea rch and license agreement (the 2015 Agreement) with Amgen, Inc. ( Amgen) to develop and commercialize bispecific antibody product candidates using the Company’s proprietary XmAb® bispecific Fc technology. Under the 2015 Agreement, the Company granted an exclusive license to Amgen to develop and commercialize bispecific drug candidates from the Company’s preclinical program that bind the CD38 antigen and the cytotoxic T-c ell binding domain CD3, (the CD38 Program). The Company will also apply its bispecific technology to five previously identified Amgen provided targets (each a Discovery Program). The Company received a $45.0 million upfront payment from Amgen and is eligible to receive up to $1.7 billion in future development, regulatory and sales milestones in total for all six programs and is eligible to receive royalties on any global net sales of products. Following the Company’s transfer of the DNA sequences, constructs and preclinical data related to its CD38 Program to Amgen, Amgen will assume full responsibility for the further development and commercialization of product candidates under the CD38 Program. Assuming successful development and commercialization of a product, the Company could receive up to $355 million in milestones payments which include $55 million in development milestones, $70 million in regulatory milestones and, $230 million in sales milestones. If commercialized, the Company is eligible to receive from high single-digit up to low double-digit royalties on global net sales of approved products under the CD38 Program. Under the 2015 Agreement, for each of the five Discovery Programs the Company will apply its bispecific technology to antibody molecules provided by Amgen that bind Discovery Program Targets and return the bispecific product candidates to Amgen for further testing, development and commercialization. Amgen has the right to substitute up to three of the previously identified targets during the research term provided that Amgen has not initiated non-human primate studies with the Xencor provided bispecific candidate. The initial research term is three years from the date of the agreement but Amgen, at its option, may request an extension of one year if Xencor has not completed delivery of all five Discovery Program bispecific candidates to Amgen. Amgen will assume full responsibility for development and commercialization of product candidates under each of the Discovery Programs. Assuming successful development and commercialization of each Discovery Program compound, the Company could receive up to $260.5 million in milestones for each compound which include $35.5 million in development milestones, $55.0 million in regulatory milestones and $170.0 million in sales milestones. If commercialized, the Company is eligible to receive mid to high single-digit royalties on global net sales of approved products. The Company evaluated the 2015 Agreement with Amgen and determined that it is a revenue arrangement with multiple deliverables or performance obligations. The Company’s substantive performance obligations under the 2015 Agreement include delivery of the DNA sequences, constructs and preclinical data related to its CD38 Program and application of its bispecific technology to five Amgen provided targets and delivery of the five bispecific product candidates. The Company evaluated the 2015 Agreement with Amgen and determined that the CD38 Program and each of the five Discovery Programs represent separate units of accounting. The $45 million upfront payment represents the total initial consideration and was allocated to each of the deliverables using the relative selling price method. After identifying each of the deliverables included in the arrangement, the Company determined its best estimate of selling price for each of the deliverables. In order to determine the best estimate of selling price for the CD38 Program, the Company determined the value of the CD38 Program by calculating a risk-adjusted present value of the potential revenue from the future development and regulatory milestones under the 2015 Agreement. This amount represents the value that a third party would be willing to pay as an upfront fee to license the Company’s CD38 Program. The Company determined the value of each of the Discovery Programs by calculating a risk-adjusted net present value of the potential revenue from future development and regulatory milestones reduced by the estimated cost of the Company’s efforts to apply its bispecific technology to the Amgen targets and deliver the five bispecific product candidates. These amounts represent the value that a third party would be willing to pay as an upfront for access to the Company’s bispecific technology and capabilities. The total allocable consideration of $45 million was allocated to the deliverables based on the relative selling price method as follows: $13.75 million to the CD38 Program and, $6.25 million to each of the five Discovery Programs The Company will recognize as collaboration revenue the amount of the total allocable consideration allocated to the CD38 Program upon delivery of the CD38 DNA sequences, constructs and preclinical data to Amgen. At the time that each bispecific Discovery Program is accepted by Amgen, the Company will recognize as collaboration revenue $6.25 million for each program. Since Amgen has substitution rights for up to three targets, revenue recognition may be delayed until the earlier that Amgen initiates non-human primate studies for a delivered bispecific Discovery Program or the right to substitute the target lapses. During the three and nine months ended September 30, 2015, we did not recognize any revenue under this arrangement. As of September 30, 2015 there was $45 million in deferred revenue related to the arrangement. 