Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 28, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Xencor Inc | |
Entity Central Index Key | 1,326,732 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
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 | 40,949,637 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 7,877 | $ 12,590 |
Marketable securities | 83,228 | 83,840 |
Accounts receivable | 150,354 | 44 |
Prepaid expenses and other current assets | 2,192 | 1,201 |
Total current assets | 243,651 | 97,675 |
Property and equipment, net | 2,508 | 2,310 |
Patents, licenses, and other intangible assets, net | 10,353 | 9,971 |
Marketable securities - long term | 77,666 | 96,891 |
Other assets | 103 | 63 |
Total assets | 334,281 | 206,910 |
Current liabilities | ||
Accounts payable | 7,694 | 6,400 |
Accrued expenses | 3,278 | 3,634 |
Current portion of deferred rent | 137 | 108 |
Current portion of deferred revenue | 103,063 | 33,287 |
Income taxes | 1,781 | |
Total current liabilities | 115,953 | 43,429 |
Deferred rent, less current portion | 424 | 507 |
Deferred revenue, less current portion | 9,307 | 542 |
Total liabilities | 125,684 | 44,478 |
Commitments and contingencies | ||
Stockholders' equity | ||
Common stock, $0.01 par value: 200,000,000 authorized shares at June 30, 2016 and December 31, 2015; 40,944,080 issued and outstanding at June 30, 2016 and 40,551,039 issued and outstanding at December 31, 2015 | 409 | 405 |
Additional paid-in capital | 428,790 | 424,128 |
Accumulated other comprehensive income (loss) | 216 | (516) |
Accumulated deficit | (220,818) | (261,585) |
Total stockholders' equity | 208,597 | 162,432 |
Total liabilities and stockholders' equity | $ 334,281 | $ 206,910 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
Condensed Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
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 | 40,944,080 | 40,551,039 |
Common Stock, shares outstanding | 40,944,080 | 40,551,039 |
Statements of Comprehensive Inc
Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenue | ||||
Collaborations, licenses and milestones | $ 66,007 | $ 1,014 | $ 73,259 | $ 2,505 |
Operating expenses | ||||
Research and development | 14,408 | 7,476 | 24,443 | 12,681 |
General and administrative | 3,043 | 2,524 | 6,993 | 5,288 |
Total operating expenses | 17,451 | 10,000 | 31,436 | 17,969 |
Income (loss) from operations | 48,556 | (8,986) | 41,823 | (15,464) |
Other income (expenses) | ||||
Interest income | 368 | 290 | 726 | 391 |
Interest expense | (10) | (4) | (37) | (8) |
Other income | (168) | 4 | (231) | |
Total other income, net | 358 | 118 | 693 | 152 |
Income (loss) before income tax | 48,914 | (8,868) | 42,516 | (15,312) |
Provision for income tax | 1,749 | 1,749 | ||
Net income (loss) | 47,165 | (8,868) | 40,767 | (15,312) |
Other comprehensive income (loss), net of tax | ||||
Net unrealized gain (loss) on marketable securities | 113 | (55) | 732 | (90) |
Comprehensive income (loss) | $ 47,278 | $ (8,923) | $ 41,499 | $ (15,402) |
Net income (loss) per share attributable to common shareholders: | ||||
Basic (in dollars per share) | $ 1.16 | $ (0.22) | $ 1 | $ (0.41) |
Diluted (in dollars per share) | $ 1.13 | $ (0.22) | $ 0.98 | $ (0.41) |
Weighted average shares used to compute net income (loss) per share attributable to common stockholders: | ||||
Basic (in shares) | 40,800,586 | 40,389,648 | 40,703,688 | 37,518,271 |
Diluted (in shares) | 41,738,460 | 40,389,648 | 41,701,262 | 37,518,271 |
Statement of Stockholders_ Equi
Statement of Stockholders’ Equity - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total |
Balance at Dec. 31, 2015 | $ 405 | $ 424,128 | $ (516) | $ (261,585) | $ 162,432 |
Balance (in shares) at Dec. 31, 2015 | 40,551,039 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise and vesting of stock awards | $ 4 | 443 | 447 | ||
Issuance of common stock upon exercise and vesting of stock awards (in shares) | 374,275 | ||||
Issuance of common stock under the employee stock purchase plan | 226 | 226 | |||
Issuance of common stock under the employee stock purchase plan (in shares) | 18,766 | ||||
Comprehensive income | 732 | 40,767 | 41,499 | ||
Stock-based compensation expense | 3,993 | 3,993 | |||
Balance at Jun. 30, 2016 | $ 409 | $ 428,790 | $ 216 | $ (220,818) | $ 208,597 |
Balance (in shares) at Jun. 30, 2016 | 40,944,080 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities | ||
Net income (loss) | $ 40,767 | $ (15,312) |
Adjustments to reconcile net income (loss) to net cash used in operating activities | ||
Depreciation and amortization | 628 | 494 |
Amortization of premium on marketable securities | 876 | 240 |
Stock-based compensation | 3,993 | 2,300 |
Abandonment of capitalized intangible assets | 45 | 54 |
Gain on disposal of assets | (9) | |
Gain on sale of marketable securities | (3) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (150,310) | 2,513 |
Interest receivable | 160 | (670) |
Prepaid expenses and other assets | (1,031) | (538) |
Accounts payable | 1,294 | 1,387 |
Accrued expenses | (357) | 328 |
Income taxes | 1,781 | |
Deferred rent | (53) | 617 |
Deferred revenue | 78,541 | (413) |
Net cash used in operating activities | (23,669) | (9,009) |
Cash flows from investing activities | ||
Purchase of marketable securities | (7,123) | (148,328) |
Purchase of intangible assets | (761) | (915) |
Purchase of property and equipment | (493) | (1,115) |
Proceeds from sale and maturities marketable securities | 26,660 | |
Proceeds from sale of property and equipment | 9 | |
Net cash provided by (used in) investing activities | 18,283 | (150,349) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock | 122,906 | |
Proceeds from issuance of common stock upon exercise of stock awards | 447 | 429 |
Proceeds from issuance of common stock under the Employee Stock Purchase Plan | 226 | 247 |
Common stock issuance cost | (7,702) | |
Net cash provided by financing activities | 673 | 115,880 |
Net decrease in cash and cash equivalents | (4,713) | (43,478) |
Cash and cash equivalents, beginning of period | 12,590 | 12,590 |
Cash and cash equivalents, end of period | 7,877 | 11,171 |
Supplemental disclosures of non-cash investing activities | ||
Net unrealized gain (loss) on marketable securities, net of tax | $ 732 | $ (90) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
