Xencor (XNCR) 10-K 1 Mar 17 2016 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2016	Feb. 17, 2017	Jun. 30, 2016
Document and Entity Information
Entity Registrant Name	Xencor Inc
Entity Central Index Key	1,326,732
Document Type	10-K
Document Period End Date	Dec. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 769,079,561
Entity Common Stock, Shares Outstanding		46,573,700
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	FY

Balance Sheets

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 14,528	$ 12,590
Marketable securities	115,608	83,840
Accounts receivable	8,616	44
Prepaid expenses and other current assets	2,901	1,201
Total current assets	141,653	97,675
Property and equipment, net	3,105	2,310
Patents, licenses, and other intangible assets, net	10,362	9,971
Marketable securities - long term	273,340	96,891
Other assets	103	63
Total assets	428,563	206,910
Current liabilities
Accounts payable	3,880	6,400
Accrued expenses	6,692	3,634
Current portion of deferred rent	128	108
Current portion of deferred revenue	95,521	33,287
Income taxes	65
Total current liabilities	106,286	43,429
Deferred rent, less current portion	397	507
Deferred revenue, less current portion	7,926	542
Total liabilities	114,609	44,478
Commitments and contingencies (see note 8)
Stockholders' equity
Preferred stock, $0.01 par value: 10,000,000 authorized shares; -0- issued and outstanding shares at December 31, 2016 and 2015
Common stock, $0.01 par value: 200,000,000 authorized shares; 46,567,978 issued and outstanding shares at December 31, 2016 and 40,551,039 issued and outstanding at December 31, 2015	466	405
Additional paid-in capital	552,889	424,128
Accumulated other comprehensive loss	(1,441)	(516)
Accumulated deficit	(237,960)	(261,585)
Total stockholders' equity	313,954	162,432
Total liabilities and stockholders' equity	$ 428,563	$ 206,910

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 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	46,567,978	40,551,039
Common stock, shares outstanding	46,567,978	40,551,039

Statements of Comprehensive Inc

Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Revenue
Collaborations, licenses and milestones	$ 87,520	$ 27,762	$ 9,520
Operating expenses
Research and development	51,872	34,140	18,516
General and administrative	13,108	11,960	7,461
Total operating expenses	64,980	46,100	25,977
Income (loss) from operations	22,540	(18,338)	(16,457)
Other income (expenses)
Interest income	2,091	744	33
Interest expense	(21)	(13)	(9)
Other income	6	15	11
Total other income, net	2,076	746	35
Income (loss) before income tax	24,616	(17,592)	(16,422)
Provision (benefit) for income tax	991
Net income (loss)	23,625	(17,592)	(16,422)
Other comprehensive income (loss)
Net unrealized gain (loss) on marketable securities	(925)	(516)
Comprehensive income (loss)	$ 22,700	$ (18,108)	$ (16,422)
Net income (loss) per share attributable to common shareholders:
Basic net income (loss) (in dollars per share)	$ 0.57	$ (0.45)	$ (0.52)
Diluted net income (loss) (in dollars per share)	$ 0.56	$ (0.45)	$ (0.52)
Weighted average shares used to compute net income (loss) per share attributable to common stockholders:
Basic (in shares)	41,267,329	39,015,131	31,390,631
Diluted (in shares)	42,388,867	39,015,131	31,390,631

Statement of Stockholders' Equi

Statement of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
Balance at Dec. 31, 2013	$ 314	$ 300,790		$ (227,571)	$ 73,533
Balance (in shares) at Dec. 31, 2013	31,354,467
Increase (Decrease) in Stockholders' Equity
Issuance of common stock upon exercise and vesting of stock awards		11			11
Issuance of common stock upon exercise and vesting of stock awards (in shares)	15,941
Issuance of common stock under the employee stock purchase plan		307			307
Issuance of common stock under the employee stock purchase plan (in shares)	63,864
Net income (loss)				(16,422)	(16,422)
Comprehensive income (loss)					(16,422)
Stock-based compensation expense		1,861			1,861
Balance at Dec. 31, 2014	$ 314	302,969		(243,993)	59,290
Balance (in shares) at Dec. 31, 2014	31,434,272
Increase (Decrease) in Stockholders' Equity
Sale of common stock, net of issuance cost	$ 86	115,118			115,204
Sale of common stock, net of issuance cost (in shares)	8,625,000
Issuance of common stock upon exercise and vesting of stock awards	$ 4	550			554
Issuance of common stock upon exercise and vesting of stock awards (in shares)	379,268
Issuance of common stock under the employee stock purchase plan	$ 1	622			623
Issuance of common stock under the employee stock purchase plan (in shares)	112,499
Net income (loss)					(17,592)
Comprehensive income (loss)			$ (516)	(17,592)	(18,108)
Stock-based compensation expense		4,869			4,869
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
Sale of common stock, net of issuance cost	$ 53	119,216			119,269
Sale of common stock, net of issuance cost (in shares)	5,272,750
Issuance of common stock upon exercise and vesting of stock awards	$ 7	1,153			1,160
Issuance of common stock upon exercise and vesting of stock awards (in shares)	699,066
Issuance of common stock under the employee stock purchase plan	$ 1	544			545
Issuance of common stock under the employee stock purchase plan (in shares)	45,123
Net income (loss)					23,625
Comprehensive income (loss)			(925)	23,625	22,700
Stock-based compensation expense		7,848			7,848
Balance at Dec. 31, 2016	$ 466	$ 552,889	$ (1,441)	$ (237,960)	$ 313,954
Balance (in shares) at Dec. 31, 2016	46,567,978

Statements of Cash Flows

Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities
Net income (loss)	$ 23,625	$ (17,592)	$ (16,422)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization	1,466	1,113	882
Amortization of premium on marketable securities	2,037	1,096
Stock-based compensation	7,848	4,869	1,861
Abandonment of capitalized intangible assets	356	296	509
Gain on disposal of assets		(9)	(2)
Gain on sale of marketable securities available-for-sale	(5)	(5)
Changes in operating assets and liabilities:
Accounts receivable	(8,572)	2,922	(2,907)
Interest receivable	(530)	(898)
Prepaid expenses and other assets	(1,700)	(1,068)	(73)
Other assets	(40)	(3)	41
Accounts payable	(2,520)	4,710	(943)
Accrued expenses	3,058	1,425	859
Deferred rent	(89)	572
Deferred tax liability	65
Deferred revenue	69,618	29,238	(5,156)
Net cash provided by (used in) operating activities	94,617	26,666	(21,351)
Cash flows from investing activities
Proceeds from sale and maturities of marketable securities	105,505	34,358
Proceeds from sale of property and equipment		9	2
Purchase of marketable securities	(316,149)	(215,798)
Purchase of intangible assets	(1,502)	(1,745)	(1,505)
Purchase of property and equipment	(1,507)	(1,930)	(780)
Net cash used in investing activities	(213,653)	(185,106)	(2,283)
Cash flows from financing activities
Proceeds from issuance of common stock upon exercise of stock awards	1,160	554	9
Proceeds from issuance of common stock under the Employee Stock Purchase Plan	545	623	307
Proceeds from issuance of common stock	126,546	122,906
Common stock issuance cost	(7,277)	(7,702)
Payments on capital lease obligations			(8)
Net cash provided by financing activities	120,974	116,381	308
Net increase (decrease) in cash and cash equivalents	1,938	(42,059)	(23,326)
Cash and cash equivalents, beginning of period	12,590	54,649	77,975
Cash and cash equivalents, end of period	14,528	12,590	54,649
Cash paid during the period for:
Interest	21	13	9
Income taxes	936	1	$ 1
Supplemental disclosures of non-cash investing activities
Net unrealized loss on marketable securities available for sale	$ 925	$ 516