2010 Agreement In December 2010, we entered into a Collaboration and Option Agreement (the 2010 Agreement) with Amgen, pursuant to which we agreed to collaborate with Amgen on development of XmAb5871 in rheumatoid arthritis (RA) through completion of a Phase 2 proof-of-concept (POC) trial. After completion of the POC trial, we would deliver a data package to Amgen and they would have 90 days to review and decide whether to exercise an option to obtain worldwide rights to XmAb5871. Upon exercise of the option and payment of a $50 million option fee, Amgen would own all rights to the compound and be responsible for further development. We received a nonrefundable upfront payment of $11 million upon execution of the Collaboration Agreement and a $2 million milestone in January 2013 upon the initiation of a Phase 1b clinical trial. In October 2014, we entered into an agreement with Amgen to terminate the 2010 Agreement pursuant to which all worldwide rights to develop and commercialize XmAb5871 reverted back to us. Our obligations to continue development of XmAb5871 under the terms of the 2010 Agreement terminated effective as of the date of the termination agreement. As a result of and effective as of the date of the termination agreement, all of Amgen’s rights to XmAb5871 terminated including the right to exercise an exclusive option to acquire the worldwide rights to XmAb5871. Amgen’s obligations to make any further payments to us are also terminated. In connection with the termination, we granted Amgen a right of first negotiation (ROFN) to obtain an exclusive license to develop and commercialize any XmAb5871 product. As a result of the termination, we recognized the remaining balance in deferred revenue as revenue in the period of the termination, October 2014. There is no remaining revenue or obligations to be reported under this agreement. There were no revenues recognized during the three and nine months ended September 30, 2015. During the three and nine months ended September 30, 2014 we recognized $0.6 million and $1.7 million of revenue under this arrangement, respectively. As of September 30, 2015, there is no remaining deferred revenue under this agreement. Merck Sharp & Dohme Corporation In July 2013, we entered into a License Agreement with Merck Sharp & Dohme Corp (Merck). Under the terms of the agreement, we provided Merck with a non-exclusive commercial license to certain patent rights to our Fc domains to apply to one of their compounds. We also provided Merck with contingent options to take additional non-exclusive commercial licenses. The contingent options provide Merck an opportunity to take non-exclusive commercial licenses at an amount less than the amount paid for the original license. The agreement provided for an upfront payment of $1.0 million and annual maintenance fees totaling $0.5 million. We are also eligible to receive future milestones and royalties as Merck advances the compound into clinical development. We determined that the deliverables under this agreement were the non-exclusive commercial license and the options. The options are considered substantive and contingent and no amount of the upfront payment was allocated to these options. We also determined that the future milestones and related payments were substantive and contingent and did not allocate any of the upfront payment to the milestones. In the first quarter of 2014, Merck initiated a Phase 1 clinical trial which triggered a $0.5 million milestone payment to us. During the three and nine months ended September 30, 2015 we recognized $25,000 and $75,000 of revenue respectively. During the three and nine months ended September 30, 2014 we recognized $25,000 and $ 0.5 million of revenue respectively. As of September 30, 2015, there is $75,000 of deferred revenue related to this arrangement. Alexion Pharmaceuticals, Inc. In January 2013, we entered into an option and license agreement with Alexion Pharmaceuticals, Inc. (Alexion). Under the terms of the 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 against six different target programs during a five -year research term under the agreement, up to completion of the first multi-dose human clinical trial for each target compound. Alexion may extend the research term for an additional three years upon written notice to us and payment of an extension fee of $2.0 million. Alexion is responsible for conducting all research and development activities under the agreement at its own expense. In addition, we granted to Alexion an exclusive option, on a target-by-target basis, to obtain an exclusive commercial, worldwide, royalty-bearing license, with sublicensing rights, under our Xtend technology to develop and commercialize products that contain the target for which the option is exercised. In order to exercise this option, Alexion must pay a $4.0 million option fee with respect to each target for which the option is exercised. Alexion may exercise this option at any time during the research term. An option must be exercised for any compound that is advanced into development after the first multi-ascending dose trial is initiated. Under the agreement, we received an upfront payment of $3.0 million. Alexion is also required to pay an annual maintenance fee of $0.5 million during the research term of the agreement and $1.0 million during any extension of the research term. We determined that $2.5 million of the upfront fee was allocated to the license and is being recognized into income over the initial research term of five years. In the third quarter of 2014, Alexion initiated a Phase 1 clinical trial with an undisclosed molecule to be used against an undisclosed target. It is the first human clinical trial