Xencor (XNCR) 10-Q 8 May 20 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 29, 2020
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2020
Entity File Number	001-36182
Entity Registrant Name	Xencor Inc
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-1622502
Entity Address, Address Line One	111 West Lemon Avenue
Entity Address, City or Town	Monrovia
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91016
City Area Code	626
Local Phone Number	305-5900
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	XNCR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		57,004,786
Entity Central Index Key	0001326732
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1

Balance Sheets

Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 73,808	$ 50,312
Marketable securities	497,841	479,470
Equity securities	2,253
Accounts receivable	6,825	21,574
Income tax receivable	904	502
Prepaid expenses and other current assets	6,476	6,547
Total current assets	588,107	558,405
Property and equipment, net	16,799	15,805
Patents, licenses, and other intangible assets, net	14,637	14,421
Marketable securities - long term	38,232	71,526
Income tax receivable		402
Other assets	9,188	9,691
Total assets	666,963	670,250
Current liabilities
Accounts payable	10,313	10,189
Accrued expenses	7,292	8,995
Lease liabilities	2,136	2,169
Deferred revenue	46,176	45,205
Total current liabilities	65,917	66,558
Lease liabilities, net of current portion	8,041	8,565
Deferred revenue, net of current portion		1,926
Total liabilities	73,958	77,049
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 par value: 10,000,000 authorized shares; -0- issued and outstanding shares at March 31, 2020 and December 31, 2019
Common stock, $0.01 par value: 200,000,000 authorized shares at March 31, 2020 and December 31, 2019; 57,001,253 issued and outstanding at March 31, 2020 and 56,902,301 issued and outstanding at December 31, 2019	570	569
Additional paid-in capital	895,855	887,873
Accumulated other comprehensive income (loss)	1,056	1,161
Accumulated deficit	(304,476)	(296,402)
Total stockholders' equity	593,005	593,201
Total liabilities and stockholders' equity	$ 666,963	$ 670,250

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
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	57,001,253	56,902,301
Common stock, shares outstanding	57,001,253	56,902,301

Statements of Comprehensive Inc

Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue
Collaborations, licenses, milestones, and royalties	$ 32,385	$ 111,939
Operating expenses
Research and development	33,943	28,183
General and administrative	7,219	5,512
Total operating expenses	41,162	33,695
Income (loss) from operations	(8,777)	78,244
Other income (expenses)
Interest income, net	3,039	2,886
Other expense, net	(2,336)	(185)
Total other income, net	703	2,701
Net income (loss) before income tax expense	(8,074)	80,945
Income tax expense		900
Net income (loss)	(8,074)	80,045
Other comprehensive income (loss)
Net unrealized gain (loss) on marketable securities	(105)	1,316
Comprehensive income (loss)	$ (8,179)	$ 81,361
Net income (loss) per share attributable to common stockholders:
Basic net income (loss) (in dollars per share)	$ (0.14)	$ 1.42
Diluted net income (loss) (in dollars per share)	$ (0.14)	$ 1.38
Weighted average shares used to compute net income (loss) per share attributable to common stockholders:
Basic (in shares)	56,946,714	56,302,967
Diluted (in shares)	56,946,714	58,009,878

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, 2018	$ 563	$ 845,366	$ (971)	$ (323,277)	$ 521,681
Balance (in shares) at Dec. 31, 2018	56,279,542
Increase (Decrease) in Stockholders' Equity
Issuance of common stock upon exercise of stock awards	$ 1	666			667
Issuance of common stock upon exercise of stock awards (in shares)	58,536
Issuance of restricted stock units (in shares)	11,311
Comprehensive income (loss)			1,316	80,045	81,361
Stock-based compensation expense		5,856			5,856
Balance at Mar. 31, 2019	$ 564	851,888	345	(243,232)	609,565
Balance (in shares) at Mar. 31, 2019	56,349,389
Balance at Dec. 31, 2019	$ 569	887,873	1,161	(296,402)	593,201
Balance (in shares) at Dec. 31, 2019	56,902,301
Increase (Decrease) in Stockholders' Equity
Issuance of common stock upon exercise of stock awards	$ 1	1,470			1,471
Issuance of common stock upon exercise of stock awards (in shares)	79,930
Issuance of restricted stock units (in shares)	19,022
Comprehensive income (loss)			(105)	(8,074)	(8,179)
Stock-based compensation expense		6,512			6,512
Balance at Mar. 31, 2020	$ 570	$ 895,855	$ 1,056	$ (304,476)	$ 593,005
Balance (in shares) at Mar. 31, 2020	57,001,253

Statements of Cash Flows

Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities
Net income (loss)	$ (8,074)	$ 80,045
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	1,373	996
Accretion of discount on marketable securities	(573)	(601)
Stock-based compensation	6,512	5,856
Abandonment of capitalized intangible assets	28	58
Equity received in connection with license agreement	(4,589)
Change in fair value of equity security	2,336
Changes in operating assets and liabilities:
Accounts receivable	14,749	(127,489)
Interest receivable	215	31
Prepaid expenses and other assets	71	942
Accounts payable	124	1,689
Accrued expenses	(1,703)	(3,957)
Income taxes		900
Lease liabilities and ROU assets	(54)	(259)
Deferred revenue	(955)	23,061
Net cash provided by (used in) operating activities	9,460	(18,728)
Cash flows from investing activities
Purchase of marketable securities	(142,477)	(49,856)
Purchase of intangible assets	(538)	(1,051)
Purchase of property and equipment	(2,073)	(415)
Proceeds maturities of marketable securities	157,653	64,995
Net cash provided by investing activities	12,565	13,673
Cash flows from financing activities
Proceeds from issuance of common stock upon exercise of stock awards	1,471	667
Net cash provided by financing activities	1,471	667
Net increase in cash and cash equivalents	23,496	(4,388)
Cash and cash equivalents, beginning of period	50,312	26,246
Cash and cash equivalents, end of period	73,808	21,858
Cash paid for:
Interest	6	4
Supplemental disclosures of non-cash investing activities
Net unrealized gain (loss) on marketable securities, net of tax	$ (105)	$ 1,316

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	1. Summary of Significant Accounting Policies ​ Basis of Presentation ​ The accompanying unaudited interim financial statements for Xencor, Inc. (the Company, Xencor, we or us) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the management of the Company believes are necessary for a fair presentation of the periods presented. The preparation of interim financial statements requires the use of management’s estimates and assumptions that affect reported amounts of assets and liabilities at the date of the interim financial statements and the reported revenues and expenditures during the reported periods. These interim financial results are not necessarily indicative of the results expected for the full fiscal year or for any subsequent interim period. ​ The accompanying unaudited interim financial statements and related notes should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 24, 2020. ​ Use of Estimates ​ The preparation of interim financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, other comprehensive gain (loss) and the related disclosures. On an ongoing basis, management evaluates its estimates, including estimates related to its accrued clinical trial and manufacturing development expenses, stock-based compensation expense, intangible assets and related amortization. Significant estimates in these interim financial statements include estimates made for royalties and accrued research and development expenses, stock-based compensation expenses, intangible assets and related amortization, estimated standalone selling price of performance obligations, the likelihood of recognizing variable consideration, and recoverability of deferred tax assets. ​ Intangible Assets ​ The Company maintains definite-lived intangible assets related to certain capitalized costs of acquired licenses and third-party costs incurred in establishing and maintaining its intellectual property rights to its platform technologies and development candidates. These assets are amortized over their useful lives, which are estimated to be the remaining patent life or the contractual term of the license. The straight-line method is used to record amortization expense. The Company assesses its intangible assets for impairment if indicators are present or changes in circumstances suggest that impairment may exist. There were no impairment charges recorded for the three months ended March 31, 2020 and 2019. ​ The Company capitalizes certain in-process intangible assets that are then abandoned when they are no longer pursued or used in current research activities. There was no material abandonment of in-process intangible assets during the three months ended March 31, 2020 or 2019. ​ 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 debt securities issued by investment grade institutions. ​ The Company considers its marketable debt securities to be available-for-sale and does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell the securities before recovery of the amortized cost basis. These assets are carried at fair value and any impairment gains (losses) related to the underlying issuer’s credit standing are recognized within other income (expense), while non-credit related impairment gains (losses) are recognized within accumulated other comprehensive income (loss). Accrued interest on marketable debt securities is included in marketable securities’ carrying value. Each reporting period, the Company reviews its portfolio of marketable debt securities, using both quantitative and qualitative factors, to determine if each security’s fair value has declined below its amortized cost basis. ​ The Company also has investments in equity securities that are carried at fair value with changes in fair value recognized within other income (expense). For equity securities with a readily determinable fair value, the Company remeasures these equity investments at each reporting period until such time that the investment is sold or disposed. If the Company sells an investment, any realized gains and losses on the sale of the securities will be recognized within other income (expense) in the Statement of Comprehensive Income (Loss) in the period of sale. ​ Recent Accounting Pronouncements ​ Pronouncements Adopted in 2020 ​ Effective January 1, 2020, the Company adopted ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as well as ASU No, 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses. The standard amends guidance on reporting credit losses for assets held at amortized cost basis and also provides an available-for-sale (AFS) debt security impairment model that is a modified version of the other-than-temporary-impairment (OTTI) model. The AFS debt security impairment model no longer allows consideration of the length of time during which the fair value has been less than its amortized cost when determining whether a credit loss exists. The adoption of this standard did not have any impact on the Company’s financial statements. ​ Effective January 1, 2020, the Company adopted ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosures for transfers between Level 1 and Level 2 of the fair value hierarchy, modifies the Level 3 disclosure requirements for non-public entities and requires additional disclosure for Level 3 fair value hierarchy. The adoption of this standard did not have any impact on the Company’s financial statements. ​ Effective January 1, 2020, the Company adopted ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, which provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard. The adoption of this standard did not have any impact on the Company’s financial statements. ​ Pronouncements Not Yet Effective ​ In December 2019, the Financial Accounting Standards Board (FASB) issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ​ In January 2020, the FASB issued ASU No. 2020-01, which clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investment – Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendment is effective for fiscal years beginning after December 15, 2020. The Company does not anticipate that the standard will have a significant impact on its financial statements. ​ There have been no other material changes to the significant accounting policies previously disclosed in the Company’s 2019 Annual Report on Form 10-K. ​

