Xencor (XNCR) 10-Q 2 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 25, 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	Sep. 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		41,138,851
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

Balance Sheets

Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 14,787	$ 12,590
Marketable securities	89,518	83,840
Accounts receivable	3,089	44
Prepaid expenses and other current assets	3,448	1,201
Total current assets	110,842	97,675
Property and equipment, net	3,050	2,310
Patents, licenses, and other intangible assets, net	10,565	9,971
Marketable securities - long term	197,570	96,891
Other assets	103	63
Total assets	322,130	206,910
Current liabilities
Accounts payable	7,334	6,400
Accrued expenses	6,536	3,634
Current portion of deferred rent	122	108
Current portion of deferred revenue	96,274	33,287
Income taxes	400
Total current liabilities	110,666	43,429
Deferred rent, less current portion	431	507
Deferred revenue, less current portion	8,613	542
Total liabilities	119,710	44,478
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 par value: 10,000,000 authorized shares; -0- issued and outstanding shares at September 30, 2016 and December 31, 2015
Common stock, $0.01 par value: 200,000,000 authorized shares at September 30, 2016 and December 31, 2015; 41,138,851 issued and outstanding at September 30, 2016 and 40,551,039 issued and outstanding at December 31, 2015	411	405
Additional paid-in capital	431,154	424,128
Accumulated other comprehensive income (loss)	(250)	(516)
Accumulated deficit	(228,895)	(261,585)
Total stockholders' equity	202,420	162,432
Total liabilities and stockholders' equity	$ 322,130	$ 206,910

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Sep. 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	41,138,851	40,551,039
Common stock, shares outstanding	41,138,851	40,551,039

Statements of Comprehensive Inc

Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue
Collaborations, licenses and milestones	$ 7,821	$ 3,503	$ 81,080	$ 6,008
Operating expenses
Research and development	14,069	10,582	38,512	23,263
General and administrative	3,007	3,233	10,000	8,521
Total operating expenses	17,076	13,815	48,512	31,784
Income (loss) from operations	(9,255)	(10,312)	32,568	(25,776)
Other income (expenses)
Interest income	579	274	1,306	425
Interest expense	(2)	(4)	(39)	(11)
Other income	3	5	5	13
Total other income, net	580	275	1,272	427
Income (loss) before income tax	(8,675)	(10,037)	33,840	(25,349)
Provision (benefit) for income tax	(598)		1,150
Net income (loss)	(8,077)	(10,037)	32,690	(25,349)
Other comprehensive income (loss)
Net unrealized gain (loss) on marketable securities	(466)	84	266	(6)
Comprehensive income (loss)	$ (8,543)	$ (9,953)	$ 32,956	$ (25,355)
Net income (loss) per share attributable to common shareholders:
Basic (in dollars per share)	$ (0.20)	$ (0.25)	$ 0.80	$ (0.66)
Diluted (in dollars per share)	$ (0.20)	$ (0.25)	$ 0.78	$ (0.66)
Weighted average shares used to compute net income (loss) per share attributable to common stockholders:
Basic (in shares)	41,033,973	40,473,520	40,814,587	38,514,179
Diluted (in shares)	41,033,973	40,473,520	41,861,361	38,514,179

Statement of Stockholders_ Equi

Statement of Stockholders’ Equity - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive 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	$ 6	942			948
Issuance of common stock upon exercise and vesting of stock awards (in shares)	569,046
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			266	32,690	32,956
Stock-based compensation expense		5,858			5,858
Balance at Sep. 30, 2016	$ 411	$ 431,154	$ (250)	$ (228,895)	$ 202,420
Balance (in shares) at Sep. 30, 2016	41,138,851

