Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K. This Item generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 are not included, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

OVERVIEW

As discussed in Part I, Item 1, Business, we are a clinical-stage biopharmaceutical company focused on discovering and developing engineered antibody therapeutics to treat patients with cancer and other serious diseases, who have unmet medical needs. Leveraging our proprietary protein engineering capabilities, including our XmAb® Fc domain technologies, we design and advance novel antibody-based drug candidates with improved functionality and therapeutic potential.

We advance selected candidates through clinical development, while also partnering with programs to access complementary development and commercialization capabilities. Our portfolio spans early- and mid-stage clinical programs, and our strategic approach emphasizes disciplined portfolio management, including advancing, partnering, or discontinuing programs based on clinical data and development priorities. Three marketed medicines have been developed using our XmAb technologies.

Refer to Part I, Item 1, Business, for a more detailed discussion of our business, technology platforms, pipeline, and key developments.

RESULTS OF OPERATIONS

The following table summarizes our results of operations for the following periods indicated:

Year Ended December 31,

(in thousands)

Revenues:

License $ — $ 8,500 $ —

Operating expenses:

(1) Other income (expense), net, included interest income, interest expense, gain/loss on marketable equity securities and asset impairment charges.

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Revenues

Total revenue for the year ended December 31, 2025 increased by $15.1 million from the same period of 2024. The change was primarily driven by the revenue recognition associated with Alexion and Incyte license agreements as discussed below. See Note 2, Collaboration and Licensing Agreements of the Notes to Consolidated Financial Statements of Part II, “Item 8. Financial Statements and Schedule” for more information on revenue recognized under the collaboration and license agreements.

Alexion: In January 2013, we entered into an Option and License Agreement (the “Alexion Agreement”) with Alexion. Under the terms of the Alexion Agreement, we granted to Alexion an exclusive research license, with limited sublicensing rights, to make and use our Xtend technology to evaluate and advance compounds. Alexion exercised its rights to one target program, ALXN1210, which is now marketed as Ultomiris®.

Under the Alexion Agreement, we recognized $70.1 million and $58.2 million of non-cash royalty revenue for the years ended December 31, 2025 and 2024, respectively.

Incyte: In June 2010, we entered into a Collaboration and License Agreement with MorphoSys AG, which was subsequently amended in 2012, 2020 and 2024 (as amended, the “MorphoSys Agreement”). The MorphoSys Agreement provides MorphoSys AG with an exclusive worldwide license to our patents and know-how to research, develop, and commercialize our 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, we are eligible to receive future milestone payments and royalties. In February 2024, Incyte assumed all of MorphoSys AG’s right, title and interest under the MorphoSys Agreement.

In February 2025, the United States Food and Drug Administration (“FDA”) accepted Incyte’s submission of a supplemental biologics license application, triggering a $12.5 million milestone payment to the Company, and approved the application in June 2025, triggering an additional $25.0 million milestone payment to the Company. Both milestone payments were received by the Company in 2025. In addition, Incyte dosed two patients in a Phase 2 study on December 29, 2025, one patient with immune thrombocytopenia and one patient with autoimmune hemolytic anemia, triggering a $4.0 million milestone payment to the Company which was paid in January 2026.

In addition, under the MorphoSys Agreement, we recognized $10.2 million and $8.7 million of non-cash royalty revenue for the years ended December 31, 2025 and 2024.

Amgen: In September 2015, we entered into a Research and License Agreement (the“Amgen Agreement”) with Amgen to develop and commercialize bispecific antibody product candidates using our proprietary XmAb® bispecific Fc technology. In December 2024, Amgen initiated a Phase 3 clinical study of xaluritamig, which triggered a $30.0 million milestone payment received in January 2025.

Novartis: In June 2016, we entered into a Collaboration and License Agreement (the “Novartis Agreement”) with Novartis to develop and commercialize bispecific and other Fc-engineered antibody product candidates using our proprietary XmAb® technologies. In 2024, Novartis initiated a Phase 2 clinical study for the Fc product candidate, resulting in $4.0 million of revenue recognized under the Novartis Agreement.

Mabgeek: On December 22, 2023, we entered into a Technology License Agreement with Mabgeek. On June 21, 2024, the parties entered into Amendment No. 1 to the Technology License Agreement (as amended, the “Mabgeek Agreement”). Under the Mabgeek Agreement, we received an upfront payment of $1.5 million, which was recognized as revenue, and is eligible to receive royalties in the low single digits on net sales of approved products. We evaluated the Mabgeek Agreement and determined that it contains a single performance obligation—access to a non-exclusive license to certain of our patents, which was transferred to Mabgeek in June 2024. Mabgeek’s Phase 3 study achieved the milestone of database lock in Mainland China on November 20, 2025, triggering a $1.8 million milestone payment, which will be received in the first quarter of 2026.

Vir Bio: In 2019, we entered into a Patent License Agreement (the “Vir Bio Agreement”) with Vir Bio, granting a non-exclusive license to our Xtend technology for up to two targets. In March 2025, Vir Bio initiated a Phase 3 study for tobevibart, triggering a $2.0 million milestone payment to us, which was paid in the second quarter of 2025.

Research and Development (R&D) Expenses

R&D expenses consist of external and internal costs incurred in the discovery and development of product candidates and new technologies. External R&D expenses primarily include costs for preclinical studies, clinical trials, and fees paid to third-party service providers, including CROs and CMOs, for activities such as clinical trial management, manufacturing and process development, IND-enabling toxicology studies, and formulation of clinical drug supplies. Internal R&D expenses primarily include salaries, benefits, and other personnel-related costs, supplies, and allocated overhead, including facility costs.

Clinical trial expenses may fluctuate from period to period due to changes in trial stage, patient enrollment, service provider costs, and the initiation or completion of clinical programs. We expect this variability to continue as our development programs progress. We expect future R&D expenses to increase compared to recent periods if we successfully advance our clinical-stage or preclinical programs into later stages of development.

Our R&D activities are primarily designed, managed, and evaluated internally, while certain activities—such as GLP toxicology studies, clinical trials and cGMP manufacturing—are conducted by CROs and CMOs. External R&D costs are tracked on a program-by-program basis, except during early research and discovery stages, when efforts are focused on identifying preclinical candidates and enhancing discovery platforms and technologies that are not attributable to a specific program. Costs related to these activities are assigned to distinct preclinical pipeline or technology development projects. Internal research and development costs are managed and reviewed on an aggregate basis and are therefore not presented at a program-specific level.

The following tables summarize our research and development expenses for the following periods indicated:

Year Ended December 31,

(in thousands)

External R&D expenses per program:

(1) We have retrospectively adjusted segment operating expenses for the years ended on December 31, 2024 and 2023 to reflect the significant segment expenses as currently reviewed by our CODM.

Total R&D expenses increased by $11.7 million for the year ended December 31, 2025, compared to the same period in 2024. The increase was primarily driven by higher external and internal costs incurred associated with the programs listed above, which are aligned with our strategic research and development priorities, partially offset by lower stock-based compensation expense in the current period. R&D expenses may fluctuate from period to period depending on the timing, progress, and level of activity of each program.

General and Administrative Expenses

General and administrative expenses consist of salaries, stock compensation, professional services related to legal, audit, consulting, patent filings, business insurance and technology expenses, facilities, and depreciation and amortization. General and administrative expensesfor the year ended December 31, 2025 remained relatively consistent with the same period in 2024.

Other Income (Expense)

Other income (expense) primarily consists of interest income and expense, gains and losses on marketable equity securities, and asset impairment charges. Other income increased by $144.4 million for the year ended December 31, 2025 compared to the same period in 2024.

The change for the year ended December 31, 2025, was primarily driven by a combination of realized and unrealized gains from the marketable equity securities. In addition, impairment charges of $20.4 million were recognized in the first quarter of 2024 related to an equity interest in a private biotechnology company.

LIQUIDITY AND CAPITAL RESOURCES

We have historically financed our operations through payments received from product development partnerships and licensing arrangements, private placements of equity securities, and public offerings of common stock. Research and

development activities have required significant capital investment since the Company’s inception and are expected to continue to require significant cash expenditure as the Company’s pipeline continues to expand.

As of December 31, 2025, we had $610.8 million of cash, cash equivalents, and marketable debt securities compared to $706.7 million as of December 31, 2024.

On February 27, 2023, we entered into an open market sale agreement (the “Sales Agreement”), pursuant to which we may, from time to time, offer and sell up to $200.0 million in shares of our common stock through SVB Securities LLC, acting as the sales agent. As of December 31, 2025, no shares have been issued under the Sales Agreement.

We expect to continue receiving payments from our collaborators for potential additional milestones, opt-ins, contingent payments, royalties, and research and development services rendered, if any. The receipt of future milestone and contingent payments is dependent on the achievement of certain research and development milestones by us or our partners and, as such, remains uncertain at this time.

We believe our current financial resources are sufficient to fund our operations through at least the next twelve months from the date of the issuance of these consolidated financial statements.

Funding Requirements

We have not generated any revenue from the sale of products developed by us to date and do not expect to do so until we obtain regulatory approval of and commercialize one or more of our internal product development candidates. As we are currently in the clinical stage of development, it will be some time before we expect to achieve this, and it is uncertain that we will ever commercialize one or more of our internal product development candidates. We expect that we will continue to increase our operating expenses in connection with ongoing and additional clinical and preclinical development of product candidates in our pipeline and candidates that we are co-developing with our partners.

Although it is difficult to predict our funding requirements, based upon our current operating plan, we expect that our existing cash, cash equivalents, marketable securities and certain potential milestone payments will fund our operating expenses and capital expenditure requirements through 2028. We have based these estimates on assumptions that may prove to be wrong which would cause us to use our capital resources sooner than we currently expect.