Fair Value of Financial Instrum

Fair Value of Financial Instruments	3 Months Ended
	Mar. 31, 2020
Fair Value of Financial Instruments
Fair Value of Financial Instruments	2. Fair Value of Financial Instruments ​ Financial instruments included in the financial statements include cash equivalents, marketable securities, accounts receivable, accounts payable and accrued expenses. Marketable securities and cash equivalents are carried at fair value. The fair value of the other financial instruments closely approximates their fair value due to their short-term 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 ​ Level 1— ​ Level 2— ​ Level 3— ​ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2020 ​ December 31, 2019 ​ Total ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ Fair Value ​ Level 1 ​ Level 2 ​ Fair Value ​ Level 1 ​ Level 2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money Market Funds ​ $ 49,800 ​ $ 49,800 ​ $ — ​ $ 32,009 ​ $ 32,009 ​ $ — Corporate Securities ​ ​ 332,691 ​ ​ — ​ ​ 332,691 ​ ​ 281,751 ​ ​ — ​ ​ 281,751 Government Securities ​ ​ 203,382 ​ ​ — ​ ​ 203,382 ​ ​ 269,245 ​ ​ — ​ ​ 269,245 Equity Securities with Readily Determinable Fair Value ​ ​ 2,253 ​ ​ 2,253 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ $ 588,126 ​ $ 52,053 ​ $ 536,073 ​ $ 583,005 ​ $ 32,009 ​ $ 550,996 ​ Our policy is to record transfers of assets between Level 1 and Level 2 at their fair values as of the end of each reporting period, consistent with the date of the determination of fair value. During the three months ended March 31, 2020 and 2019, there were no transfers between Level 1 and Level 2. The Company does not have any Level 3 assets or liabilities.

Net Income (Loss) Per Share

Net Income (Loss) Per Share	3 Months Ended
	Mar. 31, 2020
Net Income (Loss) Per Share
Net Income (Loss) Per Share	3. Net Income (Loss) Per Share ​ We compute basic net income (loss) per common share by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period without consideration of common stock equivalents. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common stock equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants, employee stock purchase plan (ESPP) and restricted stock units (RSUs). Potentially dilutive securities consisting of stock issuable under options, ESPP and RSUs are not included in the per common share calculation in periods when the inclusion of such shares would have an antidilutive effect. ​ Basic and diluted net income (loss) per common share is computed as follows (in thousands except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ 2020 2019 ​ ​ (in thousands, except share and per share data) Numerator: ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to common stockholders ​ $ (8,074) ​ $ 80,045 ​ Denominator: ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding used in computing basic net income (loss) ​ 56,946,714 ​ 56,302,967 ​ Effect of dilutive securities ​ ​ — ​ ​ 1,706,911 ​ Weighted-average common shares outstanding used in computing diluted net income (loss) ​ ​ 56,946,714 ​ ​ 58,009,878 ​ Basic net income (loss) per common share ​ $ (0.14) ​ $ 1.42 ​ Diluted net income (loss) per common share ​ $ (0.14) ​ $ 1.38 ​ ​ For the three months ended March 31, 2020, all outstanding potentially dilutive securities have been excluded from the calculation of diluted net loss per common share as the effect of including such securities would have been antidilutive. For the three months ended March 31, 2019, potentially dilutive securities consisting of 964,743 shares of stock awards are excluded from the calculation for the same period because the inclusion of such shares would have had an antidilutive effect.

Comprehensive Income (Loss)

Comprehensive Income (Loss)	3 Months Ended
	Mar. 31, 2020
Comprehensive Income (Loss)
Comprehensive Income (Loss)	4. Comprehensive Income (Loss) ​ Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss). For the three months ended March 31, 2020 and 2019, the only component of other comprehensive income (loss) is net unrealized gain (loss) on marketable securities. There were no material reclassifications out of accumulated other comprehensive income (loss) during the three months ended March 31, 2020 and 2019.

Marketable Securities

Marketable Securities	3 Months Ended
	Mar. 31, 2020
Marketable Securities
Marketable Securities	5. Marketable Securities ​ The Company’s marketable debt securities held as of March 31, 2020 and December 31, 2019 are summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ Amortized Unrealized ​ Unrealized ​ March 31, 2020 ​ Cost ​ Gains ​ Losses ​ Fair Value (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money Market Funds ​ $ 49,800 ​ $ — ​ $ — ​ $ 49,800 Corporate Securities ​ ​ 333,259 ​ ​ 22 ​ ​ (590) ​ ​ 332,691 Government Securities ​ ​ 201,748 ​ ​ 1,634 ​ ​ — ​ ​ 203,382 ​ ​ $ 584,807 ​ $ 1,656 ​ $ (590) ​ $ 585,873 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reported as ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 49,800 Marketable securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 536,073 Total investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 585,873 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ Amortized Unrealized ​ Unrealized ​ December 31, 2019 ​ Cost ​ Gains ​ Losses ​ Fair Value (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money Market Funds ​ $ 32,009 ​ $ — ​ $ — ​ $ 32,009 Corporate Securities ​ ​ 281,586 ​ ​ 195 ​ ​ (30) ​ ​ 281,751 Government Securities ​ ​ 268,239 ​ ​ 1,006 ​ ​ — ​ ​ 269,245 ​ ​ $ 581,834 ​ $ 1,201 ​ $ (30) ​ $ 583,005 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reported as ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 32,009 Marketable securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 550,996 Total investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 583,005 ​ The maturities of the Company’s marketable debt securities are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Estimated March 31, 2020 ​ Cost ​ Fair Value (in thousands) ​ ​ ​ ​ ​ ​ Mature in one year or less ​ $ 496,586 ​ $ 497,841 Mature within two years ​ ​ 38,421 ​ ​ 38,232 ​ ​ $ 535,007 ​ $ 536,073 ​ ​ The unrealized losses on available-for-sale investments and their related fair values as of March 31, 2020 and December 31, 2019 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 months ​ 12 months or greater ​ ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized March 31, 2020 ​ Fair value ​ losses ​ Fair value ​ losses (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate Securities ​ $ 141,723 ​ $ (401) ​ $ 38,232 ​ $ (189) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 months ​ 12 months or greater ​ ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized December 31, 2019 ​ Fair value ​ losses ​ Fair value ​ losses (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate Securities ​ $ 46,303 ​ $ (24) ​ $ 13,992 ​ $ (6) ​ The unrealized losses from the listed securities are primarily due to a change in the interest rate environment and not a change in the credit quality of the securities. ​ In connection with the Aimmune Agreement (as defined below) executed in February 2020, the Company received shares of Aimmune common stock which are classified as equity securities with a readily determinable fair value as of March 31, 2020. The Company recorded $2.3 million of unrealized losses related to these securities in other income (expense) during the three months ended March 31, 2020. We did not hold any equity securities in our investment portfolio at December 31, 2019.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2020
Stock-Based Compensation
Stock-Based Compensation	6. Stock Based Compensation ​ Our Board of Directors (the Board) and the requisite stockholders previously approved the 2010 Equity Incentive Plan (the 2010 Plan). In October 2013, the Board approved the 2013 Equity Incentive Plan (the 2013 Plan) and in November 2013 our stockholders approved the 2013 Plan which became effective as of December 3, 2013. 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 March 31, 2020, the total number of shares of common stock available for issuance under the 2013 Plan is 12,300,969, which includes 2,684,456 shares of common stock that were available for issuance under the 2010 Plan as of the effective date of the 2013 Plan. Unless otherwise determined by the Board, beginning January 1, 2014, and continuing until the expiration of the 2013 Plan, the total number of shares of common stock available for issuance under the 2013 Plan will automatically increase annually on January 1 of each year by 4% of the total number of issued and outstanding shares of common stock as of December 31 of the immediate preceding year. Pursuant to approval by the Board on January 1, 2020, the total number of shares of common stock available for issuance under the 2013 Plan was increased by 1,138,046 shares. As of March 31, 2020, a total of 10,030,935 options have been granted under the 2013 Plan. ​ In November 2013, the Board and our stockholders approved the 2013 Employee Stock Purchase Plan (ESPP), which became effective as of December 5, 2013. We have reserved a total of 581,286 shares of common stock for issuance under the ESPP. Unless otherwise determined by the Board, beginning on January 1, 2014, and continuing until the expiration of the ESPP, the total number of shares of common stock available for issuance under the ESPP will automatically increase annually on January 1 by the lesser of (i) 1% of the total number of issued and outstanding shares of common stock as of December 31 of the immediately preceding year, or (ii) 621,814 shares of common stock. Pursuant to approval by our Board of Directors, there was no increase in the number of authorized shares in the ESPP from 2015 to 2020. As of March 31, 2020, we have issued a total of 417,277 shares of common stock under the ESPP. ​ During the three months ended March 31, 2020, the Company awarded 221,604 RSUs to certain employees. Vesting of these awards is in three equal annual installments and is contingent on continued service to the Company. The fair value of these awards is determined based on the intrinsic value of the stock on the date of grant and will be recognized as stock-based compensation expense over the requisite service period. As of March 31, 2020, we have granted a total of 327,103 shares of common stock subject to RSUs. ​ Total employee, director and non-employee stock-based compensation expense recognized for the three months ended March 31, 2020 and 2019 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2020 2019 General and administrative ​ $ 2,291 ​ $ 1,854 ​ Research and development ​ 4,221 ​ 4,002 ​ ​ ​ $ 6,512 ​ $ 5,856 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ ​ 2020 2019 ​ Stock options ​ $ 5,882 ​ $ 5,525 ​ ESPP ​ ​ 194 ​ ​ 217 ​ Restricted stock units ​ ​ 436 ​ ​ 114 ​ ​ ​ $ 6,512 ​ $ 5,856 ​ ​ The following table summarizes option activity under our stock plans and related information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Weighted ​ ​ ​ ​ ​ ​ Average Average ​ ​ ​ ​ Number of ​ Exercise Remaining ​ Aggregate ​ ​ Shares subject ​ Price Contractual ​ Intrinsic ​ ​ to outstanding ​ (Per Term ​ Value ​ ​ options ​ Share) (in years) ​ (in thousands) Balances at December 31, 2019 7,174,319 ​ $ 24.03 ​ ​ 7.32 ​ ​ ​ Options granted 1,137,420 ​ $ 32.36 ​ ​ ​ ​ ​ ​ Options forfeited (69,654) ​ $ 30.71 ​ ​ ​ ​ ​ ​ Options exercised (79,930) ​ $ 18.40 ​ ​ ​ ​ ​ ​ Balances at March 31, 2020 8,162,155 ​ $ 25.19 ​ ​ 7.38 ​ $ 55,326 Exercisable ​ 4,429,727 ​ $ 19.50 ​ ​ 6.07 ​ $ 49,866 ​ We calculate the intrinsic value as the difference between the exercise price of the options and the closing price of common stock of $29.88 per share as of March 31, 2020. ​ Weighted average fair value of options granted during the three-month periods ended March 31, 2020 and 2019 were $16.64 and $21.20 per share, respectively. There were 1,342,447 options granted during the three-month period ended March 31, 2019. We estimated the fair value of each stock option using the Black-Scholes option-pricing model based on the date of grant of such stock option with the following weighted average assumptions for the three months ended March 31, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2020 2019 Expected term (years) ​ 6.3 6.1 ​ Expected volatility ​ 53.9 % 61.3 % Risk-free interest rate ​ 1.71 % 2.53 % Expected dividend yield ​ — % — % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ESPP ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2020 2019 Expected term (years) 0.5 - 2.0 0.5 - 2.0 ​ Expected volatility ​ 50.8 % 57.0 - 71.4 % Risk-free interest rate 1.56 - 1.65 % 1.47 - 2.70 % Expected dividend yield ​ — % — % ​ As of March 31, 2020, the unamortized compensation expense related to unvested stock options was $62.2 million. The remaining unamortized compensation expense will be recognized over the next 2.9 years. As of March 31, 2020, the unamortized compensation expense under our ESPP was $1.3 million. The remaining unamortized expense will be recognized over the next 1.7 years. ​ The following table summarizes the RSU activity for the three-month period ended March 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Restricted ​ Average Grant ​ ​ Stock ​ Date Fair Value ​ ​ Units ​ (Per unit) ​ ​ ​ ​ ​ ​ Unvested at December 31, 2019 90,006 ​ $ 34.66 Granted 221,604 ​ ​ 31.87 Vested (19,022) ​ ​ 31.72 Forfeited (3,404) ​ ​ 31.21 Unvested at March 31, 2020 289,184 ​ $ 32.76 ​ As of March 31, 2020, the unamortized compensation expense related to unvested RSUs was $9.0 million. The remaining unamortized expense will be recognized over the next 2.8 years.