with a molecule incorporating our Xtend Fc Domain technology. We received a milestone related to this trial in March 2015 upon issuance of certain patents related to our Xtend technology. During the three and nine months ended September 30, 2015 we recognized $0.3 million and $1.3 million of revenue respectively. During the three and nine months ended September 30, 2014 we recognized $ 0.2 million and $ 0.8 million of revenue respectively. As of September 30, 2015, we have deferred revenue related to this arrangement of $ 1.3 million. CSL Limited 2009 Agreement In February 2009, we entered into a Research License and Commercialization Agreement (the 2009 Agreement) with CSL Limited (CSL). Under the agreement, we provided CSL with a research license to our Fc Cytotoxic technolog y and up to five commercial options. The upfront payment of $0.75 million received at inception and the annual research license renewal payments are being recognized as revenue ratably over the five -year term of the research license. In May 2013, we entered into an amendment to the 2009 Agreement with CSL, which eliminated a contingent milestone payment requirement and reduced the royalty rate on net sales for the licensed product CSL362. The amendment provided for a payment upon signing of $2.5 million. We determined that the amendment was a material modification to the original agreement and evaluated the remaining deliverables at the date of the amendment. We determined that the remaining deliverables were the research license which expired in February 2014 and four additional options to take commercial licenses through the term of the research period. The amendment proceeds were recognized into income over the remaining period of the research term. In 2013 CSL sublicensed CSL362 (now called JNJ-5602 2473) to Janssen Biotech Inc. ( Janssen Biotech). In August 2015, CSL, through its sublicensee, Janssen Biotech, initiated a Phase 2 clinical trial for CSL362. As a result of the Phase 2 clinical trial initiation, we received a milestone payment of $2.5 million . During the three and nine months ended September 30, 2015, w e recognized $2.5 million of revenue under the arrangement. During the three and nine months ended September 30, 2014, we recognized zero and $ 0.7 million of revenue respectively. As of September 30, 2015, we have no deferred revenue related to this arrangement. 2013 Agreement In March 2013, we entered into a license agreement (the 2013 Agreement) with CSL. Under the terms of the agreement, we provided CSL with a non-exclusive commercial license to apply our technology to one of their compounds. The agreement provided for an upfront payment of $0.5 million and we were eligible to receive future milestones as CSL advanced the compound into clinical development. In March 2015, CSL notified us that they were terminating the 2013 Agreement. We have no remaining obligations under the agreement. We did not recognize any revenue under this agreement for the three and nine months ended September 30, 2015 and did not recognize any revenue for the three and nine months ended September 30, 2014. As of September 30, 2015 there is no remaining deferred revenue under the 2013 Agreement. Novo Nordisk A/S In December 2014, we entered into a c ollaboration and l icense a greement with Novo Nordisk A/S (Novo). Under the terms of the agreement we granted Novo a research license to use certain Xencor technologies including our bispecific, Immune Inhibitor, Xtend and other technologies during a two -year research term. We will provide research support for four FTE’s in collaboration with Novo to apply our technologies to Novo provided targets to identify compounds with improved properties. Novo has an option to extend the research term for another twelve months upon written notice to us and payment of another year of research funding. At the end of the research term, Novo will have a commercial license to develop and commercialize any new targets identified during the research term. The agreement provided for an upfront payment of $2.5 million and research funding of $1.6 million per year over the research term. We are also eligible to receive $2.0 million in milestone payments upon the successful completion of certain projects during the research term. In addition, if Novo identifies a compound from the collaboration to advance into clinical development, we are eligible to receive future development, regulatory and commercial milestone payments and royalties. We determined that the deliverables under the arrangement were the research license to our technologies and the research support. We believe that the research support and the technologies are integral to each other and are not separate units of accounting. The commercial license did not have standalone value at inception of the agreement due to the uncertainty of identifying a commercial target. We are recognizing the $2.5 million upfront payment as income over the two year research term. The research funding is being recognized into income over the period that the services are being provided. During the three and nine months ended September 30, 2015, we recognized $0.7 million and $2.1 million of revenue respectively. As of September 30, 2015, we have $1.9 million in deferred revenue related to this arrangement.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2015
Income Taxes
Income Taxes	9. Income Taxes No provision for U.S. income taxes has been made, net of the valuation allowance, with the exception of the minimum statutory amounts, because the Company has incurred losses since its inception. The Company has deferred tax assets consisting primarily of net operating loss and tax credit carryforwards that have been fully offset by a valuation allowance.