Statements of Cash Flows

Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities
Net income (loss)	$ 32,690	$ (25,349)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	999	768
Amortization of premium on marketable securities	1,398	642
Stock-based compensation	5,858	3,386
Abandonment of capitalized intangible assets	107	280
Gain on disposal of assets		(9)
Gain on sale of marketable securities	(6)	(4)
Changes in operating assets and liabilities:
Accounts receivable	(3,044)	2,558
Interest receivable	(541)	(659)
Prepaid expenses and other assets	(2,288)	(715)
Accounts payable	934	3,417
Accrued expenses	2,902	1,608
Income taxes	400
Deferred rent	(62)	595
Deferred revenue	71,058	43,993
Net cash used in operating activities	110,405	30,511
Cash flows from investing activities
Purchase of marketable securities	(202,147)	(168,489)
Purchase of intangible assets	(1,207)	(1,220)
Purchase of property and equipment	(1,233)	(1,724)
Proceeds from sale and maturities of marketable securities	95,205	28,008
Proceeds from sale of property and equipment		9
Net cash used in investing activities	(109,382)	(143,416)
Cash flows from financing activities
Proceeds from issuance of common stock		122,906
Proceeds from issuance of common stock upon exercise of stock awards	948	543
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	1,174	115,994
Net increase in cash and cash equivalents	2,197	3,089
Cash and cash equivalents, beginning of period	12,590	54,649
Cash and cash equivalents, end of period	14,787	57,738
Cash paid during the period for:
Income taxes	760
Supplemental disclosures of non-cash investing activities
Unrealized gain on marketable securities, net of tax	$ 266	$ 6

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 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. In May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” which provides clarifying guidance in certain narrow areas, adds some practical expedients and includes assessing the collectability criterion, presentation of sales taxes and other similar taxes collected from customers, noncash consideration, contract modifications at transition, completed contracts at transition and technical correction. The amendment has the same effective date as the new revenue recognition standard which is for fiscal periods after December 15, 2017. In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which amends the guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For available for sale debt securities, credit losses related to available-for sale debt securities should be recorded through an allowance for credit losses. The amendment is effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. 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	9 Months Ended
	Sep. 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 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, 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 nine months ended September 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	9 Months Ended
	Sep. 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 Nine Months Ended September 30, September 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 months ended September 30, 2016 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. For the nine months ended September 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 nine months ended September 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	9 Months Ended
	Sep. 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 nine months ended September 30, 2016, the only component of other comprehensive income (loss) is net unrealized gains (losses) on marketable securities. For the three months and nine months ended September 30, 2015, the only component of other comprehensive loss is net unrealized gains (losses) on marketable securities. There were no material reclassifications out of accumulated other comprehensive income (loss) during the three and nine months ended September 30, 2016 and 2015.

Marketable Securities

Marketable Securities	9 Months Ended
	Sep. 30, 2016
Marketable Securities
Marketable Securities	5. Marketable Securities The Company’s marketable securities held as of September 30, 2016 and December 31, 2015 are summarized below: Gross Gross Amortized Unrealized Unrealized September 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 September 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	9 Months Ended
	Sep. 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 September 30, 2016 the total number of shares of common stock available for issuance under the 2013 Plan is 7,157,369, 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 September 30, 2016 a total of 3,279,750 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 September 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 nine months ended September 30, 2016 are as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 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 September 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 $24.49 per share as of September 30, 2016. Weighted average fair value of options granted during the nine-month period ended September 30, 2016 and 2015 was $9.26 and $10.73 per share, respectively. There were 930,250 options granted during the period ended September 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 nine months ended September 30, 2016 and 2015: Options Options Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Expected term (years) Expected volatility % % % % Risk-free interest rate % % % % Expected dividend yield — % — % — % — % ESPP ESPP Three Months Ended Nine Months Ended September 30, September 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 September 30, 2016, the unamortized compensation expense related to unvested stock options was $17.6 million, net of estimated forfeitures. The remaining unamortized compensation expense will be recognized over the next three years.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 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 nine months ended September 30, 2016 and 2015 was $468,000 and $415,000 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. On September 27, 2016, the parties engaged in voluntary mediation and agreed to settle the complaint’s remaining claims for a total payment of $2.375 million to the class certified by the Delaware Court of Chancery. The settlement, which is subject to approval by the Court, was reached without any party admitting wrong-doing. Under the terms of the settlement, no payments shall be made to the plaintiffs by the Company or any of the defendants in the lawsuit other than payments covered by the Company’s insurance. The Company currently expects that the court will approve the settlement in the first quarter of 2017. We continue to recognize legal costs related to the litigation as incurred and offset any insurance proceeds when approved and issued. For the period ended September 30, 2016 no amount of loss related to the settlement has been accrued. As of September 30, 2016 we have reported the $2.375 million settlement as a payable and also reflected a receivable of the same amount for the insurance coverage that will fund the settlement.