Cash Flows

The following table sets forth the primary sources and uses of cash for each of the periods presented below:

Year Ended December 31,

Cash Flow from:

During the year ended December 31, 2025, cash flow used in operating activities was $135.1 million, which was primarily due to the ongoing expenses related to our research and development programs and general and administrative expenses. While overall operating expenditures remained consistent with the prior year, the change was primarily driven by higher milestone receipts in 2025, including $30.0 million received from Amgen during the year ended December 31, 2025, which had been recognized as revenue in December 2024. Cash provided by investing activities amounted to $140.0 million, primarily reflecting proceeds of $442.0 million from sales and maturities of marketable securities, offset by purchases of marketable securities totaling $298.9 million. Cash provided by financing activities of $8.2 million was primarily related to cash received from stock option exercises and the issuance of common stock under the ESPP, offset by payments to acquire non-controlling interest.

Contractual Obligations and Commitments

We are party to other contracts associated with ongoing business activities that will result in cash payments to counterparties in future periods. Based on our current operating plan, we believe that our cash and cash equivalents and marketable debt securities as of December 31, 2025 will be sufficient to satisfy our near-term capital and operating needs. Recent and expected working capital and other capital requirements include the items described below.

•For information related to our future commitments for collaboration and licensing agreements, see Note 2 of Notes to our consolidated financial statements included in “Item 8. Financial Statements and Schedules.”

•We have entered into various in-license and technology agreements that require future payments upon the achievement of specified development, regulatory, and sales milestones, as well as royalties on commercial sales. These obligations are contingent on the successful development and commercialization of the related programs, and the timing and amount of any such payments are not currently probable or reasonably estimable.

•Amounts related to future lease payments for operating lease obligations on an undiscounted basis at December 31, 2025 totaled $94.6 million, with $7.8 million expected to be paid within the next 12 months.

•We have not entered into, nor do we currently have, any off-balance sheet arrangements (as defined under SEC rules).

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we reconsider and evaluate our estimates and assumptions. We base our estimates on historical experience, current trends and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could materially differ from any of our estimates under different assumptions or conditions. Our significant accounting policies are discussed in Note 1 of Notes to our consolidated financial statements included in “Item 8. Financial Statements and Schedules.” We believe the accounting estimates listed below are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.

Revenue Recognition

Revenues are recognized when control of our services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determine revenue recognition through the following steps: (1) Identification of the contract, or contracts, with a customer; (2) Identification of the performance obligations in the contract; (3) Determination of the transaction price; (4) Allocation of the transaction price to the performance obligations in the contract; and (5) Recognition of revenue when, or as, we satisfy a performance obligation. We have not made any material changes in the accounting methodology we use to recognize revenue during the year ended December 31, 2025.

Judgment and Uncertainties: Our revenue recognition accounting methodology involves significant judgments and estimates, particularly for collaboration and licensing agreements, which often include multiple performance obligations, variable consideration in the form of milestone payments, and royalties on future product sales. In applying this methodology, we are required to exercise judgment and make estimates to, among other things: (1) determine whether multiple obligations are distinct and should be accounted for as separate performance obligations; (2) estimate the standalone selling price of each performance obligation; (3) allocate the transaction price among performance obligations based on relative standalone selling prices; and (4) determine whether revenue should be recognized at a point in time or over time for each performance obligation.

These judgments and estimates may change as additional information becomes available or as underlying assumptions are revised. Changes in these judgments or estimates could result in a material increase or decrease in the amount of revenue or deferred revenue recognized in a particular reporting period.

Accrued Research and Development Expenses

We record accrued expenses for research and development activities based on estimates of services provided to date by third-party vendors, including CROs, CMOs, preclinical research organizations, clinical sites, research institutions, and other service providers. Research and development expenses are recognized as incurred and are based on a combination of factors, including contractual terms, the progress of preclinical and clinical activities, patient enrollment and dosing, preclinical study progress, and information provided by our vendors. We have not made any material changes in the accounting methodology we use to recognize expense during the year ended December 31, 2025.

Judgment and Uncertainties: The process of estimating accrued research and development expenses involves significant judgment and is subject to inherent uncertainties. In particular, we are required to estimate the extent of services performed under our research and development agreements, including preclinical studies and clinical trials, when invoices

have not yet been received. These estimates are based on, among other things: (1) patient enrollment, dosing, and follow-up activities; (2) the timing and completion of preclinical and clinical milestones; (3) vendor-reported progress and data, which may be incomplete or subject to delay; and (4) assumptions regarding the rate at which services are rendered over the course of preclinical and clinical programs.

Actual costs incurred may differ materially from our estimates due to changes in preclinical or clinical development plans, patient enrollment rates, protocol amendments, site activation or closure, manufacturing requirements, study outcomes, or other factors outside of our control. Changes in these estimates could result in material adjustments to research and development expenses and accrued liabilities in future periods.

Liability Related to the Sale of Future Royalties

We have entered into arrangements that involve the sale of future royalty interests related to certain product candidates or partnered programs. Based on our evaluation of the terms of these arrangements, we account for the liability related to the sale of future royalties as a debt financing. The liability is initially recorded at its carrying value and subsequently measured using the effective interest method.

To amortize the royalty financing obligation, we apply the prospective method, which requires us to estimate future royalty payments over the life of the arrangement. Under this method, we periodically reassess our estimates of the amount and timing of expected royalty payments and determine a revised effective interest rate. The revised effective interest rate is the discount rate that equates the present value of the revised estimated remaining cash flows to the carrying amount of the liability and is used to recognize non-cash interest expense over the remaining term of the arrangement. We have not made any material changes in the accounting methodology we use to recognize non-cash interest expense related to the sale of future royalties during the year ended December 31, 2025.

Judgment and Uncertainties: The accounting for liabilities related to the sale of future royalties involves judgment and estimation. In particular, we are required to estimate future royalty payments, which depend on projected net product sales of the underlying products. These estimates are primarily based on externally available analyst consensus forecasts, rather than internally developed sales projections, and reflect market-based expectations for the underlying products.

Analyst consensus forecasts incorporate a number of key assumptions, including market size, patient population, product adoption and penetration, pricing, probability of technical and regulatory success, competitive dynamics, and other factors that may be outside of our control. While reliance on analyst consensus reduces subjectivity relative to internally generated forecasts, actual future royalty payments may differ materially from these estimates due to changes in market conditions, clinical or regulatory outcomes, competitive factors, or other uncertainties.

Accordingly, changes in the estimated amount or timing of expected royalty payments would result in prospective adjustments to the amortization of the liability and the effective interest rate, which could have a material impact on non-cash interest expense and the carrying value of the liability in future periods.

Stock-Based Compensation

We recognize stock-based compensation expense for equity awards, including stock options, restricted stock units (“RSUs”), and shares issued under the Employee Stock Purchase Plan (“ESPP”), based on the estimated grant-date fair value of the awards. Compensation expense is recognized on a straight-line basis over the requisite service period, generally the vesting period. We account for forfeitures as they occur.

The grant-date fair value of stock option awards is estimated using the Black-Scholes option pricing model, which requires the use of subjective assumptions, including expected term, expected volatility, risk-free interest rate, and expected dividend yield. Expected volatility and expected term are primarily based on our historical data and other relevant information, while the risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant with a maturity commensurate with the expected term of the award. We do not assume any expected dividend yield, as we have not declared or paid dividends on our common stock. We have not made any material changes in the accounting methodology we use to recognize expense during the year ended December 31, 2025.

Judgment and Uncertainties: The valuation of stock-based awards and the resulting compensation expense involve significant judgment and estimation. Changes in assumptions used to estimate the fair value of stock options, particularly expected volatility and expected term, could result in materially different stock-based compensation expense. In addition, differences between actual forfeitures and our estimates, as well as changes in the timing or amount of equity awards granted, could impact the amount and timing of stock-based compensation expense recognized in future periods.

Changes in these assumptions or estimates, or differences between actual outcomes and our assumptions, could result in a material increase or decrease in the amount of stock-based compensation expense recognized in a particular period, which could materially affect our operating expenses and results of operations.

Income Taxes

We account for income taxes using the asset and liability method, which requires us to make estimates and judgments in determining our current and deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We assess the realizability of our deferred tax assets and record a valuation allowance when it is more likely than not that some or all of the deferred tax assets will not be realized. We have not made any material changes in the accounting methodology used to assess income taxes during the year ended December 31, 2025.

We also evaluate uncertain tax positions and recognize a liability for unrecognized tax benefits when it is more likely than not that a tax position will not be sustained upon examination by taxing authorities. The amount recognized represents the largest benefit that is more than 50% likely to be realized upon ultimate settlement.

Judgment and Uncertainties: The determination of our income tax provision and related balances involves significant judgment and estimation. These judgments include, among other things, the evaluation of uncertain tax positions, the measurement of deferred tax assets and liabilities, and the assessment of the need for and amount of any valuation allowance. In assessing the realizability of deferred tax assets, we consider all available positive and negative evidence, including our history of operating losses, expectations of future taxable income, the scheduled reversal of deferred tax liabilities, and available tax planning strategies.

Our income tax provision and effective tax rate may also be affected by changes in tax laws or regulations, the geographic distribution of income or losses, the outcome of tax audits, and the ultimate utilization of tax credits and net operating loss carryforwards. Changes in estimates or assumptions related to these matters could result in a material adjustment to our income tax provision, deferred tax assets or liabilities, or valuation allowance in future periods.

Recently Issued Accounting Pronouncements

For a discussion of the impact that recently issued accounting pronouncements are expected to have on our financial position and results of operations when adopted in the future, see Note 1 of Notes to our consolidated financial statements included in “Item 8. Financial Statements and Schedules.”

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks primarily related to changes in interest rates arising from our investing activities. Our cash, cash equivalents and marketable securities are subject to interest rate risk, which may affect interest income and, to a lesser extent, the fair value of our investment portfolio. Adverse changes in interest rates may occur as a result of changes in market liquidity, credit conditions or general economic factors.

