Xencor Inc

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, with an emphasis on addressing 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 interim consolidated financial statements of the Company are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applicable to interim periods. 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.

Certain note disclosures that are normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted as they are not required for interim reporting purposes. Readers are urged to review the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for more complete descriptions and discussions. Operating results and cash flows for the nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2026.

Gale Therapeutics Inc. (“Gale”)

The interim consolidated financial statements for the nine months ended September 30, 2025 included the accounts of the Company 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 income (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.

Cash, Cash Equivalents and Restricted Cash and Cash Equivalents

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

Income Tax

The Company recorded an income tax benefit of $0.2 million and $0.1 million for the three and nine months ended September 30, 2026, respectively. The Company recorded an income tax expense of $0 and $0.1 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2026, the Company’s deferred income tax assets, consisting primarily of capitalized R&D under IRC Section 174, net operating loss and research and development tax credit carryforwards, have been fully offset by a valuation allowance.

Summary of Significant Accounting Policies

There have been no changes to the significant accounting policies disclosed in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Recent Accounting Pronouncements

The Company does not expect any recently issued accounting standards, other than those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025, to have a material impact on its financial results.

2. Collaboration and Licensing Agreements

The following table provides a summary of revenue recognized:

(1) As of September 30, 2026, there was no deferred revenue related to the agreements the Company entered into with the parties listed above.

(2) On February 26, 2026, the Company entered into a Fourth Amendment to its License Agreement with INmune Bio, Inc. (“INmune”), under which INmune agreed to pay a one-time, non-refundable, non-creditable fee of $0.1 million for an extension of its diligence obligations. The Company received the fee in the first quarter of 2026.

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

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

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 toone 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 Xtend™ 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 March 4, 2026, Alexion informed the Company that it had taken the position that it did not owe additional royalties for U.S. sales of Ultomiris and did not intend to make future payments for sales in the U.S. under the parties’ agreement. The Company disputed this position.

In the first quarter of 2026, the Company evaluated the effect of Alexion’s notice, including the variable consideration constraint and the sales‑ and usage‑based royalty guidance applicable to licenses of intellectual property. The Company concluded that royalties on disputed U.S. sales should be constrained to zero until the uncertainty was resolved. Accordingly, the Company recorded a reduction of $6.6 million to royalty revenue and a corresponding reduction to the related receivable in the quarter ended March 31, 2026. Recognition of undisputed ex‑U.S. royalties was unaffected and continues in accordance with Accounting Standards Codification (“ASC”) Topic 606’s sales‑ and usage‑based royalty guidance.

On July 29, 2026, the Company entered into a settlement agreement and release (the “Settlement Agreement”) with Alexion, fully resolving the dispute regarding U.S. royalties on Ultomiris. Pursuant to the Settlement Agreement, the Company is entitled to receive aggregate consideration of $105.0 million from Alexion, payable intwo equal installments of $52.5 million. The first installment was received in August 2026, and the second installment is due within 14 days following theone-year anniversary of the Settlement Agreement. Following the settlement and full payment, Alexion has no further obligation to pay royalties on U.S. sales of Ultomiris. The Settlement Agreement does not affect the Company’s right to receive royalties on ex-U.S. sales of Ultomiris under the existing terms of the Alexion Agreement, as amended.

The Company recognized $27.6 million of the settlement consideration as royalty revenue during the second quarter of 2026 related to the Company’s royalty rights for U.S. Ultomiris sales through June 30, 2026. The remaining $77.4 million of settlement consideration, which related to the settlement of royalty rights for periods subsequent to June 30, 2026, was recognized as royalty revenue during the three months ended September 30, 2026, as the Company had no further performance obligations.

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. In connection with the Settlement Agreement, the Company is required to fund certain shortfalls in royalties otherwise payable to OMERS under the Ultomiris Royalty Sale Agreement. As of September 30, 2026, the Company had $5.0 million of restricted cash equivalents related to these obligations. See Note 6 for additional information regarding the Ultomiris Royalty Sale Agreement.