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 accepted 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. The preparation of interim financial statements requires the use of management’s estimates and assumptions that affect reported amounts of assets and liabilities at the date of the interim financial statements and the reported revenues and expenditures during the reported periods. 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 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 8, 2016. 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. These assets are carried at fair value and the unrealized gains and losses are included in accumulated other comprehensive income (loss). Accrued interest on marketable securities is included in marketable securities. 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. Recent Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which amends the current stock compensation guidance. The amendments simplify the accounting for the taxes related to stock based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified. The standard is effective for fiscal periods beginning after December 15, 2016, with early adoption permitted. In April 2016, the FASB issued ASU No. 2016-10 “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” which amends and clarifies the revenue recognition guidance on accounting for licenses of intellectual property (IP) and identifying performance obligations. The amendment clarifies how an entity should evaluate the nature of its promise in granting a license of IP which will determine whether it recognizes revenue over time or at a point in time and also clarifies when a promised good or service is separately identifiable, which is an important step in determining whether goods or services should be accounted for as separate performance obligations. The amendment has the same effective date as the new revenue recognition standard which is for fiscal periods after December 15, 2017. The Company is currently evaluating the impact of the adoption of the new accounting pronouncements on its financial statements and related disclosures. There have been no other material changes to the significant accounting policies previously disclosed in the Company’s 2015 Annual Report on Form 10-K . |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 2. Fair Value of Financial Instruments Financial instruments included in the financial statements include cash equivalents, marketable securities, trade accounts receivable, accounts payable and accrued expenses. Marketable securities and cash equivalents are carried at fair value. The fair value of the other financial instruments closely approximates their fair value due to their short maturities. 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): June 30, 2016 December 31, 2015 Total Total Fair Value Level 1 Level 2 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 and six months ended June 30, 2016, there were no transfers between Level 1 and Level 2. The Company does not have any Level 3 assets or liabilities. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 6 Months Ended |
Jun. 30, 2016 | |
Net Income (Loss) Per Share | |
Net Income (Loss) Per Share | 3. Net Income (Loss) Per Share We compute net income (loss) per common share by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period without consideration of common stock equivalents. Diluted income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common stock equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants. 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 income (loss) per common share is computed as follows (in thousands except share and per share data): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 (in thousands, except per share data) Numerator: Net income (loss) used for calculation of basic and diluted EPS $ $ $ $ Denominator: Weighted-average shares outstanding, basic Dilutive effect of stock options — — Weighted average shares outstanding, diluted Net income (loss) per share, basic $ $ $ $ Net income (loss) per share, diluted $ $ $ $ For the three and six months ended June 30, 2016 there were no shares from the Company’s employee stock purchase plan that had a dilutive effect on shares outstanding. For the three and six months ended June 30, 2015, all 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. |
Comprehensive income
Comprehensive income | 6 Months Ended |
Jun. 30, 2016 | |
Comprehensive Loss | |
Comprehensive income | 4. Comprehensive income (loss) Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss). For the three and six months ended June 30, 2016, the only component of other comprehensive income is net unrealized gains on marketable securities. For the three months and six months ended June 30, 2015, the only component of other comprehensive loss is net unrealized losses on marketable securities. There were no material reclassifications out of accumulated other comprehensive income (loss) during the three and six months ended June 30, 2016 and 2015. |
Marketable Securities
Marketable Securities | 6 Months Ended |
Jun. 30, 2016 | |
Marketable Securities | |
Marketable Securities | 5. Marketable Securities The Company’s marketable securities held as of June 30, 2016 and December 31, 2015 are summarized below: Gross Gross Amortized Unrealized Unrealized June 30, 2016 Cost Gains Losses Fair Value (in thousands) Money Market Funds $ $ — $ — $ Corporate Securities Government Securities $ $ $ $ Reported as Cash and cash equivalents $ Marketable securities Total investments $ Gross Gross Amortized Unrealized Unrealized December 31, 2015 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 June 30, 2016 Cost Fair Value (in thousands) Mature in one year or less $ $ Mature after one year through five years $ $ Amortized Estimated December 31, 2015 Cost Fair Value (in thousands) Mature in one year or less $ $ Mature after one year through five years $ $ |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Stock-Based Compensation | |
Stock-Based Compensation | 6. Stock Based Compensation Our Board of Directors and the requisite stockholders previously approved the 2010 Equity Incentive Plan (the 2010 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 2010 Plan 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 June 30, 2016 the total number of shares of common stock available for issuance under the 2013 Plan is 7,352,140 , which includes 2,684,456 of common stock that were available for issuance under the 2010 Plan 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. Pursuant to approval by our board on January 1, 2016, the total number of shares of common stock available for issuance under the 2013 Plan was increased by 1,400,000 shares. As of June 30, 2016 a total of 3,142,750 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. We have reserved a total of 581,286 shares of common stock 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. Pursuant to approval by our board, there was no increase in the number of authorized shares in the ESPP in 2016. As of June 30, 2016, we have issued a total of 195,129 shares of common stock under the ESPP. Total employee, director and non-employee stock-based compensation expense recognized for the three and six months ended June 30, 2016 are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 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, 2015 $ Options granted $ Options forfeited $ Options cancelled $ Options exercised $ Balance at June 30, 2016 $ $ Exercisable $ $ We calculate the intrinsic value as the difference between the exercise price of the options and the closing price of common stock of $ 18.99 per share as of June 30, 2016. Weighted average fair value of options granted during the six-month period ended June 30, 2016 and 2015 was $ 8.45 and $10.58 per share, respectively. There were 909,750 options granted during the period ended June 30, 2015. 