Leases

Leases	3 Months Ended
	Mar. 31, 2020
Leases
Leases	7. Leases ​ The Company leases office and laboratory space in Monrovia, CA under a lease that continues through June 2020, with an option to renew for an additional five years . In April 2020, the Company entered into an amendment to the lease to extend the term of the lease under the original terms through September 2020. In July 2017, the Company entered into an amended lease agreement for additional space in the same building with a lease that continues through September 2022, also with an option to renew for an additional five years . The Company assesses that it is likely to exercise both options of the lease term extensions. The Company also leases office space in San Diego, CA through July 2020 which includes an option to renew for an additional five years . The Company assesses that it is unlikely to exercise the option to extend this lease. ​ The Company leases additional office space in San Diego, CA through August 2022, with an option to extend for an additional five years . The Company assesses that it is unlikely to exercise the option to extend the lease term. ​ The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. As of March 31, 2020, the Company did not have additional operating leases that have not yet commenced. ​ The following table reconciles the undiscounted cash flows for the operating leases at March 31, 2020 to the operating lease liabilities recorded on the balance sheet (in thousands): ​ ​ ​ ​ ​ Years ending December 31, ​ ​ For the remainder of 2020 ​ $ 2,001 2021 ​ 2,587 2022 ​ ​ 2,208 2023 ​ ​ 1,352 2024 ​ ​ 1,371 2025 ​ ​ 1,044 Thereafter ​ ​ 1,238 Total undiscounted lease payments ​ ​ 11,801 Less: Imputed interest ​ ​ (1,624) Present value of lease payments ​ $ 10,177 ​ ​ ​ ​ Lease liabilities - short-term ​ $ 2,136 Lease liabilities - long-term ​ ​ 8,041 Total lease liabilities ​ $ 10,177 ​ Our operating lease costs and payments were $0.7 million for each of the three months ended March 31, 2020 and 2019. At March 31, 2020, the weighted-average remaining lease term for operating leases was 5.3 years, and the weighted average discount rate for operating leases is 5.5% .

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies
Commitments and Contingencies	8. Commitments and 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. ​ The Company is 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 the Company’s balance sheet. The Company has also entered into agreements with third-party vendors which will require us to make future payments upon the delivery of goods and services in future periods.

