Xencor Inc

For a discussion of material pending legal proceedings, please read Note 7, Commitments and Contingencies to the Company’s consolidated financial statements included in Part I, “Item I. Financial Statements” of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

From time to time, the Company may be subject to various litigation and related matters arising in the ordinary course of business. We are currently a party to an action initiated by Merus N.V. (Merus) in the District of Delaware alleging that our manufacture, use, offer for sale, sale, and/or importation of common light chain antibodies and heterodimeric antibodies infringes certain claims of three Merus patents. Merus filed its complaint against us on August 5, 2024. Merus asserted claims of U.S. Patent Nos. 9,944,695, 9,358,286 and 11,926,859 (collectively, the Asserted Patents). Merus seeks a judgment of patent infringement, an order enjoining us from infringing the Asserted Patents, a damages award (together with interest), a declaration of willful infringement and a finding that this case is exceptional. On October 10, 2024, we filed a motion to dismiss the Merus complaint with prejudice under Rule 12(b)(6), in which we argued that all of the activities accused of infringement are covered by the 35 U.S.C.§ 271(e)(1) safe harbor. Our motion to dismiss under Rule 12(b)(6) was granted on October 1, 2025. The Court has provided Merus until November 11, 2025 to file an amended complaint. On February 11, 2025, we filed for inter partes review (IPR) of Merus’ U.S. Patent Nos. 9,358,286 and 11,926,859 before the U.S. Patent and Trademark Appeal Board (PTAB) seeking a finding that certain claims of those patents are unpatentable. The PTAB instituted the IPR on September 26, 2025. We believe we have 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 PTAB, but there is no guarantee that we will ultimately prevail.