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 and six months ended June 30, 2016 and 2015: Options Options Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Expected term (years) Expected volatility % % % % Risk-free interest rate % % % % Expected dividend yield — % — % — % — % ESPP ESPP Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Expected term (years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Expected volatility 67.8 - 79.6 % 70.6 - 82.9 % 67.8 - 79.6 % 70.6 - 82.9 % Risk-free interest rate .47% - .93 % .06% - .46 % .47% - .93 % .06% - .46 % Expected dividend yield — % — % — % — % As of June 30, 2016, the unamortized compensation expense related to unvested stock options was $16.8 million, net of estimated forfeitures. The remaining unamortized compensation expense will be recognized over the next three years. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | 7. Commitments and Contingencies Operating Leases The Company leases office and laboratory space in Monrovia, CA through June 2020 with an option to renew for an additional five years. The Company also leases office space in San Diego, CA through April 2018 and includes an option to renew for a period of one year . In March 2016, the Company signed a lease for additional space contiguous with its existing office space. The combined lease expires in June 2020. The leases are accounted for as non-cancellable operating leases and future minimum payments are as follows (in thousands): Years ending December 31, For the remainder of the fiscal year $ 2017 2018 2019 2020 Thereafter — Rent expense for the six months ended June 30, 2016 and 2015 was $298,000 and $272,000 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. On December 14, 2015, the Court entered an Order and Partial Final Judgment approving the settlement of the invalidity claims, validating each corporate act challenged in the complaint, dismissing with prejudice Count II of the complaint (the invalidity claims) and granting plaintiff’s counsel a fee award. We have paid the plaintiff’s legal award of $950,000 net of insurance proceeds of $187,500 which has been reflected as a charge in our 2015 operations. We continue to recognize legal costs as incurred and offset any insurance proceeds when approved and issued. Based on the nature of the remaining claim, the Company believes that it is not possible to estimate the likelihood of loss or a range of potential loss related to the claim; accordingly, no amount for any loss has been accrued at June 30, 2016. |
Collaboration and Licensing Agr
Collaboration and Licensing Agreements | 6 Months Ended |
Jun. 30, 2016 | |
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 six months ended June 30, 2016 and 2015. Novartis In June 2016, the Company entered into a Collaboration and License Agreement (the Agreement) with Novartis Institutes for BioMedical Research, Inc., or Novartis, to develop and commercialize bispecific and other Fc modulated antibody drug candidates using the Company’s proprietary XmAb® technologies and drug candidates. Pursuant to the Agreement: · The Company granted Novartis certain exclusive rights to research, develop and commercialize XmAb14045 and XmAb13676, two development stage products that incorporate the Company’s bispecific Fc technology, · The Company will apply its bispecific technology in up to four target pair antibodies identified by Novartis (each a Global Discovery Program) and, · The Company will provide Novartis with a non-exclusive license to certain of its Fc technologies to apply against up to ten targets identified by Novartis. The Company received a non-refundable upfront payment under the Agreement of $150 million in July 2016 and is eligible to receive up to $2.4 billion in future development, regulatory and sales milestones in total for all programs that could be developed under the Agreement. Under the Agreement, the Company granted Novartis a worldwide co-exclusive license with Xencor to research, develop and manufacture XmAb14045 and XmAb13676. The Company also granted Novartis an exclusive license to commercialize XmAb14045 and XmAb13676 in all worldwide territories outside the United States (U.S.). XmAb14045 is a clinical candidate that binds the CD123 antigen and the cytotoxic T-cell binding domain CD3 (the XmAb14045 Program) and targets acute myeloid leukemia (AML). XmAb13676 is a clinical candidate that binds the CD20 antigen and the cytotoxic T-cell binding domain CD3 (the XmAb13676 Program) and targets B-cell malignancies. Assuming successful development and commercialization of a product, the Company could receive up to $325 million in milestone payments for each of XmAb14045 and XmAb13676 . The total potential milestones for each product include $90 million in development milestones, $110 million in regulatory milestones and, $125 million in sales milestones. If commercialized, the Company is eligible to receive tiered low double-digit royalties on global net sales of approved products outside the US. The Company and Novartis will co-develop XmAb14045 and XmAb13676 worldwide and share development costs equally. The Company may elect to opt-out of the development of either program by providing notice to Novartis. If the Company elects to opt-out with respect to a program, Novartis will receive the Company’s U.S. rights to the program and the Company will receive low double-digit royalties on U.S. net sales in addition to the royalties on net sales outside the US. Pursuant to the Novartis Agreement, the Company will apply its bispecific technology to up to four target pair antibodies selected, available for exclusive license to Novartis and not subject to a Xencor internal program. The Company will apply its bispecific technology to generate bispecific antibody candidates from starting target pair antibodies provided by Novartis for each of the four Global Discovery Programs and return the bispecific product candidate to Novartis for further testing, development and commercialization. Novartis has the right to substitute up to four of the original selected target pair antibodies during the research term provided that Novartis has not filed and received acceptance for an Investigational New Drug Application (IND) with the Xencor provided bispecific candidate. The research term is five years from the date of the Agreement. Novartis will assume full responsibility for development and commercialization