Collaboration and Licensing Agr

Collaboration and Licensing Agreements	3 Months Ended
	Mar. 31, 2020
Collaboration and Licensing Agreements
Collaboration and Licensing Agreements	9. Collaboration and Licensing Agreements ​ The following is a summary description of the material revenue arrangements, including arrangements that generated revenue in the three months ended March 31, 2020 and 2019. ​ Genentech In February 2019, the Company entered into a collaboration and license agreement (the Genentech Agreement) with Genentech, Inc. and F. Hoffman-La Roche Ltd (collectively, Genentech) for the development and commercialization of novel IL-15 collaboration products (Collaboration Products), including XmAb24306 (also named RG6323), the Company’s IL-15/IL-15Ra candidate. The Genentech Agreement became effective March 8, 2019. Under the terms of the Genentech Agreement, Genentech received an exclusive worldwide license to XmAb24306 and other Collaboration Products, including any new IL-15 programs identified during the joint research collaboration. Genentech and Xencor will jointly collaborate on worldwide development of XmAb24306 and potentially other Collaboration Products with Genentech maintaining all worldwide commercialization rights, subject to Xencor having an option to co-promote in the United States. Xencor has the right to perform clinical studies of Collaboration Products in combination with other therapeutic agents at its own cost, subject to certain requirements. The Company received a $120.0 million upfront payment and is eligible to receive up to an aggregate of $160.0 million in clinical milestone payments for each Collaboration Product that advances to Phase 3 clinical trials. The Company is also eligible to receive 45% share of net profits for sales of XmAb24306 and other Collaboration Products, while also sharing in net losses at the same percentage rate. The parties will jointly share in development and commercialization costs for all programs designated as a development program under the Genentech Agreement at the same percentage rate, while Genentech will bear launch costs entirely. The initial 45% profit-cost share percent is subject to ratchet down at the Company’s discretion and convertible to a royalty under certain restrictions. Pursuant to the Genentech Agreement, XmAb24306 is designated as a development program and all costs incurred for developing XmAb24306 from March 8, 2019, the effective date of the Genentech Agreement, are being shared with Genentech under the initial cost-sharing percentage. Pursuant to the Genentech Agreement, the Company and Genentech will conduct joint research activities for a two -year period to identify and discover additional IL-15 candidates developed from the Company’s cytokine and bispecific technologies. The two-year research term may be extended an additional year if both parties agree. The Company and Genentech are each responsible for their own costs in conducting the research activities. The Company is eligible for clinical milestone payments for new Collaboration Products identified from the research efforts. The Company recognized the $111.7 million allocated to the license when it satisfied its performance obligation and transferred the license to Genentech in March 2019. A total of $8.3 million of the transaction price was allocated to the research activities and is being recognized over a period of time through the end of the research term that services are rendered. A total of $0.7 million of revenue related to the research activities was recognized in the three-month period ended March 31, 2020. For the three months ended March 31, 2020 and March 31, 2019, the Company recognized $0.7 million and $112.0 million of income, respectively, from the Genentech Agreement. As of March 31, 2020, there is a $1.4 million payable related to cost-sharing development activities during the first quarter of 2020 for the XmAb24306 program. There is $5.4 million in deferred revenue as of March 31, 2020 which reflects the obligation to perform research services during the remaining research term. Astellas Effective March 29, 2019, the Company entered into a Research and License Agreement (Astellas Agreement) with Astellas Pharma Inc. (Astellas) pursuant to which the Company and Astellas will conduct a discovery program to characterize compounds and products for development and commercialization. Under the Astellas Agreement, Astellas was granted a worldwide exclusive license, with the right to sublicense products in the field created by the research activities. Pursuant to the Astellas Agreement, the Company will apply its bispecific Fc technology to research antibodies provided by Astellas to generate bispecific antibody candidates and will conduct limited testing and characterization of the bispecific candidates and return the candidates to Astellas for development and commercialization. The activities will be conducted under a research plan agreed to by both parties to the Astellas Agreement. Astellas will assume full responsibility for development and commercialization of the antibody candidate. Pursuant to the Astellas Agreement, the Company received an upfront payment of $15.0 million and is eligible to receive up to $240.0 million in milestones which include $32.5 million in development milestones, $57.5 million in regulatory milestones and $150.0 million in sales milestones. If commercialized, the Company is eligible to receive royalties on net sales that range from the high-single to low-double digit percentages. The Company recognized the $13.6 million allocated to the bispecific antibodies when it satisfied its performance obligation and transferred the bispecific antibodies to Astellas in June 2019. The $1.4 million allocated to the research activities is being recognized as the research services are being completed over the period of time the Company expects to complete the activities under the research plan. For the three months ended March 31, 2020, the Company recognized $0.3 million revenue related to the arrangement, and no revenue was recognized under this arrangement for the three months ended March 31, 2019. There is million in deferred revenue as of March 31, 2020 related to the obligation to complete research activities under the Astellas Agreement. Novartis In June 2016, the Company entered into a Collaboration and License Agreement (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. The Company received an upfront payment of $150.0 million and is eligible to receive additional development, regulatory and sales milestones. Pursuant to the Novartis Agreement: ● The Company granted Novartis certain exclusive rights to research, develop and commercialize vibecotamab (XmAb14045) and plamotamab (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. Under the Novartis Agreement, the Company and Novartis are co-developing vibecotamab worldwide and sharing development costs. In December 2018, Novartis notified the Company it was terminating its rights with respect to the plamotamab, which became effective June 2019. No revenue was recognized during the three months ended March 31, 2020 or 2019. As of March 31, 2020, there is a receivable of $0.6 million related to cost-sharing of development activities for the first quarter of 2020 for the vibecotamab program, and $40.1 million in deferred revenue related to the obligation to deliver two additional Global Discovery Programs to Novartis under the arrangement. Amgen Inc. In September 2015, the Company entered into a research and license agreement (the Amgen Agreement) with Amgen Inc. (Amgen) to develop and commercialize bispecific antibody product candidates using the Company’s proprietary XmAb bispecific Fc technology. Under the Amgen Agreement, the Company granted an exclusive license to Amgen to develop and commercialize bispecific drug candidates from the Company’s preclinical program that bind the CD38 antigen and the cytotoxic T cell binding domain CD3 (the CD38 program). The Company also agreed to apply its bispecific technology to five previously identified Amgen provided targets (each a Discovery Program). The Company has received a total of $60.5 million in upfront payments and milestone payments and is eligible to receive up to $600.0 million in future development, regulatory and sales milestone payments in total for programs in development and is eligible to receive royalties on any global net sales of products. No revenue was recognized under the arrangement during the three months ended March 31, 2020 or 2019. As of March 31, 2020, there was no deferred revenue related to the arrangement. MorphoSys AG In June 2010, the Company entered into a Collaboration and License Agreement with MorphoSys AG (MorphoSys), which was subsequently amended in March 2012. Under the agreement, we granted MorphoSys an exclusive worldwide license to the Company’s patents and know-how to research, develop and commercialize the XmAb5574 product candidate (subsequently renamed MOR208 and tafasitamab) with the right to sublicense under certain conditions. If certain developmental, regulatory and sales milestones are achieved, the Company is eligible to receive future milestone payments and royalties. In February 2020, the U.S. Food and Drug Administration (FDA) accepted MorphoSys’ Biologics License Application (BLA) for tafasitamab and the Company received a milestone payment of $12.5 million. The Company recognized the payment as revenue in the period that the milestone event occurred. The Company recognized $12.5 million of milestone revenue for the three months ended March 31, 2020, and no revenue was recognized under this arrangement for the three months ended March 31, 2019. As of March 31, 2020, the Company has no deferred revenue related to this agreement. Alexion Pharmaceuticals, Inc. In January 2013, the Company entered into an option and license agreement with Alexion Pharmaceuticals, Inc. (Alexion). Under the terms of the agreement, the Company granted to Alexion an exclusive research license, with limited sublicensing rights, to make and use the Company’s Xtend technology to evaluate and advance compounds. Alexion exercised its rights to one target program, ALXN1210, which is now marketed as Ultomiris®. The Company is eligible to receive contractual milestones for certain commercial achievements and is also entitled to receive royalties based on a percentage of net sales of Ultomiris 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. Under ASC 606, the Company recognizes revenue for sales-based royalties upon the subsequent sale of the product. We began earning royalty revenue from the sale of Ultomiris in 2019. The Company recognized $3.3 million of royalty revenue under this arrangement for the three months ended March 31, 2020 . No royalty revenue was recognized for the three months ended March 31, 2019. As of March 31, 2020, there is a receivable of $6.0 million related to royalties due under the arrangement. There is no deferred revenue related to this agreement. INmune Bio, Inc. In October 2017, the Company entered into a License Agreement with INmune Bio, Inc. (INmune). Under the terms of the agreement, the Company provided INmune with an exclusive license to certain rights to a proprietary protein, XPRO1595. Under the agreement the Company received an upfront payment of $100,000, a 19% fully diluted equity interest in INmune and an option to acquire additional shares of INmune. The Company is eligible to receive a percentage of sublicensing revenue received for XPRO1595 and also royalties in the mid-single digit percent range on the sale of approved products. The equity interest in INmune consists of 1,585,000 shares of common stock and the option is to purchase up to an additional 10% of the fully diluted interest in INmune for $10.0 million. We have recorded our equity interest in INmune at cost pursuant to ASC 323. We did not record our share of the net loss from INmune during the three months ended March 31, 2020 or 2019, respectively, as the carrying value of this investment has been reduced to zero. The Company did not recognize any revenue related to the agreement for the three months ended March 31, 2020 and 2019. There is no deferred revenue as of March 31, 2020 related to this agreement. Vir Biotechnology, Inc. In the third quarter of 2019, the Company entered into a Patent License Agreement (the VirBio Agreement) with Vir Biotechnology (VirBio) pursuant to which the Company provided a non-exclusive license to its Xtend technology for up to two targets. Under the terms of the VirBio Agreement, the Company received an upfront payment and is eligible to receive total milestones of $155.25 million which include $5.25 million of development milestones, $30.0 million of regulatory milestones and $120.0 million of sales milestones. In addition, the Company is eligible to receive royalties on the net sales of approved products in the low single digit percent range. The Company evaluated the VirBio Agreement and determined that the single performance obligation was access to a non-exclusive license to certain patents of the Company which were transferred to VirBio upon execution of the VirBio Agreement in July 2019. In March 2020, the Company entered into a second Patent License Agreement (the Second VirBio Agreement) with VirBio pursuant to which the Company provided a non-exclusive license to its Xtend technology to extend the half-life of novel antibodies VirBio is investigating as potential treatments for patients with SARS-CoV-2, which causes COVID-19. Under the terms of the Second VirBio Agreement, VirBio is responsible for all research, development, regulatory and commercial activities for the antibody, and the Company is eligible to receive royalties on the net sales of approved products in the mid-single digit percent range. The Company determined that the Second VirBio Agreement was a modification of the original agreement and the transfer of the license occurred at inception of the VirBio Agreement. The total consideration under the arrangement did not change with the Second VirBio Agreement as the Company will potentially receive additional royalty revenue which is variable consideration and is not included in the transaction price. The Company did not recognize revenue related to the agreement for the three months ended March 31, 2020 or 2019. There is no deferred revenue as of March 31, 2020 related to this agreement. Aimmune Therapeutics, Inc. On February 4, 2020, the Company entered into a License, Development and Commercialization Agreement (the Aimmune Agreement) with Aimmune Therapeutics, Inc. (Aimmune) pursuant to which the Company granted Aimmune an exclusive worldwide license to XmAb7195, which was renamed AIMab7195. Under the Aimmune Agreement, Aimmune will be responsible for all further development and commercialization activities for XmAb7195. The Company received an upfront payment of $5.0 million and 156,238 shares of Aimmune common stock with an aggregate value of $4.6 million on the closing date. Under the Aimmune Agreement, the Company is also eligible to receive up to $385.0 million in milestones, which include $22.0 million in development milestones, $53.0 million in regulatory milestones and $310.0 million in sales milestones, and tiered royalties on net sales of approved products from high-single to mid-teen percent range. Under the Aimmune Agreement, Aimmune received exclusive worldwide rights to manufacture, develop and commercialize XmAb7195. They also received the rights to all data, information and research materials related to the XmAb7195 program. The Company evaluated the Aimmune Agreement under the revenue recognition standard ASC 606 and identified the following performance obligations that it deemed to be distinct at the inception of the contract: ● License to the rights to the XmAb7195 drug candidate; and ● Rights to material, data and information that the Company had accumulated in connection with manufacturing, testing and conducting clinical trials for the XmAb7195 program and intellectual property filings and information (XmAb7195 data). The Company considered the licenses as functional intellectual property as Aimmune has the right to use XmAb7195 at the time that the Company transfers such rights. The rights to the XmAb7195 data are not considered to be separate from the license to XmAb7195 as Aimmune cannot benefit from the license without the supporting data and documentation. The Company determined the transaction price at inception is $9.6 million which consists of the $5.0 million upfront payment and the 156,238 shares of Aimmune common stock which had a value of $4.6 million on the closing date. The Company determined that the transaction price is to be allocated to the performance obligations. The Aimmune Agreement includes variable consideration for potential future milestones and royalties that were contingent on future success factors for the XmAb7195 program. The Company used the “most likely amount” method to determine the variable consideration. None of the development, regulatory or sales milestones or royalties were included in the transaction price. The Company will re-evaluate the transaction price in each reporting period as uncertain events are resolved or other changes in circumstances occur. The Company determined the transaction price at inception of the Aimmune Agreement and allocated it to the performance obligation, delivery of the XmAb7195 license. The Company completed delivery of its performance obligations in March 2020. The license to XmAb7195 was transferred to Aimmune at inception of the agreement, and the XmAb7195 data was transferred to Aimmune in March 2020. The Company recognized $9.6 million of revenue related to the agreement for the three months ended March 31, 2020. There is no deferred revenue as of March 31, 2020 related to this agreement. Gilead Sciences, Inc. In January 2020, the Company entered into a Technology License Agreement (the Gilead Agreement) with Gilead Sciences, Inc. (Gilead), in which the Company provided an exclusive license to its Cytotoxic Fc and Xtend Fc technologies for an initial identified antibody and options for up to three additional antibodies directed to the same molecular target. The Company retains the right to grant licenses for other antibodies directed to the target, subject to the Company’s approval. Gilead is responsible for all development and commercialization activities for all target candidates. The Company received an upfront payment of $6.0 million and is eligible to receive up to $67.0 million in milestones, which include $10.0 million in development milestones, $27.0 million in regulatory milestones and $30.0 million in sales milestones for each product incorporating the antibodies selected. In addition, the Company is eligible to receive royalties in the low-single digit percentage range on net sales of approved products. In March 2020, Gilead exercised options on two additional antibody compounds and in April 2020 we received a total of $5.0 million in payment of the two options. The Company evaluated the Gilead Agreement under the revenue recognition standard ASC 606 and identified the following performance obligations that it deemed to be distinct at the inception of the contract: ● Non-exclusive license to its Cytotoxic Fc and Xtend Fc technologies; and, ● Options for four exclusive commercial licenses to incorporate the licensed technologies on approved target compounds The Company considered the licenses as functional intellectual property as Gilead has the right to use the technologies at the time that the Company transfers such rights. Each of the four options is considered a separate performance obligation as the arrangement does not confer material rights to the options without payment of the option exercise fee. Gilead will benefit from each option upon exercise of each of the four options and payment of each option fee as Gilead has access to each technology at inception of the arrangement and the rights are transferred upon payment of each option fee. The total transaction price is $11.0 million which includes the upfront payment of $6.0 million and the option fee payment of $5.0 million which is contractually due with the exercise of the two options by Gilead. The milestone payments are variable consideration to which the Company applied the “most likely amount” method and concluded at inception of the Agreement it is unlikely that the Company will collect such payments. The milestone payments were not included in the transaction price and the Company will review this conclusion and update at each reporting period. The Company allocated $3.5 million of the transaction price to the licenses to the cytotoxic Fc and Xtend Fc technologies and recognized income for the licenses at inception of the arrangement when Gilead began benefiting access to them. The Company allocated The Company recognized ​ Revenue earned The revenues recorded for the three months ended March 31, 2020 were earned principally from the following licensees (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ 2020 ​ 2019 ​ ​ ​ ​ ​ ​ Aimmune ​ $ 9.6 $ — ​ Alexion ​ 3.3 ​ — ​ Astellas ​ ​ 0.3 ​ ​ — ​ Genentech ​ ​ 0.7 ​ ​ 112.0 ​ Gilead ​ ​ 6.0 ​ ​ — ​ MorphoSys ​ ​ 12.5 ​ ​ — ​ Total ​ $ 32.4 ​ $ 112.0 ​ ​ The table below summarizes the disaggregation of revenue recorded for the three months ended March 31, 2020 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ 2020 ​ 2019 ​ ​ ​ ​ ​ ​ Research collaboration $ 1.0 $ 0.3 ​ Milestone ​ ​ 12.5 ​ — ​ Licensing ​ ​ 15.6 ​ 111.7 ​ Royalties ​ ​ 3.3 ​ ​ — ​ Total ​ $ 32.4 ​ $ 112.0 ​ ​ Remaining Performance Obligations and Deferred Revenue The Company’s remaining performance obligations are delivery of two Global Discovery Programs under the Novartis Agreement and the conduct of research activities pursuant to research plans under the Genentech and Astellas Agreements. As of March 31, 2020 and 2019, the Company has deferred revenue of $46.2 million and $63.1 million, respectively. As of March 31, 2020, all deferred revenue is classified as current liabilities as the Company’s obligations to perform services are due on demand when requested by Novartis and by Astellas under the Novartis Agreement and Astellas Agreements, respectively. The Company’s obligation to perform research services to Genentech will end within one year . As of March 31, 2019, $59.2 million was classified as current liabilities for the same reason, and $3.9 million of the deferred revenue liability was classified as long-term for the portion of obligations to perform research services to Genentech after one year .