Under the Alexion Agreement, the Company recognized royalty revenue of $83.5 million and $18.7 million during the three months ended September 30, 2026 and 2025, respectively, and $122.3 million and $51.0 million during the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026 and December 31, 2025, the Company recorded $61.0 million and $19.7 million in accounts receivable based on estimated royalties due under the arrangement. $8.5 million and $19.7 million of these receivables will be paid directly to OMERS.

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.

In February 2025, the United States Food and Drug Administration (“FDA”) accepted Incyte’s submission of a supplemental biologics license application (“BLA”), 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 recognized as revenue in 2025 and collected in January 2026.

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 right to receive up to $29.3 million of royalties earned after July 1, 2023 related to sales of Monjuvi/Minjuvi under the Company’s existing license agreement with Incyte. Upon OMERS receiving cumulative royalties of $29.3 million, all subsequent royalties revert to the Company. The $41.5 million of milestone payments the Company recognized in 2025 is not subject to the Monjuvi Royalty Sale Agreement.

During the second quarter of 2026, cumulative royalties payable to OMERS reached the $29.3 million cumulative royalty cap under the Monjuvi Royalty Sale Agreement. Accordingly, all royalties earned after the cumulative royalty cap was reached revert to and are retained by the Company.

Under the MorphoSys Agreement, the Company recognized royalty revenue of $4.0 million and $10.8 million during the three and nine months ended September 30, 2026, respectively. Of the $10.8 million recognized during the nine months ended September 30, 2026, $6.0 million represented non-cash royalties payable to OMERS before the cumulative royalty cap was reached, and $4.8 million represented royalties retained by the Company after the cap was reached. As of September 30, 2026, the Company recorded $3.9 million in accounts receivable for estimated royalties due. For the three and nine months ended September 30, 2025, the Company recognized non-cash royalty revenue of $2.3 million and $6.8 million, respectively.

In July 2026, Incyte completed its acquisition of Vega Therapeutics, including VGA039, an investigational monoclonal antibody in Phase 3 development for von Willebrand disease. In August 2026, Incyte dosed the first patient in a Phase 3 clinical trial of VGA039, triggering a $1.5 million milestone payment to the Company, which was received in the third quarter of 2026.

Astellas Pharma Inc. (“Astellas”)

Effective March 2019, the Company entered into a Research and License Agreement (“Astellas Agreement”) with Astellas pursuant to which the Company and Astellas conducted a discovery program to characterize compounds and products for development and commercialization. Under the Astellas Agreement, Astellas was granted a worldwide exclusive license, with the right to sublicense products in the field created by the research activities.

The Company received an upfront payment and is eligible to receive up to $207.5 million in regulatory and sales milestones. If commercialized, the Company is eligible to receive royalties on net sales that range from the high-single to low-double digit percentages.

In August 2026, Astellas initiated a Phase 3 clinical trial of ASP2138, which triggered a $25.0 million milestone payment to the Company that was received in the third quarter of 2026.

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 totwo targets, including 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.

The Company recognized nominal amounts of royalty revenue for the three and nine months ended September 30, 2026 and 2025. 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.

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 May 2026, Zenas submitted a BLA to the FDA for obexelimab in IgG4-RD, which triggered a $10.0 million milestone payment to the Company under the Zenas Agreement that the Company received during the second quarter of 2026. In addition, in the third quarter of 2026, Zenas’s partner submitted a marketing authorization application for obexelimab to the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan, which triggered a $2.5 million milestone payment to the Company under the Zenas Agreement that was received during the third quarter of 2026.

Under thetwo Zenas agreements, the Company received equity-based consideration and is eligible to receive up to $447.5 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.

3. Marketable Debt and Equity Securities

Marketable Debt Securities

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

The following table summarizes the contract maturities of the Company’s marketable debt securities as of September 30, 2026:

The Company didnot record any allowance for credit losses on its marketable debt securities during the three and nine months ended September 30, 2026 and 2025.

Marketable Equity Securities

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

During the three months ended September 30, 2026, the Company sold approximately 2.1 million shares of Zenas for cash proceeds of approximately $66.9 million.

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

The gains (losses) on marketable equity securities for the three and nine months ended September 30, 2026 were primarily driven by the sale of Zenas shares described above and changes in the fair value of its remaining holdings.