Summary of Significant Accounti

Summary of Significant Accounting Policies	12 Months Ended
	Dec. 31, 2016
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	1. Summary of Significant Accounting Policies Description of Business Xencor, Inc. (we, us, our, or the Company) was incorporated in California in 1997 and reincorporated in Delaware in September 2004. We are a clinical‑stage biopharmaceutical company focused on discovering and developing engineered monoclonal antibodies to treat severe and life‑threatening diseases with unmet medical needs. We use our proprietary XmAb technology platform to create next‑generation antibody product candidates designed to treat autoimmune and allergic diseases, cancer, and other conditions. We focus on the portion of the antibody that interacts with multiple segments of the immune system, referred to as the Fc domain, which is constant and interchangeable among antibodies. Our engineered Fc domains, the XmAb technology, are applied to our pipeline of antibody‑based drug candidates to increase immune inhibition, improve cytotoxicity, extend half‑life and most recently create bispecific antibodies. Our operations are based in Monrovia and San Diego, California. Basis of Presentation The Company’s financial statements as of December 31, 2016, 2015, and 2014 and for the years then‑ended have been prepared in accordance with accounting principles generally accepted in the United States. Reclassification of Prior Year Presentation Certain prior year balances within Other Income have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include useful lives of long-lived assets, the periods over which certain revenues and expenses will be recognized including collaboration revenue recognized from non-refundable upfront licensing payments, the amount of non-cash compensation costs related to share-based payments to employees and non-employees and the period over which these costs are expensed. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , as a new Topic, Accounting Standards Codification Topic 606 (“ASU 2014-09”). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customer Topic 606, Principal versus Agent Considerations , which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers Topic 606, Identifying Performance Obligations and Licensing , which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers Topic 606, Narrow-Scope Improvements and Practical Expedients , related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectibility, non-cash consideration and the presentation of sales and other similar taxes collected from customers. In December 2016, the FASB issued ASU No. 2016-20, T echnical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers , which amends certain narrow aspects of the guidance issued in ASU 2014-09 including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. These ASUs are effective for public entities for interim and annual reporting periods beginning after December 15, 2017, including interim periods within that year, which for us is the period beginning January 1, 2018. The Company will adopt the new standard in 2018 and will evaluate and plan for its implementation including assessing its overall impact during the second and third quarter of 2017. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Liabilities, which eliminates the available-for-sale classification for equity securities and requires equity securities to be measured at fair value with changes in the fair value recognized through net income. In addition it updates certain presentation and disclosure requirements. The new standard will be effective for reporting periods beginning after December 15, 2017. While we are assessing the impact of the guidance on our financial statements, we would be required to recognize mark-to-market gains and losses associated with any available-for-sale equity securities through net income instead of accumulated other comprehensive income. We do not carry any equity securities in our investment portfolio.We continue to review the requirements of the revised standard and any potential impact it may have on our financial statements. In February 2016, the FASB issued ASU 2016-02 Leases . The new guidance requires lessees to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases not considered short term. The new standard will be effective for reporting periods beginning after December 15, 2018. In transition, we are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, including the option to utilize a number of practical expedients. We will evaluate our operating lease arrangements to determine the impact of this amendment on the financial statements. This evaluation includes a review of our lease expenses, which are primarily operating lease arrangements for our facilities in Monrovia and San Diego. 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 addition, the standard allows an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as currently required, or account for forfeitures when they occur. We are adopting the new standard in the first quarter of 2017and established an accounting policy election to account for forfeitures when they occur. As such, we will recognize a cumulative-effect adjustment in retained earnings on awards that were in process of vesting as of December 31, 2016. We do not expect the adoption to have a material impact on our results of operations or financial position. 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. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. Credit losses on available-for-sale securities will be required when the amortized cost is below the fair market value.The amendment is effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. We will apply the standard’s provision as a cumulative effect adjustment to retained earnings as of the beginning of the first effective reporting period. We do not expect the adoption to have a material impact on our results of operations or financial postion. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The standard clarifies when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. The amendment is effective for fiscal years beginning after December 15, 2017 with early adoption permitted. We continue to review the requirements of this standard and any potential impact it may have on our financial statements. There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Revenue Recognition We have, to date, earned revenue from research and development collaborations, which may include research and development services, licenses of our internally-developed technologies, licenses of our internally-developed drug candidates, or combinations of these. We recognize revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; transfer of, or access to, the rights of our drug candidates or technologies has been completed or services have been rendered; our price to the customer is fixed or determinable and collectability is reasonably assured. The terms of our license and research and development and collaboration agreements generally include non-refundable upfront payments, research funding, co-development reimbursements, license fees and, milestone and other contingent payments to us for the achievement of defined collaboration objectives and certain clinical, regulatory and sales‑based events, as well as royalties on sales of any commercialized products. The terms of our licensing agreements include non‑refundable upfront fees, annual licensing fees, and contractual payment obligations for the achievement of pre‑defined preclinical, clinical, regulatory and sales‑based events by our partners. The licensing agreements also include royalties on sales of any commercialized products by our partners. Multiple‑Element Revenue Arrangements. Certain of our collaboration and license agreements represent multiple‑element revenue arrangements. To account for such transactions, we determine the elements, or deliverables, included in the arrangement and determine which deliverables are separate units for accounting purposes. We consider delivered items to be separate units of accounting if the delivered items have stand‑alone value to the customer. If the delivered items are separate units we allocate the consideration received or due under the arrangement to the various elements based on each elements’ relative selling price. The identification of individual elements in a multiple‑element arrangement and the estimation of the selling price of each element involve significant judgment, including consideration as to whether each delivered element has standalone value to the customer. We determine the estimated selling price for deliverables within each arrangement using vendor‑specific objective evidence (VSOE) of selling price, if available, or third‑party evidence of selling price if VSOE is not available, or our best evidence of selling price if neither VSOE nor third‑party evidence is available. To date, we have used our best evidence of selling price for each of our deliverables. Determining the best estimate of selling price for a deliverable requires significant judgment. We use our best estimate of selling price to estimate the selling price for licenses to our technologies and product candidates, since we do not have VSOE or third‑party evidence of selling price for these deliverables. The basis of our estimate of selling price is the arm’s length negotiation with the licensee that occurs in each transaction. The potential value of our technology to a licensee in a transaction depends on a variety of factors unique to each transaction. Factors that impact the negotiation and hence that we consider in our estimates center on the specific product candidate and include: the product candidate’s potential market size, the product candidate’s stage of development, the existence of competitive technologies that could be substituted for ours by the licensee and the scientific assessment of the product candidate’s likelihood of success at various development stages. The most common deliverable for our licensing transactions is the commercial license for our technology in the product candidate, and frequently a research license with an option for commercial license. We have also entered into multiple arrangements that involve the deliverable of drug candidates at various stages of development. The upfront payments, annual license fees, contingent payments, milestones and royalties relate to these licenses and/or options and depend on the product‑specific factors described above. The other significant deliverable is research and development services and the price for these depends on estimates for our personnel and supply costs and the costs of third‑party contract research organizations necessary to support the services. We recognize consideration allocated to an individual element when all other revenue recognition criteria are met for that element. Our multiple‑element revenue arrangements may include the following: · License arrangements The deliverables under our collaboration and license agreements generally include exclusive or non‑exclusive licenses to one or more of our technologies. The technologies can be applied to a collaborator’s product candidates for discovery, development, manufacturing and commercialization. We will also enter into agreements for the exclusive or non‑exclusive licenses to our internally developed product candidates. To account for this element of the arrangement, we evaluate whether the exclusive or non‑exclusive license has standalone value apart from the undelivered elements to the collaboration partner, which may include research and development services or options for commercial licenses, based on the consideration of the facts and circumstances of each arrangement, including the research and development capabilities of the collaboration partner and other market participants. We recognize arrangement consideration allocated to licenses upon delivery of the license, if the facts and circumstances indicate the license has standalone value apart from the undelivered elements. If facts and circumstances indicate that the delivered license does not have standalone value from the undelivered elements, we recognize the revenue as a combined unit of accounting. In those circumstances we recognize revenue from non‑refundable upfront fees in the same manner as the undelivered item(s), which is generally the period over which we provide research and developments services. · Collaboration Arrangements The deliverables under our collaboration arrangements generally involve the license to certain rights to one or more of our product candidates in addition to a license to access one or more of our technologies. These arrangements may require us to apply our technologies to a partner-identified or provided antibody and deliver a drug candidate that incorporates one of our technologies to the partner. To account for the element of the rights to a drug candidate that we have created, we evaluate whether the rights to the drug candidate has standalone value separate from the obligation to apply our technologies to partner-identified antibodies. We recognize arrangement consideration allocated to the rights to the drug candidates upon transfer of the rights to the partner which generally occurs upon execution of the agreement. We recognize arrangement consideration allocated to the obligation to apply our technologies to partner-identified antibodies as the partner accepts the drug candidates that incorporates our technologies, subject to any substitution or replacement provisions. · Research and Development Services The deliverables under our collaboration and license arrangements may include research and development services we perform on behalf of or with the collaboration partner. As the provision of research and development services is an integral part of our operations and we may be principally responsible for the performance of these services under the agreements, we recognize revenue on a gross basis for research and development services as we perform those services. Additionally, we recognize research related funding under collaboration research and development efforts as revenue as we perform or deliver the related services in accordance with contract terms. Milestone Revenue. Our collaboration and license agreements generally include contingent contractual payments related to achievement of specific research, development and regulatory milestones and sales‑based milestones that are based solely upon the performance of the licensee or collaborator. Research, development and regulatory contingent contractual payments and milestone payments are typically payable under our collaborations when our collaborator selects a compound, or initiates or advances a covered product candidate in preclinical or clinical development, upon submission for marketing approval of a covered product with regulatory authorities, upon receipt of actual marketing approvals of a covered product or for additional indications, or upon the first commercial sale of a covered product. Sales‑based contingent contractual payments are typically payable when annual sales of a covered product reach specific levels. At the inception of each arrangement that includes contingent contractual payments, we evaluate whether each potential payment and milestone is substantive and at risk to both parties based on the basis of the contingent nature of the milestone event. We evaluate factors such as scientific, regulatory, commercial and other risks that we must overcome to achieve the respective milestone event, whether the contractual payment due at each milestone event is reasonable relative to all deliverables and payment terms in the arrangement in making this assessment and whether the contingent contractual payment relates solely to past performance. Additionally, certain of our product development and technology license arrangements may include milestone payments related to the achievement of specific research and development milestones, which are achieved in whole or in part on our performance. We recognize any payment that is contingent upon the achievement of a substantive milestone entirely in the period in which the milestone is achieved. A milestone is defined as an event that can only be achieved based in whole or in part either on our performance, or the performance of our collaborators, or the occurrence of a specific outcome resulting from our past performance for which there is a substantive uncertainty at the date the arrangement is entered into that the event will be achieved. Collaborative Research and Licensing Agreements 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 engineered antibody drug candidates using the Company’s proprietary XmAb® technologies and drug candidates. Pursuant to the Novartis 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 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.). 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, if 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, if 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 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 best estimate of selling price which was allocated 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 best estimated selling price 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 best 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 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 Agreement. At the time that each Global Discovery Program is accepted by Novartis, the Company will recognize 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. No bispecific antibodies for Global Discovery Programs were delivered during 2016. 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 year ended December 31, 2016, we recognized $59.7 million of revenue under this arrangement. As of December 31, 2016 there is a receivable of $809,000 and $90.3 million in deferred revenue related to the arrangement. Amgen Inc. 2015 Agreement In September 2015, the Company entered into a research and license agreement (the 2015 Agreement) with Amgen Inc. (Amgen) to develop and commercialize bispecific antibody product candidates using the Company’s proprietary XmAb® bispecific Fc technology. Under the 2015 Agreement, the Company granted an exclusive license to Amgen to develop and commercialize bispecific drug candidates from the Company’s preclinical program that bind the CD38 antigen and the cytotoxic T-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 million upfront payment from Amgen and is eligible to receive up to $1.7 billion in future development, regulatory and sales milestones in total for all six programs and is eligible to receive royalties on any global net sales of products. Following the Company’s transfer of the DNA sequences, constructs and preclinical data related to its CD38 Program to Amgen, Amgen will assume full responsibility for the further development and commercialization of product candidates under the CD38 Program. Assuming successful development and commercialization of a product, the Company could receive up to $355 million in milestones payments which include $55 million in development milestones, $70 million in regulatory milestones and, $230 million in sales milestones. If commercialized, the Company is eligible to receive from high single-digit up to low double-digit royalties on global net sales of approved products under the CD38 Program. Under the 2015 Agreement, for each of the

Comprehensive Income (Loss)

Comprehensive Income (Loss)	12 Months Ended
	Dec. 31, 2016
Comprehensive Income (Loss)
Comprehensive income (loss)	2. Comprehensive Income (Loss) Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss). For the years ended December 31, 2016 and 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 loss during the year ended December 31, 2016.

Marketable Securities

Marketable Securities	12 Months Ended
	Dec. 31, 2016
Marketable Securities
Marketable Securities	3. Marketable Securities The Company’s marketable securities held as of December 31, 2016 and 2015 are summarized below: December 31, 2016 Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value (in thousands) Money Market Funds $ $ — $ — $ Corporate Securities Government Securities $ $ $ $ Reported as Cash and cash equivalents $ Marketable securities Total investments $ December 31, 2015 Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value (in thousands) Money Market Funds $ $ — $ — $ Corporate Securities Government Securities — $ $ $ $ The maturities of the Company’s marketable securities as of December 31, 2016 are as follows: Amortized Estimated Cost Fair Value (in thousands) Mature in one year or less $ $ Mature after one year through five years $ $ The unrealized losses on available-for-sale investments and their related fair values as of December 31, 2016 are as follows: Less than 12 months 12 months or greater Fair value Unrealized losses Fair value Unrealized losses (in thousands) Corporate Securities $ $ $ $ Government Securities $ $ $ $

Sale of Additional Common Stock

Sale of Additional Common Stock	12 Months Ended
	Dec. 31, 2016
Sale of Additional Common Stock
Sale of Additional Common Stock	4. Sale of Additional Common Stock In March 2015, we completed the sale of 8,625,000 shares of common stock which included shares we issued pursuant to our underwriters’ exercise of their over-allotment option pursuant to a follow-on offering. We received net proceeds of $115.2 million, after underwriting discounts, commissions and estimated offering expenses. In December 2016, we completed the sale of 5,272,750 shares of common stock which included shares we issued pursuant to our underwriters’ exercise of their over-allotment option pursuant to a follow-on financing. We received net proceeds of $119.3 million after underwriting discounts, commissions and offering expenses. On September 19, 2016, we entered into an Equity Distribution Agreement (the Distribution Agreement) with Piper Jaffray & Co (Piper Jaffray) pursuant to which we may sell from time to time, at our option, up to an aggregate of $40 million of common stock through Piper Jaffray as sales agent. The issuance and sale of these shares by Xencor under the Distribution Agreement will be pursuant to our shelf registration statement on Form S-3 (File No.333-213700) declared effective by the SEC on October 5, 2016. We are not obligated sell any shares of common stock under the Agreement and to date, we have not sold any shares under the Distribution Agreement.

Property and Equipment

Property and Equipment	12 Months Ended
	Dec. 31, 2016
Property and Equipment
Property and Equipment	5. Property and Equipment Property and equipment consist of the following: December 31, 2016 2015 (In thousands) Computers, software and equipment $ $ Furniture and fixtures Leasehold and tenant improvements Less accumulated depreciation and amortization $ $ Depreciation expense in 2016, 2015 and 2014 was $712,000, $519,000 and $188,000, respectively.

Income Taxes

Income Taxes	12 Months Ended
	Dec. 31, 2016
Income Taxes
Income Taxes	6. Inc ome Taxes Our effective tax rate differs from the statutory federal income tax rate, primarily as a result of the changes in valuation allowance. The provision for income taxes of $1.0 million for the year ended December 31, 2016 represents federal and state alternative minimum tax. For the years ended December 31, 2015 and 2014 there was no current provision for federal or state income taxes due to taxable losses subject to a valuation allowance incurred in each of the years. A reconciliation of the federal statutory income tax to our effective income tax is as follows (in thousands): Year Ended December 31, 2016 2015 2014 Federal statutory income tax $ $ $ State and local income taxes — — Non-deductible research and development credit — Stock based compensation Application of net operating loss carryforwards — — Alternative minimum tax — — Other Net change in valuation allowance Income tax provision $ $ — $ — The tax effect of temporary differences that give rise to a significant portion of the deferred tax assets and liabilities at December 31, 2016 and 2015 is presented below (in thousands): 2016 2015 Deferred income tax assets Net operating loss carryforwards $ $ Research credits Depreciation Unrealized loss on securities Accrued compensation Deferred revenue State taxes — Gross deferred income tax assets Valuation allowance Net deferred income tax assets Deferred income tax liabilities Patent costs Licensing costs Capitalized legal costs Gross deferred income tax liabilities Net deferred income tax asset $ — $ — Due to the uncertainty surrounding the realization of the benefits of our deferred tax assets in future tax periods, we have placed a valuation allowance against our deferred tax assets. The Company recognizes valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company’s net deferred income tax asset is not more likely than not to be realized due to the lack of sufficient sources of future taxable income and cumulative losses that have resulted over the years. During the year ended December 31, 2016, the valuation allowance decreased by $6.4 million. Upon analysis, there were changes in ownership under Section 382 of the Internal Revenue Code and related state provisions as a result of our sale of preferred stock and sale of common stock during 2013. Section 382 limits the amount of net operating losses and tax credit forwards that may be available after a change in ownership. The Company has adjusted its net operating loss and tax credit carryforwards to reflect the impact of the section 382 limitations. The Company’s tax returns remain open to potential inspection for the years 2013 and onwards for federal purposes and 2012 and onwards for state purposes. As of December 31, 2016, we had cumulative net operating loss carryforwards for federal and state income tax purposes of $145.2 million and $91.6 million respectively, and available tax credit carryforwards of approximately $6.4 million for federal income tax purposes and $5.2 million for state income tax purposes, which can be carried forward to offset future taxable income, if any. Our federal net operating loss carryforwards expire starting in 2018, state net operating losses expire starting in 2017 including $19.9 million that will expire in 2017, and federal tax credit carryforwards expire starting in 2019. Utilization of the net operating losses and tax credits are subject to a substantial annual limitation due to ownership changes which occurred. As a result of these changes, provisions in the Internal Revenue Code of 1986 under Section 382 and similar state provisions may result in the expiration of certain of our net operating losses and tax credits before we can use them.