Collaboration and Licensing Agr

Collaboration and Licensing Agreements	9 Months Ended
	Sep. 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 nine months ended September 30, 2016 and 2015. Novartis In June 2016, the Company entered into a Collaboration and License Agreement (the Novartis Agreement) with Novartis Institutes for BioMedical Research, Inc., (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 Novartis 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 Novartis Agreement. Under the Novartis 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.). 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 Novartis 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 $76.0 million in milestones for each target which includes $16.0 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 Novartis Agreement and determined that it is a revenue arrangement with multiple deliverables or performance obligations. The Company’s substantive performance obligations under the Novartis 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 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 four 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 Novartis 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 Novartis Agreement. During the three and nine months ended September 30, 2016, we recognized $0.6 million and $59.1 million of revenue, respectively. As of September 30, 2016 there is $90.9 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. 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 a product candidate for a Discovery target. In the third quarter ended September 30, 2016, the Company delivered an additional product candidate for a Discover target. As of September 30, 2016, the Company has delivered five of the discovery programs with Amgen exercising its substitution rights to one program. 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, 2016, we recognized $6.25 million and $18.75 million in revenue under this arrangement, respectively. As of September 30, 2016 there is $12.5 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 nine months ended September 30, 2016 and 2015 we recognized $25,000 and $75,000 of revenue respectively. As of September 30, 2016, 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 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 nine months ended September 30, 2016 we recognized $250,000 and $750,000 of revenue respectively. During the three and nine months ended September 30, 2015 we recognized $250,000 and $1.3 million of revenue respectively. As of September 30, 2016, we have deferred revenue related to this arrangement of $0.8 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 September 30, 2016 and 2015, we recognized $0.7 million of revenue. During each of the nine months ended September 30, 2016 and 2015, we recognized $2.1 million of revenue. As of September 30, 2016, we have $0.6 million in deferred revenue related to this arrangement.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2016
Income Taxes
Income Taxes	9. Income taxes The provision (benefit) for income taxes for the three and nine months ended September 30, 2016 represents the federal and state alternative minimum tax based on the Company’s projected year end effective income tax rates applicable to alternative minimum taxable income which cannot be fully 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)	9 Months Ended
	Sep. 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. In May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” which provides clarifying guidance in certain narrow areas, adds some practical expedients and includes assessing the collectability criterion, presentation of sales taxes and other similar taxes collected from customers, noncash consideration, contract modifications at transition, completed contracts at transition and technical correction. The amendment has the same effective date as the new revenue recognition standard which is for fiscal periods after December 15, 2017. In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which amends the guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For available for sale debt securities, credit losses related to available-for sale debt securities should be recorded through an allowance for credit losses. The amendment is effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. 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)	9 Months Ended
	Sep. 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): September 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)	9 Months Ended
	Sep. 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 Nine Months Ended September 30, September 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)	9 Months Ended
	Sep. 30, 2016
Marketable Securities
Schedule of marketable securities	Gross Gross Amortized Unrealized Unrealized September 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 September 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)	9 Months Ended
	Sep. 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 nine months ended September 30, 2016 are as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 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 September 30, 2016 $ $ 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, 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 Nine Months Ended September 30, September 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)	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies
Schedule of future minimum payments for non-cancellable operating 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	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Fair Value of Financial Instruments
Money Market Funds	$ 14,787	$ 12,590	$ 57,738	$ 54,649
Total Fair Value	297,949	190,184
Money Market Funds
Fair Value of Financial Instruments
Money Market Funds	10,861	9,453
Corporate Securities
Fair Value of Financial Instruments
Securities	172,943	114,846
Government Securities
Fair Value of Financial Instruments
Securities	114,145	65,885
Level 1
Fair Value of Financial Instruments
Total Fair Value	10,861	9,453
Level 1 | Money Market Funds
Fair Value of Financial Instruments
Money Market Funds	10,861	9,453
Level 2
Fair Value of Financial Instruments
Total Fair Value	287,088	180,731
Level 2 | Corporate Securities
Fair Value of Financial Instruments
Securities	172,943	114,846
Level 2 | Government Securities
Fair Value of Financial Instruments
Securities	$ 114,145	$ 65,885