4. Fair Value Measurements

The Company employs a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The Company’s valuation techniques and inputs used to measure fair value and the definition of the three levels (Level 1, Level 2, and Level 3) of the fair value hierarchy are disclosed in Note 1, Organization and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements of Part II, “Item 8. Consolidated Financial Statements and Supplementary Data” of its Annual Report on Form 10-K for the year ended December 31, 2025.

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. As of September 30, 2026 and December 31, 2025, 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:

5. Balance Sheet Accounts

Property and Equipment

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

Depreciation and amortization expense for property and equipment for the three months ended September 30, 2026 and 2025 was $2.1 million and $2.4 million, respectively. Depreciation and amortization expense for property and equipment for the nine months ended September 30, 2026 and 2025 was $6.7 million and $7.2 million, respectively.

Patents, Licenses, and Other Intangible Assets

The following table summarizes the Company’s 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. Amortization expense was $0.2 million for each of the three-month periods ended September 30, 2026 and 2025. Amortization expense was $0.5 million and $0.7 million for the nine months ended September 30, 2026 and 2025, 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 or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. During the three and nine months ended September 30, 2026, the Company recorded asset impairment charges of $0 and $0.8 million, respectively, related to the discontinuation of development programs, as management determined the associated intangible assets were no longer expected to provide future economic benefit. During the three and nine months ended September 30, 2025, the Company recorded asset impairment charges of $1.6 million and $8.3 million, respectively, following its decision to pause development of certain programs and prioritize other pipeline assets, resulting in a write-down of the associated patents to their estimated fair value.

The following table presents the estimated future amortization expense related to definite-lived assets as of September 30, 2026:

Accrued Expenses

Accrued expenses consist of the following:

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 occurred 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.

In March 2026, Alexion notified the Company that it did not believe additional U.S. royalties are owed and did not intend to make future payments for U.S. sales. On July 29, 2026, the Company entered into the Settlement Agreement with Alexion related to the royalty dispute. See Note 2 for additional information regarding the Settlement Agreement and the related funding arrangements associated with the Company’s obligations under the Ultomiris Royalty Sale Agreement.

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.

During the second quarter of 2026, cumulative royalties payable to OMERS reached the $29.3 million cap. Accordingly, all royalties earned subsequent to reaching the cap are retained by the Company.

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

The Company records the obligations at their carrying value using the effective interest method. In order to amortize the liabilities related to the sale of future royalties, the Company utilizes the prospective method to estimate the future royalties to be paid by the Company to the counterparty over the life of the arrangement. Under the prospective method, a new effective interest rate is determined based on the revised estimate of remaining cash flows. The new rate is the discount rate that equates the present value of the revised estimate of remaining cash flows with the carrying amount of the debt, and it will be used to recognize non-cash interest expense for the remaining periods. The Company periodically assesses the amount and the timing of expected royalty payments using a combination of internal projections and forecasts from external sources. The estimates of future net product sales (and resulting royalty payments) are based on key assumptions such as future sales forecasts and other significant events. To the extent such payments are greater or less than the Company’s initial estimates or the timing of such payments is different than its original estimates, the Company will prospectively adjust the amortization of the royalty financing obligations and the effective interest rate. As of September 30, 2026, the estimated effective interest rate was 17.0% for the Ultomiris Royalty Sale Agreement.

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

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.

On August 5, 2024, Merus N.V. (“Merus”) filed a complaint 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 infringe certain claims of Merus patents. 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. 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. 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 Trial and Appeal Board 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.

The Company and Merus resolved these disputes. On July 7, 2026, Merus filed a voluntary dismissal with prejudice of its complaint in the District of Delaware, and the case was terminated on July 8, 2026. On July 7, 2026, the Company and Merus also filed a Joint Motion to Terminate the inter partes reviews, which were granted on July 9, 2026. In connection with the settlement, the Company received a $7.0 million cash payment from Merus in July 2026, which was recorded as an offset to general and administrative expenses.

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 September 30, 2026 and December 31, 2025.

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:

On February 25, 2026, the Company filed an automatic universal shelf registration statement on Form S-3 (File No. 333-293727) 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 therein. 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 25, 2029.