of each product candidate under each of the Global Discovery Programs. Assuming successful development and commercialization of each Global Discovery Program compound, the Company could receive up to $250.0 million in milestones for each Global Discovery Program which includes $50.0 million in development milestones, $100.0 million in regulatory milestones and $100.0 million in sales milestones. If commercialized, the Company is eligible to receive mid-single digit royalties on global net sales of approved products. Under the Novartis Agreement, the Company has the right to participate in the development and commercialization of one of the Global Discovery Programs prior to filing an IND for Global Discovery Program. If the Company elects to participate in development, it will assume responsibility for 25% of the worldwide development costs for the program and 50% of commercialization costs and will receive 50% of the US profits on net sales of the product. Under the Novartis Agreement, the Company is also granting Novartis a non-exclusive research license to use certain of the Company’s Fc technologies, specifically Cytotoxic, Xtend and Immune Inhibitor to research, develop, commercialize and manufacture antibodies against up to ten targets selected by Novartis, available for non-exclusive license and not subject to a Xencor internal program. Novartis will assume all research, development and commercialization costs for products that are developed from application of the Fc technologies. Assuming successful development and commercialization of a compound that incorporates an Fc technology, the Company could receive up to $75.0 million in milestones for each target which includes $15.0 million in development milestones, $30.0 million in regulatory milestones and $30 million in sales milestones. If commercialized, the Company is eligible to receive low single-digit royalties on global net sales of approved products. The Company evaluated the Agreement and determined that it is a revenue arrangement with multiple deliverables or performance obligations. The Company’s substantive performance obligations under the Agreement include: · delivery of an exclusive license to commercialize XmAb14045 in worldwide territories outside the U.S., with worldwide co-exclusive rights with Xencor to research, develop and manufacture XmAb14045 · delivery of an exclusive license to commercialize XmAb13676 in worldwide territories outside the U.S., with worldwide co-exclusive rights with Xencor to research, develop and manufacture XmAb13676 · application of its bispecific technology to four Novartis selected target pair antibodies and delivery of four bispecific product candidates and, · delivery of a non-exclusive license to its Fc technologies: Cytotoxic, Xtend and Immune Inhibitor The Company determined that the $150 million upfront payment represents the total initial consideration and was allocated to each of the deliverables using the relative selling price method. The Company determined that each of the development and regulatory milestones is substantive. Although sales milestones are not considered substantive, they are still recognized upon achievement of a milestone. After identifying each of the deliverables included in the arrangement, the Company determined the relative selling price using its best estimate of selling price for each of the deliverables. The estimated selling price for the licensing rights to the XmAb13676 Program are the Company’s best estimate of selling price and was determined based on market conditions, similar arrangements entered into by third parties including the Company’s understanding of pricing terms offered for comparable transactions that involve licensing bispecific antibody development candidates. The Company reviewed recent published market transactions that are comparable to the license of the XmAb13676 Program in the Novartis Agreement. The Company adjusted the value of the published market information to reflect differences in stage of development and rights and potential markets to determine the estimated selling price for the license rights to the XmAb13676 program. This amount represents the value that a third party would be willing to pay for certain rights to the XmAb13676 Program including the exclusive right to commercialize XmAb13676 in all territories outside the U.S. The Company determined the estimated selling price for the rights to the XmAb14045 Program using the income approach by calculating a risk-adjusted present value of the potential revenue that could be earned from the license reduced by the minimum development costs that the Company is obligated to fund under the Agreement. This amount represents the value that a third party would be willing to pay for certain rights to the XmAb14045 Program including the right to commercialize XmAb14045 in all territories outside the U.S. The Company’s estimated selling price for each Global Discovery Program is the Company’s best estimate. The best estimate for each Global Discovery Programs was determined using the income approach by calculating a risk-adjusted net present value of the potential revenue that could be earned from each Global Program license reduced by the estimated cost of the Company’s efforts to deliver the completed Global Program bispecific candidate to Novartis. 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 Company’s estimated selling price for the Fc licenses is its best estimate and was determined by considering market and entity-specific factors. The Company has previously licensed its Fc technologies on a limited basis to third parties. The Company considered the term of the Novartis license, scope of the rights granted for each license, the type of technologies subject to the license, and the potential number of targets that may be applied in establishing its best estimate for the Fc license. The total allocable consideration of $150 million was allocated to the deliverables based on the relative selling price method as follows: * $27.1 million to the XmAb14045 Program, * $31.4 million to the XmAb13676 Program, * $20.05 million to each of the five Global Discovery Programs and, * $11.3 million to the Fc licenses The Company recognized as license revenue the amount of the total allocable consideration allocated to the XmAb13676 and XmAb14045 Programs upon delivery of the exclusive license to Novartis both of which were transferred as of the effective date of the Agreement. At the time that each Global Discovery Program is accepted by Novartis, the Company will recognize as collaboration revenue of $20.05 million for each program. Since Novartis has substitution rights for up to four target pair antibodies, revenue recognition may be delayed until the earlier that Novartis has an open IND for a delivered bispecific Discovery Program or the right to substitute the target pair lapses. The Company will