Stock-Based Compensation

Stock-Based Compensation	12 Months Ended
	Dec. 31, 2016
Stock-Based Compensation
Stock-Based Compensation	7. 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 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 December 31, 2016, the total number of shares of common stock available for issuance under the 2013 Plan was 7,027,349. 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 by 4% of the total number of issued and outstanding shares of common stock as of December 31 of the immediate preceding year. On January 1, 2016, the total number of shares of common stock available for issuance under the 2013 Plan was automatically increased by 1,400,000 shares, which number is included in the number of shares available for issuance above. As of December 31, 2016 a total of 3,434,250 options have 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. Under the ESPP our employees may elect to have between 1-15% of their compensation withheld to purchase Company stock at a discount. The ESPP had an initial two-year term that includes four six-month purchase periods and employee withholding amounts may be used to purchase Company stock during each six-month purchase period. The initial two-year term ended in December 2015 and pursuant to the provisions of the ESPP, the second two-year term began automatically upon the end of the initial term. The total number of shares that can be purchased with the withholding amounts are based on the lower of 85% of the Company’s stock price at the initial offering date or, 85% of the Company’s stock price at each purchase date. 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 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. On January 1, 2014, the total number of shares of common stock available for issuance under the ESPP was automatically increased by 313,545 shares, which number is included in the number of shares reserved for issuance above. Pursuant to approval by our board, there was no increase in the number of authorized shares in the ESPP in 2016 or 2015. As of December 31, 2016 and 2015, we have issued a total of 221,486 and 176,383 shares of common stock, respectively, under the ESPP. Information with respect to stock options outstanding is as follows: December 31, 2016 2015 2014 Exercisable options Weighted average exercise price per share of exercisable options $ $ $ Weighted average grant date fair value per share of options granted during the year $ $ $ Options available for future grants Weighted average remaining contractual life The following table summarizes stock option activity for the years ended December 31, 2016 and 2015: Weighted- Weighted- Average Average Remaining Exercise Contractual Aggregate Number of Price Term Intrinsic Value Shares (Per Share) (1) (in years) (in thousands) (2) Balances at December 31, 2014 $ Options granted Options forfeited Options expired Options exercised(3) Balances at December 31, 2015 $ Options granted Options forfeited Options expired Options exercised(3) Balances at December 31, 2016 $ $ As of December 31, 2016 Options vested and expected to vest $ $ Exercisable $ $ (1) The weighted average exercise price per share is determined using exercise price per share for stock options. (2) The aggregate intrinsic value is calculated as the difference between the exercise price of the option and the fair value of our common stock for in‑ the‑money options at December 31, 2016 and 2015. (3) The total intrinsic value of stock options exercised was $11.2 million, $5.4 million and $155,000 for the years ended December 31, 2016, 2015 and 2014 respectively. The stock options outstanding and exercisable by exercise price at December 31, 2016 are as follows: Stock Options Outstanding Stock Options Exercisable Weighted- Average Remaining Weighted- Weighted- Range of Contractual Average Average Exercise Number of Term Exercise Price Number of Exercise Price Prices Shares (in years) Per Share Shares Per Share $0.59 – $4.25 $ $ $5.50 – $9.26 $ $ $9.78 – $14.75 $ $ $14.77 – $22.35 $ $ $24.38 – $26.76 $ — $ — $ $ We estimated the fair value of employee and non‑employee awards using the Black‑Scholes valuation model. The fair value of employee stock options is being amortized on a straight‑line basis over the requisite service period of the awards. Management estimates the probability of non‑employee awards being vested based upon an evaluation of the non‑employee achieving their specific performance goals. Options granted after our Initial Public Offering, are issued at the fair market value of our stock at the date the grant is approved by our board of directors. The fair value of employee stock options was estimated using the following weighted average assumptions for the years ended December 31, 2016, 2015 and 2014: Options 2016 2015 2014 Common stock fair value per share $ 11.50 - 26.76 $ 11.82 - 22.35 $ 8.56 - 16.52 Expected volatility 75.77% - 90.83% 69.17% - 86.46% Risk-free interest rate 1.03% - 2.18% 1.44% - 1.84% 1.67% - 1.96% Expected dividend yield — — — Expected term (in years) 5.23 - 6.08 5.23 - 6.08 ESPP 2016 2015 2014 Expected term (years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Expected volatility 67.8% - 79.8% 67.8% - 82.9% 70.6% - 71.8% Risk-free interest rate .47% - .93% .07% - .93% .06% - .46% Expected dividend yield — — — Total employee, director and non‑employee stock‑based compensation expense recognized was as follows: Year Ended December 31, (In thousands) 2016 2015 2014 General and administrative $ $ $ Research and development $ $ $ The expected term of stock options represents the average period the stock options are expected to remain outstanding. The expected stock price volatility for our stock options for the years ended December 31, 2016, 2015 and 2014 was determined by examining the historical volatilities for industry peers and adjusting for differences in our life cycle and financing leverage. Industry peers consist of several public companies in the biopharmaceutical industry. We determined the average expected life of stock options based on the simplified method because our common stock has not been publicly traded for an extended period and we do not have a track record of our stock being traded on the public markets for sufficient time to establish the volatility of our stock. The risk‑free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of our stock options. The expected dividend assumption is based on our history and expectation of dividend payouts. As of December 31, 2016 and 2015, the unamortized compensation expense related to unvested stock options was $18.1 million and $10.8 million, respectively. The remaining unamortized compensation expense will be recognized over the next 2.72 years. At December 31, 2016 and 2015, the unamortized compensation expense was $481,000 and $395,000 respectively under our ESPP. The remaining unamortized expense will be recognized over the next 11.5 months.

Commitments and Contingencies

Commitments and Contingencies	12 Months Ended
	Dec. 31, 2016
Commitments and Contingencies
Commitments and Contingencies	8. Commitments and Contingencies Operating leases The Company leases office and laboratory space in Monrovia, CA. In January 2015, we entered into a new lease agreement for the property. The new lease replaces the previous lease and extends our lease term to June 2020 with an option to renew for an additional five years. The new lease is a non-cancelable operating lease. The Company also leased office space in San Diego, CA through April 2018 which included 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. At December 31, 2016 the future minimum lease payments under the operating leases were as follows: Operating Years ending December 31, Leases 2017 $ 2018 2019 2020 Thereafter — Rent expense for the years ended December 31, 2016, 2015 and 2014 was $638,000, $558,000 and $597,000 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, 2015, 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, we filed the Amended Counter-Claim and the 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 cost 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 Court has scheduled a Settlement hearing for April 4, 2017. We continue to recognize legal costs related to the litigation as incurred and offset any insurance proceeds when approved and issued. For the year ended December 31, 2016 no amount of loss related to the settlement has been accrued. As of December 31, 2016, we have reported an outstanding settlement amount of $2.355 million as a payable and also reflected a receivable of the same amount for the insurance coverage that will fund the remaining settlement costs. We are obligated to make future payments to third parties under in‑license agreements, including sublicense fees, royalties, and payments that become due and payable on the achievement of certain development and commercialization milestones. As the amount and timing of sublicense fees and the achievement and timing of these milestones are not probable and estimable, such commitments have not been included on our balance sheet. Guarantees In the normal course of business, we indemnify certain employees and other parties, such as collaboration partners and other parties that perform certain work on behalf of, or for the Company or take licenses to our technologies. We have agreed to hold these parties harmless against losses arising from our breach of representations or covenants, intellectual property infringement or other claims made against these parties in performance of their work with us. These agreements typically limit the time within which the party may seek indemnification by us and the amount of the claim. It is not possible to prospectively determine the maximum potential amount of liability under these indemnification agreements since we have not had any prior indemnification claims on which to base the calculation. Further, each potential claim would be based on the unique facts and circumstances of the claim and the particular provisions of each agreement. We are not aware of any potential claims and did not record a liability as of December 31, 2016 and 2015.

401(k) Plan

401(k) Plan	12 Months Ended
	Dec. 31, 2016
401(k) Plan
401(k) Plan	9. 401(k) Plan We have a 401(k) plan covering all full‑time employees. Employees may make pre‑tax contributions up to the maximum allowable by the Internal Revenue Code. Participants are immediately vested in their employee contributions and employer discretionary contributions, if any. No employer contributions were made for the years ended December 31, 2016, 2015 or 2014.

Condensed Quarterly Financial D

Condensed Quarterly Financial Data (unaudited)	12 Months Ended
	Dec. 31, 2016
Condensed Quarterly Financial Data (unaudited)
Condensed Quarterly Financial Data (unaudited)	10. Condensed Quarterly Financial Data (unaudited) The following table contains selected unaudited financial data for each quarter of 2016 and 2015. The unaudited information should be read in conjunction with the Company’s financial statements and related notes included elsewhere in this report. The Company believes that the following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period. Quarterly Financial Data (in thousands, except per share data): 2016 Quarter Ended March 31, June 30, September 30, December 31, Total revenue $ $ $ $ Income (loss) from operations Net income (loss) Basic net income (loss) per common share Diluted net income (loss) per common share $ $ $ $ 2015 Quarter Ended March 31, June 30, September 30, December 31, Total revenue $ $ $ $ Income (loss) from operations Net income (loss) Basic net income (loss) per common share Diluted net income (loss) per common share $ $ $ $