On February 27, 2023, the Company entered into a sales agreement (the “Sales Agreement”) with Leerink Partners LLC (formerly, SVB Securities LLC) (the “Agent”), pursuant to which the Company may offer and sell, from time to time through the 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 would be issued pursuant to a prospectus supplement, which the Company would have to file before it can sell any ATM Shares in the ATM Offering. As of September 30, 2026, no shares have been issued under the Sales Agreement.

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 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 includestwo 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. Sublease income is recognized on a straight-line basis over the sublease term and is recorded as other income in the consolidated statements of operations and comprehensive income (loss). The Company recognized sublease income of $0.4 million and $1.3 million during the three and nine months ended September 30, 2026, respectively.

The Company continues to account for the head lease as an operating lease and remains primarily obligated under the original lease agreement. Future minimum sublease receipts as of September 30, 2026 are as follows:

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 will decrease 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:

The following table presents maturities of operating lease liabilities on an undiscounted basis as of September 30, 2026:

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

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, increasing the number of shares authorized for issuance thereunder by 3,000,000 shares. On June 16, 2026, the Company’s stockholders approved a subsequent amendment to the 2023 Plan, increasing the number of shares authorized for issuance thereunder by an additional 4,000,000 shares. As of September 30, 2026, the total number of shares of common stock reserved for issuance under the 2023 Plan is 22,450,938.

In addition, the Company’s Board and stockholders approved the Employee Stock Purchase Plan (the “ESPP”), which became effective on December 5, 2013. As of September 30, 2026, the total number of shares of common stock available for issuance under the ESPP is 739,190.

The following table presents a summary of awards outstanding:

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

Stock Option Awards

The following table presents a summary of the stock option activity for the nine months ended September 30, 2026:

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 three and nine months ended September 30, 2026 was $0.9 million and $1.0 million, respectively. The total intrinsic value of the options exercised during the three and nine months ended September 30, 2025 was $0 and $0.5 million, respectively.

As of September 30, 2026, the pre-tax compensation expense for all outstanding unvested stock options in the amount of $35.9 million will be recognized in the Company’s results of operations over a weighted average period of 2.5 years.

The per share weighted average grant date fair values of the stock options granted in the period are $11.43 and $7.29 for the three and nine months ended September 30, 2026, respectively, and $4.59 and $7.11 for the three and nine months ended September 30, 2025, 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:

(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:

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

As of September 30, 2026, there was $24.1 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 2.0 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:

As of September 30, 2026, the pre-tax compensation expense for all outstanding shares issued under the Company’s ESPP in the amount of $0.2 million will be recognized in the Company’s results of operations over a weighted average period ofthree months.

11. Net Income (Loss) Per Share

The following table presents the computation of basic and diluted net income (loss) per share.

For the nine months ended September 30, 2026 and the three and nine months ended September 30, 2025, all outstanding stock options and RSUs were excluded from the calculation of diluted net loss per share because their inclusion would have been anti-dilutive.

12. Segment Reporting

The Company operates as a single reportable segment focused on discovering and developing engineered antibody therapeutics to treat patients with cancer and autoimmune diseases who have unmet medical needs.

The Company’s Chief Executive Officer (“CEO”) serves as the Chief Operating Decision Maker (“CODM”). The CODM evaluates performance, allocates resources, and conducts planning and forecasting on a consolidated basis using financial information as presented in the Company’s consolidated statements of operations and comprehensive income (loss). In addition, the CODM reviews research and development expenses by program. Managing and allocating resources at the corporate level enables the Company’s CEO to assess the overall level of resources available and to deploy those resources in alignment with the Company’s long-term, corporate-wide strategic objectives.

The table below details the Company’s revenues and expenses and reconciles those amounts to the Company’s consolidated net loss including noncontrolling interest as computed under U.S. GAAP in the consolidated statements of operations and comprehensive income (loss):

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

For the three and nine months ended September 30, 2026 and 2025, the Company’s total revenues were derived from collaboration and licensing agreements and were reported within the Company’s single operating segment. Revenues are attributed to geographic areas based on the location of the Company’s customers. For the three and nine months ended September 30, 2026 and 2025, substantially all of the Company’s revenues were generated from customers located in the United States, and substantially all of the Company’s long-lived assets were located in the United States. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.