Summary of Significant Accoun16

Summary of Significant Accounting Policies (Polices)	9 Months Ended
	Sep. 30, 2015
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying unaudited interim financial statements for Xencor, Inc. (the Company) have been prepared in accordance with U.S. generally a ccepted accounting principles ( GAAP) for interim financial information. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the management of the Company believes are necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of the results expected for the full fiscal year or for any subsequent interim period. The accompanying unaudited interim financial statements and related notes should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 23, 2015, as amended.
Marketable Securities	Marketable Securities The Company has an investment policy that includes guidelines on acceptable investment securities, minimum credit quality, maturity parameters and concentration and diversification. The Company invests its excess cash primarily in marketable securities issued by investment grade institutions. The Company considers its marketable securities to be “available-for-sale”, as defined by authoritative guidance issued by the Financi al Accounting Standards Board ( FASB). These assets are carried at fair value and the unrealized gains and losses are included in accumulated other comprehensive income (loss). If a decline in the value of a marketable security in the Company’s investment portfolio is deemed to be other-than-temporary, the Company writes down the security to its current fair value and recognizes a loss as a charge against income. The Company reviews its portfolio of marketable securities, using both quantitative and qualitative factors, to determine if declines in fair value below cost are other-than-temporary. There have been no other material changes to the significant accounting policies previously disclosed in the Company’s 2014 Annual Report on Form 10-K, as amended.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which establishes principles for reporting revenue and cash flows arising from an entity’s contracts with customers. This new revenue recognition standard will replace most of the recognition guidance within the United States GAAP. In July 2015, the FASB announced that the new pronouncement will be effective for reporting periods beginning after December 15, 2017. The new pronouncement permits the use of either the retroactive or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its financial statements and related disclosures.

Fair Value of Financial Instr17

Fair Value of Financial Instruments (Tables)	9 Months Ended
	Sep. 30, 2015
Fair Value of Financial Instruments
Schedule of assets recorded at fair value	The assets recorded at fair value are classified within the hierarchy as follows for the periods reported (in thousands): September 30, Total Fair Value Level 1 Level 2 Money Market Funds $ $ $ — Corporate Securities — Government Securities — $ $ $

Net Loss Per Share (Tables)

Net Loss Per Share (Tables)	9 Months Ended
	Sep. 30, 2015
Net Loss Per Share
Schedule of basic and diluted net loss per common share	Basic and diluted (loss) per common share is computed as follows (in thousands except share and per share data) Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in thousands, except per share data) Basic numerator: Net loss attributable to common stockholders $ $ $ $ Denominator: Weighted-average common shares outstanding used in computing basic and diluted net loss Basic net loss per common share $ $ $ $
Schedule of potentially dilutive securites	Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in thousands) (in thousands) Employee stock purchase plan shares Options to purchase common stock