Net Income (Loss) Per Share (De

Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Numerator:
Net income (loss) used for calculation of basic and diluted EPS	$ (8,077)	$ (10,037)	$ 32,690	$ (25,349)
Denominator:
Weighted average common shares outstanding, basic	41,033,973	40,473,520	40,814,587	38,514,179
Dilutive effect of stock options			1,046,774
Weighted average common shares outstanding, diluted	41,033,973	40,473,520	41,861,361	38,514,179
Net income (loss) per common share, basic (in dollars per share)	$ (0.20)	$ (0.25)	$ 0.80	$ (0.66)
Net income (loss) per common share, diluted (in dollars per share)	$ (0.20)	$ (0.25)	$ 0.78	$ (0.66)

Net Income (Loss) Per Share - A

Net Income (Loss) Per Share - Anti-dilutive securities (Details)	9 Months Ended
	Sep. 30, 2016shares
Employee Stock Purchase Plan
Net Income (Loss) Per Share
Anti-dilutive securities (in shares)	0

Marketable Securities (Details)

Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities
Amortized cost	$ 298,189	$ 190,700
Gross unrealized gains	112	6
Gross unrealized losses	(352)	(522)
Fair value	297,949	190,184
Marketable securities
Schedule of Available-for-sale Securities
Fair value	287,088	180,731
Money Market Funds
Schedule of Available-for-sale Securities
Amortized cost	10,861	9,453
Fair value	10,861	9,453
Corporate Securities
Schedule of Available-for-sale Securities
Amortized cost	173,145	115,148
Gross unrealized gains	84	6
Gross unrealized losses	(286)	(308)
Fair value	172,943	114,846
Government Securities
Schedule of Available-for-sale Securities
Amortized cost	114,183	66,099
Gross unrealized gains	28
Gross unrealized losses	(66)	(214)
Fair value	114,145	65,885
Cash and Cash Equivalents
Schedule of Available-for-sale Securities
Fair value	$ 10,861	$ 9,453

Marketable Securities - Maturit

Marketable Securities - Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Amortized Cost
Maturing in one year or less	$ 89,548	$ 83,963
Maturing after one year through five years	197,780	97,284
Total amortized cost	287,328	181,247
Estimate Fair Value
Maturing in one year or less	89,518	83,840
Maturing after one year through five years	197,570	96,891
Total estimated fair value	$ 287,088	$ 180,731

Stock Based Compensation (Detai

Stock Based Compensation (Details) - shares	Dec. 02, 2013	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Stock-based compensation
Common stock, shares issued		41,138,851		40,551,039
Employee stock options
Stock-based compensation
Options granted (in shares)		1,275,000	930,250
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		7,157,369
Annual percentage increase in shares of common stock available for issuance		4.00%
Awards issued under the plan (in shares)		3,279,750
Annual increase in shares of common stock available for issuance (in shares)		1,400,000
The 2010 Plan
Stock-based compensation
Total number of shares of common stock available for issuance		2,684,456
Options granted (in shares)	0