Our investment activities are governed by our Investment Policy, which is designed to preserve principal, maintain liquidity to meet operational needs and optimize investment returns within acceptable risk parameters. Under this policy, we primarily invest in high-quality corporate securities and U.S. government agencies with strong credit ratings. We classify our marketable securities as available-for-sale, which provides flexibility to manage our portfolio in response to market conditions, liquidity needs and investment opportunities.

Due to the relatively short-term nature and conservative risk profile of our investment portfolio, we do not believe that a sudden change in market interest rates would have a material adverse effect on the fair value of our investments, results of operations or cash flows. Accordingly, an immediate change in interest rates would not be expected to materially impact our financial condition.

We do not believe that our cash, cash equivalents and marketable securities are subject to significant risk of default or illiquidity. However, we maintain balances at financial institutions that may exceed federally insured limits, and while management believes these institutions are creditworthy, we cannot provide assurance that future adverse events will not affect the value or liquidity of such holdings.

Item 8. Financial Statements and Schedules

Index to Consolidated Financial Statements

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID: 185) 69

Report of Independent Registered Public Accounting Firm (PCAOB ID: 49) 72

Consolidated Balance Sheets 73

Consolidated Statements of Operations and Comprehensive Loss 74

Consolidated Statements of Stockholders’ Equity 75

Consolidated Statements of Cash Flows 76

Notes to Consolidated Financial Statements 78

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Xencor, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheet of Xencor, Inc. and subsidiary (the Company) as of December 31, 2025, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited the adjustments to the 2024 and 2023 consolidated financial statements to retrospectively apply the change in segment composition, as described in Note 14. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2024 or 2023 consolidated financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 or 2023 consolidated financial statements taken as a whole.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and

directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Sufficiency of audit evidence over the liability related to the sale of future royalties

As discussed in Notes 1 and 6 to the consolidated financial statements, the Company records the liability under the Ultomiris Royalty Sale Agreement with OCM Life Sciences Portfolio LP at carrying value using the effective interest method. The liability and related interest expense are based on current estimates of future royalties to be paid over the life of the agreement. The Company periodically reassesses the estimate of total future royalty payments and prospectively adjusts the effective interest rate used to recognize non-cash interest expense. The liability related to the sale of future royalties was $119.7 million as of December 31, 2025.

We identified the evaluation of the sufficiency of audit evidence over the carrying value of the liability related to the sale of future royalties as a critical audit matter. Subjective auditor judgment was required to evaluate the sufficiency of audit evidence obtained because of the level of audit effort associated with evaluating the carrying value of the liability related to the sale of future royalties.

The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over the carrying value of the liability related to the sale of future royalties. We evaluated the design and tested the operating effectiveness of certain internal controls related to management’s valuation process, including the determination of future royalties to be paid. We inspected and reviewed the key terms of the Ultomiris Royalty Sale Agreement and assessed the relevance and reliability of the third-party data used in management’s estimation of royalties on future sales of Ultomiris. We performed sensitivity analyses over the estimated Ultomiris future royalties and evaluated the impact of changes in the estimated future royalties on the carrying value of the liability. We evaluated the sufficiency of audit evidence obtained by assessing the cumulative results of the audit procedures and potential bias in the accounting estimate, including the appropriateness of the nature and extent of such evidence.

Evaluation of accrued research and development costs

As discussed in Note 1 to the consolidated financial statements, the Company engages other entities that conduct certain research and development activities on its behalf. The Company estimates preclinical and clinical trial expenses based on the services performed according to the related agreements. Significant judgments and estimates are made by the Company to determine the costs incurred during the period that have not been invoiced.

We identified the evaluation of certain accrued research and development costs as a critical audit matter. Challenging auditor judgment was required to evaluate the nature and extent of evidence available to determine the degree of completion of research and development programs when the Company has not yet been invoiced or otherwise notified of the actual cost.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to management’s research and development accrual process. We inquired with the Company’s personnel responsible for overseeing the research and development activities to understand the contract terms together with related executed change orders and the progress of the activities including project milestones. For certain accrued research and development costs, we evaluated management’s estimate of the amount to be accrued by examining agreements, invoices, and third-party confirmations. We also examined payments processed after period end and evaluated whether services received prior to period end were included in the Company’s estimate of costs incurred as of December 31, 2025.

KPMG LLP

We have served as the Company’s auditor since 2025.

San Diego, California

February 25, 2026

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Xencor, Inc.

Opinion on the Financial Statements

We have audited, before the effects of the adjustments to retrospectively apply the changes in the Company’s disclosures about segment reporting and related information in Note 14, the accompanying consolidated balance sheet of Xencor, Inc. and its subsidiary (the Company) as of December 31, 2024, the related consolidated statements of loss, comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements). The 2024 financial statements before the effects of the adjustments disclosed in Note 14 are not presented herein. In our opinion, before the effects of the adjustments to retrospectively apply the changes in the Company’s disclosures about segment reporting and related information in Note 14, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to retrospectively apply the changes in the Company’s disclosures about segment reporting and related information in Note 14 and, accordingly we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

RSM US LLP

We served as the Company’s auditor from 2015 to 2025.

Los Angeles, California

February 26, 2025

Xencor, Inc.

Consolidated Balance Sheets

(in thousands, except per share amounts)

December 31,

Assets

Current assets:

Prepaid expenses and other current assets 22,789 18,977

Patents, licenses, and other intangible assets, net 8,385 18,485

Liabilities and Stockholders’ Equity

Current liabilities:

Income tax payable 3,589 —

Liabilities related to the sales of future royalties 43,267 48,447

Lease liabilities, net of current portion 64,735 65,338

Commitments and contingencies

Noncontrolling interest and stockholders’ equity

Accumulated other comprehensive income (loss) 1,576 (663)

Total stockholders’ equity attributable to Xencor, Inc. 635,587 677,611

Noncontrolling interest — (3,585)

Total noncontrolling interest and stockholders’ equity 635,587 674,026

Total liabilities and stockholders’ equity $ 875,495 $ 951,945

The accompanying notes are an integral part of these consolidated financial statements.

Xencor, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share amounts)

Year Ended December 31,

Revenue

Operating expenses:

Other income (expense):

Gain (loss) on marketable equity securities, net 101,514 (31,422) (395)

Net loss attributable to noncontrolling interest (214) (3,922) (163)

Other comprehensive income (loss), net of tax:

Net unrealized gain (loss) on marketable debt securities 2,239 (1,954) 8,243

The accompanying notes are an integral part of these consolidated financial statements.

Xencor, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands)

Shares Amount

Issuance of restricted stock units 558 6 (6) — — — —

Contribution from noncontrolling interest owners — — — — — 500 500

Net unrealized gain on marketable debt securities — — — 8,243 — — 8,243

Issuance of restricted stock units 609 6 (6) — — — —

Net unrealized loss on marketable debt securities — — — (1,954) — — (1,954)

Issuance of restricted stock units 844 8 (8) — — — —

Net unrealized gain on marketable debt securities — — — 2,239 — — 2,239

Purchase of noncontrolling interest — — (5,524) — — 3,799 (1,725)

The accompanying notes are an integral part of these consolidated financial statements.

Xencor, Inc.

Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

Cash flows from operating activities

Adjustments to reconcile net loss to net cash used in operating activities:

Gain on sale of marketable securities, net (14,388) (37) —

Change in fair value of marketable equity securities (87,126) 31,422 395

Equity received in connection with license agreement — — (10,000)

Abandonment of capitalized intangibles — 2,329 1,267

Changes in operating assets and liabilities:

Interest receivable from marketable debt securities 2,622 (3,441) (1,028)

Deferred revenue — — (30,320)

Other assets and liabilities, net (7,177) — —

Cash flows from investing activities

Proceeds from sales of marketable equity securities 36,941 6,640 —

Proceeds from sale of property and equipment — — 1

Cash flows from financing activities

Proceeds from the exercises of stock options 8,667 6,313 3,412

Proceeds from issuance of common stock and pre-funded warrants — 201,256 —

Common stock and pre-funded warrants issuance costs — (12,077) —

Proceeds from the sale of future royalties — — 183,330

Proceeds from noncontrolling interest — — 500

Cash paid to acquire noncontrolling interest (1,725) — —

Xencor, Inc.

Consolidated Statements of Cash Flows - (Continued)

(in thousands)

Year Ended December 31,

Supplemental disclosure of cash flow information

Interest paid $ 5 $ 33 $ 22

The accompanying notes are an integral part of these consolidated financial statements.

Xencor, Inc.

Notes to Consolidated Financial Statements

1. Organization and Summary of Significant Accounting Policies

Organization

Xencor, Inc. (the “Company”) was incorporated in California in 1997 and reincorporated in Delaware in September 2004. The Company is a clinical-stage biopharmaceutical company focused on discovering and developing engineered antibody therapeutics to treat patients with cancer and autoimmune diseases, who have unmet medical needs. The Company uses its protein engineering capabilities to design new technologies and XmAb® drug candidates with improved properties. The Company advances these candidates into clinical-stage development, where the Company is conducting Phase 1 and Phase 2 studies for a broad portfolio of programs. Based on the results of these studies, the Company determines which programs to advance into later stages of development and potentially commercialization, which to partner in order to access complementary resources to optimize development, and which to discontinue.

Consolidation and Basis of Presentation

The consolidated financial statements of Xencor, Inc. have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In the opinion of management, all material adjustments of a normal recurring nature have been made to present fairly the Company’s financial position, the results of operations and cash flows for the periods presented. All intercompany transactions and balances have been eliminated.