Summary of Significant Accoun17

Summary of Significant Accounting Policies (Polices)	12 Months Ended
	Dec. 31, 2016
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The Company’s financial statements as of December 31, 2016, 2015, and 2014 and for the years then‑ended have been prepared in accordance with accounting principles generally accepted in the United States.
Reclassification of Prior Year Presentation	Reclassification of Prior Year Presentation Certain prior year balances within Other Income have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include useful lives of long-lived assets, the periods over which certain revenues and expenses will be recognized including collaboration revenue recognized from non-refundable upfront licensing payments, the amount of non-cash compensation costs related to share-based payments to employees and non-employees and the period over which these costs are expensed.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , as a new Topic, Accounting Standards Codification Topic 606 (“ASU 2014-09”). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customer Topic 606, Principal versus Agent Considerations , which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers Topic 606, Identifying Performance Obligations and Licensing , which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers Topic 606, Narrow-Scope Improvements and Practical Expedients , related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectibility, non-cash consideration and the presentation of sales and other similar taxes collected from customers. In December 2016, the FASB issued ASU No. 2016-20, T echnical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers , which amends certain narrow aspects of the guidance issued in ASU 2014-09 including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. These ASUs are effective for public entities for interim and annual reporting periods beginning after December 15, 2017, including interim periods within that year, which for us is the period beginning January 1, 2018. The Company will adopt the new standard in 2018 and will evaluate and plan for its implementation including assessing its overall impact during the second and third quarter of 2017. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Liabilities, which eliminates the available-for-sale classification for equity securities and requires equity securities to be measured at fair value with changes in the fair value recognized through net income. In addition it updates certain presentation and disclosure requirements. The new standard will be effective for reporting periods beginning after December 15, 2017. While we are assessing the impact of the guidance on our financial statements, we would be required to recognize mark-to-market gains and losses associated with any available-for-sale equity securities through net income instead of accumulated other comprehensive income. We do not carry any equity securities in our investment portfolio.We continue to review the requirements of the revised standard and any potential impact it may have on our financial statements. In February 2016, the FASB issued ASU 2016-02 Leases . The new guidance requires lessees to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases not considered short term. The new standard will be effective for reporting periods beginning after December 15, 2018. In transition, we are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, including the option to utilize a number of practical expedients. We will evaluate our operating lease arrangements to determine the impact of this amendment on the financial statements. This evaluation includes a review of our lease expenses, which are primarily operating lease arrangements for our facilities in Monrovia and San Diego. 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 addition, the standard allows an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as currently required, or account for forfeitures when they occur. We are adopting the new standard in the first quarter of 2017and established an accounting policy election to account for forfeitures when they occur. As such, we will recognize a cumulative-effect adjustment in retained earnings on awards that were in process of vesting as of December 31, 2016. We do not expect the adoption to have a material impact on our results of operations or financial position. 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. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. Credit losses on available-for-sale securities will be required when the amortized cost is below the fair market value.The amendment is effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. We will apply the standard’s provision as a cumulative effect adjustment to retained earnings as of the beginning of the first effective reporting period. We do not expect the adoption to have a material impact on our results of operations or financial postion. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The standard clarifies when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. The amendment is effective for fiscal years beginning after December 15, 2017 with early adoption permitted. We continue to review the requirements of this standard and any potential impact it may have on our financial statements. There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
Revenue Recognition	Revenue Recognition We have, to date, earned revenue from research and development collaborations, which may include research and development services, licenses of our internally-developed technologies, licenses of our internally-developed drug candidates, or combinations of these. We recognize revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; transfer of, or access to, the rights of our drug candidates or technologies has been completed or services have been rendered; our price to the customer is fixed or determinable and collectability is reasonably assured. The terms of our license and research and development and collaboration agreements generally include non-refundable upfront payments, research funding, co-development reimbursements, license fees and, milestone and other contingent payments to us for the achievement of defined collaboration objectives and certain clinical, regulatory and sales‑based events, as well as royalties on sales of any commercialized products. The terms of our licensing agreements include non‑refundable upfront fees, annual licensing fees, and contractual payment obligations for the achievement of pre‑defined preclinical, clinical, regulatory and sales‑based events by our partners. The licensing agreements also include royalties on sales of any commercialized products by our partners. Multiple‑Element Revenue Arrangements. Certain of our collaboration and license agreements represent multiple‑element revenue arrangements. To account for such transactions, we determine the elements, or deliverables, included in the arrangement and determine which deliverables are separate units for accounting purposes. We consider delivered items to be separate units of accounting if the delivered items have stand‑alone value to the customer. If the delivered items are separate units we allocate the consideration received or due under the arrangement to the various elements based on each elements’ relative selling price. The identification of individual elements in a multiple‑element arrangement and the estimation of the selling price of each element involve significant judgment, including consideration as to whether each delivered element has standalone value to the customer. We determine the estimated selling price for deliverables within each arrangement using vendor‑specific objective evidence (VSOE) of selling price, if available, or third‑party evidence of selling price if VSOE is not available, or our best evidence of selling price if neither VSOE nor third‑party evidence is available. To date, we have used our best evidence of selling price for each of our deliverables. Determining the best estimate of selling price for a deliverable requires significant judgment. We use our best estimate of selling price to estimate the selling price for licenses to our technologies and product candidates, since we do not have VSOE or third‑party evidence of selling price for these deliverables. The basis of our estimate of selling price is the arm’s length negotiation with the licensee that occurs in each transaction. The potential value of our technology to a licensee in a transaction depends on a variety of factors unique to each transaction. Factors that impact the negotiation and hence that we consider in our estimates center on the specific product candidate and include: the product candidate’s potential market size, the product candidate’s stage of development, the existence of competitive technologies that could be substituted for ours by the licensee and the scientific assessment of the product candidate’s likelihood of success at various development stages. The most common deliverable for our licensing transactions is the commercial license for our technology in the product candidate, and frequently a research license with an option for commercial license. We have also entered into multiple arrangements that involve the deliverable of drug candidates at various stages of development. The upfront payments, annual license fees, contingent payments, milestones and royalties relate to these licenses and/or options and depend on the product‑specific factors described above. The other significant deliverable is research and development services and the price for these depends on estimates for our personnel and supply costs and the costs of third‑party contract research organizations necessary to support the services. We recognize consideration allocated to an individual element when all other revenue recognition criteria are met for that element. Our multiple‑element revenue arrangements may include the following: · License arrangements The deliverables under our collaboration and license agreements generally include exclusive or non‑exclusive licenses to one or more of our technologies. The technologies can be applied to a collaborator’s product candidates for discovery, development, manufacturing and commercialization. We will also enter into agreements for the exclusive or non‑exclusive licenses to our internally developed product candidates. To account for this element of the arrangement, we evaluate whether the exclusive or non‑exclusive license has standalone value apart from the undelivered elements to the collaboration partner, which may include research and development services or options for commercial licenses, based on the consideration of the facts and circumstances of each arrangement, including the research and development capabilities of the collaboration partner and other market participants. We recognize arrangement consideration allocated to licenses upon delivery of the license, if the facts and circumstances indicate the license has standalone value apart from the undelivered elements. If facts and circumstances indicate that the delivered license does not have standalone value from the undelivered elements, we recognize the revenue as a combined unit of accounting. In those circumstances we recognize revenue from non‑refundable upfront fees in the same manner as the undelivered item(s), which is generally the period over which we provide research and developments services. · Collaboration Arrangements The deliverables under our collaboration arrangements generally involve the license to certain rights to one or more of our product candidates in addition to a license to access one or more of our technologies. These arrangements may require us to apply our technologies to a partner-identified or provided antibody and deliver a drug candidate that incorporates one of our technologies to the partner. To account for the element of the rights to a drug candidate that we have created, we evaluate whether the rights to the drug candidate has standalone value separate from the obligation to apply our technologies to partner-identified antibodies. We recognize arrangement consideration allocated to the rights to the drug candidates upon transfer of the rights to the partner which generally occurs upon execution of the agreement. We recognize arrangement consideration allocated to the obligation to apply our technologies to partner-identified antibodies as the partner accepts the drug candidates that incorporates our technologies, subject to any substitution or replacement provisions. · Research and Development Services The deliverables under our collaboration and license arrangements may include research and development services we perform on behalf of or with the collaboration partner. As the provision of research and development services is an integral part of our operations and we may be principally responsible for the performance of these services under the agreements, we recognize revenue on a gross basis for research and development services as we perform those services. Additionally, we recognize research related funding under collaboration research and development efforts as revenue as we perform or deliver the related services in accordance with contract terms. Milestone Revenue. Our collaboration and license agreements generally include contingent contractual payments related to achievement of specific research, development and regulatory milestones and sales‑based milestones that are based solely upon the performance of the licensee or collaborator. Research, development and regulatory contingent contractual payments and milestone payments are typically payable under our collaborations when our collaborator selects a compound, or initiates or advances a covered product candidate in preclinical or clinical development, upon submission for marketing approval of a covered product with regulatory authorities, upon receipt of actual marketing approvals of a covered product or for additional indications, or upon the first commercial sale of a covered product. Sales‑based contingent contractual payments are typically payable when annual sales of a covered product reach specific levels. At the inception of each arrangement that includes contingent contractual payments, we evaluate whether each potential payment and milestone is substantive and at risk to both parties based on the basis of the contingent nature of the milestone event. We evaluate factors such as scientific, regulatory, commercial and other risks that we must overcome to achieve the respective milestone event, whether the contractual payment due at each milestone event is reasonable relative to all deliverables and payment terms in the arrangement in making this assessment and whether the contingent contractual payment relates solely to past performance. Additionally, certain of our product development and technology license arrangements may include milestone payments related to the achievement of specific research and development milestones, which are achieved in whole or in part on our performance. We recognize any payment that is contingent upon the achievement of a substantive milestone entirely in the period in which the milestone is achieved. A milestone is defined as an event that can only be achieved based in whole or in part either on our performance, or the performance of our collaborators, or the occurrence of a specific outcome resulting from our past performance for which there is a substantive uncertainty at the date the arrangement is entered into that the event will be achieved.
Collaborative Research and Licensing Agreements	Collaborative Research and Licensing Agreements 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 engineered antibody drug candidates using the Company’s proprietary XmAb® technologies and drug candidates. Pursuant to the Novartis 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 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.). 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, if 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, if 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 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 best estimate of selling price which was allocated 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 best estimated selling price 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 best 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 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 Agreement. At the time that each Global Discovery Program is accepted by Novartis, the Company will recognize 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. No bispecific antibodies for Global Discovery Programs were delivered during 2016. 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 year ended December 31, 2016, we recognized $59.7 million of revenue under this arrangement. As of December 31, 2016 there is a receivable of $809,000 and $90.3 million in deferred revenue related to the arrangement. Amgen Inc. 2015 Agreement In September 2015, the Company entered into a research and license agreement (the 2015 Agreement) with Amgen Inc. (Amgen) to develop and commercialize bispecific antibody product candidates using the Company’s proprietary XmAb® bispecific Fc technology. Under the 2015 Agreement, the Company granted an exclusive license to Amgen to develop and commercialize bispecific drug candidates from the Company’s preclinical program that bind the CD38 antigen and the cytotoxic T-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 million upfront payment from Amgen and is eligible to receive up to $1.7 billion in future development, regulatory and sales milestones in total for all six programs and is eligible to receive royalties on any global net sales of products. Following the Company’s transfer of the DNA sequences, constructs and preclinical data related to its CD38 Program to Amgen, Amgen will assume full responsibility for the further development and commercialization of product candidates under the CD38 Program. Assuming successful development and commercialization of a product, the Company could receive up to $355 million in milestones payments which include $55 million in development milestones, $70 million in regulatory milestones and, $230 million in sales milestones. If commercialized, the Company is eligible to receive from high single-digit up to low double-digit royalties on global net sales of approved products under the CD38 Program. Under the 2015 Agreement, for each of the five Discovery Programs the Company will apply its bispecific technology to antibody molecules provided by Amgen that bind Discovery Program Targets and return the bispecific product candidates to Amgen for further testing, development and commercialization. Amgen has the right to substitute up to three of the previously identified targets during the research term provided that Amgen has not initiated non-human primate studies with the Xencor provided bispecific candidate. The initial research term is three years from the date of the agreement but Amgen, at its option, may request an extension of one year if Xencor has not completed delivery of all five Discovery Program bispecific candidates to Amgen. Amgen will assume full responsibility for development and commercialization of product candidates under each of the Discovery Programs. Assuming successful development and commercialization of each Discovery Program compound, the Company could receive up to $260.5 million in milestones for each compound which include $35.5 million in development milestones, $55 million in regulatory milestones and $170 million in sales milestones. If commercialized, the Company is eligible to receive mid to high single-digit royalties on global net sales of approved products. The Company evaluated the 2015 Agreement with Amgen and determined that it is a revenue arrangement with multiple deliverables or performance obligations. The Company’s substantive performance obligations under the 2015 Agreement include delivery of the DNA sequences, constructs and preclinical data related to its CD38 Program and application of its bispecific technology to five Amgen provided targets and delivery of the five bispecific product candidates. The Company evaluated the 2015 Agreement with Amgen and determined that the CD38 Program and each of the five Discovery Programs represent separate units of accounting. The $45 million upfront payment represents the total initial consideration and was allocated to each of the deliverables using the relative selling price method. After identifying each of the deliverables included in the arrangement, the Company determined its best estimate of selling price for each of the deliverables. In order to determine the best estimate of selling price for the CD38 Program, the Company determined the value of the CD38 Program by calculating a risk-adjusted present value of the potential revenue from the future development and regulatory milestones under the 2015 Agreement. This amount represents the value that a third party would be willing to pay as an upfront fee to license the Company’s CD38 Program. The Company determined the value of each of the Discovery Programs by calculating a risk-adjusted net present value of the potential revenue from future development and regulatory milestones reduced by the estimated cost of the Company’s efforts to apply its bispecific technology to the Amgen targets and deliver the five bispecific product candidates. These amounts represent the value that a third party would be willing to pay as an upfront fee 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 During the fourth quarter of 2015 we delivered the CD38 DNA sequences, constructs and preclinical data to Amgen. At the time that each bispecific Discovery Program is accepted by Amgen, the Company will recognize as collaboration revenue $6.25 million for each program. Since Amgen has substitution rights for up to three targets, revenue recognition may be delayed until the earlier that Amgen initiates non-human primate studies for a delivered bispecific Discovery Program or the right to substitute the target lapses. During 2016, the Company delivered bispecific antibody candidates for five Discovery Programs and Amgen elected to substitute one of the originally identified antibody candidates. During the year ended December 30, 2016 and 2015, we recognized $18.75 million and $13.75 million in revenue, respectively under this arrangement. As of December 31, 2016 there was $12.5 million in deferred revenue related to the arrangement. 2010 Agreement In December 2010, we entered into a Collaboration and Option Agreement (the 2010 Agreement) with Amgen, pursuant to which we agreed to collaborate with Amgen on development of XmAb5871 in rheumatoid arthritis (RA) through completion of a Phase 2 proof-of-concept (POC) trial. In October 2014, we entered into an agreement with Amgen to terminate the 2010 Agreement pursuant to which all worldwide rights to develop and commercialize XmAb5871 reverted back to us. Our obligations to continue development of XmAb5871 under the terms of the 2010 Agreement terminated effective as of the date of the termination agreement. As a result of and effective as of the date of the termination agreement, all of Amgen’s rights to XmAb5871 terminated including the right to exercise an exclusive option to acquire the worldwide rights to XmAb5871. Amgen’s obligations to make any further payments to us are also terminated. In connection with the termination, we granted Amgen a right of first negotiation (ROFN) to obtain an exclusive license to develop and commercialize any XmAb5871 product. The ROFN requires us to notify Amgen if we decide to pursue a licensing transaction with a third party involving XmAb5871. Upon receipt of the notification, Amgen will have a limited time to review the data from XmAb5871 and enter into negotiations to obtain an exclusive license to develop and commercialize any future XmAb5871 product. The ROFN will expire upon the earlier of: (1) October 27, 2019, (2) initiation by us of a Phase 3 clinical trial with XmAb5871 or (3) the transfer or sale to a third party of substantially all of our business. We have determined that the termination results in a cancellation of all our obligations to Amgen under the 2010 Agreement. We have evaluated the terms of the ROFN and determined that it has de minimis value because Amgen’s rights under the ROFN are limited to an exclusive negotiating period of a short duration and there is no bargain element in the ROFN. As a result of the termination, we have recognized $5.2 million of income which represents the balance of the deferred revenue related to the agreement at the time of the termination. The total revenue recognized under this arrangement was zero for each of the year ended December 2016 and 2015 and $6.9 million for the year ended December 31, 2014. As of December 31, 2016 we have no deferred revenue related to this agreement. 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, IIb, Xtend and others during a two year research term. We received an upfront payment of $2.5 million and received research funding of $1.6 million per year over the research term. We recognized 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. The total revenue recognized under this agreement was $2.7 million, $2.9 million and $0.1 million for the years ended December 31, 2016, 2015 and 2014 respectively. As of December 31, 2016 we have no deferred revenue related to the agreement. MorphoSys Ag In June 2010, we entered into a Collaboration and License Agreement with MorpohSys AG (MorphoSys), which we subsequently amended in March 2012. The agreement provided us an upfront payment of $13 million in exchange for an exclusive worldwide license to our patents and know‑how to research, develop and commercialize our XmAb5574 product candidate (subsequently renamed MOR208) with the right to sublicense under certain conditions. Under the agreement, we agreed to collaborate with MorphoSys to develop and commercialize XmAb5574/MOR208. If certain developmental, regulatory and sales milestones are achieved, we are eligible to receive future milestone payments and royalties. There were no revenues recognized under this arrangement for the years ended December 31, 2016, 2015 and 2014. As of December 31, 2016, we have no deferred revenue related to this agreement. 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. 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. In addition, if certain development, regulatory and commercial milestones are achieved, we are eligible to receive up to $66.5 million for the first product to achieve such milestones on a target‑by‑target basis. If licensed products are successfully commercialized, we are also entitled to receive royalties based on a percentage of net sales of such products sold by Alexion, its affiliates or its sub licensees, which percentage is in the low single digits. Alexion’s royalty obligations continue on a product‑by‑product and country‑by‑ country basis until the expiration of the last‑to‑expire valid claim in a licensed patent covering the applicable product in such country. In the third quarter of 2014, Alexion achieved a clinical development milestone with an undisclosed molecule to be used against an undisclosed target. In the fourth quarter of 2015, Alexion exercised its option to take an exclusive commercial license and achieved a further clinical development milestone. In December 2016, Alexion achieved a Phase 3 clinical development milestone for an undisclosed target. The total revenue recognized under this arrangement was $6.0 million, $8.5 million and $1.0 million for the years ended December 31, 2016, 2015 and 2014, respectively. As of December 31, 2016 there was a receivable of $5.0 million and deferred revenue related to this agreement of $0.6 million. Boehringer Ingelheim International GmbH In 2007 we entered into a Research Licensee and Collaboration Agreement with Boehringer Ingelheim International GmbH (BI). Under the agreement, we provided BI with a three‑year research license to one of our technologies and commercial options. We identified the deliverables under the agreement at inception as the research licenses and options to acquire commercial licenses to up to two compounds. Upon exercise of an option to a commercial license, we are eligible to receive future milestone payments and royalties. We determined that the future milestones and related payments were substantive and contingent and we did not allocate any of the upfront consideration to the milestones. The upfront payment and the annual license fees were recognized ratably into income over the research license term which expired in 2011 and payments for the commercial options were recognized in the period the commercial option was exercised since the options were contingent and substantive. During 2012, BI advanced a compound that incorporates our technology into clinical development and we received a milestone payment of $1.2 million and recognized the payment as revenue in the period the milestone event occurred. No revenue related to this arrangement was recognized in 2016, 2015 or 2014. There is no deferred revenue related to this agreement at December 31, 2016. CSL Limited 2009 Agreement In 2009 we entered into a Research License and Commercialization Agreement with CSL Limited (CSL-2009). Under the agreement, we provided CSL with a research license to one of our technologies and up to five commercial options. The upfront payment of $0.75 million received at inception and the annual research license renewal payments were recognized as revenue ratably over the five‑year term of the research license. In May 2013, we entered into an amendment to the February 2009 Research License and Commercialization Agreement with CSL, which eliminated a contingent milestone payment requirement and reduced the royalty rate on net sales for a product in development. The amendment provided for a payment upon signing of $2.5 million. We determined that the amendment was a material modification to the original agreement and evaluated the remaining deliverables at the date of the amendment. We determined that the remaining deliverables were the research license which expired in February 2014 and four additional options to take commercial licenses through the term of the research period. The options were considered to be substantive and contingent and we did not allocate any of the proceeds received in the amendment to the options. The amendment proceeds were recognized into income over the remaining period of the research term. In 2013 CSL sublicensed CSL362 (now called JNJ-56022473) to Janssen Biotech Inc. (Janssen Biotech). In August 2015, CSL, through its sub licensee, Janssen Biotech, initiated a Phase 2 clinical trial for CSL362 for which we received a milestone payment. Total revenue recognized for the years ended December 31, 2016, 2015 and 2014 was $0, $2.5 million and $0.7 million respectively. As of December 31, 2016 we have no deferred revenue related to this agreement. Merck Sharp & Dohme Corp. 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. In the first quarter of 2014, Merck initiated a Phase 1 clinical trial which triggered a $0.5 million milestone payment to us. For each of the years ended December 31, 2016 and 2015 total revenue recognized was $0.1 million, and for the year ended December 31, 2014, total revenue recognized was $0.6 million. As of December 31, 2016, we had deferred revenue of $50,000 related to this agreement. Potential Milestones As of December 31, 2016, the Company may be eligible to receive the following maximum payments from its collaborative partners and licensees based upon contractual terms in the agreements assuming all options are exercised and all milestones are achieved: Potential Milestones (in millions) Total Partner Development-based Regulatory-based Sales-based Milestones Alexion (1) $ $ $ $ Amgen BI (1) CSL Janssen 2009 (1) Janssen (1) — Merck (1) — MorphoSys (1) Novartis Total $ $ $ $ (1) The payments are solely dependent upon activities of the collaborative partner or licensee. Revenue earned The $87.5 million, $27.8 million and $9.5 million of revenue recorded for the years ended December 31, 2016, 2015 and 2014, respectively was earned principally from the following licensees (in millions): Year Ended December 31, 2016 2015 2014 Amgen $ $ $ Alexion Novo Nordisk — Novartis — — CSL — Other Total $ $ $ A portion of our revenue is earned from collaboration partners outside the United States. Non‑U.S. revenue is denominated in U.S. dollars. A breakdown of our revenue from U.S. and Non‑U.S. sources for the years ended December 31, 2016, 2015 and 2014 is as follows (in millions): Year Ended December 31, 2016 2015 2014 U.S. Revenue $ $ $ Non-U.S. Revenue Total $ $ $
Deferred Revenue	Deferred Revenue Deferred revenue arises from payments received in advance of the culmination of the earnings process. We have classified deferred revenue for which we stand ready to perform within the next 12 months as a current liability. We recognize deferred revenue as revenue in future periods when the applicable revenue recognition criteria have been met. The total amounts reported as deferred revenue were $103.4 million and $33.8 million at December 31, 2016 and 2015, respectively.
Research and Development Expenses	Research and Development Expenses Research and development expenses include costs we incur for our own and for our collaborators research and development activities. Research and development costs are expensed as incurred. These costs consist primarily of salaries and benefits, including associated stock‑based compensation, laboratory supplies, facility costs, and applicable overhead expenses of personnel directly involved in the research and development of new technology and products, as well as fees paid to other entities that conduct certain research development activities on our behalf. We estimate preclinical study and clinical trial expenses based on the services performed pursuant to the contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on our behalf based on the actual time and expenses incurred by them. Further, we accrue expenses related to clinical trials based on the level of patient enrollment and activity according to the related agreement. We monitor patient enrollment levels and related activity to the extent reasonably possible and adjust estimates accordingly. We capitalize acquired research and development technology licenses and third‑party contract rights and amortize the costs over the shorter of the license term or the expected useful life. We review the license arrangements and the amortization period on a regular basis and adjust the carrying value or the amortization period of the licensed rights if there is evidence of a change in the carrying value or useful life of the asset.
Cash and Cash Equivalents	Cash and Cash Equivalents We consider cash equivalents to be only those investments which are highly liquid, readily convertible to cash and which mature within three months from the date of purchase.
Marketable Securities	Marketable Securities The Company has an investment policy that includes guidelines on acceptable investment securities, minimum credit quality, maturity parameters and concentration and diversification. The Company invests its excess cash primarily in marketable securities issued by investment grade institutions. The Company considers its marketable securities to be “available-for-sale”, as defined by authoritative guidance issued by the FASB. 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. Accrued interest was $1.4 million and $0.9 million at December 31, 2016 and 2015, respectively. 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.
Concnetrations of Risk	Concentrations of Risk Cash, cash equivalents and marketable securities are financial instruments that potentially subject the Company to concentrations of risk. Xencor invests its cash in corporate debt securities and U.S. sponsored agencies with strong credit ratings. Xencor has established guidelines relative to diversification and maturities that are designed to help ensure safety and liquidity. These guidelines are periodically reviewed to take advantage of trends in yields and interest rates. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. Amounts on deposit in excess of federally insured limits at December 31, 2016 and 2015 approximated $14.0 million and $12.1 million, respectively. We have payables with two service providers that represent 28% of our total payables and three service providers that represented 55% of our total payables for the years ended December 31, 2016 and 2015, respectively. We rely on two critical suppliers for the manufacture of our drug product for use in our clinical trials. While we believe that there are alternative vendors available, a change in manufacturing vendors could cause a delay in the availability of drug product and result in a delay of conducting and completing our clinical trials. No other vendor accounted for more than 10% of total payables at December 31, 2016 or 2015.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Our financial instruments primarily consist of cash and cash equivalents, marketable securities, 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 approximate 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): December 31, 2016 Total Fair Value Level 1 Level 2 Money Market Funds in Cash and Cash Equivalents $ $ $ — Corporate Securities — Government Securities — $ $ $ December 31, 2015 Total Fair Value Level 1 Level 2 Money Market Funds in Cash and Cash Equivalents $ $ $ — Corporate Securities — Government Securities — $ $ $
Property and Equipment	Property and Equipment Property and equipment are recorded at cost and depreciated using the straight‑line method over the estimated useful lives of the assets. Expenditures for repairs and maintenance are charged to expense as incurred while renewals and improvements are capitalized. Useful lives by asset category are as follows: Computers, software and equipment 3 - 5 years Furniture and fixtures 5 - 7 years Leasehold improvements 5 - 7 years or remaining lease term, whichever is less
Patents, Licenses, and Other Intangible Assets	Patents, Licenses, and Other Intangible Assets The cost of acquiring licenses is capitalized and amortized on the straight‑ line basis over the shorter of the term of the license or its estimated economic life, ranging from five to 25 years. Third‑party costs incurred for acquiring patents are capitalized. Capitalized costs are accumulated until the earlier of the period that a patent is issued or we abandon the patent claims. Cumulative capitalized patent costs are amortized on a straight‑line basis from the date of issuance over the shorter of the patent term or the estimated useful economic life of the patent, ranging from 13 to 20 years. Our senior management, with advice from outside patent counsel, assesses three primary criteria to determine if a patent will be capitalized initially: i) technical feasibility, ii) magnitude and scope of new technical function covered by the patent compared to the company’s existing technology and patent portfolio, particularly assessing the value added to our product candidates or licensing business, and iii) legal issues, primarily assessment of patentability and prosecution cost. We review our intellectual property on a regular basis to determine if there are changes in the estimated useful life of issued patents and if any capitalized costs for unissued patents should be abandoned. Capitalized patent costs related to abandoned patent filings are charged off in the period of the decision to abandon. During 2016, 2015 and 2014, we abandoned previously capitalized patent and licensing related charges of $356,000 $296,000 and $509,000, respectively. The carrying amount and accumulated amortization of patents, licenses, and other intangibles is as follows (in thousands): December 31, 2016 2015 Patents, definite life $ $ Patents, pending issuance Licenses and other amortizable intangible assets Nonamortizable intangible assets (trademarks) Total gross carrying amount Accumulated amortization—patents Accumulated amortization—licenses and other Total intangible assets, net $ $ Amortization expense for patents, licenses, and other intangible assets was $755,000, $594,000 and $694,000 for the years ended December 31, 2016, 2015 and 2014, respectively. Future amortization expense for patent, licenses, and other intangible assets recorded as of December 31, 2016, and for which amortization has commenced, is as follows: Year ended December 31, (in thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total $ The above amortization expense forecast is an estimate. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets, and other events. As of December 31, 2016, the Company has $4.1 million of intangible assets which are in‑process and have not been placed in service and, accordingly amortization on these assets has not commenced.
Long-Lived Assets	Long‑Lived Assets Management reviews long‑lived assets which include fixed assets and amortizable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. We did not recognize a loss from impairment for the years ended December 31, 2016, 2015 or 2014.
Income Taxes	Income Taxes We account for income taxes in accordance with accounting guidance which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. We assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is greater than 50% likelihood that a tax benefit will be sustained, we have recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is a 50% or less likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. We did not have any material uncertain tax positions at December 31, 2016 or 2015. Our policy is to recognize interest and penalties on taxes, if any, as a component of income tax expense.
Stock-Based Compensation	Stock‑Based Compensation We recognize compensation expense using a fair‑value‑based method for costs related to all share‑based payments, including stock options and shares issued under our Employee Stock Purchase Plan (ESPP). Stock‑based compensation cost related to employees and directors is measured at the grant date, based on the fair‑value—based measurement of the award using the Black‑Scholes method, and is recognized as expense over the requisite service period on a straight‑line basis. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data and industry published statistics to estimate pre‑vesting option forfeitures and record stock‑based compensation expense only for those awards that are expected to vest. We recorded stock‑based compensation and expense for stock‑based awards to employees, directors and consultants of approximately $7.8 million, $4.9 million and $1.8 million for the years ended December 31, 2016, 2015 and 2014, respectively. Included in the 2016 and 2015 balances for total compensation expense is $378,000 and $341,000, relating to our ESPP, respectively. Options granted to individual service providers that are not employees or directors are accounted for at estimated fair value using the Black‑Scholes option‑pricing method and are subject to periodic re‑measurement over the period during which the services are rendered.
Net Income (Loss) Per Share	Net Income (Loss) Per Share Basic net income (loss) per common share is computed by dividing the net income or loss by the weighted‑average number of common shares outstanding during the period. Potentially dilutive securities consisting of stock options at December 31, 2015 and 2014, and stock purchases under the Employee Stock Purchase Plan were not included in the diluted net loss per common shares calculation because the inclusion of such shares would have had an antidilutive effect as follows: Year Ended December 31, 2016 2015 2014 (in thousands) Options to purchase common stock — Employee stock purchase plan shares — Total — Year Ended December 31, 2016 2015 2014 (in thousands, except per share data) Basic Numerator: Net income (loss) attributable to common stockholders for basic net income (loss) per share $ $ $ Denominator: Weighted-average common shares outstanding Basic net income (loss) per common share $ $ $ Diluted Numerator: Net income (loss) attributable to common stockholders for diluted net income (loss) per share $ $ $ Denominator: Weighted average number of common shares outstanding used in computing basic net income (loss) per common share Dilutive effect of employee stock options and ESPP — — Weighted-average number of common shares outstanding used in computing diluted net income (loss) per common share Diluted net income (loss) per common share $ $ $
Segment Reporting	Segment Reporting The Company determines its segment reporting based upon the way the business is organized for making operating decisions and assessing performance. The Company has only one operating segment related to the development of pharmaceutical products.