recognize as licensing revenue the amount of the total consideration allocated to the Fc license over the five year research term beginning from the effective date of the Agreement. During the three and six months ended June 30, 2016, we recognized $58.6 million of revenue under this arrangement. As of June 30, 2016 there is $91.4 million in deferred revenue related to the arrangement. Amgen, Inc. In September 2015, the Company entered into a research and license agreement (the Amgen Agreement) with Amgen, Inc. (Amgen) to develop and commercialize bispecific antibody product candidates using the Company’s proprietary XmAb® bispecific Fc technology. Under the Amgen 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-cell 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. In the fourth quarter ended December 31, 2015, the Company transferred the research material and 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. Pursuant to the Amgen 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. Subject to approval by Xencor, 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 Amgen 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 Amgen Agreement and determined that it is a revenue arrangement with multiple deliverables or performance obligations. The Company’s substantive performance obligations under the Amgen Agreement include delivery of research material and 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 Amgen Agreement 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 Amgen 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 recognized as collaboration revenue the amount of consideration allocated to the CD38 Programs upon delivery of the CD38 research material and data to Amgen in the fourth quarter of 2015. In the first quarter ended March 31, 2016, Amgen exercised its substitution rights with respect to one of the previously identified Discovery targets. In the first quarter ended March 31, 2016, the Company delivered bispecific product candidates for three Discovery Program targets to Amgen. In the second quarter ended June 30, 2016 the Company delivered an additional product candidate for a Discovery target. As of June 30, 2016, the Company has delivered four of the discovery programs with Amgen exercising its substitution rights to one . 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 six months ended June 30, 2016, we recognized $6.2 million and $12.5 million in revenue under this arrangement, respectively. As of June 30, 2016 there is $18.7 million in deferred revenue related to the arrangement. 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. During each of the three and six months ended June 30, 2016 and 2015 we recognized $25,000 and $50,000 of revenue respectively. As of June 30, 2016, there is $ 100,000 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 achieved a clinical development milestone with an undisclosed molecule to be used against an undisclosed target. We received a milestone related to this trial in March 2015 upon issuance of certain patents related to our Xtend technology. In the fourth quarter of 2015, Alexion exercised its option to take an exclusive commercial license and achieved a further clinical development milestone. As a result of Alexion’s exercise to take a commercial option to an undisclosed compound, the Company is eligible to receive additional development, regulatory and sales milestones under the agreement. If commercialized, the Company is eligible to receive royalties on global net sales of approved products. During the three and six months ended June 30, 2016 and 2015 we recognized $250,000 and $500,000 of revenue respectively. As of June 30, 2016, we have deferred revenue related to this arrangement of $ 1.0 million. Novo Nordisk A/S In December 2014, we entered into a collaboration and license agreement 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, Fcy-IIb, Xtend and other technologies during a two -year research term. 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. We determined that future milestone payments were substantive and contingent and we did not allocate any of the upfront consideration to these milestones. During each of the three months ended June 30, 2016 and 2015, we recognized $0.7 million of revenue. During each of the six months ended June 30, 2016 and 2015, we recognized $1.4 million of revenue. As of June 30, 2016, we have $1.0 million in deferred revenue related to this arrangement. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Taxes | |
Income Taxes | 9 . Income taxes The provision for income taxes for the three and six months ended June 30, 2016 represents the interim period tax allocation of the federal and state alternative minimum tax based on the Company’s projected year end effective income tax rates which cannot be offset by the Company’s net operating loss carryforwards. 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) | 6 Months Ended |
Jun. 30, 2016 | |
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 accepted 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. The preparation of interim financial statements requires the use of management’s estimates and assumptions that affect reported amounts of assets and liabilities at the date of the interim financial statements and the reported revenues and expenditures during the reported periods. 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 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 8, 2016. |
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. These assets are carried at fair value and the unrealized gains and losses are included in accumulated other comprehensive income (loss). Accrued interest on marketable securities is included in marketable securities. 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which amends the current stock compensation guidance. The amendments simplify the accounting for the taxes related to stock based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified. The standard is effective for fiscal periods beginning after December 15, 2016, with early adoption permitted. In April 2016, the FASB issued ASU No. 2016-10 “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” which amends and clarifies the revenue recognition guidance on accounting for licenses of intellectual property (IP) and identifying performance obligations. The amendment clarifies how an entity should evaluate the nature of its promise in granting a license of IP which will determine whether it recognizes revenue over time or at a point in time and also clarifies when a promised good or service is separately identifiable, which is an important step in determining whether goods or services should be accounted for as separate performance obligations. The amendment has the same effective date as the new revenue recognition standard which is for fiscal periods after December 15, 2017. The Company is currently evaluating the impact of the adoption of the new accounting pronouncements on its financial statements and related disclosures. There have been no other material changes to the significant accounting policies previously disclosed in the Company’s 2015 Annual Report on Form 10-K |