Gale Therapeutics Inc. (“Gale”)

The consolidated financial statements included the accounts of Xencor, Inc. and Gale, a variable interest entity for which the Company was the primary beneficiary. Up through January 20, 2025, the Company owned or was exposed to less than 100% of the economics, and accordingly, the Company recorded net loss attributable to noncontrolling interests in its consolidated statements of operations and comprehensive loss equal to the percentage of the economic or ownership interests retained in such entity by the respective noncontrolling party. Effective January 20, 2025, the Company obtained 100% of the economic interests in Gale and no longer recognized a noncontrolling interest in its consolidated financial statements.

Effective April 29, 2025, Gale was merged into the Company in a transaction between entities under common control. The Company completed a common-control transfer of assets and liabilities with Gale. The assets and liabilities were recognized at historical carrying amounts; no fair value measurement was applied. This transaction did not result in a change in reporting entity and was accounted for prospectively, with no adjustments to prior periods.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable. Actual results could materially differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with original maturities of 90 days or less from the date of purchase to be cash equivalents. As of December 31, 2025 and 2024, the Company’s cash equivalents comprised of money market funds with maturities less than 90 days from the date of purchase. Cash equivalents are reported at fair value.

As part of the San Diego facility lease, the Company issued a letter of credit to the landlord, secured by a cash collateral account classified as restricted cash on the consolidated balance sheets. The amount of the letter of credit decreases over the lease term. As of December 31, 2025, the outstanding letter of credit was $0.3 million.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:

December 31,

(in thousands)

Total cash, cash equivalents and restricted cash $ 54,362 $ 41,262

Marketable Debt and Equity Securities

The Company classifies all marketable debt securities as available-for-sale, as such securities may be required to be sold prior to maturity. Management determines the appropriate classification at the time of purchase. Marketable debt securities with original maturities greater than three months and remaining maturities of twelve months or less as of the balance sheet date are classified as short-term marketable debt securities.

Available-for-sale securities are carried at fair value, with unrealized gains and losses recorded as a component of other comprehensive income (loss) until realized. The amortized cost of these securities is adjusted for the amortization of premiums and accretion of discounts to maturity, which are included in interest income.

The Company regularly evaluates its marketable debt securities for declines in fair value. In assessing whether a decline represents a credit-related impairment, the Company considers, among other factors, the creditworthiness of the issuer, the severity and duration of the unrealized loss, and whether the Company intends or is more likely than not required to sell the security before recovery of its amortized cost basis. Credit-related losses are recognized in net income, while non-credit-related losses are recorded in other comprehensive income (loss). Realized gains and losses are included in other income (expense), and the cost of securities sold is determined using the specific identification method. Interest and dividends earned on available-for-sale securities are included in interest income.

Accrued interest on available-for-sale debt securities is recorded in prepaid expenses and other current assets on the Company's consolidated balance sheets. For purposes of measuring credit-related impairments, the Company excludes accrued interest from the amortized cost basis and fair value of available-for-sale securities and does not record an allowance for credit losses on accrued interest. Any uncollectible accrued interest would be written off as a reversal of interest income in the period it is determined to be uncollectible. To date, no accrued interest has been written off.

The Company also holds equity securities in publicly traded biotechnology companies that were received in connection with certain licensing transactions with its partners. These equity securities are measured at fair value, with changes in fair value recognized in earnings and reported in the consolidated statements of operations. Equity securities with readily determinable fair values are measured at each reporting period until the investment is sold or otherwise disposed of. Upon sale or disposition of an equity security, any realized gains or losses are recognized in the consolidated statements of operations in the period of sale. As of December 31, 2025 and 2024, all of the Company’s holdings of equity securities were publicly traded and had readily determinable fair values.

See Note 3. Marketable Securities and Note 4. Fair Value Measurement for additional information.

Accounts Receivable

Accounts receivable primarily consist of royalty and milestone receivables from the Company’s license and collaboration agreements, as well as receivables arising from cost-sharing development activities. Payment terms under the Company’s agreements generally require settlement within 30 to 60 days.

The Company evaluates accounts receivable for expected credit losses in accordance with Accounting Standards Codification 326, Financial Instruments – Credit Losses. As of December 31, 2025 and 2024, based on this evaluation, the Company determined that an allowance for credit losses was not material and, accordingly, no allowance was recorded.

Concentrations of Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, marketable securities, and accounts receivable.

Cash and cash equivalents and restricted cash are maintained at reputable financial institutions, and balances may at times exceed federally insured limits. The Company has not experienced any losses related to these balances. Amounts on deposit in excess of federally insured limits at December 31, 2025 and 2024 approximated $54.1 million and $40.8 million, respectively. The Company also invests excess cash in corporate debt securities and government securities with strong credit ratings. The Company has established guidelines related to diversification and maturities designed to maintain safety

and liquidity and periodically reviews and modifies these guidelines to respond to trends in yields and interest rates without compromising safety or liquidity.

Concentrations of credit risk related to accounts receivable arise from the Company’s licensing and collaboration agreements. As of December 31, 2025 and 2024, receivables from two customers represented approximately 91% and 76% of the Company’s total accounts receivable, respectively. No other customer accounted for more than 10% of total accounts receivable at December 31, 2025 or 2024.

Property and Equipment

Property and equipment are recorded at cost, net of accumulated depreciation, with depreciation commencing when the asset is placed in service. Depreciation expense is recorded on a straight-line basis over the estimated useful lives of the assets. Upon disposition, the cost and accumulated depreciation of assets retired or sold are removed from the respective asset category, and any gain or loss is recognized in the Company’s consolidated statement of operations. The estimated useful lives of property and equipment are as follows (in years):

Estimated Useful Lives

Research equipment 5

Furniture and fixtures 5

Computers and software 1 to 3

Leasehold Improvements Shorter of asset life or remaining lease term

The Company periodically assesses long-lived assets or asset groups, including property and equipment, for recoverability when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the Company identifies an indicator of impairment, the Company assesses recoverability by comparing the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset. An impairment loss is recognized when the carrying amount is not recoverable and is measured as the excess of carrying value over fair value. There were no impairment charges during the years ended December 31, 2025, 2024, and 2023.

Patents, Licenses, and Other Intangible Assets

Patents, licenses and other intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives, ranging from 2 to 27 years. Third-party costs incurred for acquiring patents are capitalized if there is a determined future economic benefit; otherwise, the Company expenses costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications) in general and administrative expenses in the consolidated statements of operations and comprehensive loss.

The Company reviews its intellectual property on a regular basis to determine if there are changes in the estimated useful life of issued patents and if any capitalized costs for unissued patents should be abandoned. Capitalized patent costs related to abandoned patent filings are charged off in the period of the decision to abandon.Abandonment charges for the years ended 2025, 2024 and 2023 were $0, $2.3 million and $1.3 million, respectively.

Liabilities Related to the Sales of Future Royalties

The Company accounts for proceeds received from the sale of future royalties as financial liabilities in accordance with the debt classification model. These liabilities are amortized using the effective interest method over the estimated life of the royalty sale agreements based on the Company’s current estimate of future royalty payments to be made to OMERS.

The excess of the total expected royalty payments over the net proceeds received is recognized as non-cash interest expense over the life of the liability. Interest is imputed on the unamortized portion of the liability using the effective interest method and is recorded based on the timing of royalty payments to be made to OMERS over the term of the royalty sale agreement. The effective interest rate is affected by the timing and amount of forecasted royalty payments.

The Company’s estimate of future royalty payments is reviewed quarterly. Because the effective interest rate is dependent on the timing and amount of forecasted revenue, any significant changes in those estimates result in a prospective adjustment to the effective interest rate and related interest expense. Under the prospective method, a revised effective interest rate is determined based on the updated estimate of remaining cash flows and represents the discount rate that equates the present value of the revised estimated cash flows to the carrying amount of the liability at the date of revision. The revised rate is applied prospectively to recognize non-cash interest expense over the remaining term of the arrangement. Royalty revenue continues to be recognized as earned, and royalty payments made to the counterparty are recorded as a reduction of the liability when paid and are not recognized as a component of the Company’s revenue. For further information regarding the terms and carrying values of these instruments, see Note 6.

Revenue Recognition

The revenue standard provides a five-step framework for recognizing revenue as control of promised goods or services is transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps: (i) identify the contract; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. At contract inception, the Company assesses whether the goods or services promised within each contract are distinct and, therefore, represent a separate performance obligation, or whether they are not distinct and are combined with other goods and services. The Company then determines the transaction price, allocates the transaction price to the performance obligations, and recognizes revenue when (or as) each performance obligation is satisfied.

Upfront license payments are recognized as revenue upon delivery of the license, provided the license is determined to be distinct from other performance obligations in the contract and the customer has the ability to use and benefit from the license. Other performance obligations typically include research and development services. If a license is not distinct, the license and related services are combined into a single performance obligation, and revenue is recognized either at a point in time or over time, depending on the nature of the combined performance obligation. For performance obligations satisfied over time, the Company recognizes revenue using a measure of progress that reflects the transfer of control of goods or services to the customer and reassesses this measure each reporting period.

Collaboration agreements may also provide for milestone payments and royalties. Milestones are generally categorized as development, regulatory, or sales-based milestones. The Company includes milestone and royalty consideration in the transaction price only to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur. Consideration that meets this threshold is included in the transaction price using the most likely amount method; amounts that do not meet this threshold are excluded until the uncertainty is resolved. The Company reassesses this estimate each reporting period and records any changes to the transaction price on a cumulative catch-up basis.

Milestone payments that were excluded from the transaction price due to the variable consideration constraint are recognized as revenue in the period in which the uncertainty is resolved. If a milestone is achieved during the performance period, revenue is recognized based on the extent of performance completed, with any remaining amount recorded as deferred revenue. Sales-based or usage-based royalties related to licenses of intellectual property are recognized at the later of when the related sales occur or when the associated performance obligation has been satisfied, in accordance with the sales-based royalty exception.