Summary of Significant Accoun18

Summary of Significant Accounting Policies (Tables)	12 Months Ended
	Dec. 31, 2016
Summary of Significant Accounting Policies
Schedule of receivables from maximum payments from collaborative partners and licensees	Potential Milestones (in millions) Total Partner Development-based Regulatory-based Sales-based Milestones Alexion (1) $ $ $ $ Amgen BI (1) CSL Janssen 2009 (1) Janssen (1) — Merck (1) — MorphoSys (1) Novartis Total $ $ $ $ (1) The payments are solely dependent upon activities of the collaborative partner or licensee.
Schedule of revenue by licensees	The $87.5 million, $27.8 million and $9.5 million of revenue recorded for the years ended December 31, 2016, 2015 and 2014, respectively was earned principally from the following licensees (in millions): Year Ended December 31, 2016 2015 2014 Amgen $ $ $ Alexion Novo Nordisk — Novartis — — CSL — Other Total $ $ $
Schedule of revenue from U.S. and Non U.S. sources	A breakdown of our revenue from U.S. and Non‑U.S. sources for the years ended December 31, 2016, 2015 and 2014 is as follows (in millions): Year Ended December 31, 2016 2015 2014 U.S. Revenue $ $ $ Non-U.S. Revenue Total $ $ $
Schedule of assets recorded at fair value	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): December 31, 2016 Total Fair Value Level 1 Level 2 Money Market Funds in Cash and Cash Equivalents $ $ $ — Corporate Securities — Government Securities — $ $ $ December 31, 2015 Total Fair Value Level 1 Level 2 Money Market Funds in Cash and Cash Equivalents $ $ $ — Corporate Securities — Government Securities — $ $ $
Schedule of useful lives by asset category	Computers, software and equipment 3 - 5 years Furniture and fixtures 5 - 7 years Leasehold improvements 5 - 7 years or remaining lease term, whichever is less
Schedule of carrying amount and accumulated amortization of patents, licenses, and other intangibles	The carrying amount and accumulated amortization of patents, licenses, and other intangibles is as follows (in thousands): December 31, 2016 2015 Patents, definite life $ $ Patents, pending issuance Licenses and other amortizable intangible assets Nonamortizable intangible assets (trademarks) Total gross carrying amount Accumulated amortization—patents Accumulated amortization—licenses and other Total intangible assets, net $ $
Future amortization expense for patents, licenses, and other intangible assets	Year ended December 31, (in thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total $
Schedule of potentially dilutive securities	Year Ended December 31, 2016 2015 2014 (in thousands) Options to purchase common stock — Employee stock purchase plan shares — Total —
Schedule of basic and diluted net loss per common share	Year Ended December 31, 2016 2015 2014 (in thousands, except per share data) Basic Numerator: Net income (loss) attributable to common stockholders for basic net income (loss) per share $ $ $ Denominator: Weighted-average common shares outstanding Basic net income (loss) per common share $ $ $ Diluted Numerator: Net income (loss) attributable to common stockholders for diluted net income (loss) per share $ $ $ Denominator: Weighted average number of common shares outstanding used in computing basic net income (loss) per common share Dilutive effect of employee stock options and ESPP — — Weighted-average number of common shares outstanding used in computing diluted net income (loss) per common share Diluted net income (loss) per common share $ $ $