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2020
Income Taxes
Income Taxes	10. Income taxes ​ On March 27, 2020, the president signed the Coronavirus Aid, Relief and Economic Security (CARES) Act. The legislation provides several changes to corporation income taxes including: ● Deferral of employer payroll taxes for the remainder of 2020, with repayment of the deferred amounts in December 2021 and in December 2022. ● Modification of the rules applicable to the deductibility of net operation losses (NOLs) incurred in tax years beginning in 2018, 2019 and 2020. ● Acceleration of the corporate minimum tax credit. ​ The Company reviewed the new legislation and determined that certain provisions would provide income tax benefits: ● The Company qualifies for the deferral of payroll taxes and expects to benefit from this provision. No deferral was recorded for the period ended March 31, 2020, but the Company expects to defer its payroll tax liabilities for the remainder of 2020. ● The Company has NOL and income tax credit carryforwards which are subject to a valuation allowance, due to uncertainty about the ability to utilize such losses and credits in future periods. Accordingly, the Company does not expect the changes in the NOL provisions in the legislation to provide any benefit in the near-term. ● As of December 31, 2019, the Company had recorded a receivable of $0.8 million related to the corporate minimum tax credit. Under previous income tax provisions, one-half of the minimum tax credit would be received in 2020 and the remainder in subsequent years. As a result of the new legislation, the Company expects to receive a refund for the entire $0.8 million minimum tax credit in 2020. ​ There was no provision for income taxes for the three months ended March 31, 2020. The provision for income taxes of $0.9 million for the three months ended March 31, 2019 represents the interim period tax allocation of the state alternative minimum tax based on the Company’s projected year-end effective income tax rates which cannot be offset by the Company’s net operating loss carryforwards. The Company has a federal income tax receivable of $0.8 million at March 31, 2020 related to refundable alternative minimum tax credits and a state income tax receivable of $0.1 million related to overpayment of prior year taxes. As of March 31, 2020, the Company’s deferred income tax assets, consisting primarily of net operating loss and tax credit carryforwards, have been fully offset by a valuation allowance. ​

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Polices)	3 Months Ended
	Mar. 31, 2020
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation ​ The accompanying unaudited interim financial statements for Xencor, Inc. (the Company, Xencor, we or us) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the management of the Company believes are necessary for a fair presentation of the periods presented. The preparation of interim financial statements requires the use of management’s estimates and assumptions that affect reported amounts of assets and liabilities at the date of the interim financial statements and the reported revenues and expenditures during the reported periods. These interim financial results are not necessarily indicative of the results expected for the full fiscal year or for any subsequent interim period. ​ The accompanying unaudited interim financial statements and related notes should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 24, 2020.
Use of Estimates	Use of Estimates ​ The preparation of interim financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, other comprehensive gain (loss) and the related disclosures. On an ongoing basis, management evaluates its estimates, including estimates related to its accrued clinical trial and manufacturing development expenses, stock-based compensation expense, intangible assets and related amortization. Significant estimates in these interim financial statements include estimates made for royalties and accrued research and development expenses, stock-based compensation expenses, intangible assets and related amortization, estimated standalone selling price of performance obligations, the likelihood of recognizing variable consideration, and recoverability of deferred tax assets.
Intangible Assets	Intangible Assets ​ The Company maintains definite-lived intangible assets related to certain capitalized costs of acquired licenses and third-party costs incurred in establishing and maintaining its intellectual property rights to its platform technologies and development candidates. These assets are amortized over their useful lives, which are estimated to be the remaining patent life or the contractual term of the license. The straight-line method is used to record amortization expense. The Company assesses its intangible assets for impairment if indicators are present or changes in circumstances suggest that impairment may exist. There were no impairment charges recorded for the three months ended March 31, 2020 and 2019. ​ The Company capitalizes certain in-process intangible assets that are then abandoned when they are no longer pursued or used in current research activities. There was no material abandonment of in-process intangible assets during the three months ended March 31, 2020 or 2019.
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 debt securities issued by investment grade institutions. ​ The Company considers its marketable debt securities to be available-for-sale and does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell the securities before recovery of the amortized cost basis. These assets are carried at fair value and any impairment gains (losses) related to the underlying issuer’s credit standing are recognized within other income (expense), while non-credit related impairment gains (losses) are recognized within accumulated other comprehensive income (loss). Accrued interest on marketable debt securities is included in marketable securities’ carrying value. Each reporting period, the Company reviews its portfolio of marketable debt securities, using both quantitative and qualitative factors, to determine if each security’s fair value has declined below its amortized cost basis. ​ The Company also has investments in equity securities that are carried at fair value with changes in fair value recognized within other income (expense). For equity securities with a readily determinable fair value, the Company remeasures these equity investments at each reporting period until such time that the investment is sold or disposed. If the Company sells an investment, any realized gains and losses on the sale of the securities will be recognized within other income (expense) in the Statement of Comprehensive Income (Loss) in the period of sale.
Recent Accounting Pronouncements	Recent Accounting Pronouncements ​ Pronouncements Adopted in 2020 ​ Effective January 1, 2020, the Company adopted ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as well as ASU No, 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses. The standard amends guidance on reporting credit losses for assets held at amortized cost basis and also provides an available-for-sale (AFS) debt security impairment model that is a modified version of the other-than-temporary-impairment (OTTI) model. The AFS debt security impairment model no longer allows consideration of the length of time during which the fair value has been less than its amortized cost when determining whether a credit loss exists. The adoption of this standard did not have any impact on the Company’s financial statements. ​ Effective January 1, 2020, the Company adopted ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosures for transfers between Level 1 and Level 2 of the fair value hierarchy, modifies the Level 3 disclosure requirements for non-public entities and requires additional disclosure for Level 3 fair value hierarchy. The adoption of this standard did not have any impact on the Company’s financial statements. ​ Effective January 1, 2020, the Company adopted ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, which provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard. The adoption of this standard did not have any impact on the Company’s financial statements. ​ Pronouncements Not Yet Effective ​ In December 2019, the Financial Accounting Standards Board (FASB) issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ​ In January 2020, the FASB issued ASU No. 2020-01, which clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investment – Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendment is effective for fiscal years beginning after December 15, 2020. The Company does not anticipate that the standard will have a significant impact on its financial statements. ​ There have been no other material changes to the significant accounting policies previously disclosed in the Company’s 2019 Annual Report on Form 10-K.