Research and Development (“R&D”) Expense and Accrued R&D Expenses

R&D expenses are expensed as incurred and include costs for the Company’s internal research activities as well as fees paid to third-party vendors, including clinical research organizations (“CROs”), contract manufacturing organizations (“CMOs”), preclinical research organizations, clinical sites, research institutions, and other service providers. R&D expenses consist primarily of salaries and benefits, including stock-based compensation, laboratory supplies, facilities and applicable overhead costs, external services, clinical trial and manufacturing costs, and fees paid to third parties that conduct research and development activities on the Company’s behalf.

The Company records accrued R&D expenses for services that have been performed but not yet invoiced based on estimates of the services provided to date. Accruals are determined using available information, including contractual terms, the progress of preclinical and clinical activities, patient enrollment and dosing information, preclinical study progress, and communications with third-party vendors regarding services rendered. Estimates are adjusted as additional information becomes available or as invoices are received, and such adjustments are recorded in the period in which the information becomes known.

Payments made for R&D services prior to the services being rendered are recorded as prepaid assets in the consolidated balance sheets and expensed as the related services are performed.

Leases

The Company determines whether a contract is, or contains, a lease at inception. All of the Company’s leases are classified as operating leases. Leases with terms greater than one-year are recognized on the Company’s consolidated balance sheets as right-of-use assets that represent the Company’s right to use an underlying asset for the lease term, and lease liabilities that represent its obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the expected lease

term. As of December 31, 2025 and 2024, the Company is not reasonably certain that it will exercise renewal options for any lease facilities. Therefore, these options are not included in the right-of-use assets and liabilities.

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis an amount equal to the lease payments over a similar term and in a similar economic environment. The Company records expense to recognize lease payments on a straight-line basis over the expected lease term. Costs determined to be variable and not based on an index or rate are not included in the measurement of the lease liability and are expensed as incurred.

Stock-Based Compensation

Share-based compensation expense for all stock-based awards, including stock options, restricted stock units (“RSUs”), and shares issued under the Employee Stock Purchase Plan (“ESPP”), is measured based on the estimated grant-date fair value of the awards and recognized as compensation expense over the requisite service period, generally the vesting period, on a straight-line basis. The Company accounts for forfeitures as they occur.

The grant-date fair value of stock option awards is estimated using the Black-Scholes option pricing model, which requires the use of subjective assumptions, including expected term, expected volatility, risk-free interest rate, and expected dividend yield. Expected volatility and expected term are primarily based on the Company’s historical data and other relevant information, while the risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant with a maturity commensurate with the expected term of the award. The Company does not assume any expected dividend yield, as it has never declared or paid dividends on its common stock.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting basis and the respective tax basis of the Company’s assets and liabilities, and expected benefits of utilizing net operating loss, capital loss, and tax-credit carryforwards. The Company assesses the likelihood that its deferred tax assets will be realized and, to the extent management does not believe these assets are more likely than not to be realized, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in earnings in the period that includes the enactment date. As of December 31, 2025 and 2024, the Company’s deferred tax assets, consisting primarily of capitalized R&D under IRC Section 174, net operating loss carryforwards and research and development tax credit carryforwards, have been fully offset by a valuation allowance.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, making permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, reinstating the option to expense domestic research and development costs, and increasing the limitation on business interest expense deduction. The Company has evaluated the impact of the new tax law on its financial condition and results of operations and determined it is not material to its effective income tax rate and net deferred federal income tax assets, as it continues to maintain a full valuation allowance.

Net Loss Per Share

Net loss per share is computed using the weighted-average number of common shares outstanding and pre-funded warrants during the period. Diluted earnings per share is computed using the weighted-average number and dilutive potential common shares outstanding during the period. Dilutive potential common shares primarily consist of outstanding stock options, restricted stock units and ESPP.

Comprehensive Loss

Comprehensive loss consists of net loss in excess of unrealized gains and losses on marketable debt securities. The Company displays comprehensive loss and its components as part of the consolidated statements of operations and comprehensive loss.

Segment Information

The Company operates as a single segment because its chief operating decision maker (“CODM”) reviews operating results on an aggregate basis and manages its operations as a single operating segment.

Recent Accounting Pronouncements

In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-06, Intangible - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Improvements to Internal-

Use Software, to amend certain aspects of the accounting for and disclosure of software costs. This ASU will become effective for the Company beginning January 1, 2028, and is not expected to have a material impact on its consolidated financial statements or related disclosures.

In September 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Subtopic 326): Practical Expedient for Reasonable and Supportable Forecasts, which allows entities to elect a practical expedient that assumes current conditions as of the balance sheet date remain unchanged over the remaining life of the asset when developing reasonable and supportable forecasts used to estimate expected credit losses. This ASU will become effective for the Company beginning January 1, 2026, and is not expected to have a material impact on its consolidated financial statements or related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. In January 2025, the FASB also issued ASU 2025-01, Clarifying the Effective Date, to provide further guidance on the transition period for the new requirements. These updates require entities to provide disaggregated disclosures of income statement expenses. These ASUs do not affect the expense captions presented on the face of the income statement but instead require the disaggregation of certain expense captions into specified categories within the footnotes to the financial statements. These ASUs will become effective for the Company beginning January 1, 2027, and the Company is currently evaluating the impact on its consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires expanded disclosure of income tax rate reconciliation information and income taxes paid. The Company adopted this standard effective January 1, 2025, on a prospective basis. The adoption of this standard resulted in increased disclosures in the Company’s consolidated financial statements but did not have a material impact on the Company’s financial position, results of operations, or cash flows. See Note 11 – Income Taxes for the additional disclosures required by this ASU.

2. Collaboration and Licensing Agreements

The following table provides a summary of revenue recognized:

Year Ended December 31,

(in thousands)

Third Party Licensee — 7,000 —

The following table presents a disaggregation of revenue recognized during the periods indicated:

Year Ended December 31,

(in thousands)

License $ — $ 8,500 $ —

The following table summarizes the balance of receivables and contract liabilities related to the Company’s collaboration and license agreements:

December 31,

(in thousands)

Receivables included in accounts receivable $ 29,299 $ 53,546

Contract liabilities included in deferred revenue $ — $ —

Alexion Pharmaceuticals, Inc. (“Alexion”)

In January 2013, the Company entered into an Option and License Agreement (the “Alexion Agreement”) with Alexion, which was acquired by AstraZeneca in 2021. Under the terms of the Alexion 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®.

Under the Alexion Agreement, no further milestone payments are expected. The Company is entitled to receive royalties in the low single digits based on a percentage of net sales of Ultomiris sold by Alexion, its affiliates or its sublicensees. Alexion’s royalty obligations apply on a product-by-product and country-by-country basis and continue until the expiration of the last-to-expire valid licensed patent covering the applicable product in such country. On December 9, 2025, a patent term extension related to the XtendTM Fc domain for antibodies targeting C5 was announced, extending the expected royalty term for Ultomiris® net sales into December 2028 in the United States.

On November 3, 2023, the Company entered into a royalty sale agreement (the “Ultomiris Royalty Sale Agreement”) with OCM Life Sciences Portfolio LP (“OMERS”), under which OMERS acquired the rights to certain royalties associated with the existing license relating to Ultomiris.

Under the Alexion Agreement, the Company recognized non-cash royalty revenue of $70.1 million, $58.2 million, and $12.5 million for the years ended December 31, 2025, 2024 and 2023, respectively, and cash royalty revenue of $32.4 million and milestone revenue of $20.0 million in 2023. As of December 31, 2025, the Company recorded $19.7 million in accounts receivable based on estimated royalties due under the arrangement. Payment of this receivable will be made directly to OMERS. See Note 6.

Amgen Inc. (“Amgen”)

In September 2015, the Company entered into a Research and License Agreement (the“Amgen Agreement”) with Amgen to develop and commercialize bispecific antibody product candidates using the Company’s proprietary XmAb® bispecific Fc technology.

In December 2024, Amgen initiated a Phase 3 clinical study of xaluritamig, which triggered a $30.0 million milestone payment received by the Company in January 2025. Under the Amgen Agreement, the Company is eligible to receive up to $225.0 million in regulatory and sales milestone payments related to the xaluritamig program, as well as royalties on global net sales of approved products.

There were no contract assets and liabilities recorded as of December 31, 2025.

Gilead Sciences, Inc. (“Gilead”)

In January 2020, the Company entered into a Technology License Agreement (the “Gilead Agreement”) with Gilead, pursuant to which the Company granted Gilead 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. Gilead is responsible for all development and commercialization activities for all target candidates.

The Company recognized $6.0 million in milestone revenue during fiscal 2023 upon the initiation of the first Phase 2 clinical trial for two licensed products. Under the Gilead Agreement, the Company received an upfront payment and is eligible to receive up to $128.0 million in development, regulatory, and sales milestone payments for each product incorporating the selected antibodies, as well as royalties in the low-single-digit percentage range on net sales of approved products.

There were no contract assets and liabilities recorded as of December 31, 2025.

Janssen Biotech, Inc., a Johnson & Johnson Company (“Janssen”)

J&J Agreement

In November 2020, the Company entered into a Collaboration and License Agreement (the “J&J Agreement”) with Janssen, to discover and develop novel CD28 bispecific antibody product candidates for the treatment of prostate cancer using the Company’s XmAb bispecific antibody technology. Under the J&J Agreement, the parties conducted joint research activities, with Janssen retaining exclusive worldwide rights to develop and commercialize licensed products identified from the collaboration. The Company satisfied its research performance obligations under the J&J Agreement in 2021.

Under the J&J Agreement, the Company received an upfront payment and is eligible to receive up to $640.0 million in development, regulatory and sales milestone payments, as well as royalties on net sales of approved products ranging from the high-single-digit to low-double-digit percentages.