Marketable Securities (Tables)

Marketable Securities (Tables)	9 Months Ended
	Sep. 30, 2015
Marketable Securities
Schedule of marketable securities	Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value (in thousands) Money Market Funds $ $ — $ — $ Corporate Securities Government Securities $ $ $ $ Reported as Cash and cash equivalents $ Marketable securities Total investments $
Schedule of maturities of marketable securities	Amortized Estimated Cost Fair Value (in thousands) Mature in one year or less $ $ Mature after one year through five years $ $

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2015
Stock-Based Compensation
Schedule of total employee, director and non-employee stock-based compensation expense recognized	Total employee, director and non-employee stock-based compensation expense recognized for the three months and nine months ended September 30, 2015 and 2014 are as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 General and administrative $ $ $ $ Research and development $ $ $ $
Summary of stock option activity	Weighted Weighted Average Average Number of Exercise Remaining Aggregate Shares subject Price Contractual Intrinsic to outstanding (Per Term Value options Share) (in years) (in thousands) Balances at December 31, 2014 $ Options granted $ Options forfeited $ Options exercised $ Balance at September 30, 2015 $ $ Exercisable $ $
Schedule of weighted average assumptions used for estimation of fair value of stock options	Options Options Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Expected term (years) Expected volatility % % % % Risk-free interest rate % % % % Expected dividend yield — % — % — % — %
Schedule of weighted average assumptions used for estimation of fair value of ESPP	ESPP ESPP Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Expected term (years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Expected volatility 70.6 - 82.9 % % 70.6 - 82.9 % % Risk-free interest rate .06% - .46 % .06% - .46 % .06% - .46 % .06% - .46 % Expected dividend yield — % — % — % — %

Commitments and Contingencies (

Commitments and Contingencies (Tables)	9 Months Ended
	Sep. 30, 2015
Commitments and Contingencies
Schedule of future minimum payments under the non-cancelable operating and capital leases	Future minimum payments under the non-cancelable operating leases consist of the following (in thousands): Operating Years ending December 31, Leases For the remainder of the fiscal year $ 2016 2017 2018 2019 Thereafter

Summary of Significant Accoun22

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2015	Sep. 30, 2015
Proceeds from sale of common stock		$ 115,204
Common Stock
Sale of common stock	8,625,000	8,625,000
Proceeds from sale of common stock		$ 86

Fair Value of Financial Instr23

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Fair Value of Financial Instruments
Money Market Funds	$ 57,738	$ 54,649	$ 60,923	$ 77,975
Total Fair Value	149,742
Money Market Funds
Fair Value of Financial Instruments
Money Market Funds	9,904
Corporate Securities
Fair Value of Financial Instruments
Securities	88,651
Government Securities
Fair Value of Financial Instruments
Securities	51,187
Level 1
Fair Value of Financial Instruments
Total Fair Value	9,904
Level 1 | Money Market Funds
Fair Value of Financial Instruments
Money Market Funds	9,904
Level 2
Fair Value of Financial Instruments
Total Fair Value	139,838
Level 2 | Corporate Securities
Fair Value of Financial Instruments
Securities	88,651
Level 2 | Government Securities
Fair Value of Financial Instruments
Securities	$ 51,187

Net Loss Per Share (Details)

Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Basic and diluted numerator:
Net loss attributable to common stockholders	$ (10,037)	$ (6,278)	$ (25,349)	$ (15,073)
Denominator:
Weighted-average common shares outstanding used in computing basic and diluted net loss (in shares)	40,473,520	31,395,626	38,514,179	31,376,502
Basic and diluted net loss per common share (in dollars per share)	$ (0.25)	$ (0.20)	$ (0.66)	$ (0.48)

Net Loss Per Share (Details 2)