Fair Value of Financial Instr17
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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): June 30, 2016 December 31, 2015 Total Total Fair Value Level 1 Level 2 Fair Value Level 1 Level 2 Money Market Funds $ $ $ — $ $ $ — Corporate Securities — — Government Securities — — $ $ $ $ $ $ |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Net Income (Loss) Per Share | |
Schedule of basic and diluted net loss per common share | Basic and diluted income (loss) per common share is computed as follows (in thousands except share and per share data): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 (in thousands, except per share data) Numerator: Net income (loss) used for calculation of basic and diluted EPS $ $ $ $ Denominator: Weighted-average shares outstanding, basic Dilutive effect of stock options — — Weighted average shares outstanding, diluted Net income (loss) per share, basic $ $ $ $ Net income (loss) per share, diluted $ $ $ $ |
Marketable Securities (Tables)
Marketable Securities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Marketable Securities | |
Schedule of marketable securities | Gross Gross Amortized Unrealized Unrealized June 30, 2016 Cost Gains Losses Fair Value (in thousands) Money Market Funds $ $ — $ — $ Corporate Securities Government Securities $ $ $ $ Reported as Cash and cash equivalents $ Marketable securities Total investments $ Gross Gross Amortized Unrealized Unrealized December 31, 2015 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 June 30, 2016 Cost Fair Value (in thousands) Mature in one year or less $ $ Mature after one year through five years $ $ Amortized Estimated December 31, 2015 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) | 6 Months Ended |
Jun. 30, 2016 | |
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 and six months ended June 30, 2016 are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 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, 2015 $ Options granted $ Options forfeited $ Options cancelled $ Options exercised $ Balance at June 30, 2016 $ $ Exercisable $ $ |
Schedule of weighted average assumptions used for estimation of fair value of stock options | Options Options Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 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 Six Months Ended June 30, June 30, 2016 2015 2016 2015 Expected term (years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Expected volatility 67.8 - 79.6 % 70.6 - 82.9 % 67.8 - 79.6 % 70.6 - 82.9 % Risk-free interest rate .47% - .93 % .06% - .46 % .47% - .93 % .06% - .46 % Expected dividend yield — % — % — % — % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies | |
Schedule of future minimum payments under the non-cancelable operating and capital leases | The leases are accounted for as non-cancellable operating leases and future minimum payments are as follows (in thousands): Years ending December 31, For the remainder of the fiscal year $ 2017 2018 2019 2020 Thereafter — |
Fair Value of Financial Instr22
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Fair Value of Financial Instruments | |||||
Money Market Funds | $ 7,877 | $ 12,590 | $ 11,171 | $ 12,590 | $ 54,649 |
Total Fair Value | 167,863 | 190,184 | |||
Money Market Funds | |||||
Fair Value of Financial Instruments | |||||
Money Market Funds | 6,969 | 9,453 | |||
Corporate Securities | |||||
Fair Value of Financial Instruments | |||||
Securities | 103,405 | 114,846 | |||
Government Securities | |||||
Fair Value of Financial Instruments | |||||
Securities | 57,489 | 65,885 | |||
Level 1 | |||||
Fair Value of Financial Instruments | |||||
Total Fair Value | 6,969 | 9,453 | |||
Level 1 | Money Market Funds | |||||
Fair Value of Financial Instruments | |||||
Money Market Funds | 6,969 | 9,453 | |||
Level 2 | |||||
Fair Value of Financial Instruments | |||||
Total Fair Value | 160,894 | 180,731 | |||
Level 2 | Corporate Securities | |||||
Fair Value of Financial Instruments | |||||
Securities | 103,405 | 114,846 | |||
Level 2 | Government Securities | |||||
Fair Value of Financial Instruments | |||||
Securities | $ 57,489 | $ 65,885 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Numerator: | ||||
Net income (loss) used for calculation of basic and diluted EPS | $ 47,165 | $ (8,868) | $ 40,767 | $ (15,312) |
Denominator: | ||||
Weighted average common shares outstanding, basic | 40,800,586 | 40,389,648 | 40,703,688 | 37,518,271 |
Dilutive effect of stock options | 937,874 | 997,574 | ||
Weighted average common shares outstanding, diluted | 41,738,460 | 40,389,648 | 41,701,262 | 37,518,271 |
Net income (loss) per common share, basic (in dollars per share) | $ 1.16 | $ (0.22) | $ 1 | $ (0.41) |
Net income (loss) per common share, diluted (in dollars per share) | $ 1.13 | $ (0.22) | $ 0.98 | $ (0.41) |
Net Income (Loss) Per Share - A
Net Income (Loss) Per Share - Anti-dilutive securities (Details) - shares | 3 Months Ended | 6 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Employee Stock Purchase Plan | ||
Net Income (Loss) Per Share | ||
Anti-dilutive securities (in shares) | 0 | 0 |
Marketable Securities (Details)
Marketable Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities | ||
Amortized cost | $ 167,615 | $ 190,700 |
Gross unrealized gains | 266 | 6 |
Gross unrealized losses | (18) | (522) |
Fair value | 167,863 | 190,184 |
Marketable securities | ||
Schedule of Available-for-sale Securities | ||
Fair value | 160,894 | 180,731 |
Money Market Funds | ||
Schedule of Available-for-sale Securities | ||
Amortized cost | 6,969 | 9,453 |
Fair value | 6,969 | 9,453 |
Corporate Securities | ||
Schedule of Available-for-sale Securities | ||
Amortized cost | 103,216 | 115,148 |
Gross unrealized gains | 201 | 6 |
Gross unrealized losses | (12) | (308) |
Fair value | 103,405 | 114,846 |
Government Securities | ||
Schedule of Available-for-sale Securities | ||
Amortized cost | 57,430 | 66,099 |
Gross unrealized gains | 65 | |
Gross unrealized losses | (6) | (214) |
Fair value | 57,489 | 65,885 |
Cash and Cash Equivalents | ||
Schedule of Available-for-sale Securities | ||
Fair value | $ 6,969 | $ 9,453 |
Marketable Securities - Maturit
Marketable Securities - Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Amortized Cost | ||
Maturing in one year or less | $ 83,202 | $ 83,963 |
Maturing after one year through five years | 77,444 | 97,284 |
Total amortized cost | 160,646 | 181,247 |
Estimate Fair Value | ||
Maturing in one year or less | 83,228 | 83,840 |
Maturing after one year through five years | 77,666 | 96,891 |