Second J&J Agreement

In October 2021, the Company entered into a second collaboration and license agreement with J&J (the “Second J&J Agreement”), pursuant to which Janssen received an exclusive worldwide license to develop, manufacture, and commercialize plamotamab, the Company’s CD20 x CD3 bispecific antibody candidate. The parties also agreed to collaborate on additional CD28 bispecific antibody research, with Janssen holding exclusive development and commercialization rights, subject to certain opt-in rights by the Company.

Under the Second J&J Agreement, the Company received an upfront payment and is eligible to receive up to $636.3 million in development, regulatory and sales milestone payments, as well as tiered royalties on net sales of approved products. The Company completed its research performance obligations under the Second J&J Agreement in December

2023, and Janssen selected three CD20 x CD3 bispecific antibody candidates to conduct further development. In June 2024, Janssen notified the Company of its decision to terminate its rights to plamotamab.

The Company recognized $77.8 million of revenue related to the two J&J agreements for the year ended December 31, 2023. There were no contract assets or contract liabilities related to the J&J agreements as of December 31, 2025.

Incyte Corporation (“Incyte”)

In June 2010, the Company entered into a Collaboration and License Agreement (the “MorphoSys Agreement”) with MorphoSys AG (“MorphoSys”). Under the MorphoSys Agreement, the Company granted MorphoSys an exclusive worldwide license to its 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. In February 2024, Incyte assumed all of MorphoSys’ right, title and interest in the MorphoSys Agreement and acquired exclusive global development and commercialization rights to tafasitamab. If certain developmental, regulatory and sales milestones are achieved, the Company is eligible to receive future milestone payments and royalties from Incyte.

Under the MorphoSys Agreement, the Company is eligible to receive up to $195.0 million in developmental, regulatory and sales milestones, as well as royalties on net sales, subject to the terms and conditions of the agreement.

On November 3, 2023, the Company entered into a royalty sale agreement (the “Monjuvi Royalty Sale Agreement”) with OMERS, under which OMERS acquired the rights to certain royalties associated with the existing license relating to Incyte. The $41.5 million of milestone payments recognized by the Company in 2025 are not subject to the Monjuvi Royalty Sale Agreement.

Under the MorphoSys Agreement, the Company recognized non-cash royalty revenue of $10.2 million, $8.7 million, and $2.1 million for the years ended December 31, 2025, 2024 and 2023, respectively, and cash royalty revenue of $6.6 million in 2023. As of December 31, 2025, the Company recorded $3.0 million in accounts receivable based on estimated royalties due under the arrangement. Payment of this receivable will be made directly to OMERS. See Note 6.

Hunan Mabgeek Biotech Co., Ltd., formerly known as, Shanghai Mabgeek Biotech Co., Ltd. (“Mabgeek”)

On December 22, 2023, the Company entered into a Technology License Agreement with Mabgeek. On June 21, 2024, the parties entered into Amendment No. 1 to the Technology License Agreement (as amended, the “Mabgeek Agreement”). Under the Mabgeek Agreement, the Company received an upfront payment of $1.5 million, which was recognized as revenue, and is eligible to receive royalties in the low single digits on net sales of approved products.

The Company evaluated the Mabgeek Agreement and determined that it contains a single performance obligation—access to a non-exclusive license to certain Company patents, which was transferred to Mabgeek in June 2024. Mabgeek’s Phase 3 study achieved the milestone of database lock in Mainland China on November 20, 2025, triggering a $1.8 million milestone payment, which will be received in the first quarter of 2026.

Under the Mabgeek Agreement, the Company is eligible to receive up to $10.1 million in regulatory and sales milestone payments, as well as royalties on net sales, subject to the terms and conditions of the agreement. As of December 31, 2025, the Company recorded $1.8 million in accounts receivable and no liabilities.

Novartis Institute for Biomedical Research, Inc. (“Novartis”)

In June 2016, the Company entered into a Collaboration and License Agreement (the “Novartis Agreement”) with Novartis to develop and commercialize bispecific and other Fc-engineered antibody product candidates using the Company’s proprietary XmAb® technologies.

In June 2021, Novartis selected an Fc product candidate and assumed full responsibility for its development and commercialization. In 2024, Novartis initiated a Phase 2 clinical study for the Fc product candidate, resulting in $4.0 million of revenue recognized under the Novartis Agreement.

Under the Novartis Agreement, the Company is eligible to receive up to $309.0 million in development, clinical, and sales milestone payments, as well as royalties on net sales of approved products.

As of December 31, 2025, there were no contract assets or liabilities related to the Novartis Agreement.

Novo Nordisk Health Care AG (“Novo Nordisk”)

In August 2020, the Company entered into a Technology License Agreement (the “Omeros Agreement”) with Omeros Corporation (“Omeros”), pursuant to which the Company granted Omeros rights to use the Company’s Xtend Fc technology for certain antibody product candidates, including zaltenibart. In November 2025, Novo Nordisk acquired exclusive global development and commercialization rights to zaltenibart from Omeros, and the Omeros Agreement was assigned to Novo Nordisk. Under the Omeros Agreement, Novo Nordisk is responsible for all development and commercialization activities related to zaltenibart.

In 2023, Omeros advanced zaltenibart into a Phase 2 clinical study, resulting in $5.0 million of revenue under the Omeros Agreement. Under the Omeros Agreement, the Company is eligible to receive up to $60.0 million in development, clinical, and sales milestone payments, as well as royalties on net sales.

There were no contract assets or contract liabilities recorded as of December 31, 2025.

Vega Therapeutics, Inc. (“Vega”)

In October 2021, the Company entered into a Technology License Agreement (the “Vega Agreement”) with Vega, granting Vega a non-exclusive license to its Xtend Fc technology. In March 2024, Vega initiated a Phase 1 study, resulting in $0.5 million of revenue under the Vega Agreement.

Under the Vega Agreement, the Company is eligible to receive up to $30.0 million in developmental, regulatory and sales milestones, as well as royalties on net sales, subject to the terms and conditions of the agreement. There were no contract assets or contract liabilities related to the Vega Agreement as of December 31, 2025.

Vir Biotechnology, Inc. (“Vir Bio”)

In 2019, the Company entered into a Patent License Agreement (the “Vir Bio Agreement”) with Vir Bio, granting a non-exclusive license to its Xtend technology for up to two targets, including that of tobevibart. In March 2025, Vir Bio initiated a Phase 3 study for tobevibart, triggering a $2.0 million milestone payment to the Company, which was paid in the second quarter of 2025.

In March 2020, the Company entered into a second Patent License Agreement (the “Second Vir Bio Agreement”) with Vir Bio, granting a non-exclusive license to its Xtend technology to extend the half-life of novel antibodies Vir Bio developed as potential treatments for patients with COVID-19, including sotrovimab. Under the terms of the Second Vir Bio Agreement, Vir Bio is responsible for all research, development, regulatory and commercial activities for the antibodies, and the Company is eligible to receive royalties on the net sales of approved products in the mid-single digit percentage range. Vir Bio and its marketing partner, GSK, began recording sales for sotrovimab beginning in June 2021. In March 2022, the FDA deauthorized sotrovimab’s use in all U.S. regions due to increases in the proportion of COVID-19 cases caused by the Omicron BA.2 subvariant.

The Company recognized a nominal amount of royalty revenue for the year ended December 31, 2025,and $0.6 million and $2.2 million for the years ended December 31, 2024 and 2023, respectively. Under the Vir Bio Agreement, the Company is eligible to receive up to $65.0 million in developmental, regulatory and sales milestones, as well as royalties on net sales, subject to the terms and conditions of the agreement.

There were no contract assets or contract liabilities related to the Vir Bio Agreement as of December 31, 2025.

Zenas BioPharma, Inc. (“Zenas”)

In November 2020, the Company entered into a License Agreement (the “Zenas Agreement”) with Zenas, pursuant to which the Company granted Zenas exclusive worldwide rights to develop and commercialize three preclinical-stage Fc-engineered drug candidates.

In November 2021, the Company entered into a second license agreement (the “Second Zenas Agreement”), pursuant to which the Company granted Zenas exclusive worldwide rights to develop and commercialize obexelimab (XmAb5871). The Company satisfied its performance obligations under the Zenas agreements in 2021.

In 2023, Zenas initiated a Phase 3 clinical study of obexelimab, which triggered an equity-based milestone payment. The Company recognized $10.0 million of milestone revenue in 2023, representing the fair value of the equity shares received at the date of issuance. Under the two Zenas agreements, the Company received equity-based consideration and is eligible to receive up to $460.0 million in regulatory and sales milestones, as well as royalties on net sales of approved products in the mid-single-digit to mid-teen percentage range.

There were no contract assets or contract liabilities recorded as of December 31, 2025.

Third-Party License

In May 2024, the Company entered into a Patent License Agreement with a third-party licensee. The Company satisfied its performance obligation under the agreement, resulting in $7.0 million of revenue. There is no further obligation under this agreement.

3. Cash Equivalents, Marketable Debt and Equity Securities

Cash Equivalents and Marketable Debt Securities

The Company’s marketable debt securities consisted of the following:

AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses Fair Value

(in thousands)

Reported as

Marketable debt securities 556,760

AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses Fair Value

(in thousands)

Reported as

Marketable debt securities 665,804

The following table summarizes the contract maturities of the Company’s marketable debt securities as of December 31, 2025:

AmortizedCost EstimatedFair Value

(in thousands)

The Company did not record any impairment losses on its marketable debt securities during the years ended December 31, 2025, 2024 and 2023.

Marketable Equity Securities

The Company’s marketable equity securities consisted of the following:

December 31,

(in thousands)

INmune Bio, Inc. $ — $ 8,805

Viridian Therapeutics, Inc. — 13,748

During the year ended December 31, 2025, the Company sold its entire holdings in INmune Bio, Inc., consisting of 1,885,533 shares, for total proceeds of $13.8 million. During the same period, the Company also sold its entire holdings in Viridian Therapeutics, Inc., consisting of 717,144 shares, for total proceeds of $23.2 million.