Fair Value of Financial Instr_2

Fair Value of Financial Instruments (Tables)	3 Months Ended
	Mar. 31, 2020
Fair Value of Financial Instruments
Schedule of assets recorded at fair value	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2020 ​ December 31, 2019 ​ Total ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ Fair Value ​ Level 1 ​ Level 2 ​ Fair Value ​ Level 1 ​ Level 2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money Market Funds ​ $ 49,800 ​ $ 49,800 ​ $ — ​ $ 32,009 ​ $ 32,009 ​ $ — Corporate Securities ​ ​ 332,691 ​ ​ — ​ ​ 332,691 ​ ​ 281,751 ​ ​ — ​ ​ 281,751 Government Securities ​ ​ 203,382 ​ ​ — ​ ​ 203,382 ​ ​ 269,245 ​ ​ — ​ ​ 269,245 Equity Securities with Readily Determinable Fair Value ​ ​ 2,253 ​ ​ 2,253 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ $ 588,126 ​ $ 52,053 ​ $ 536,073 ​ $ 583,005 ​ $ 32,009 ​ $ 550,996

Net Income (Loss) Per Share (Ta

Net Income (Loss) Per Share (Tables)	3 Months Ended
	Mar. 31, 2020
Net Income (Loss) Per Share
Schedule of basic and diluted net income (loss) per common share	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ 2020 2019 ​ ​ (in thousands, except share and per share data) Numerator: ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to common stockholders ​ $ (8,074) ​ $ 80,045 ​ Denominator: ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding used in computing basic net income (loss) ​ 56,946,714 ​ 56,302,967 ​ Effect of dilutive securities ​ ​ — ​ ​ 1,706,911 ​ Weighted-average common shares outstanding used in computing diluted net income (loss) ​ ​ 56,946,714 ​ ​ 58,009,878 ​ Basic net income (loss) per common share ​ $ (0.14) ​ $ 1.42 ​ Diluted net income (loss) per common share ​ $ (0.14) ​ $ 1.38 ​

Marketable Securities (Tables)

Marketable Securities (Tables)	3 Months Ended
	Mar. 31, 2020
Marketable Securities
Schedule of marketable securities	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ Amortized Unrealized ​ Unrealized ​ March 31, 2020 ​ Cost ​ Gains ​ Losses ​ Fair Value (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money Market Funds ​ $ 49,800 ​ $ — ​ $ — ​ $ 49,800 Corporate Securities ​ ​ 333,259 ​ ​ 22 ​ ​ (590) ​ ​ 332,691 Government Securities ​ ​ 201,748 ​ ​ 1,634 ​ ​ — ​ ​ 203,382 ​ ​ $ 584,807 ​ $ 1,656 ​ $ (590) ​ $ 585,873 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reported as ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 49,800 Marketable securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 536,073 Total investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 585,873 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ Amortized Unrealized ​ Unrealized ​ December 31, 2019 ​ Cost ​ Gains ​ Losses ​ Fair Value (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money Market Funds ​ $ 32,009 ​ $ — ​ $ — ​ $ 32,009 Corporate Securities ​ ​ 281,586 ​ ​ 195 ​ ​ (30) ​ ​ 281,751 Government Securities ​ ​ 268,239 ​ ​ 1,006 ​ ​ — ​ ​ 269,245 ​ ​ $ 581,834 ​ $ 1,201 ​ $ (30) ​ $ 583,005 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reported as ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 32,009 Marketable securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 550,996 Total investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 583,005
Schedule of maturities of marketable securities	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Estimated March 31, 2020 ​ Cost ​ Fair Value (in thousands) ​ ​ ​ ​ ​ ​ Mature in one year or less ​ $ 496,586 ​ $ 497,841 Mature within two years ​ ​ 38,421 ​ ​ 38,232 ​ ​ $ 535,007 ​ $ 536,073
Schedule of unrealized losses on available-for-sale investments	​ The unrealized losses on available-for-sale investments and their related fair values as of March 31, 2020 and December 31, 2019 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 months ​ 12 months or greater ​ ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized March 31, 2020 ​ Fair value ​ losses ​ Fair value ​ losses (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate Securities ​ $ 141,723 ​ $ (401) ​ $ 38,232 ​ $ (189) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 months ​ 12 months or greater ​ ​ ​ ​ ​ Unrealized ​ ​ ​ ​ Unrealized December 31, 2019 ​ Fair value ​ losses ​ Fair value ​ losses (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate Securities ​ $ 46,303 ​ $ (24) ​ $ 13,992 ​ $ (6)

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2020
Stock-Based Compensation
Schedule of total employee, director and non-employee stock-based compensation expense recognized	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2020 2019 General and administrative ​ $ 2,291 ​ $ 1,854 ​ Research and development ​ 4,221 ​ 4,002 ​ ​ ​ $ 6,512 ​ $ 5,856 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ ​ 2020 2019 ​ Stock options ​ $ 5,882 ​ $ 5,525 ​ ESPP ​ ​ 194 ​ ​ 217 ​ Restricted stock units ​ ​ 436 ​ ​ 114 ​ ​ ​ $ 6,512 ​ $ 5,856 ​
Summary of stock option activity	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Weighted ​ ​ ​ ​ ​ ​ Average Average ​ ​ ​ ​ Number of ​ Exercise Remaining ​ Aggregate ​ ​ Shares subject ​ Price Contractual ​ Intrinsic ​ ​ to outstanding ​ (Per Term ​ Value ​ ​ options ​ Share) (in years) ​ (in thousands) Balances at December 31, 2019 7,174,319 ​ $ 24.03 ​ ​ 7.32 ​ ​ ​ Options granted 1,137,420 ​ $ 32.36 ​ ​ ​ ​ ​ ​ Options forfeited (69,654) ​ $ 30.71 ​ ​ ​ ​ ​ ​ Options exercised (79,930) ​ $ 18.40 ​ ​ ​ ​ ​ ​ Balances at March 31, 2020 8,162,155 ​ $ 25.19 ​ ​ 7.38 ​ $ 55,326 Exercisable ​ 4,429,727 ​ $ 19.50 ​ ​ 6.07 ​ $ 49,866
Schedule of weighted average assumptions used for estimation of fair value of stock options	​ ​ ​ ​ ​ ​ ​ ​ ​ Options ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2020 2019 Expected term (years) ​ 6.3 6.1 ​ Expected volatility ​ 53.9 % 61.3 % Risk-free interest rate ​ 1.71 % 2.53 % Expected dividend yield ​ — % — %
Schedule of weighted average assumptions used for estimation of fair value of ESPP	​ ​ ​ ​ ​ ​ ​ ​ ​ ESPP ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2020 2019 Expected term (years) 0.5 - 2.0 0.5 - 2.0 ​ Expected volatility ​ 50.8 % 57.0 - 71.4 % Risk-free interest rate 1.56 - 1.65 % 1.47 - 2.70 % Expected dividend yield ​ — % — %
Summary of restricted stock unity activity	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Restricted ​ Average Grant ​ ​ Stock ​ Date Fair Value ​ ​ Units ​ (Per unit) ​ ​ ​ ​ ​ ​ Unvested at December 31, 2019 90,006 ​ $ 34.66 Granted 221,604 ​ ​ 31.87 Vested (19,022) ​ ​ 31.72 Forfeited (3,404) ​ ​ 31.21 Unvested at March 31, 2020 289,184 ​ $ 32.76

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2020
Leases
Schedule of operating lease liabilities maturities	The following table reconciles the undiscounted cash flows for the operating leases at March 31, 2020 to the operating lease liabilities recorded on the balance sheet (in thousands): ​ ​ ​ ​ ​ Years ending December 31, ​ ​ For the remainder of 2020 ​ $ 2,001 2021 ​ 2,587 2022 ​ ​ 2,208 2023 ​ ​ 1,352 2024 ​ ​ 1,371 2025 ​ ​ 1,044 Thereafter ​ ​ 1,238 Total undiscounted lease payments ​ ​ 11,801 Less: Imputed interest ​ ​ (1,624) Present value of lease payments ​ $ 10,177 ​ ​ ​ ​ Lease liabilities - short-term ​ $ 2,136 Lease liabilities - long-term ​ ​ 8,041 Total lease liabilities ​ $ 10,177

Collaboration and Licensing A_2

Collaboration and Licensing Agreements (Tables)	3 Months Ended
	Mar. 31, 2020
Collaboration and Licensing Agreements
Schedule of revenue by licensees	The revenues recorded for the three months ended March 31, 2020 were earned principally from the following licensees (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ 2020 ​ 2019 ​ ​ ​ ​ ​ ​ Aimmune ​ $ 9.6 $ — ​ Alexion ​ 3.3 ​ — ​ Astellas ​ ​ 0.3 ​ ​ — ​ Genentech ​ ​ 0.7 ​ ​ 112.0 ​ Gilead ​ ​ 6.0 ​ ​ — ​ MorphoSys ​ ​ 12.5 ​ ​ — ​ Total ​ $ 32.4 ​ $ 112.0 ​
Schedule of disaggregation of revenue	The table below summarizes the disaggregation of revenue recorded for the three months ended March 31, 2020 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ 2020 ​ 2019 ​ ​ ​ ​ ​ ​ Research collaboration $ 1.0 $ 0.3 ​ Milestone ​ ​ 12.5 ​ — ​ Licensing ​ ​ 15.6 ​ 111.7 ​ Royalties ​ ​ 3.3 ​ ​ — ​ Total ​ $ 32.4 ​ $ 112.0 ​

Summary of Significant Accoun_3

Summary of Significant Accounting Policies - Intangibles (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Summary of Significant Accounting Policies
Impairment of intangible assets	$ 0	$ 0