Total estimated fair value | $ 160,894 | $ 180,731 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - shares | Dec. 02, 2013 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 |
Stock-based compensation | ||||
Common Stock, shares issued | 40,944,080 | 40,551,039 | ||
Employee stock options | ||||
Stock-based compensation | ||||
Options granted (in shares) | 1,138,000 | 909,750 | ||
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% | |||
Awards issued under the plan (in shares) | 0 | |||
Common Stock, shares issued | 195,129 | |||
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 | 7,352,140 | |||
Annual percentage increase in shares of common stock available for issuance | 4.00% | |||
Awards issued under the plan (in shares) | 3,142,750 | |||
Annual increase in shares of common stock available for issuance (in shares) | 1,400,000 | |||
Prior Plans | ||||
Stock-based compensation | ||||
Total number of shares of common stock available for issuance | 2,684,456 | |||
The 2010 Plan | ||||
Stock-based compensation | ||||
Options granted (in shares) | 0 |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Stock-based compensation | ||||
Total employee, director and non-employee stock-based compensation expense | $ 2,033 | $ 1,193 | $ 3,993 | $ 2,300 |
General and administrative | ||||
Stock-based compensation | ||||
Total employee, director and non-employee stock-based compensation expense | 874 | 520 | 1,826 | 1,035 |
Research and development | ||||
Stock-based compensation | ||||
Total employee, director and non-employee stock-based compensation expense | $ 1,159 | $ 673 | $ 2,167 | $ 1,265 |
Stock-Based Compensation - Opti
Stock-Based Compensation - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 02, 2013 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 |
Employee stock options | ||||
Number of Shares subject to outstanding options | ||||
Balance at the beginning of the period (in shares) | 3,370,901 | |||
Options granted (in shares) | 1,138,000 | 909,750 | ||
Options forfeited (in shares) | (43,486) | |||
Options cancelled (in shares) | (1,031) | |||
Options exercised (in shares) | (374,275) | |||
Balance at the end of the period (in shares) | 4,090,109 | 3,370,901 | ||
Exercisable options (in shares) | 1,728,711 | |||
Weighted Average Exercise Price (Per Share) | ||||
Balance at the beginning of the period (in dollars per share) | $ 8.50 | |||
Options granted (in dollars per share) | 12.71 | |||
Options forfeited (in dollars per share) | $ 12.03 | |||
Options cancelled (in dollars per share) | 15.69 | |||
Options exercised (in dollars per share) | $ 1.20 | |||
Balance at the end of the period (in dollars per share) | 10.30 | $ 8.50 | ||
Exercisable (in dollars per share) | $ 7.24 | |||
Weighted-average remaining contractual life | 7 years 9 months 18 days | 6 years 11 months 23 days | ||
Weighted-average remaining contractual life of awards exercisable | 6 years 4 months 2 days | |||
Aggregate intrinsic value of options outstanding | $ 35,630 | |||
Aggregate intrinsic value of options exercisable | $ 20,347 | |||
Closing price of common stock (in dollars per share) | $ 18.99 | |||
Weighted average fair value of options granted (in dollars per share) | $ 8.45 | $ 10.58 | ||
The 2010 Plan | ||||
Number of Shares subject to outstanding options | ||||
Options granted (in shares) | 0 |
Stock Based Compensation - Assu
Stock Based Compensation - Assumptions (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Weighted average assumptions for estimated fair value of employee stock options | ||||
Total unrecognized compensation expense, net of estimated forfeitures | $ 16.8 | $ 16.8 | ||
Period to recognize total unrecognized compensation expense | 3 years | |||
Employee stock options | ||||
Weighted average assumptions for estimated fair value of employee stock options | ||||
Expected term (years) | 5 years 10 months 24 days | 5 years 10 months 24 days | 6 years 1 month 6 days | 6 years |
Expected volatility (as a percent) | 76.10% | 75.60% | 75.80% | 76.40% |
Risk-free interest rate (as a percent) | 1.36% | 1.60% | 1.53% | 1.61% |
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) | 67.80% | 70.60% | 67.80% | 70.60% |
Risk-free interest rate (as a percent) | 0.47% | 0.06% | 0.47% | 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) | 79.60% | 82.90% | 79.60% | 82.90% |
Risk-free interest rate (as a percent) | 0.93% | 0.46% | 0.93% | 0.46% |
Commitments and Contingencies31
Commitments and Contingencies (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Feb. 28, 2015 | Jan. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Operating Leases | ||||
For the remainder of the fiscal year | $ 375,000 | |||
2,017 | 807,000 | |||
2,018 | 833,000 | |||
2,019 | 859,000 | |||
2,020 | 466,000 | |||
Net rent expense | $ 298,000 | $ 272,000 | ||
Office Space | ||||
Renewal term | 1 year | 5 years |
Commitments and Contingencies -
Commitments and Contingencies - Litigation (Details) - USD ($) | Oct. 05, 2015 | Dec. 31, 2015 | Jun. 30, 2016 |
Commitments and Contingencies | |||
Damages sought | $ 950,000 | ||
Paid legal award | $ 950,000 | ||
Insurance proceeds | $ 187,500 | ||
Loss contingency accrual | $ 0 |
Collaboration and Licensing A33
Collaboration and Licensing Agreements (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||
Jul. 31, 2016USD ($) | Jun. 30, 2016USD ($)productitem | Sep. 30, 2015USD ($)item | Dec. 31, 2014USD ($) | Jul. 31, 2013USD ($)item | Jan. 31, 2013USD ($)item | Jun. 30, 2016USD ($) | Mar. 31, 2016item | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Collaboration research and licensing agreements | ||||||||||||
Revenue recognized | $ 66,007,000 | $ 1,014,000 | $ 73,259,000 | $ 2,505,000 | ||||||||
Current portion of deferred revenue | $ 103,063,000 | 103,063,000 | 103,063,000 | $ 33,287,000 | ||||||||
License Agreement | Merck Sharp & Dohme Corp. | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Nonrefundable upfront payment | $ 1,000,000 | |||||||||||
Annual maintenance fees | $ 500,000 | |||||||||||
Revenue recognized | 25,000 | 50,000 | 25,000 | 50,000 | ||||||||
Deferred revenue | 100,000 | 100,000 | 100,000 | |||||||||
Number of compounds | item | 1 | |||||||||||
Portion of nonrefundable upfront payment allocated to option | $ 0 | |||||||||||
License Agreement | Alexion Pharmaceuticals, Inc. | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Nonrefundable upfront payment | 2,500,000 | |||||||||||
Research term of revenue recognized | 5 years | |||||||||||
Option and license agreement | Alexion Pharmaceuticals, Inc. | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Nonrefundable upfront payment | $ 3,000,000 | |||||||||||
Number of different target programs | item | 6 | |||||||||||
Research license term | 5 years | |||||||||||
Annual maintenance fees | $ 500,000 | |||||||||||
Revenue recognized | 250,000 | 500,000 | 250,000 | 500,000 | ||||||||
Deferred revenue | 1,000,000 | 1,000,000 | $ 1,000,000 | |||||||||