Net realized and unrealized gains (losses) on marketable equity securities, recognized in other income (expense) in the consolidated statements of operations, were as follows:

Year Ended December 31,

(in thousands)

Less: Gains recorded on sale of marketable equity securities 14,388 1,280 —

The increase in unrealized gains for the year ended December 31, 2025 was primarily attributable to the higher fair value of the Company’s equity investment in Zenas BioPharma, Inc.

No impairment losses were recognized on marketable equity securities during the years ended December 31, 2025 and 2023. The Company recorded impairment charges of $20.4 million related to equity securities without a readily determinable fair value during the year ended December 31, 2024.

4. Fair Value Measurement

The Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date using the exit price. Accordingly, when market observable data are not readily available, the Company’s own assumptions are used to reflect those that market participants would be presumed to use in pricing the asset or liability at the measurement date.

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses, approximate fair value due to their short-term maturities.

Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the level of judgment associated with inputs used to measure their fair values and the level of market price observability, as follows:

Level 1 Unadjusted quoted prices are available in active markets for identical assets or liabilities as of the reporting date.

Level 2 Pricing inputs are other than quoted prices in active markets, which are based on the following:

• Quoted prices for similar assets or liabilities in active markets;

• Quoted prices for identical or similar assets or liabilities in non-active markets; or

• Either directly or indirectly observable inputs as of the reporting date.

Level 3 Pricing inputs are unobservable and significant to the overall fair value measurement, and the determination of fair value requires significant management judgment or estimation.

In certain cases, inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Thus, a Level 3 fair value

measurement may include inputs that are observable (Level 1 or Level 2) and unobservable (Level 3). The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset or liability.

The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2, or from Level 2 to Level 3. The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused the transfer. There were no transfers during the years ended December 31, 2025 and 2024. At December 31, 2025 and 2024, the Company did not have any financial assets or financial liabilities based on Level 3 measurements.

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation techniques utilized by the Company:

TotalFair Value Level 1 Level 2 Level 3

(in thousands)

Cash equivalents:

Marketable debt securities:

TotalFair Value Level 1 Level 2 Level 3

(in thousands)

Cash equivalents:

Marketable debt securities:

5. Balance Sheet Accounts

Property and Equipment

The following table summarizes the Company’s major classes of property and equipment:

December 31,

(in thousands)

Computer, software and office equipment 2,003 2,131

Less: accumulated depreciation and amortization (51,472) (42,179)

Depreciation and amortization expense for property and equipment for the years ended December 31, 2025, 2024 and 2023 was $9.6 million, $10.8 million and $10.1 million, respectively.

Patents, Licenses, and Other Intangible Assets

The following table summarizes the Company’s patents, licenses, and other intangible assets:

December 31,

(in thousands)

Licenses and other intangible assets 972 2,430

Total patents, licenses, and other intangible assets, net $ 8,385 $ 18,485

Amortization expense was $0.9 million, $1.3 million, and $1.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. None of these assets with definite useful lives are anticipated to have a residual value.

Patents, licenses and other intangible assets are reviewed annually for impairment and more frequently if potential impairment indicators exist. The Company recorded the asset impairment charges of $9.2 million during the year ended December 31, 2025, related to its decision to pause further development of certain programs and prioritize resources toward advancing other pipeline programs.As a result, associated patents related to the paused programs were impaired.

The following table presents the estimated future amortization expense related to definite-lived assets as of December 31, 2025:

Amortization Expense

Year ending December 31, (in thousands)

Accrued Expense

Accrued expenses consist of the following:

December 31,

(in thousands)

6. Liabilities Related to the Sales of Future Royalties

Ultomiris Royalty Sale Agreement

On November 3, 2023, the Company and OMERS entered into the Ultomiris Royalty Sale Agreement. Pursuant to the Ultomiris Royalty Sale Agreement, OMERS acquired the rights to a portion of royalties and milestones earned after July 1, 2023 associated with the existing license relating to Ultomiris® (ravulizumab-cwvz) in exchange for an upfront payment of $192.5 million. Pursuant to the Ultomiris Royalty Sale Agreement and subject to the Company’s existing license with Alexion, OMERS acquired the right to receive: (i) 100% of royalties payable on past and future sales related to Ultomiris that occur from July 1, 2023 through December 31, 2025; (ii) up to $35.0 million annually in royalties on future sales related to Ultomiris that occur from January 1, 2026 through December 31, 2028, with any royalties in excess of $35.0 million reverting to the Company; (iii) up to $12.0 million annually in royalties on future sales related to Ultomiris that occur from and after January 1, 2029, with any royalties in excess of $12.0 million reverting to the Company; and (iv) $18.0 million of a certain future sales based milestone payment pursuant to the existing license with Alexion, which was paid in the fourth quarter of 2023.

Monjuvi Royalty Sale Agreement

On November 3, 2023, the Company and OMERS entered into the Monjuvi Royalty Sale Agreement. Pursuant to the Monjuvi Royalty Sale Agreement, OMERS acquired the rights to a portion of royalties earned after July 1, 2023 associated with the existing license relating to Monjuvi®/Minjuvi® (tafasitamab-cxix) in exchange for an upfront payment of $22.5 million. Pursuant to the Monjuvi Royalty Sale Agreement and subject to the Company’s existing license with Incyte, OMERS acquired the right to receive up to $29.3 million in royalties earned after July 1, 2023 related to sales of Monjuvi/Minjuvi, with any royalties in excess of $29.3 million paid to OMERS reverting to the Company.

The Company evaluated the terms of both Ultomiris and Monjuvi Royalty Sale Agreements and concluded, in accordance with the relevant accounting guidance, that these transactions are to be accounted for as debt, with the proceeds recorded as liabilities related to the sale of future royalties on its consolidated balance sheets.

The Company accounts for the royalty financing obligations in accordance with its accounting policy for the sale of future royalties, as described in Note 1. The obligations are recorded at carrying value and amortized using the effective interest method. The Company applies the prospective method to adjust the effective interest rate based on revised

estimates of future royalty payments. As of December 31, 2025, the estimated effective interest rates were 24.2% and 17.3% for Ultomiris and Monjuvi Royalty Sale Agreements, respectively.

The following table presents the activities with respect to the liabilities related to the sales of future royalties:

December 31,

(in thousands)

Royalties owed to OMERS — 834

7. Commitments and Contingencies

Litigation

From time to time, the Company may be subject to claims and legal proceedings arising in the ordinary course of business. The Company evaluates each matter and assesses its potential financial exposure. If the potential loss from a legal proceeding is considered probable and the amount can be reasonably estimated, the Company records an accrual for the estimated loss. Because the outcome of legal proceedings is inherently uncertain, significant judgment is required in assessing the likelihood of a loss and whether the amount is reasonably estimable. The Company’s assessments and any recorded accruals are based on information available at the time of evaluation. As additional information becomes available, the Company re-evaluates its estimates and may adjust recorded liabilities accordingly.

The Company is currently a party to an action initiated by Merus N.V. (“Merus”) in the District of Delaware alleging that the Company’s manufacture, use, offer for sale, sale and/or importation of common light chain antibodies and heterodimeric antibodies infringes certain claims of Merus patents. Merus filed its complaint against the Company on August 5, 2024. Merus asserted claims of U.S. Patent Nos. 9,944,695, 9,358,286 and 11,926,859. Merus sought a judgment of patent infringement, an order enjoining the Company from infringing those patents, a damages award (together with interest), a declaration of willful infringement, and a finding that this case is exceptional. On October 10, 2024, the Company filed a motion to dismiss the Merus complaint with prejudice under Rule 12(b)(6), in which the Company argued that all of the activities accused of infringement are covered by the 35 U.S.C.§ 271(e)(1) safe harbor. Merus filed its response to the Company’s motion on October 31, 2024, and the Company replied to Merus’ response on November 14, 2024. On September 30, 2025, the Court granted the motion to dismiss Merus’ complaint, but permitted Merus to file an amended complaint. On November 11, 2025, Merus filed a first amended complaint, and asserted claims of U.S. Patent Nos. 9,944,695, 9,358,286, 11,926,859, and 12,123,043. On December 16, 2025, the Company filed a motion to dismiss the first amended complaint on the same grounds previously asserted. Briefing on the motion to dismiss is ongoing, and the Court held a hearing on the motion to dismiss on February 17, 2026. On February 11, 2025, the Company filed for inter partes review of Merus’ U.S. Patent Nos. 9,358,286 and 11,926,859 before the U.S. Patent and Trademark Office’s Patent and Trial Appeal Board (“PTAB”) seeking a finding that certain claims of those patents are unpatentable. On September 26, 2025, the U.S. Patent and Trademark Appeal Board granted institution of the inter partes review. A schedule for the inter partes review has been set, and oral argument is scheduled for June 24, 2026. The Company believes it has strong defenses to Merus’ claims, including defenses of invalidity and/or non-infringement—some of which have already been accepted by the district court and preliminarily accepted by the PTAB, but there is no guarantee that the Company will ultimately prevail.

Commitments

The Company is party to certain license agreements that obligate it to make future payments to third parties, which may include sublicense fees, royalties and milestone payments contingent upon the achievement of specified development and commercialization events. Because the occurrence, timing and amounts of these potential payments are not currently

probable or reasonably estimable, they have not been recorded on the Company’s consolidated balance sheets as of December 31, 2025 and 2024.

In addition, the Company has entered into agreements with various third-party vendors for research, development and manufacturing services. These agreements generally provide for future payments contingent upon the vendors’ delivery of goods or performance of services. Such commitments are not recorded until the related goods or services are received.