Marketable Securities (Tables)

Marketable Securities (Tables)	12 Months Ended
	Dec. 31, 2016
Marketable Securities
Schedule of marketable securities	December 31, 2016 Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value (in thousands) Money Market Funds $ $ — $ — $ Corporate Securities Government Securities $ $ $ $ Reported as Cash and cash equivalents $ Marketable securities Total investments $ December 31, 2015 Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value (in thousands) Money Market Funds $ $ — $ — $ Corporate Securities Government Securities — $ $ $ $
Schedule of maturities of marketable securities	Amortized Estimated Cost Fair Value (in thousands) Mature in one year or less $ $ Mature after one year through five years $ $
Schedule of unrealized losses on available-for-sale investments	Less than 12 months 12 months or greater Fair value Unrealized losses Fair value Unrealized losses (in thousands) Corporate Securities $ $ $ $ Government Securities $ $ $ $

Property and Equipment (Tables)

Property and Equipment (Tables)	12 Months Ended
	Dec. 31, 2016
Property and Equipment
Schedule of property and equipment	December 31, 2016 2015 (In thousands) Computers, software and equipment $ $ Furniture and fixtures Leasehold and tenant improvements Less accumulated depreciation and amortization $ $

Income Taxes (Tables)

Income Taxes (Tables)	12 Months Ended
	Dec. 31, 2016
Income Taxes
Reconciliation of the federal statutory income tax rate to our effective income tax rate	Year Ended December 31, 2016 2015 2014 Federal statutory income tax $ $ $ State and local income taxes — — Non-deductible research and development credit — Stock based compensation Application of net operating loss carryforwards — — Alternative minimum tax — — Other Net change in valuation allowance Income tax provision $ $ — $ —
Schedule of tax effect of temporary differences that give rise to a significant portion of the deferred tax assets and liabilities	2016 2015 Deferred income tax assets Net operating loss carryforwards $ $ Research credits Depreciation Unrealized loss on securities Accrued compensation Deferred revenue State taxes — Gross deferred income tax assets Valuation allowance Net deferred income tax assets Deferred income tax liabilities Patent costs Licensing costs Capitalized legal costs Gross deferred income tax liabilities Net deferred income tax asset $ — $ —

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	12 Months Ended
	Dec. 31, 2016
Stock-Based Compensation
Schedule of stock options outstanding	December 31, 2016 2015 2014 Exercisable options Weighted average exercise price per share of exercisable options $ $ $ Weighted average grant date fair value per share of options granted during the year $ $ $ Options available for future grants Weighted average remaining contractual life
Summary of stock option activity	Weighted- Weighted- Average Average Remaining Exercise Contractual Aggregate Number of Price Term Intrinsic Value Shares (Per Share) (1) (in years) (in thousands) (2) Balances at December 31, 2014 $ Options granted Options forfeited Options expired Options exercised(3) Balances at December 31, 2015 $ Options granted Options forfeited Options expired Options exercised(3) Balances at December 31, 2016 $ $ As of December 31, 2016 Options vested and expected to vest $ $ Exercisable $ $
Schedule of stock options outstanding and exercisable by exercise price	Stock Options Outstanding Stock Options Exercisable Weighted- Average Remaining Weighted- Weighted- Range of Contractual Average Average Exercise Number of Term Exercise Price Number of Exercise Price Prices Shares (in years) Per Share Shares Per Share $0.59 – $4.25 $ $ $5.50 – $9.26 $ $ $9.78 – $14.75 $ $ $14.77 – $22.35 $ $ $24.38 – $26.76 $ — $ — $ $
Schedule of weighted average assumptions used for estimation of fair value of stock options	Options 2016 2015 2014 Common stock fair value per share $ 11.50 - 26.76 $ 11.82 - 22.35 $ 8.56 - 16.52 Expected volatility 75.77% - 90.83% 69.17% - 86.46% Risk-free interest rate 1.03% - 2.18% 1.44% - 1.84% 1.67% - 1.96% Expected dividend yield — — — Expected term (in years) 5.23 - 6.08 5.23 - 6.08
Schedule of weighted average assumptions used for estimation of fair value of ESPP	ESPP 2016 2015 2014 Expected term (years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Expected volatility 67.8% - 79.8% 67.8% - 82.9% 70.6% - 71.8% Risk-free interest rate .47% - .93% .07% - .93% .06% - .46% Expected dividend yield — — —
Schedule of total employee, director and non-employee stock-based compensation expense recognized	Year Ended December 31, (In thousands) 2016 2015 2014 General and administrative $ $ $ Research and development $ $ $

Commitments and Contingencies (

Commitments and Contingencies (Tables)	12 Months Ended
	Dec. 31, 2016
Commitments and Contingencies
Schedule of future minimum payments under the non-cancelable operating and capital leases	Operating leases The Company leases office and laboratory space in Monrovia, CA. In January 2015, we entered into a new lease agreement for the property. The new lease replaces the previous lease and extends our lease term to June 2020 with an option to renew for an additional five years. The new lease is a non-cancelable operating lease. The Company also leased office space in San Diego, CA through April 2018 which included 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. At December 31, 2016 the future minimum lease payments under the operating leases were as follows: Operating Years ending December 31, Leases 2017 $ 2018 2019 2020 Thereafter —

Condensed Quarterly Financial24

Condensed Quarterly Financial Data (unaudited) (Tables)	12 Months Ended
	Dec. 31, 2016
Condensed Quarterly Financial Data (unaudited)
Schedule of Quarterly Financial Data	2016 Quarter Ended March 31, June 30, September 30, December 31, Total revenue $ $ $ $ Income (loss) from operations Net income (loss) Basic net income (loss) per common share Diluted net income (loss) per common share $ $ $ $ 2015 Quarter Ended March 31, June 30, September 30, December 31, Total revenue $ $ $ $ Income (loss) from operations Net income (loss) Basic net income (loss) per common share Diluted net income (loss) per common share $ $ $ $

Summary of Significant Accoun25

Summary of Significant Accounting Policies - Collaborative Research and Licensing Agreement (Details)

1 Months Ended

3 Months Ended

12 Months Ended

Jul. 31, 2016USD ($)

Jun. 30, 2016USD ($)item

Sep. 30, 2015USD ($)item

Dec. 31, 2014USD ($)

Oct. 31, 2014USD ($)

Jul. 31, 2013USD ($)item

May 31, 2013USD ($)item

Jan. 31, 2013USD ($)item

Jun. 30, 2010USD ($)

Dec. 31, 2016USD ($)item

Sep. 30, 2016USD ($)

Jun. 30, 2016USD ($)

Mar. 31, 2016USD ($)

Dec. 31, 2015USD ($)

Sep. 30, 2015USD ($)item

Jun. 30, 2015USD ($)

Mar. 31, 2015USD ($)

Mar. 31, 2014USD ($)

Dec. 31, 2016USD ($)item

Dec. 31, 2015USD ($)

Dec. 31, 2014USD ($)

Dec. 31, 2012USD ($)

Dec. 31, 2009USD ($)item

Dec. 31, 2007item

Collaboration research and licensing agreements

Potential milestone payment

$ 4,818,500,000

Revenue recognized

$ 6,440,000

$ 7,821,000

$ 66,007,000

$ 7,252,000

$ 21,754,000

$ 3,503,000

$ 1,014,000

$ 1,491,000

87,520,000

$ 27,762,000

$ 9,520,000

Deferred revenue

103,400,000

33,800,000

103,400,000

33,800,000

Accounts receivable

8,616,000

$ 44,000

8,616,000

44,000

Novartis

Collaboration research and licensing agreements

Potential milestone payment

2,410,000,000

Revenue recognized

59,700,000

Amgen, Inc.

Collaboration research and licensing agreements

Potential milestone payment

1,657,500,000

Revenue recognized

18,700,000

13,800,000

6,900,000

Merck Sharp & Dohme Corp.

Collaboration research and licensing agreements

Potential milestone payment

9,500,000

Alexion Pharmaceuticals, Inc.

Collaboration research and licensing agreements

Potential milestone payment

390,500,000

Revenue recognized

6,000,000

8,500,000

1,000,000

CSL Limited

Collaboration research and licensing agreements

Revenue recognized

2,500,000

700,000

Novo Nordisk

Collaboration research and licensing agreements

Revenue recognized

2,700,000

2,900,000

MorphoSys

Collaboration research and licensing agreements

Potential milestone payment

299,000,000

Collaboration And License Agreement | Novartis

Collaboration research and licensing agreements

Nonrefundable upfront payment

$ 150,000,000

Revenue recognized

59,700,000

Deferred revenue

90,300,000

90,300,000

Accounts receivable

809,000

809,000

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 | item

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 targets for which bispecific technology applied | item

4

Collaboration And License Agreement | Novartis | Global Discovery Program

Collaboration research and licensing agreements

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%

Number of bispecific product candidates delivered | item

0

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 | item

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

$ 2,700,000

2,900,000

$ 100,000

Deferred revenue

0

0

Research term of revenue recognized

2 years

Collaboration And License Agreement | MorphoSys

Collaboration research and licensing agreements

Nonrefundable upfront payment

$ 13,000,000

Revenue recognized

0

0

$ 0

Deferred revenue

0

0

Collaboration and Option Agreement | Amgen, Inc.

Collaboration research and licensing agreements

Revenue recognized

$ 5,200,000

0

0

6,900,000

Deferred revenue

0

0

License Agreement | Merck Sharp & Dohme Corp.

Collaboration research and licensing agreements

Nonrefundable upfront payment

$ 1,000,000

Annual maintenance fees

$ 500,000

Revenue recognized

$ 500,000

100,000

100,000

600,000

Deferred revenue

50,000

50,000

Number of compounds | item

1

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

6,000,000

8,500,000

1,000,000

Deferred revenue

600,000

600,000

Annual maintenance fees payable during any extension of research term

1,000,000

Milestone payment to be received for first product upon achievement of certain development, regulatory and commercial milestones

$ 66,500,000

Research License and Option Agreement | Novo Nordisk

Collaboration research and licensing agreements

Milestone payment received

$ 1,600,000

2009 Research License and Commercialization Agreement | CSL Limited

Collaboration research and licensing agreements

Nonrefundable upfront payment

$ 750,000

Potential milestone payment

15,000,000

Research license term

5 years

Milestone payment received

$ 2,500,000

Revenue recognized

0

2,500,000

700,000

Deferred revenue

0

0

Number of technologies to which research license is provided | item

1

Number of commercial options | item

4

5

Research Licensee and Collaboration Agreement 2007 Agreement | Boehringer Ingelheim International GmbH

Collaboration research and licensing agreements

Research license term

3 years

Milestone payment received

$ 1,200,000

Revenue recognized

0

0

$ 0

Deferred revenue

0

0

Number of commercial options | item

1

Number of compounds | item

2

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

Revenue recognized

18,750,000

$ 13,750,000

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 previously identified products | item

3

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

5

Development-based

Collaboration research and licensing agreements

Potential milestone payment

$ 901,500,000

Development-based | Novartis

Collaboration research and licensing agreements

Potential milestone payment

540,000,000

Development-based | Amgen, Inc.

Collaboration research and licensing agreements

Potential milestone payment

232,500,000

Development-based | Merck Sharp & Dohme Corp.

Collaboration research and licensing agreements

Potential milestone payment

3,500,000

Development-based | Alexion Pharmaceuticals, Inc.

Collaboration research and licensing agreements

Potential milestone payment

42,500,000

Development-based | MorphoSys

Collaboration research and licensing agreements

Potential milestone payment

62,000,000

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 | 2009 Research License and Commercialization Agreement | CSL Limited

Collaboration research and licensing agreements

Potential milestone payment

6,000,000

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 research and licensing agreements

Potential milestone payment

1,636,000,000

Regulatory-based | Novartis

Collaboration research and licensing agreements

Potential milestone payment

920,000,000

Regulatory-based | Amgen, Inc.

Collaboration research and licensing agreements

Potential milestone payment

345,000,000

Regulatory-based | Merck Sharp & Dohme Corp.

Collaboration research and licensing agreements

Potential milestone payment

6,000,000

Regulatory-based | Alexion Pharmaceuticals, Inc.

Collaboration research and licensing agreements

Potential milestone payment

168,000,000

Regulatory-based | MorphoSys

Collaboration research and licensing agreements

Potential milestone payment

187,000,000

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 | 2009 Research License and Commercialization Agreement | CSL Limited

Collaboration research and licensing agreements

Potential milestone payment

4,000,000

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 research and licensing agreements

Potential milestone payment

2,281,000,000

Sales-based | Novartis

Collaboration research and licensing agreements

Potential milestone payment

950,000,000

Sales-based | Amgen, Inc.