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 | |||||||||||
Collaboration And License Agreement | Novartis | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Revenue recognized | 58,600,000 | 58,600,000 | ||||||||||
Deferred revenue | 91,400,000 | 91,400,000 | 91,400,000 | |||||||||
Collaboration And License Agreement | Novartis | Forecast | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Nonrefundable upfront payment | $ 150,000,000 | |||||||||||
Collaboration And License Agreement | Novartis | Maximum | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 2,400,000 | |||||||||||
Collaboration And License Agreement | Novartis | Maximum | XmAb14045 | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 325,000,000 | |||||||||||
Collaboration And License Agreement | Novartis | Maximum | XmAb13676 | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | $ 325,000,000 | |||||||||||
Collaboration And License Agreement | Novartis | Bispecific FC Technologies | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Number of development stage products | product | 2 | |||||||||||
Number of previously identified products | item | 4 | |||||||||||
Research license term | 5 years | |||||||||||
Collaboration And License Agreement | Novartis | Bispecific FC Technologies | XmAb14045 | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Allocation of consideration to deliverables | $ 27,100,000 | |||||||||||
Collaboration And License Agreement | Novartis | Bispecific FC Technologies | XmAb13676 | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Allocation of consideration to deliverables | $ 31,400,000 | |||||||||||
Collaboration And License Agreement | Novartis | Bispecific FC Technologies | Maximum | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Number of antibody molecules for which bispecific technology applied | item | 4 | |||||||||||
Collaboration And License Agreement | Novartis | Global Discovery Program | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Number of different target programs | item | 4 | |||||||||||
Percentage of responsibility for development costs | 25.00% | |||||||||||
Percentage of responsibility for commercialization costs | 50.00% | |||||||||||
Percentage of profits on net sales of the product | 50.00% | |||||||||||
Allocation of consideration to deliverables | $ 20,050,000 | |||||||||||
Number of Global discovery programs | item | 5 | |||||||||||
Collaboration And License Agreement | Novartis | Global Discovery Program | Maximum | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Number of antibody targets for which bispecific technology applied | item | 4 | |||||||||||
Potential milestone payment | $ 250,000,000 | |||||||||||
Collaboration And License Agreement | Novartis | FC Licenses | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Number of bispecific product candidates delivered | product | 4 | |||||||||||
Allocation of consideration to deliverables | $ 11,300,000 | |||||||||||
Collaboration And License Agreement | Novartis | FC Licenses | Maximum | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Number of targets against which non-exclusive license is provided | item | 10 | |||||||||||
Potential milestone payment | $ 75,000,000 | |||||||||||
Collaboration And License Agreement | Novo Nordisk | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Nonrefundable upfront payment | $ 2,500,000 | |||||||||||
Research license term | 2 years | |||||||||||
Revenue recognized | 700,000 | $ 700,000 | 1,400,000 | $ 1,400,000 | ||||||||
Deferred revenue | 1,000,000 | 1,000,000 | $ 1,000,000 | |||||||||
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 | |||||||||||
Number of different target programs | item | 6 | |||||||||||
Number of previously identified products | item | 3 | |||||||||||
Revenue recognized | 6,200,000 | $ 12,500,000 | ||||||||||
Deferred revenue | 18,700,000 | $ 18,700,000 | 18,700,000 | |||||||||
Research and License Agreement 2015 | Amgen, Inc. | CD38 Program | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 355,000,000 | |||||||||||
Allocation of consideration to deliverables | 13,750,000 | |||||||||||
Research and License Agreement 2015 | Amgen, Inc. | Discovery Program | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | $ 260,500,000 | |||||||||||
Number of different target programs | item | 3 | |||||||||||
Number of previously identified products | item | 1 | |||||||||||
Research license term | 3 years | |||||||||||
Allocation of consideration to deliverables | $ 6,250,000 | |||||||||||
Additional research term | 1 year | |||||||||||
Previous targets which bispecific technology will be applied | item | 5 | |||||||||||
Number of delivered discover programs | item | 4 | |||||||||||
Number of substitution rights | item | 1 | |||||||||||
Development-based | Collaboration And License Agreement | Novartis | XmAb14045 | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 90,000,000 | |||||||||||
Development-based | Collaboration And License Agreement | Novartis | XmAb13676 | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | $ 90,000,000 | |||||||||||
Development-based | Collaboration And License Agreement | Novartis | Global Discovery Program | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 50,000,000 | |||||||||||
Development-based | Collaboration And License Agreement | Novartis | FC Licenses | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 15,000,000 | |||||||||||
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 | Collaboration And License Agreement | Novartis | XmAb14045 | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 110,000,000 | |||||||||||
Regulatory-based | Collaboration And License Agreement | Novartis | XmAb13676 | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 110,000,000 | |||||||||||
Regulatory-based | Collaboration And License Agreement | Novartis | Global Discovery Program | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 100,000,000 | |||||||||||
Regulatory-based | Collaboration And License Agreement | Novartis | FC Licenses | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 30,000,000 | |||||||||||
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 | Collaboration And License Agreement | Novartis | XmAb14045 | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 125,000,000 | |||||||||||
Sales-based | Collaboration And License Agreement | Novartis | XmAb13676 | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 125,000,000 | |||||||||||
Sales-based | Collaboration And License Agreement | Novartis | Global Discovery Program | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | $ 100,000,000 | |||||||||||
Sales-based | Collaboration And License Agreement | Novartis | FC Licenses | ||||||||||||
Collaboration research and licensing agreements | ||||||||||||
Potential milestone payment | 30,000,000 | |||||||||||
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 |