Fair Value of Financial Instr_3

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019
Fair Value of Financial Instruments
Money Market Funds	$ 73,808	$ 50,312
Marketable Securities	536,073
Equity Securities with Readily Determinable Fair Value	2,253
Total Fair Value	588,126	583,005
Transfers from level 1 to level 2	0		$ 0
Transfers from level 2 to level 1	0		$ 0
Money Market Funds
Fair Value of Financial Instruments
Money Market Funds	49,800	32,009
Corporate Securities
Fair Value of Financial Instruments
Marketable Securities	332,691	281,751
Government Securities
Fair Value of Financial Instruments
Marketable Securities	203,382	269,245
Level 1
Fair Value of Financial Instruments
Equity Securities with Readily Determinable Fair Value	2,253
Total Fair Value	52,053	32,009
Level 1 | Money Market Funds
Fair Value of Financial Instruments
Money Market Funds	49,800	32,009
Level 2
Fair Value of Financial Instruments
Total Fair Value	536,073	550,996
Level 2 | Corporate Securities
Fair Value of Financial Instruments
Marketable Securities	332,691	281,751
Level 2 | Government Securities
Fair Value of Financial Instruments
Marketable Securities	$ 203,382	$ 269,245

Net Income (Loss) Per Share (De

Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Net income (loss) attributable to common stockholders	$ (8,074)	$ 80,045
Denominator:
Weighted average common shares outstanding, basic	56,946,714	56,302,967
Effect of dilutive securities		1,706,911
Weighted average common shares outstanding, diluted	56,946,714	58,009,878
Basic net income (loss) (in dollars per share)	$ (0.14)	$ 1.42
Diluted net income (loss) (in dollars per share)	$ (0.14)	$ 1.38
Dilutive effect of employee stock options and ESPP		1,706,911

Net Income (Loss) Per Share - A

Net Income (Loss) Per Share - Anti-dilutive securities (Details)	3 Months Ended
	Mar. 31, 2019shares
Net Income (Loss) Per Share
Securities excluded in calculation of EPS	964,743

Marketable Securities (Details)

Marketable Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities
Cash and cash equivalents	$ 73,808	$ 50,312
Investments, amortized cost	584,807	581,834
Investments	585,873	583,005
Total amortized cost	535,007
Gross unrealized gains	1,656	1,201
Gross unrealized losses	(590)	(30)
Marketable Securities	536,073
Marketable securities
Schedule of Available-for-sale Securities
Marketable Securities	536,073	550,996
Money Market Funds
Schedule of Available-for-sale Securities
Cash and cash equivalents	49,800	32,009
Corporate Securities
Schedule of Available-for-sale Securities
Total amortized cost	333,259	281,586
Gross unrealized gains	22	195
Gross unrealized losses	(590)	(30)
Marketable Securities	332,691	281,751
Government Securities
Schedule of Available-for-sale Securities
Total amortized cost	201,748	268,239
Gross unrealized gains	1,634	1,006
Marketable Securities	203,382	269,245
Cash and Cash Equivalents
Schedule of Available-for-sale Securities
Cash and cash equivalents	$ 49,800	$ 32,009

Marketable Securities - Maturit

Marketable Securities - Maturities (Details) $ in Thousands	Mar. 31, 2020USD ($)
Amortized Cost
Maturing in one year or less	$ 496,586
Maturing within two years	38,421
Total amortized cost	535,007
Estimate Fair Value
Maturing in one year or less	497,841
Maturing within two years	38,232
Total estimated fair value	$ 536,073

Marketable Securities - Unreali

Marketable Securities - Unrealized losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Unrealized losses
Equity securities, net unrealized losses	$ (2,336)
Corporate Securities
Fair value
Fair value, less than 12 months	141,723	$ 46,303
Fair value, 12 months or greater	38,232	13,992
Unrealized losses
Unrealized losses, Less than 12 months	(401)	(24)
Unrealized losses, 12 months or greater	$ (189)	$ (6)

Stock Based Compensation (Detai

Stock Based Compensation (Details)	Dec. 02, 2013shares	Mar. 31, 2020itemshares	Mar. 31, 2019shares	Dec. 31, 2019shares
Stock-based compensation
Common stock, shares issued		57,001,253		56,902,301
Employee stock options
Stock-based compensation
Options granted (in shares)		1,137,420	1,342,447
ESPP
Stock-based compensation
Total number of shares of common stock available for issuance		581,286
Awards issued under the plan (in shares)		417,277
Increase in shares of common stock available for issuance (in shares)		0
ESPP | Maximum
Stock-based compensation
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
Restricted stock units
Stock-based compensation
Awards issued under the plan (in shares)		327,103
Granted		221,604
Annual installment vesting periods | item		3
The 2013 Plan
Stock-based compensation
Total number of shares of common stock available for issuance		12,300,969
Annual percentage increase in shares of common stock available for issuance		4.00%
Awards issued under the plan (in shares)		10,030,935
Increase in shares of common stock available for issuance (in shares)		1,138,046
The 2010 Plan
Stock-based compensation
Total number of shares of common stock available for issuance		2,684,456
Options granted (in shares)	0

Stock-Based Compensation - Empl

Stock-Based Compensation - Employee expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	$ 6,512	$ 5,856
Employee stock options
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	5,882	5,525
ESPP
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	194	217
Restricted stock units
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	436	114
General and administrative
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	2,291	1,854
Research and development
Stock-based compensation
Total employee, director and non-employee stock-based compensation expense	$ 4,221	$ 4,002

Stock-Based Compensation - Opti

Stock-Based Compensation - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	Dec. 02, 2013	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Employee stock options
Number of Shares subject to outstanding options
Balance at the beginning of the period (in shares)		7,174,319
Options granted (in shares)		1,137,420	1,342,447
Options forfeited (in shares)		(69,654)
Options exercised (in shares)		(79,930)
Balance at the end of the period (in shares)		8,162,155		7,174,319
Exercisable options (in shares)		4,429,727
Weighted Average Exercise Price (Per Share)
Balance at the beginning of the period (in dollars per share)		$ 24.03
Options granted (in dollars per share)		32.36
Options forfeited (in dollars per share)		30.71
Options exercised (in dollars per share)		18.40
Balance at the end of the period (in dollars per share)		25.19		$ 24.03
Exercisable (in dollars per share)		$ 19.50
Weighted-average remaining contractual life		7 years 4 months 17 days		7 years 3 months 25 days
Weighted-average remaining contractual life of awards exercisable		6 years 25 days
Aggregate intrinsic value of options outstanding		$ 55,326
Aggregate intrinsic value of options exercisable		$ 49,866
Closing price of common stock (in dollars per share)		$ 29.88
Weighted average fair value of options granted (in dollars per share)		$ 16.64	$ 21.20
The 2010 Plan
Number of Shares subject to outstanding options
Options granted (in shares)	0

Stock-Based Compensation - FV o

Stock-Based Compensation - FV of employee stock options (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Employee stock options
Weighted average assumptions for estimated fair value of employee stock options
Expected volatility (as a percent)	53.90%	61.30%
Risk-free interest rate (as a percent)	1.71%	2.53%
Expected term (years)	6 years 3 months 18 days	6 years 1 month 6 days
Compensation expense
Unamortized compensation expense related to unvested options	$ 62.2
Period to recognize unamortized compensation expense	2 years 10 months 24 days
ESPP
Weighted average assumptions for estimated fair value of employee stock options
Expected volatility, low end of range (as a percent)		57.00%
Expected volatility, high end of range (as a percent)		71.40%
Expected volatility (as a percent)	50.80%
Risk-free interest rate, low end of range (as a percent)	1.56%	1.47%
Risk-free interest rate, high end of range (as a percent)	1.65%	2.70%
Compensation expense
Unamortized compensation expense related to unvested options	$ 1.3
Period to recognize unamortized compensation expense	1 year 8 months 12 days
ESPP | Minimum
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	6 months	6 months
ESPP | Maximum
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	2 years	2 years

Stock Based Compensation - Rest

Stock Based Compensation - Restricted stock units (Details) - Restricted stock units $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020USD ($)$ / sharesshares
Stock-based compensation
Beginning balance | shares	90,006
Granted | shares	221,604
Vested | shares	(19,022)
Forfeited | shares	(3,404)
Ending balance | shares	289,184
Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares	$ 34.66
Weighted Average Grant Date Fair Value, Granted | $ / shares	31.87
Weighted Average Grant Date Fair Value, Vested | $ / shares	31.72
Weighted Average Grant Date Fair Value, Forfeited | $ / shares	31.21
Weighted Average Grant Date Fair Value, Ending Balance | $ / shares	$ 32.76
Compensation expense
Unamortized compensation expense related to unvested restricted stock units | $	$ 9,000
Period to recognize unamortized compensation expense	2 years 9 months 18 days

Leases (Details)

Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Jul. 31, 2017
Lessee, Lease, Description [Line Items]
Option to extend	true
For the remainder of 2020	$ 2,001
2021	2,587
2022	2,208
2023	1,352
2024	1,371
2025	1,044
Thereafter	1,238
Total undiscounted lease payments	11,801
Less: Imputed interest	(1,624)
Present value of lease payments	$ 10,177
Monrovia, CA - office and laboratory space
Lessee, Lease, Description [Line Items]
Renewal term	5 years
Monrovia, CA - office and laboratory space with additional space
Lessee, Lease, Description [Line Items]
Renewal term		5 years
San Diego, CA - office space
Lessee, Lease, Description [Line Items]
Renewal term	5 years
San Diego, CA - second office space
Lessee, Lease, Description [Line Items]
Renewal term	5 years

Leases - Operating lease liabil

Leases - Operating lease liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Leases
Lease liability - short-term	$ 2,136		$ 2,169
Lease liability - long-term	8,041		$ 8,565
Operating lease liabilities	10,177
Operating lease cost	700	$ 700
Cash paid for operating leases	$ 700	$ 700
Remaining lease term	5 years 3 months 18 days
Discount rate	5.50%

Collaboration and Licensing A_3

Collaboration and Licensing Agreements (Details)