Net Loss Per Share (Details 2) - shares	3 Months Ended			9 Months Ended
	Sep. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net Loss Per Share
Anti-dilutive securities (in shares)	3,409,000		1,395,000	3,409,000	1,395,000
Employee stock options
Net Loss Per Share
Anti-dilutive securities (in shares)	3,378,000		1,361,000	3,378,000	1,361,000
Employee Stock Purchase Plan
Net Loss Per Share
Anti-dilutive securities (in shares)	31,000		34,000	31,000	34,000
Common Stock
Net Loss Per Share
Sale of common stock		8,625,000		8,625,000

Marketable Securities (Details)

Marketable Securities (Details) $ in Thousands	Sep. 30, 2015USD ($)
Schedule of Available-for-sale Securities
Amortized cost	$ 149,748
Gross unrealized gains	75
Gross unrealized losses	(81)
Fair value	149,742
Marketable securities
Schedule of Available-for-sale Securities
Fair value	139,838
Money Market Funds
Schedule of Available-for-sale Securities
Amortized cost	9,904
Fair value	9,904
Corporate Securities
Schedule of Available-for-sale Securities
Amortized cost	88,668
Gross unrealized gains	55
Gross unrealized losses	(72)
Fair value	88,651
Government Securities
Schedule of Available-for-sale Securities
Amortized cost	51,176
Gross unrealized gains	20
Gross unrealized losses	(9)
Fair value	51,187
Cash and Cash Equivalents
Schedule of Available-for-sale Securities
Fair value	$ 9,904

Marketable Securities (Details

Marketable Securities (Details 2) $ in Thousands	Sep. 30, 2015USD ($)
Amortized Cost
Maturing in one year or less	$ 70,208
Maturing after one year through five years	69,636
Total amortized cost	139,844
Estimate Fair Value
Maturing in one year or less	70,206
Maturing after one year through five years	69,632
Total estimated fair value	$ 139,838

Stock Based Compensation (Detai

Stock Based Compensation (Details) - shares	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014	Dec. 02, 2013	Aug. 31, 2010
Stock-based compensation
Common Stock, shares issued	40,477,003	31,434,272
Employee Stock Purchase Plan
Stock-based compensation
Total number of shares of common stock available for issuance	581,286
Annual percentage increase in shares of common stock available for issuance	1.00%
Common Stock, shares issued	111,852
Annual increase in shares of common stock available for issuance (in shares)	621,814
The 2013 Plan
Stock-based compensation
Total number of shares of common stock available for issuance	6,335,940
Annual percentage increase in shares of common stock available for issuance	4.00%
Awards issued under the plan (in shares)	1,994,750
Prior Plans
Stock-based compensation
Total number of shares of common stock available for issuance	2,684,456			0
The 2010 Plan
Stock-based compensation
Total number of shares of common stock available for issuance			0

Stock-Based Compensation (Detai

Stock-Based Compensation (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	$ 1,086	$ 491	$ 3,386	$ 1,110
General and administrative
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	593	276	1,628	575
Research and development
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	$ 493	$ 215	$ 1,758	$ 535

Stock-Based Compensation (Det30

Stock-Based Compensation (Details 3) - Employee stock options - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Number of Shares subject to outstanding options
Balance at the beginning of the period (in shares)	2,826,794
Options granted (in shares)	930,250	1,019,021
Options forfeited (in shares)	(9,375)
Options exercised (in shares)	(369,743)
Balance at the end of the period (in shares)	3,377,926
Weighted Average Exercise Price (Per Share)
Balance at the beginning of the period (in dollars per share)	$ 5.12
Options granted (in dollars per share)	15.96
Options forfeited (in dollars per share)	18.75
Options exercised (in dollars per share)	1.47
Balance at the end of the period (in dollars per share)	$ 8.47
Exercisable (in shares)	1,515,353
Exercisable (in dollars per share)	$ 3.69
Weighted-Average Remaining Contractual Term, Balance outstanding	7 years 2 months 16 days
Weighted-Average Remaining Contractual Term, Exercisable	5 years 1 month 24 days
Aggregate Intrinsic Value, Balance outstanding	$ 16,173
Aggregate Intrinsic Value, Exercisable	$ 12,965
Closing price of common stock (in dollars per share)	$ 12.23
Weighted average fair value of options granted (in dollars per share)	$ 10.73	$ 7.11