Stock-Based Compensation - Empl

Stock-Based Compensation - Employee expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	$ 1,866	$ 1,086	$ 5,858	$ 3,386
General and administrative
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	874	593	2,699	1,628
Research and development
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	$ 992	$ 493	$ 3,159	$ 1,758

Stock-Based Compensation - Opti

Stock-Based Compensation - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	Dec. 02, 2013	Sep. 30, 2016	Sep. 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)		1,275,000	930,250
Options forfeited (in shares)		(47,883)
Options cancelled (in shares)		(1,031)
Options exercised (in shares)		(569,046)
Balance at the end of the period (in shares)		4,027,941		3,370,901
Exercisable options (in shares)		1,723,815
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)		13.85
Options forfeited (in dollars per share)		$ 12.05
Options cancelled (in dollars per share)		15.69
Options exercised (in dollars per share)		$ 1.67
Balance at the end of the period (in dollars per share)		11.12		$ 8.50
Exercisable (in dollars per share)		$ 8.09
Weighted-average remaining contractual life		7 years 10 months 17 days		6 years 11 months 23 days
Weighted-average remaining contractual life of awards exercisable		6 years 8 months 1 day
Aggregate intrinsic value of options outstanding		$ 53,879
Aggregate intrinsic value of options exercisable		$ 28,317
Closing price of common stock (in dollars per share)		$ 24.49
Weighted average fair value of options granted (in dollars per share)		$ 9.26	$ 10.73
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		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Weighted average assumptions for estimated fair value of employee stock options
Total unrecognized compensation expense, net of estimated forfeitures	$ 17.6		$ 17.6
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)	6 years 1 month 6 days	6 years 4 months 24 days	6 years 1 month 6 days	6 years 1 month 6 days
Expected volatility (as a percent)	79.30%	86.50%	76.20%	76.60%
Risk-free interest rate (as a percent)	1.23%	1.95%	1.50%	1.62%
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		9 Months Ended
	Feb. 28, 2015	Jan. 31, 2015	Sep. 30, 2016	Sep. 30, 2015
Operating Leases
For the remainder of the fiscal year			$ 196,000
2,017			807,000
2,018			833,000
2,019			859,000
2,020			466,000
Net rent expense			$ 468,000	$ 415,000
Office Space
Renewal term	1 year	5 years

Commitments and Contingencies -

Commitments and Contingencies - Litigation (Details) - USD ($)	Sep. 27, 2016	Oct. 05, 2015	Dec. 31, 2015	Sep. 30, 2016
Commitments and Contingencies
Damages sought		$ 950,000
Paid legal award	$ 2,375,000		$ 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

9 Months Ended

Jul. 31, 2016USD ($)

Jun. 30, 2016USD ($)productitem

Sep. 30, 2015USD ($)item

Dec. 31, 2014USD ($)

Jul. 31, 2013USD ($)item

Jan. 31, 2013USD ($)item

Sep. 30, 2016USD ($)

Mar. 31, 2016item

Sep. 30, 2015USD ($)item

Sep. 30, 2016USD ($)item

Sep. 30, 2015USD ($)item

Dec. 31, 2015USD ($)

Collaboration research and licensing agreements

Revenue recognized

$ 7,821,000

$ 3,503,000

$ 81,080,000

$ 6,008,000

Current portion of deferred revenue

96,274,000

96,274,000

$ 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

25,000

75,000

75,000

Deferred revenue

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

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

250,000

750,000

1,300,000

Deferred revenue

800,000

$ 800,000

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

Nonrefundable upfront payment

$ 150,000,000

Revenue recognized

600,000

59,100,000

Deferred revenue

90,900,000

90,900,000

Collaboration And License Agreement | Novartis | Maximum

Collaboration research and licensing agreements

Potential milestone payment

2,400,000,000

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

4

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

$ 76,000,000

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

2,100,000

$ 2,100,000

Deferred revenue

600,000

$ 600,000

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

6,250,000

$ 18,750,000

Deferred revenue

$ 12,500,000

12,500,000

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

5

5

Number of delivered discover programs | item

5

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

16,000,000

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