Feb. 04, 2020USD ($)shares

Mar. 29, 2019USD ($)

Apr. 30, 2020USD ($)

Mar. 31, 2020USD ($)item

Jan. 31, 2020USD ($)item

Jun. 30, 2019USD ($)

Mar. 31, 2019USD ($)

Feb. 28, 2019USD ($)

Oct. 31, 2017USD ($)shares

Jun. 30, 2017USD ($)

Jun. 30, 2016USD ($)item

Sep. 30, 2015USD ($)item

Jan. 31, 2013Program

Mar. 31, 2020USD ($)itemOption

Sep. 30, 2019USD ($)item

Mar. 31, 2019USD ($)

Dec. 31, 2019USD ($)

Collaboration research and licensing agreements

Deferred revenue

$ 46,200,000

$ 63,100,000

$ 46,200,000

$ 63,100,000

Revenue recorded

32,385,000

111,939,000

Current portion of deferred revenue

46,176,000

46,176,000

$ 45,205,000

Non Current portion of deferred revenue

$ 1,926,000

Licensing

Collaboration research and licensing agreements

Revenue recorded

15,600,000

111,700,000

Royalty

Collaboration research and licensing agreements

Revenue recorded

3,300,000

Milestone

Collaboration research and licensing agreements

Revenue recorded

12,500,000

Genentech

Collaboration research and licensing agreements

Revenue recorded

$ 700,000

112,000,000

Current portion of deferred revenue

59,200,000

59,200,000

Non Current portion of deferred revenue

3,900,000

3,900,000

Genentech | Maximum

Collaboration research and licensing agreements

Term of revenue recognized

1 year

Astellas

Collaboration research and licensing agreements

Revenue recorded

$ 300,000

Novartis

Collaboration research and licensing agreements

Number of performance obligations

2

MorphoSys

Collaboration research and licensing agreements

Revenue recorded

$ 12,500,000

Alexion

Collaboration research and licensing agreements

Revenue recorded

3,300,000

Aimmune

Collaboration research and licensing agreements

Revenue recorded

9,600,000

Gilead

Collaboration research and licensing agreements

Revenue recorded

6,000,000

Collaboration and License Agreement | Genentech

Collaboration research and licensing agreements

Nonrefundable upfront payment

$ 120,000,000

Percentage of profits on net sales of the product

45.00%

Research license term

2 years

Revenue recognized

700,000

112,000,000

Collaboration and License Agreement | Genentech | XmAb24306

Collaboration research and licensing agreements

Cost sharing receivable (payable)

(1,400,000)

(1,400,000)

Collaboration and License Agreement | Genentech | Research service

Collaboration research and licensing agreements

Performance obligation

$ 8,300,000

Revenue recognized

700,000

Deferred revenue

5,400,000

5,400,000

Collaboration and License Agreement | Genentech | Licensing

Collaboration research and licensing agreements

Revenue recognized

111,700,000

Collaboration and License Agreement | Genentech | Maximum

Collaboration research and licensing agreements

Potential milestone payment

$ 160,000,000

Collaboration and License Agreement | Novartis

Collaboration research and licensing agreements

Nonrefundable upfront payment

$ 150,000,000

Revenue recognized

0

0

Deferred revenue

40,100,000

40,100,000

Cost sharing receivable (payable)

600,000

$ 600,000

Collaboration and License Agreement | Novartis | Discovery Program

Collaboration research and licensing agreements

Number of performance obligations | item

2

Collaboration and License Agreement | Novartis | Bispecific FC Technologies

Collaboration research and licensing agreements

Number of development stage products | item

2

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 | FC Licenses | Maximum

Collaboration research and licensing agreements

Number of targets against which non-exclusive license is provided | item

10

Collaboration and License Agreement | MorphoSys

Collaboration research and licensing agreements

Revenue recognized

$ 12,500,000

0

Deferred revenue

0

0

Collaboration and License Agreement | MorphoSys | Milestone

Collaboration research and licensing agreements

Revenue recognized

$ 12,500,000

Research and License Agreement | Astellas

Collaboration research and licensing agreements

Nonrefundable upfront payment

$ 15,000,000

Potential milestone payment

240,000,000

Revenue recognized

300,000

0

Deferred revenue

700,000

700,000

Research and License Agreement | Astellas | Bispecific

Collaboration research and licensing agreements

Revenue recognized

$ 13,600,000

Research and License Agreement | Astellas | Research service

Collaboration research and licensing agreements

Performance obligation

1,400,000

Research and License Agreement | Amgen, Inc.

Collaboration research and licensing agreements

Upfront and milestone payment

$ 60,500,000

Potential milestone payment

$ 600,000,000

Revenue recognized

0

0

Deferred revenue

0

0

Number of previously identified products | item

5

Research and License Agreement | VIR Biotechnology

Collaboration research and licensing agreements

Potential milestone payment

$ 155,250,000

Revenue recognized

2,019

2,019

Deferred revenue

0

0

Number of different target programs | item

2

Option and License Agreement | Alexion

Collaboration research and licensing agreements

Deferred revenue

0

0

Cost sharing receivable (payable)

6,000,000

6,000,000

Number of different target programs | Program

1

Option and License Agreement | Alexion | Royalty

Collaboration research and licensing agreements

Revenue recognized

3,300,000

0

License Agreement | INmune

Collaboration research and licensing agreements

Nonrefundable upfront payment

$ 100,000

Revenue recognized

0

0

Deferred revenue

0

0

Fully-diluted equity interests (as a percentage)

19.00%

Additional equity interests (as a percentage)

10.00%

Equity issued in shares | shares

1,585,000

Equity issues, value

$ 10,000,000

Carrying value

0

$ 0

0

$ 0

License Agreement | Gilead

Collaboration research and licensing agreements

Performance obligation

$ 11,000,000

Nonrefundable upfront payment

6,000,000

Potential milestone payment

$ 67,000,000

Revenue recognized

6,000,000

Deferred revenue

$ 5,000,000

$ 5,000,000

Options exercised

2

2

Number of compounds | item

3

Number of commercial licenses | item

4

License Agreement | Gilead | Forecast

Collaboration research and licensing agreements

Revenue recognized

$ 5,000,000

License Agreement | Gilead | Cytotoxic Fc and Xtend Fc Technologies

Collaboration research and licensing agreements

Performance obligation

$ 3,500,000

$ 3,500,000

License Agreement | Gilead | Initial Option Exercises

Collaboration research and licensing agreements

Performance obligation

2,500,000

2,500,000

License, Development, and Commercialization Agreement | Aimmune

Collaboration research and licensing agreements

Performance obligation

$ 9,600,000

Nonrefundable upfront payment

5,000,000

Potential milestone payment

$ 385,000,000

Revenue recognized

9,600,000

Deferred revenue

$ 0

$ 0

Equity issued in shares | shares

156,238

Equity issues, value

$ 4,600,000

Development-based | Research and License Agreement | Astellas

Collaboration research and licensing agreements

Potential milestone payment

32,500,000

Development-based | Research and License Agreement | VIR Biotechnology

Collaboration research and licensing agreements

Potential milestone payment

$ 5,250,000

Development-based | License Agreement | Gilead

Collaboration research and licensing agreements

Potential milestone payment

$ 10,000,000

Development-based | License, Development, and Commercialization Agreement | Aimmune

Collaboration research and licensing agreements

Potential milestone payment

22,000,000

Regulatory-based | Research and License Agreement | Astellas

Collaboration research and licensing agreements

Potential milestone payment

57,500,000

Regulatory-based | Research and License Agreement | VIR Biotechnology

Collaboration research and licensing agreements

Potential milestone payment

30,000,000

Regulatory-based | License Agreement | Gilead

Collaboration research and licensing agreements

Potential milestone payment

27,000,000

Regulatory-based | License, Development, and Commercialization Agreement | Aimmune

Collaboration research and licensing agreements

Potential milestone payment

53,000,000

Sales-based | Research and License Agreement | Astellas

Collaboration research and licensing agreements

Potential milestone payment

$ 150,000,000

Sales-based | Research and License Agreement | VIR Biotechnology

Collaboration research and licensing agreements

Potential milestone payment

$ 120,000,000

Sales-based | License Agreement | Gilead

Collaboration research and licensing agreements

Potential milestone payment

$ 30,000,000

Sales-based | License, Development, and Commercialization Agreement | Aimmune

Collaboration research and licensing agreements

Potential milestone payment

$ 310,000,000

Collaborative and Licensing Agr

Collaborative and Licensing Agreements - Revenue Recognition (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	$ 32,385,000	$ 111,939,000
Deferred revenue	46,200,000	63,100,000
Current portion of deferred revenue	46,176,000		$ 45,205,000
Non Current portion of deferred revenue			$ 1,926,000
Research collaboration
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	1,000,000	300,000
Milestone
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	12,500,000
Licensing
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	15,600,000	111,700,000
Royalty
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	3,300,000
Aimmune
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	9,600,000
Alexion
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	3,300,000
Astellas
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	300,000
Genentech
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	700,000	112,000,000
Current portion of deferred revenue		59,200,000
Non Current portion of deferred revenue		$ 3,900,000
Gilead
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	6,000,000
MorphoSys
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recorded	$ 12,500,000
Novartis
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of performance obligations	2
Collaboration and License Agreement | MorphoSys
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue	$ 0
Collaboration and License Agreement | Novartis
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue	$ 40,100,000
Minimum | Genentech
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Term of revenue recognized	1 year
Maximum | Genentech
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Term of revenue recognized	1 year

Income Taxes (Details)

Income Taxes (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2020	Dec. 31, 2019
Reconciliation of federal statutory income tax to effective income tax
Payroll taxes deferred		$ 0
Income tax expense	$ 900,000
State
Reconciliation of federal statutory income tax to effective income tax
Income tax receivable		100,000
Federal
Reconciliation of federal statutory income tax to effective income tax
Income tax receivable		$ 800,000	$ 800,000