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Collaboration and Licensing Agreements | 6 Months Ended
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Jun. 30, 2024
Collaboration and Licensing Agreements |
Collaboration and Licensing Agreements | Collaboration and Licensing Agreements The following is a summary description of the material collaboration arrangements in the three and six months ended June 30, 2024 and 2023. Alexion Pharmaceuticals, Inc. In January 2013, the Company entered into an Option and License Agreement (the Alexion Agreement) with Alexion Pharmaceuticals, Inc. (Alexion). 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®. The Company is entitled to receive royalties based on a percentage of net sales of Ultomiris sold by Alexion, its affiliates or its sublicensees, which percentage is in the low single digits. Alexion’s royalty obligations continue on a product-by-product and country-by-country basis until the expiration of the last-to-expire valid claim in a licensed patent covering the applicable product in such country. On November 3, 2023, the Company entered into the Ultomiris Royalty Sale Agreement with OMERS, in which OMERS acquired the rights to certain royalties associated with the existing license relating to Ultomiris in exchange for cash consideration. For the six months ended June 30, 2024, Company earned and recognized $26.4 million in non-cash royalty revenue under the Ultomiris Royalty Sale Agreement. The Company recognized $13.8 million and $26.4 million of non-cash royalty revenue during the three and six months ended June 30, 2024, respectively, and $11.2 million and $21.6 million of royalty revenue under this arrangement for the three and six months ended June 30, 2023, respectively. As of June 30, 2024, there is $13.8 million receivable and no deferred revenue related to this agreement. Payment of this receivable will be made directly to OMERS. Genentech, Inc., and F. Hoffmann-La Roche Ltd In February 2019, the Company entered into a collaboration and license agreement (the Genentech Agreement) with Genentech, Inc. and F. Hoffmann-La Roche Ltd (collectively, Genentech) for the development and commercialization of novel IL-15 collaboration products (Collaboration Products), including efbalropendekin alfa (also named XmAb306 and RG6323), the Company’s IL-15/IL15Rα-Fc candidate. Under the terms of the Genentech Agreement, Genentech received an exclusive worldwide license to XmAb306, and we shared in 45% of development and commercialization costs of Collaboration Products, and we were eligible to share in 45% of net profits and losses from the sale of approved products. However, in the fourth quarter of 2023, we agreed with Genentech to convert our current development cost and profit-sharing arrangement into a royalty and milestone payment-based arrangement. Pursuant to the terms of the amended agreement with Genentech, effective June 1, 2024, Genentech assumed sole responsibility over all clinical, regulatory and commercial activities. We are eligible to receive up to $600.0 million in milestones, including $115.0 million in development milestones, $185.0 million in regulatory milestones and $300.0 million in sales-based milestones and tiered royalties ranging from low double-digit to mid-teens percentages. The Company did not recognize revenue related to the Genentech Agreement for the three and six months ended June 30, 2024 or 2023. As of June 30, 2024, there is a $7.6 million payable related to cost-sharing development activities during the first half of 2024 for development studies being conducted under the Genentech Agreement. There is no deferred revenue as of June 30, 2024, as obligations to perform research activities have expired. Janssen Biotech, Inc., a Johnson & Johnson company J&J Agreement In November 2020, the Company entered into a Collaboration and License Agreement (the J&J Agreement) with Janssen Biotech, Inc., a Johnson & Johnson company, pursuant to which the Company and J&J conducted research and development activities to discover novel CD28 bispecific antibodies for the treatment of prostate cancer. Xencor together with J&J conducted joint research activities to discover XmAb bispecific antibodies against CD28 and against an undisclosed prostate tumor-target with J&J maintaining exclusive worldwide rights to develop and commercialize licensed products identified from the research activities. Under the J&J Agreement, the Company conducted research activities and applied its bispecific Fc technology to antibodies targeting prostate cancer provided by J&J. Upon completion of the research activities J&J had a candidate selection option to advance an identified candidate for development and commercialization. In November 2021, the Company completed its performance obligations under the research activities and delivered CD28 bispecific antibodies to J&J. In December 2021, J&J selected a bispecific CD28 candidate for further development. J&J will assume full responsibility for development and commercialization of the CD28 bispecific antibody candidate. The Company did not recognize revenue for the three and six months ended June 30, 2024 and 2023 under the J&J Agreement. As of June 30, 2024, there is no deferred revenue related to this Agreement. Second J&J Agreement On October 1, 2021, the Company entered into a second Collaboration and License Agreement (the Second J&J Agreement) with J&J