Collaboration research and licensing agreements

Potential milestone payment

1,080,000,000

Sales-based | Alexion Pharmaceuticals, Inc.

Collaboration research and licensing agreements

Potential milestone payment

180,000,000

Sales-based | MorphoSys

Collaboration research and licensing agreements

Potential milestone payment

50,000,000

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 | 2009 Research License and Commercialization Agreement | CSL Limited

Collaboration research and licensing agreements

Potential milestone payment

5,000,000

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

Summary of Significant Accoun26

Summary of Significant Accounting Policies - Collaborative Research and Licensing Agreements - Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Revenue recognition
Total									$ 4,818,500
Revenue recognized	$ 6,440	$ 7,821	$ 66,007	$ 7,252	$ 21,754	$ 3,503	$ 1,014	$ 1,491	87,520	$ 27,762	$ 9,520
Accounts receivable	8,616				44				8,616	44
Deferred revenue	103,400				$ 33,800				103,400	33,800
Development-based
Revenue recognition
Total									901,500
Regulatory-based
Revenue recognition
Total									1,636,000
Sales-based
Revenue recognition
Total									2,281,000
UNITED STATES
Revenue recognition
Revenue recognized									84,800	22,400	8,600
Non United States
Revenue recognition
Revenue recognized									2,700	5,400	900
Amgen, Inc.
Revenue recognition
Total									1,657,500
Revenue recognized									18,700	13,800	6,900
Amgen, Inc. | Development-based
Revenue recognition
Total									232,500
Amgen, Inc. | Regulatory-based
Revenue recognition
Total									345,000
Amgen, Inc. | Sales-based
Revenue recognition
Total									1,080,000
MorphoSys
Revenue recognition
Total									299,000
MorphoSys | Development-based
Revenue recognition
Total									62,000
MorphoSys | Regulatory-based
Revenue recognition
Total									187,000
MorphoSys | Sales-based
Revenue recognition
Total									50,000
Alexion Pharmaceuticals, Inc.
Revenue recognition
Total									390,500
Revenue recognized									6,000	8,500	1,000
Alexion Pharmaceuticals, Inc. | Development-based
Revenue recognition
Total									42,500
Alexion Pharmaceuticals, Inc. | Regulatory-based
Revenue recognition
Total									168,000
Alexion Pharmaceuticals, Inc. | Sales-based
Revenue recognition
Total									180,000
BI
Revenue recognition
Total									27,000
BI | Development-based
Revenue recognition
Total									9,000
BI | Regulatory-based
Revenue recognition
Total									6,000
BI | Sales-based
Revenue recognition
Total									12,000
CSL Limited
Revenue recognition
Revenue recognized										2,500	700
Janssen
Revenue recognition
Total									10,000
Janssen | Development-based
Revenue recognition
Total									6,000
Janssen | Sales-based
Revenue recognition
Total									4,000
Merck Sharp & Dohme Corp.
Revenue recognition
Total									9,500
Merck Sharp & Dohme Corp. | Development-based
Revenue recognition
Total									3,500
Merck Sharp & Dohme Corp. | Regulatory-based
Revenue recognition
Total									6,000
Novo Nordisk
Revenue recognition
Revenue recognized									2,700	2,900
Other
Revenue recognition
Revenue recognized									400	100	900
2009 Research License and Commercialization Agreement | CSL Limited
Revenue recognition
Total									15,000
Revenue recognized									0	$ 2,500	$ 700
Deferred revenue	$ 0								0
2009 Research License and Commercialization Agreement | CSL Limited | Development-based
Revenue recognition
Total									6,000
2009 Research License and Commercialization Agreement | CSL Limited | Regulatory-based
Revenue recognition
Total									4,000
2009 Research License and Commercialization Agreement | CSL Limited | Sales-based
Revenue recognition
Total									$ 5,000

Summary of Significant Accoun27

Summary of Significant Accounting Policies - Concentration Risk (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016USD ($)customeritem	Dec. 31, 2015USD ($)customeritem	Dec. 31, 2014USD ($)
Concentrations of risk
Accrued interest | $	$ 1,400	$ 900
Research and Development Expense | $	$ 51,872	$ 34,140	$ 18,516
Concentrations of Risk
Amounts on deposit in excess of federally insured limits approximately	$ 14	$ 12.1
Payables | Service providers or vendors
Concentrations of risk
Concentration risk percentage	28.00%	55.00%
Number of service providers | customer	2	3
Number of critical suppliers | customer	2
Number of vendors | item	0	0

Summary of Significant Accoun28

Summary of Significant Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Fair Value of Financial Instruments
Money Market Funds	$ 14,528	$ 12,590	$ 54,649	$ 77,975
Fair Value, Measurements, Recurring
Fair Value of Financial Instruments
Total Fair Value	401,085	190,184
Fair Value, Measurements, Recurring | Money Market Funds
Fair Value of Financial Instruments
Money Market Funds	12,137	9,453
Fair Value, Measurements, Recurring | Corporate Securities
Fair Value of Financial Instruments
Securities	181,483	114,846
Fair Value, Measurements, Recurring | Government Securities
Fair Value of Financial Instruments
Securities	207,465	65,885
Level 1 | Fair Value, Measurements, Recurring
Fair Value of Financial Instruments
Total Fair Value	12,137	9,453
Level 1 | Fair Value, Measurements, Recurring | Money Market Funds
Fair Value of Financial Instruments
Money Market Funds	12,137	9,453
Level 2 | Fair Value, Measurements, Recurring
Fair Value of Financial Instruments
Total Fair Value	388,948	180,731
Level 2 | Fair Value, Measurements, Recurring | Corporate Securities
Fair Value of Financial Instruments
Securities	181,483	114,846
Level 2 | Fair Value, Measurements, Recurring | Government Securities
Fair Value of Financial Instruments
Securities	$ 207,465	$ 65,885

Summary of Significant Accoun29

Summary of Significant Accounting Policies - Property, Plant, and Equipment (Details)	12 Months Ended
	Dec. 31, 2016
Computers, software and equipment | Minimum
Property and Equipment
Estimated useful lives of the assets	3 years
Computers, software and equipment | Maximum
Property and Equipment
Estimated useful lives of the assets	5 years
Furniture and fixtures | Minimum
Property and Equipment
Estimated useful lives of the assets	5 years
Furniture and fixtures | Maximum
Property and Equipment
Estimated useful lives of the assets	7 years
Leasehold improvements | Minimum
Property and Equipment
Estimated useful lives of the assets	5 years
Leasehold improvements | Maximum
Property and Equipment
Estimated useful lives of the assets	7 years

Summary of Significant Accoun30

Summary of Significant Accounting Policies - Intangibles (Details)	12 Months Ended
	Dec. 31, 2016USD ($)item	Dec. 31, 2015USD ($)	Dec. 31, 2014USD ($)
Patents, licenses, and other intangible assets
Number of primary criteria to determine capitalization of patent | item	3
Total gross carrying amount	$ 14,114,000	$ 13,010,000
Total intangible assets, net	10,362,000	9,971,000
Amortization expense for patents, licenses, and other intangible assets	755,000	594,000	$ 694,000
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2,017	700,000
2,018	693,000
2,019	682,000
2,020	627,000
2,021	558,000
Thereafter	2,290,000
Total	5,550,000
Nonamortizable intangible assets (trademarks)
Patents, licenses, and other intangible assets
Nonamortizable intangible assets (trademarks)	$ 399,000	399,000
Acquired licenses | Minimum
Patents, licenses, and other intangible assets
Estimated economic life	5 years
Acquired licenses | Maximum
Patents, licenses, and other intangible assets
Estimated economic life	25 years
Patents
Patents, licenses, and other intangible assets
Accumulated amortization	$ (2,792,000)	(2,214,000)
Patents | Minimum
Patents, licenses, and other intangible assets
Estimated economic life	13 years
Patents | Maximum
Patents, licenses, and other intangible assets
Estimated economic life	20 years
Patents, definite life
Patents, licenses, and other intangible assets
Amortizable intangible assets	$ 7,570,000	6,488,000
Patents, pending issuance
Patents, licenses, and other intangible assets
Amortizable intangible assets	4,134,000	4,051,000
Licenses and other amortizable intangible assets
Patents, licenses, and other intangible assets
Amortizable intangible assets	2,011,000	2,072,000
Accumulated amortization	(960,000)	(825,000)
Capitalized patent and licensing
Patents, licenses, and other intangible assets
Impairment of Intangible Assets (Excluding Goodwill)	356,000	$ 296,000	$ 509,000
In-process intangible assets
Patents, licenses, and other intangible assets
Total gross carrying amount	$ 4,100,000

Summary of Significant Accoun31

Summary of Significant Accounting Policies - Net Loss Per Share (Details)	3 Months Ended								12 Months Ended
	Dec. 31, 2016USD ($)$ / shares	Sep. 30, 2016USD ($)$ / shares	Jun. 30, 2016USD ($)$ / shares	Mar. 31, 2016USD ($)$ / shares	Dec. 31, 2015USD ($)$ / shares	Sep. 30, 2015USD ($)$ / shares	Jun. 30, 2015USD ($)$ / shares	Mar. 31, 2015USD ($)$ / shares	Dec. 31, 2016USD ($)segment$ / sharesshares	Dec. 31, 2015USD ($)$ / sharesshares	Dec. 31, 2014USD ($)$ / sharesshares
Net Income (Loss) Per Share
Anti-dilutive securities (in shares)										1,356,000	2,852,000
Basic numerator:
Net income (loss) | $	$ (9,065,000)	$ (8,077,000)	$ 47,165,000	$ (6,398,000)	$ 7,757,000	$ (10,037,000)	$ (8,868,000)	$ (6,444,000)	$ 23,625,000	$ (17,592,000)	$ (16,422,000)
Net income (loss) attributable to common stockholders for basic net income (loss) per share | $									$ 23,625,000	$ (17,592,000)	$ (16,422,000)
Denominator:
Weighted average common shares outstanding, basic									41,267,329	39,015,131	31,390,631
Net income (loss) per common share, basic (in dollars per share) | $ / shares	$ (0.21)	$ (0.20)	$ 1.16	$ (0.16)	$ 0.19	$ (0.25)	$ (0.22)	$ (0.19)	$ 0.57	$ (0.45)	$ (0.52)
Diluted numerator:
Net income (loss) attributable to common stockholders for basic net income (loss) per share | $									$ 23,625,000	$ (17,592,000)	$ (16,422,000)
Denominator
Weighted average common shares outstanding, basic									41,267,329	39,015,131	31,390,631
Dilutive effect of conversion of convertible preferred stock									1,121,538
Weighted Average Number of Shares Outstanding, Diluted, Total									42,388,867	39,015,131	31,390,631
Net income (loss) per common share, diluted (in dollars per share) | $ / shares	$ (0.21)	$ (0.20)	$ 1.13	$ (0.16)	$ 0.19	$ (0.25)	$ (0.22)	$ (0.19)	$ 0.56	$ (0.45)	$ (0.52)
Segment Reporting
Income Tax Expense (Benefit) | $									$ 991,000
Number of Operating Segments | segment									1
Stock-Based Compensation
Stock-based compensation expense | $									$ 7,848,000	$ 4,869,000	$ 1,861,000
Employee stock options
Net Income (Loss) Per Share
Anti-dilutive securities (in shares)										1,281,000	2,827,000
Employee Stock Purchase Plan
Net Income (Loss) Per Share
Anti-dilutive securities (in shares)										75,000	25,000
Stock-Based Compensation
Stock-based compensation expense | $									$ 378,000	$ 341,000

Summary of Significant Accoun32

Summary of Significant Accounting Policies - Segments (Details)	12 Months Ended
	Dec. 31, 2016segment
Segment Reporting
Number of Operating Segments	1

Marketable Securities (Details)

Marketable Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities
Amortized cost	$ 402,517	$ 190,700
Gross unrealized gains	50	6
Gross unrealized losses	(1,482)	(522)
Fair value	401,085	190,184
Marketable securities
Schedule of Available-for-sale Securities
Fair value	388,948
Money Market Funds
Schedule of Available-for-sale Securities
Amortized cost	12,137	9,453
Fair value	12,137	9,453
Corporate Securities
Schedule of Available-for-sale Securities
Amortized cost	182,394	115,148
Gross unrealized gains	6	6
Gross unrealized losses	(917)	(308)
Fair value	181,483	114,846
Government Securities
Schedule of Available-for-sale Securities
Amortized cost	207,986	66,099
Gross unrealized gains	44
Gross unrealized losses	(565)	(214)
Fair value	207,465	$ 65,885
Cash and Cash Equivalents
Schedule of Available-for-sale Securities
Fair value	$ 12,137

Marketable Securities - Maturit

Marketable Securities - Maturities (Details) $ in Thousands	Dec. 31, 2016USD ($)
Amortized Cost
Maturing in one year or less	$ 115,748
Maturing after one year through five years	274,632
Total amortized cost	390,380
Estimate Fair Value
Maturing in one year or less	115,608
Maturing after one year through five years	273,340
Total estimated fair value	$ 388,948

Marketable Securities - Unreali

Marketable Securities - Unrealized losses (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016USD ($)
Fair value
Fair value, less than 12 months	$ 99,787
Fair value, 12 months or greater	238,684
Unrealized losses
Unrealized losses, Less than 12 months	(149)
Unrealized losses, 12 months or greater	(1,333)
Corporate Securities
Fair value
Fair value, less than 12 months	82,215
Fair value, 12 months or greater	88,990
Unrealized losses
Unrealized losses, Less than 12 months	(133)
Unrealized losses, 12 months or greater	(784)
Government Securities
Fair value
Fair value, less than 12 months	17,573
Fair value, 12 months or greater	149,694
Unrealized losses
Unrealized losses, Less than 12 months	(16)
Unrealized losses, 12 months or greater	$ (549)