Stock Based Compensation (Det31

Stock Based Compensation (Details 4) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Employee stock options
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	6 years 4 months 24 days	6 years	6 years 1 month 6 days	6 years
Expected volatility (as a percent)	86.50%	77.40%	76.60%	77.40%
Risk-free interest rate (as a percent)	1.95%	2.02%	1.62%	2.02%
Total unrecognized compensation expense, net of estimated forfeitures	$ 11.3		$ 11.3
Period to recognize total unrecognized compensation expense			3 years
Employee Stock Purchase Plan
Weighted average assumptions for estimated fair value of employee stock options
Expected volatility (as a percent)		70.60%		70.60%
Employee Stock Purchase Plan | Minimum
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	6 months	6 months	6 months	6 months
Expected volatility (as a percent)	70.60%		70.60%
Risk-free interest rate (as a percent)	0.06%	0.06%	0.06%	0.06%
Employee Stock Purchase Plan | Maximum
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	2 years	2 years	2 years	2 years
Expected volatility (as a percent)	82.90%		82.90%
Risk-free interest rate (as a percent)	0.46%	0.46%	0.46%	0.46%

Commitments and Contingencies32

Commitments and Contingencies (Details) - USD ($)	1 Months Ended		9 Months Ended
	Feb. 28, 2015	Jan. 31, 2015	Sep. 30, 2015	Sep. 30, 2014
Operating Leases
For the remainder of the fiscal year			$ 165,000
2,016			679,000
2,017			699,000
2,018			602,000
2,019			581,000
Thereafter			299,000
Net rent expense			$ 415,000	$ 441,800
Office Space
Renewal term	1 year	5 years

Commitments and Contingencies33

Commitments and Contingencies (Details 2) - USD ($)	Oct. 05, 2015	Sep. 30, 2015
Loss Contingencies [Line Items]
Loss contingency accrual		$ 0
Maximum | Forecast
Loss Contingencies [Line Items]
Legal fees to be reimbursed	$ 950,000