8. Stockholders’ Equity

The following table summarizes the Company’s shares of common stock and preferred stock:

Par Value Authorized Issued Outstanding

On February 27, 2023, the Company filed an automatic universal shelf registration statement on Form S-3 (File No. 333-270030) as a well-known seasoned issuer as defined in Rule 405 under the Securities Act of 1933, as amended, which became effective upon filing (the “Shelf Registration Statement”). The Shelf Registration Statement allows the Company to offer an indeterminate amount of securities, including equity securities, debt securities, warrants, rights, units and depositary shares, from time to time as described in the Shelf Registration Statement. The specific terms of any offering under the Shelf Registration Statement will be established at the time of such offering. The Shelf Registration Statement will expire on February 27, 2026. The Company plans to file a new shelf registration statement on Form S-3 with the SEC simultaneously with, or promptly after, the filing of this Annual Report on Form 10-K, which would replace the Shelf Registration Statement.

On February 27, 2023, the Company entered into a sales agreement (the “Sales Agreement”) with SVB Securities LLC (the “Agent”) pursuant to which the Company may offer and sell, from time to time, throughthe Agent (the “ATM Offering”), shares of its common stock having an aggregate offering price of up to $200.0 million (the “ATM Shares”). Any ATM Shares offered and sold in the ATM Offering are to be issued pursuant to the Shelf Registration Statement and the 424(b) prospectus supplement relating to the ATM Offering dated February 27, 2023 (the “ATM Prospectus”). From the date of the ATM Prospectus through December 31, 2025, no shares of the Company’s common stock were sold pursuant to the ATM Offering and, as of December 31, 2025, the Company may sell shares of its common stock for remaining gross proceeds of up to $200.0 million from time to time pursuant to the ATM Prospectus.

On September 12, 2024, the Company completed an underwritten public offering pursuant to the Company’s Shelf Registration Statement. In the offering, the Company sold pre-funded warrants to purchase up to 3,088,888 shares of common stock at a purchase price of $17.99 per pre-funded warrant, for an aggregate value of approximately $55.6 million. The pre-funded warrants were classified as equity in the Company’s consolidated financial statements. In January 2026, pre-funded warrants to purchase up to 1,388,888 shares of common stock were exercised on a cashless basis, resulting in the issuance of shares of common stock. The warrants had a nominal exercise price of $0.01 per share. The exercise resulted in nominal proceeds to the Company and did not have a material impact on the Company’s financial statements.

9. Leases

Monrovia, California: The Company leases office and laboratory space in Monrovia, California. The lease term was set to expire in December 2025 and provided an option to renew the entire premises for an additional five-year term,

which the Company elected not to exercise. Instead, on August 8, 2025, the Company entered into a seventh amendment to the lease agreement to extend the term for one year, effective January 1, 2026 through December 31, 2026.

The total lease expense associated with this amended lease is approximately $0.9 million.

Pasadena, California: In June 2021, the Company entered into a lease agreement for laboratory and office space in Pasadena, California, with a lease term through July 2035 and no renewal option. The lease includes two phases: Phase 1 commenced on August 1, 2022, and Phase 2 commenced on December 1, 2022.

The lease provides tenant improvement allowances of up to $17.0 million for Phase 1 and $3.3 million for Phase 2. In August 2022, the lease was amended to provide an additional $5.0 million in Phase 1 improvement allowance in exchange for an increase in rent.

On December 18, 2025, the Company entered into a sublease agreement to sublease a portion of its space to a third party. The sublease term commenced on February 1, 2026 and expires on January 31, 2031. The Company remains primarily obligated under the original lease agreement. There is no current impact to the Company’s financial results for the year ended December 31, 2025, as the sublease term does not commence until February 1, 2026.

San Diego, California: In August 2023, the Company entered into a sublease agreement for office space in San Diego, California, with a lease term from September 2023 through December 2027. As part of the sublease, the Company issued a $0.4 million letter of credit to the landlord, secured by a cash collateral account classified as restricted cash on the consolidated balance sheets. The amount of the letter of credit decreases over the lease term.

The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. The components of lease assets and liabilities along with their classification on the Company’s consolidated balance sheets were as follows:

December 31,

Lease Assets and Liabilities Classification 2025 2024

(in thousands)

Operating lease assets Right-of-use assets $ 37,592 $ 38,341

Current operating lease liabilities Lease liabilities $ 3,263 $ 3,009

The following table presents maturities of operating lease liabilities on an undiscounted basis as of December 31, 2025:

Year Amounts

(in thousands)

Less: Imputed interest (26,614)

Total operating lease liabilities (includes current portion) $ 67,998

The following table presents lease costs, supplemental cash flow and other information:

Year Ended December 31,

(in thousands)

December 31,

Weighted-average remaining lease term (in years) 9.3 years 10.2 years

Weighted-average discount rate (%) 7.0 % 7.0 %

10. Stock-Based Compensation

In June 2023, the Company’s Board of Directors (the “Board”) and stockholders approved the 2023 Equity Incentive Plan (the “2023 Plan”), which became effective on June 14, 2023, and replaced the 2013 Equity Incentive Plan (the “2013 Plan”). No additional awards may be granted under the 2013 Plan.

The 2023 Plan reserves 3,000,000 shares of common stock, plus any remaining shares available under the 2013 Plan as of the effective date. In addition, shares subject to outstanding awards under the 2013 Plan that expire, are forfeited, or otherwise terminate without being issued after June 14, 2023, will be added to the 2023 Plan share reserve. The 2023 Plan does not include an automatic annual share increase (an evergreen provision). On June 12, 2025, the Company’s stockholders approved the amendment and restatement of the 2023 Plan to increase the number of authorized shares reserved for issuance thereunder by 3,000,000 shares. As of December 31, 2025, the total number of shares of common stock reserved for issuance under the 2023 Plan is 19,878,573.

In addition, the Company’s Board and stockholders approved the ESPP, which became effective on December 5, 2013. As of December 31, 2025, the total number of shares of common stock available for issuance under the ESPP is 817,666.

The following table presents a summary of awards outstanding:

The following table summarizes stock-based compensation expenses included in operating expenses:

Year Ended December 31,

(in thousands)

Year Ended December 31,

(in thousands)

Stock Option Awards

The following table presents a summary of the stock option activity for the year ended December 31, 2025:

The aggregate intrinsic values represent the amount by which the market price of the underlying stock exceeds the exercise price of the option. The total intrinsic value of the options exercised during the years ended December 31, 2025, 2024, and 2023 were $2.0 million, $3.8 million, and $4.8 million, respectively.

As of December 31, 2025, the unrecognized compensation expense for all outstanding unvested stock options in the amount of $31.8 million will be recognized in the Company’s results of operations over a weighted average period of 2.2 years.

The per share weighted average grant date fair values of the stock options granted are $7.10, $12.06, and $15.98 for the years ended December 31, 2025, 2024 and 2023, respectively.The following table provides the weighted-average assumptions used in the calculation of grant date per share fair values of these stock options based on the Black-Scholes option pricing model:

Year Ended December 31,

Expected term (in years) (1) 6.4 6.4 6.1

Risk-free interest rate (3) 4.1 % 4.2 % 4.2 %

Expected dividend yield (4) — % — % — %

(1) The computation of expected term was determined based on the option holders’ past exercise patterns.

(2) Volatility is estimated based on volatility average of the Company’s common stock price.

(3) The risk-free interest rate is based on that of the U.S. Treasury yields with equivalent terms in effect at the time of the grant.

(4) The dividend yield is zero as the Company currently does not pay a dividend.

Restricted Stock Units (“RSUs”)

The following table summarizes the activity of the Company’s RSUs:

RestrictedStockUnits Weighted Average Grant Date Fair Value(Per unit)

The fair value of RSUs was determined based on the closing price of the Company’s common stock on the grant date.

As of December 31, 2025, there was $20.0 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 1.8 years.

Employee Stock Purchase Plan

The following table provides the assumptions used in the calculation of grant date fair values of these shares issued under the Company’s ESPP based on the Black-Scholes option pricing model:

Year Ended December 31,

Expected dividend yield (4) — % — % — %

(1) The computation of expected term was determined based on the option holders’ past exercise patterns.

(2) Volatility is estimated based on volatility average of the Company’s common stock price.

(3) The risk-free interest rate is based on that of the U.S. Treasury yields with equivalent terms in effect at the time of the grant.

(4) The dividend yield is zero as the Company currently does not pay a dividend.

As of December 31, 2025, there was no unrecognized pre-tax compensation expense related to outstanding shares issued under the Company’s ESPP.

11. Income Taxes

Income Tax Provision

Income tax provision consisted of the following:

Year Ended December 31,

(in thousands)

Current

Deferred

Federal $ — $ — $ —

State — — —

Total deferred tax $ — $ — $ —

The following table presents a reconciliation of the tax expense based on the statutory rate to the Company’s actual tax expense in the consolidated statements of operations and comprehensive loss. A notional 21% tax rate was applied as follows:

Amount Percent

(in thousands)

U.S. Federal statutory income tax $ (18,778) (21.0) %

Research and development tax credits (6,965) (7.8) %

Change in valuation allowance 17,556 19.6 %

State and local income taxes (1) 3,175 3.6 %

Nontaxable or nondeductible items:

Nondeductible share-based compensation 7,069 7.8 %

Other tax expenses (6) — %

Changes in unrecognized tax benefits 939 1.1 %

Other adjustments (486) (0.5) %

Income tax provision and effective income tax rate $ 2,504 2.8 %

(1) State taxes in Massachusetts, Minnesota, New York, and New York City represented the majority (greater than 50 percent) of the tax effect in this category.

Year Ended December 31,

XNCR US Equity

XNCR · 10-K · period ended 2025-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Schedules

XNCR US Equity☆

XNCR · 10-K · period ended 2025-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Schedules

XNCR US Equity