Sale of Additional Common Sto36

Sale of Additional Common Stock (Details) - USD ($)	Sep. 19, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Proceeds from sale of common stock				$ 119,269,000	$ 115,204,000
Common Stock
Sale of common stock		5,272,750	8,625,000	5,272,750	8,625,000
Proceeds from sale of common stock		$ 119,300,000	$ 115,200,000	$ 53,000	$ 86,000
Piper Jaffray | Common Stock | Maximum
Aggregate value of stock sold	$ 40,000,000

Property and Equipment (Details

Property and Equipment (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Property and equipment
Property and equipment, gross	$ 10,650,000	$ 9,194,000
Less accumulated depreciation and amortization	(7,545,000)	(6,884,000)
Property and equipment, net	3,105,000	2,310,000
Depreciation expense	712,000	519,000	$ 188,000
Computers, software and equipment
Property and equipment
Property and equipment, gross	6,735,000	5,338,000
Furniture and fixtures
Property and equipment
Property and equipment, gross	125,000	102,000
Leasehold and tenant improvements
Property and equipment
Property and equipment, gross	$ 3,790,000	$ 3,754,000

Income Taxes - Reconciliation (

Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Reconciliation of federal statutory income tax to effective income tax
Federal statutory income tax rate	$ 7,718	$ (6,157)	$ (5,583)
State and local income taxes	1,451
Non-deductible research and development credit		708	435
Application of net operating loss carryforwards	(3,544)
Stock based compensation	733	651	478
Alternative minimum tax	1,000
Other	8	14	2
Net change in valuation allowance	(6,366)	4,784	$ 4,668
Income tax provision	1,000
Deferred income tax assets
Net operating loss carryforwards	54,860	69,348
Research credits	11,561	8,096
Depreciation	668	735
Stock-based compensation	573	206
Accrued compensation	719	511
Deferred revenue	5,236	1,032
State taxes	97
Gross deferred income tax assets	73,714	79,928
Valuation allowance	(69,670)	(76,036)
Net deferred income tax assets	4,044	3,892
Deferred income tax liabilities
Patent costs	(3,725)	(3,489)
Licensing costs	(261)	(339)
Capitalized legal costs	(58)	(64)
Gross deferred income tax liabilities	(4,044)	(3,892)
Net deferred income tax asset
Increase (decrease) in deferred tax asset valuation allowance	$ 6,400

Income Taxes - Carryforwards (D

Income Taxes - Carryforwards (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Taxes [Line Items]
Provision (benefit) for income tax	$ 991
Federal
Income Taxes [Line Items]
Current provision		$ 0	$ 0
Cumulative net operating loss carryforwards	145,200
Tax credit carryforwards	6,400
State
Income Taxes [Line Items]
Current provision		$ 0	$ 0
Cumulative net operating loss carryforwards	91,600
Tax credit carryforwards	5,200
Expiring net operating losses	$ 19,900

Stock-Based Compensation - Plan

Stock-Based Compensation - Plan details (Details)	Jan. 01, 2016shares	Jan. 01, 2014shares	Dec. 31, 2016item$ / sharesshares	Dec. 31, 2015$ / sharesshares	Dec. 31, 2014$ / sharesshares
Stock options
Stock-based compensation
Total number of shares of common stock available for issuance			2,943,216	2,917,182	2,583,186
Options granted (in shares)			1,429,500	940,250
Information with respect to stock options outstanding
Exercisable options (in shares)			1,743,765	1,600,351	1,393,729
Weighted-average exercise price per share of exercisable options (in dollars per share) | $ / shares			$ 8.87	$ 3.99	$ 1.01
Weighted average grant date fair value per share of options granted during the year (in dollars per share) | $ / shares			$ 10.30	$ 10.66	$ 7.39
Weighted-average remaining contractual life			7 years 9 months 26 days	6 years 11 months 23 days	6 years 5 months 5 days
Employee Stock Purchase Plan
Stock-based compensation
Total number of shares of common stock available for issuance			581,286
Initial term of plan			2 years
Second term of plan			2 years
Number of six month purchase periods | item			4
Purchase period			6 months
Increase in shares of common stock available for issuance (in shares)		313,545	0	0
Awards issued under the plan (in shares)			221,486	176,383
Employee Stock Purchase Plan | Minimum
Stock-based compensation
Percentage of compensation that employees may withhold to purchase stock at a discount			1.00%
Employee Stock Purchase Plan | Maximum
Stock-based compensation
Percentage of compensation that employees may withhold to purchase stock at a discount			15.00%
Purchase price as percentage of stock price at the initial offering date			85.00%
Purchase price as percentage of stock price at the purchase date			85.00%
Annual percentage increase in shares of common stock available for issuance			1.00%
Annual increase in shares of common stock available for issuance (in shares)			621,814
The 2010 Plan
Stock-based compensation
Total number of shares of common stock available for issuance			0
The 2013 Plan
Stock-based compensation
Total number of shares of common stock available for issuance			7,027,349
Annual percentage increase in shares of common stock available for issuance			4.00%
Increase in shares of common stock available for issuance (in shares)	1,400,000
Awards issued under the plan (in shares)			3,434,250

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Option Activity (Details) - Stock options - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Stock option activity, Number of Shares
Balance at the beginning of the period (in shares)	3,370,901	2,826,794
Options granted (in shares)	1,429,500	940,250
Options forfeited (in shares)	(54,503)	(9,375)
Options expired (in shares)	(1,031)	(7,500)
Options exercised (in shares)	(699,066)	(379,268)
Balance at the end of the period (in shares)	4,045,801	3,370,901	2,826,794
Options vested and expected to vest (in shares)	3,811,024
Exercisable (in shares)	1,743,765	1,600,351	1,393,729
Weighted Average Exercise Price (Per Share)
Balance at the beginning of the period (in dollars per share)	$ 8.50	$ 5.12
Options granted (in dollars per share)	15.08	15.94
Options forfeited (in dollars per share)	12.21	18.75
Options expired (in dollars per share)	15.69	11.76
Options exercised (in dollars per share)	1.66	1.46
Balance at the end of the period (in dollars per share)	11.95	8.50	$ 5.12
Options vested and expected to vest (in dollars per share)	11.73
Exercisable (in dollars per share)	$ 8.87	$ 3.99	$ 1.01
Additional information
Weighted-Average Remaining Contractual Term, Balance outstanding	7 years 9 months 26 days	6 years 11 months 23 days	6 years 5 months 5 days
Weighted-Average Remaining Contractual Term, Options vested and expected to vest	7 years 9 months
Weighted-Average Remaining Contractual Term, Exercisable	6 years 8 months 1 day
Aggregate Intrinsic Value, Balance outstanding	$ 58,131,000	$ 21,854,000
Aggregate Intrinsic Value, Options vested and expected to vest	55,588,000
Aggregate Intrinsic Value, Exercisable	30,435,000
Intrinsic value of options exercised	$ 11,200,000	$ 5,400,000	$ 155,000

Stock-Based Compensation - Opti

Stock-Based Compensation - Options by exercise price (Details)	12 Months Ended
	Dec. 31, 2016$ / sharesshares
Stock options outstanding and exercisable by exercise price
Stock Options Outstanding, Number of Shares | shares	4,045,801
Stock Options Outstanding, Remaining Contractual Term	7 years 9 months 26 days
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share)	$ 11.95
Stock Options Exercisable, Number of Shares | shares	1,743,765
Stock Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 8.87
$0.59 - $4.25
Stock options outstanding and exercisable by exercise price
Range of Exercise Prices, lower limit (in dollars per share)	0.59
Range of Exercise Prices, upper limit (in dollars per share)	$ 4.25
Stock Options Outstanding, Number of Shares | shares	781,051
Stock Options Outstanding, Remaining Contractual Term	5 years 5 months 1 day
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share)	$ 2.83
Stock Options Exercisable, Number of Shares | shares	699,072
Stock Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 2.66
$5.50 - $9.26
Stock options outstanding and exercisable by exercise price
Range of Exercise Prices, lower limit (in dollars per share)	5.50
Range of Exercise Prices, upper limit (in dollars per share)	$ 9.26
Stock Options Outstanding, Number of Shares | shares	17,157
Stock Options Outstanding, Remaining Contractual Term	7 years 11 days
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share)	$ 5.97
Stock Options Exercisable, Number of Shares | shares	15,188
Stock Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 5.55
$9.78 – $14.75
Stock options outstanding and exercisable by exercise price
Range of Exercise Prices, lower limit (in dollars per share)	9.78
Range of Exercise Prices, upper limit (in dollars per share)	$ 14.75
Stock Options Outstanding, Number of Shares | shares	2,142,530
Stock Options Outstanding, Remaining Contractual Term	8 years 3 months 18 days
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share)	$ 12.10
Stock Options Exercisable, Number of Shares | shares	646,252
Stock Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 11.31
$14.77 – $22.35
Stock options outstanding and exercisable by exercise price
Range of Exercise Prices, lower limit (in dollars per share)	14.77
Range of Exercise Prices, upper limit (in dollars per share)	$ 22.35
Stock Options Outstanding, Number of Shares | shares	877,063
Stock Options Outstanding, Remaining Contractual Term	8 years 3 months 7 days
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share)	$ 16.40
Stock Options Exercisable, Number of Shares | shares	383,253
Stock Options Exercisable, Weighted-Average Exercise Price (in dollars per share)	$ 16.20
$24.38 – $26.76
Stock options outstanding and exercisable by exercise price
Stock Options Outstanding, Number of Shares | shares	228,000
Stock Options Outstanding, Remaining Contractual Term	9 years 10 months 10 days
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share)	$ 25.30

Stock-Based Compensation - FV o

Stock-Based Compensation - FV of employee stock options (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Compensation expense
Total employee, director and non-employee stock-based compensation expense	$ 7,848,000	$ 4,869,000	$ 1,861,000
Employee stock options
Weighted average assumptions for estimated fair value of employee stock options
Common stock fair value per share minimum	11.50	11.82	8.56
Common stock fair value per share maximum	26.76	22.35	16.52
Expected volatility, low end of range (as a percent)	75.77%	69.17%
Expected volatility, high end of range (as a percent)	90.83%	86.46%
Expected volatility (as a percent)			77.40%
Risk-free interest rate, low end of range (as a percent)	1.03%	1.44%	1.67%
Risk-free interest rate, high end of range (as a percent)	2.18%	1.84%	1.96%
Expected term (years)			6 years
Compensation expense
Unamortized compensation expense related to unvested options	$ 18,100,000	$ 10,800,000
Period to recognize unamortized compensation expense	2 years 8 months 19 days
Employee stock options | Minimum
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	5 years 2 months 23 days	5 years 2 months 23 days
Employee stock options | Maximum
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	6 years 29 days	6 years 29 days
Employee Stock Purchase Plan
Weighted average assumptions for estimated fair value of employee stock options
Expected volatility, low end of range (as a percent)	67.80%	67.80%	70.60%
Expected volatility, high end of range (as a percent)	79.80%	82.90%	71.80%
Risk-free interest rate, low end of range (as a percent)	0.47%	0.07%	0.06%
Risk-free interest rate, high end of range (as a percent)	0.93%	0.93%	0.46%
Compensation expense
Unamortized compensation expense related to unvested options	$ 481,000	$ 395,000
Period to recognize unamortized compensation expense	11 years 6 months
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
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
General and administrative
Compensation expense
Total employee, director and non-employee stock-based compensation expense	$ 3,592,000	$ 2,218,000	$ 848,000
Research and development
Compensation expense
Total employee, director and non-employee stock-based compensation expense	$ 4,256,000	$ 2,650,000	$ 1,013,000

Commitments and Contingencies44

Commitments and Contingencies (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Operating Leases
For the remainder of the fiscal year	$ 807,000
2,017	833,000
2,018	859,000
2,019	466,000
Net rent expense	$ 638,000	$ 558,000	$ 597,000
Monrovia
Renewal term	5 years

Commitments and Contingencies -

Commitments and Contingencies - Litigation (Details) - USD ($)	Sep. 27, 2016	Oct. 05, 2015	Dec. 31, 2015	Dec. 31, 2016
Loss Contingencies [Line Items]
Loss contingency accrual				$ 0
Outstanding settlement amount				$ 2,355,000
DePinto vs John S Stafford Litigation Case
Loss Contingencies [Line Items]
Damages sought		$ 950,000
Insurance proceeds			$ 187,500
Paid legal award	$ 2,375,000		$ 950,000

401(k) Plan (Details)

401(k) Plan (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
401(k) Plan
Employer contributions	$ 0	$ 0	$ 0

Condensed Quarterly Financial47

Condensed Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Condensed Quarterly Financial Data (unaudited)
Total revenue	$ 6,440	$ 7,821	$ 66,007	$ 7,252	$ 21,754	$ 3,503	$ 1,014	$ 1,491	$ 87,520	$ 27,762	$ 9,520
Income (loss) from operations	(10,028)	(9,255)	48,556	(6,733)	7,438	(10,312)	(8,986)	(6,478)	22,540	(18,338)	(16,457)
Net income (loss)	$ (9,065)	$ (8,077)	$ 47,165	$ (6,398)	$ 7,757	$ (10,037)	$ (8,868)	$ (6,444)	$ 23,625	$ (17,592)	$ (16,422)
Basic net income (loss) (in dollars per share)	$ (0.21)	$ (0.20)	$ 1.16	$ (0.16)	$ 0.19	$ (0.25)	$ (0.22)	$ (0.19)	$ 0.57	$ (0.45)	$ (0.52)
Diluted net income (loss) (in dollars per share)	$ (0.21)	$ (0.20)	$ 1.13	$ (0.16)	$ 0.19	$ (0.25)	$ (0.22)	$ (0.19)	$ 0.56	$ (0.45)	$ (0.52)