Collaboration and Licensing A34

Collaboration and Licensing Agreements (Details)	1 Months Ended						3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2015USD ($)item	Jul. 31, 2013USD ($)item	May. 31, 2013USD ($)item	Mar. 31, 2013USD ($)item	Jan. 31, 2013USD ($)item	Feb. 28, 2009USD ($)item	Sep. 30, 2015USD ($)item	Sep. 30, 2014USD ($)	Mar. 31, 2014USD ($)	Sep. 30, 2015USD ($)item	Sep. 30, 2014USD ($)	Dec. 31, 2014USD ($)employee	Dec. 31, 2010USD ($)
Collaboration research and licensing agreements
Revenue recognized							$ 3,503,000	$ 848,000		$ 6,008,000	$ 3,856,000
Current portion of deferred revenue	$ 47,652,000						47,652,000			47,652,000		$ 2,254,000
Collaboration and Option Agreement | Amgen, Inc.
Collaboration research and licensing agreements
Option term after delivery of the data from a Phase 2 proof-of-concept (POC) clinical trial													90 days
Nonrefundable upfront payment													$ 11,000,000
Milestone payment received					$ 2,000,000
Revenue recognized								600,000		0	1,700,000
Deferred revenue	0						0			0
Option fee													$ 50,000,000
License Agreement | Merck Sharp & Dohme Corp.
Collaboration research and licensing agreements
Nonrefundable upfront payment		$ 1,000,000
Annual maintenance fees		$ 500,000
Milestone payment received									$ 500,000
Revenue recognized							25,000	25,000		75,000	500,000
Deferred revenue	75,000						75,000			75,000
Number of compounds | item		1
Portion of nonrefundable upfront payment allocated to option		$ 0
License Agreement | Alexion Pharmaceuticals, Inc.
Collaboration research and licensing agreements
Revenue recognized										2,500,000
Option and license agreement | Alexion Pharmaceuticals, Inc.
Collaboration research and licensing agreements
Nonrefundable upfront payment					3,000,000
Annual maintenance fees					$ 500,000
Revenue recognized							300,000	200,000		1,300,000	800,000
Deferred revenue	1,300,000						1,300,000			1,300,000
Number of different target programs | item					6
Research license term					5 years
Additional research term					3 years
Extension fee					$ 2,000,000
Annual maintenance fees payable during any extension of research term					1,000,000
Option fee					$ 4,000,000
Research term of revenue recognized					5 years
2009 Research License and Commercialization Agreement | CSL Limited
Collaboration research and licensing agreements
Nonrefundable upfront payment						$ 750,000
Research license term						5 years
2009 Research License and Commercialization Agreement | CSL Limited | Maximum
Collaboration research and licensing agreements
Number of commercial options | item						5
May 2013 Research License and Commercialization Agreement | CSL Limited
Collaboration research and licensing agreements
Nonrefundable upfront payment			$ 2,500,000
Milestone payment received										2,500,000
Revenue recognized								0			700,000
Deferred revenue	0						0			0
Number of commercial options | item			4
March 2013 License Agreement | CSL Limited
Collaboration research and licensing agreements
Nonrefundable upfront payment				$ 500,000
Revenue recognized							0	$ 0		0	$ 0
Deferred revenue	0						0			0
Number of compounds | item				1
Collaboration And License Agreement | Novo Nordisk
Collaboration research and licensing agreements
Nonrefundable upfront payment												2,500,000
Potential milestone payment												$ 2,000,000
Revenue recognized							700,000			2,100,000
Deferred revenue	1,900,000						1,900,000			$ 1,900,000
Research license term												2 years
Additional research term												12 months
Research funding												$ 1,600,000
Number of full time employees that will be given research support | employee												4
Research term of revenue recognized										2 years
Research and License Agreement 2015 | Amgen, Inc.
Collaboration research and licensing agreements
Nonrefundable upfront payment	45,000,000
Potential milestone payment	1,700,000,000
Revenue recognized							0			$ 0
Deferred revenue	$ 45,000,000						$ 45,000,000			$ 45,000,000
Number of different target programs | item	6
Number of previously indentified products | item	3						3			3
Research and License Agreement 2015 | Amgen, Inc. | CD38 Program
Collaboration research and licensing agreements
Nonrefundable upfront payment										$ 13,750,000
Potential milestone payment										355,000,000
Research and License Agreement 2015 | Amgen, Inc. | Discovery Program
Collaboration research and licensing agreements
Nonrefundable upfront payment										6,250,000
Potential milestone payment										$ 260,500,000
Research license term										3 years
Additional research term										1 year
Previous targets which bispecific technology will be applied | item	5						5			5
Development-based | Research and License Agreement 2015 | Amgen, Inc. | CD38 Program
Collaboration research and licensing agreements
Potential milestone payment										$ 55,000,000
Development-based | Research and License Agreement 2015 | Amgen, Inc. | Discovery Program
Collaboration research and licensing agreements
Potential milestone payment										35,500,000
Regulatory-based | Research and License Agreement 2015 | Amgen, Inc. | CD38 Program
Collaboration research and licensing agreements
Potential milestone payment										70,000,000
Regulatory-based | Research and License Agreement 2015 | Amgen, Inc. | Discovery Program
Collaboration research and licensing agreements
Potential milestone payment										55,000,000
Sales-based | Research and License Agreement 2015 | Amgen, Inc. | CD38 Program
Collaboration research and licensing agreements
Potential milestone payment										230,000,000
Sales-based | Research and License Agreement 2015 | Amgen, Inc. | Discovery Program
Collaboration research and licensing agreements
Potential milestone payment										$ 170,000,000

Income Taxes (Details)

Income Taxes (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Federal
Provision for income tax net of valuation allowance	$ 0