pursuant to which the Company granted J&J an exclusive worldwide license to develop, manufacture, and commercialize plamotamab, the Company’s CD20 x CD3 development candidate, and pursuant to which Xencor and J&J conducted research and development activities to discover novel CD28 bispecific antibodies. The parties conducted joint research activities for a two-year period to discover XmAb bispecific antibodies against CD28 and undisclosed B cell tumor-targets with J&J receiving exclusive worldwide rights, subject to certain Xencor opt-in rights, to develop, manufacture and commercialize pharmaceutical products that contain one or more of such discovered antibodies (CD28 Licensed Antibodies). The Agreement became effective on November 5, 2021. The Company collaborated with J&J on clinical development of plamotamab with J&J and shared development costs with J&J paying 80% and the Company paying 20% of certain development costs. In June 2024, the Company was notified that J&J will terminate its rights to plamotamab. The Company is generally responsible for conducting research activities under the Second J&J Agreement, and J&J is generally responsible for all development, manufacturing, and commercialization activities for CD28 Licensed Antibodies that are advanced. Revenue from the research activities was recognized over a period of time through the end of the research term that services were rendered as we determined that the input method was the appropriate approach to recognize income for such services. There is a receivable of $5.2 million as of June 30, 2024, related to cost-sharing activities for development of plamotamab under the Second J&J Agreement. No revenue was recognized for the three and six months ended June 30, 2024, and the Company recognized $22.2 million and $27.5 million of revenue for the three and six months ended June 30, 2023, respectively. There is no deferred revenue as of June 30, 2024 related to the Second J&J Agreement as obligations to perform research activities have expired. MorphoSys AG/Incyte Corporation In June 2010, the Company entered into a Collaboration and License Agreement with MorphoSys AG (MorphoSys), which was subsequently amended. Under the agreement, we granted MorphoSys an exclusive worldwide license to the Company’s patents and know-how to research, develop and commercialize the XmAb5574 product candidate (subsequently renamed MOR208 and tafasitamab) with the right to sublicense under certain conditions. In February 2024, Incyte Corporation 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. On November 3, 2023, the Company entered into the Monjuvi Royalty Sale Agreement with OMERS, pursuant to which OMERS acquired the rights to certain royalties earned after July 1, 2023 associated with the existing license relating to Monjuvi. The Company recognized $1.6 million and $4.4 million of non-cash royalty revenue during the three and six months ended June 30, 2024, respectively. The Company recognized $2.0 million and $3.9 million of royalty revenue during the three and six months ended June 30, 2023, respectively. As of June 30, 2024, there is a receivable of $2.1 million related to estimated royalties due under the arrangement. As of June 30, 2024, there is no deferred revenue related to this agreement. Shanghai Mabgeek Biotech Co., Ltd. On December 22, 2023, the Company entered into a Technology License Agreement with Shanghai Mabgeek Biotech Co., Ltd. (Mabgeek), and the Company and Mabgeek entered into Amendment No. 1 on June 21, 2024 (collectively, Mabgeek Agreement). Under the Mabgeek Agreement, the Company received an upfront payment of $1.5 million and up to $11.9 million of milestones. In addition, the Company is eligible to receive royalties on the net sales of approved products in the low single digits. The Company evaluated the Mabgeek Agreement and determined that the single performance obligation was access to a non-exclusive license to certain patents of the Company which were transferred to Mabgeek in June 2024. The Company recognized $1.5 million of license revenue related to the agreement for the three and six months ended June 30, 2024. There is no deferred revenue as of June 30, 2024 related to this agreement. Vega Therapeutics, Inc. In October 2021, the Company entered into a Technology License Agreement (the Vega Agreement) with Vega Therapeutics, Inc. (Vega), in which the Company provided Vega a non-exclusive license to its Xtend Fc technology. In March 2024, Vega notified the Company that it initiated a Phase 1 study, and the Company recorded milestone revenue of $0.5 million. The Company recognized $0.5 million of revenue for the six months ended June 30, 2024. No revenue was recognized for the three months ended June 30, 2024 or the three and six months ended June 30, 2023. Vir Biotechnology, Inc. In 2019, the Company entered into a Patent License Agreement (the Vir Agreement) with Vir Biotechnology, Inc. (Vir) pursuant to which the Company provided a non-exclusive license to its Xtend technology for up to two targets. In March 2020, the Company entered into a second Patent License Agreement (the Second Vir Agreement) with Vir pursuant to which the Company provided a non-exclusive license to its Xtend technology to extend the half-life of novel antibodies Vir developed as potential treatments for patients with COVID-19, including sotrovimab. Under the terms of the Second Vir Agreement, Vir 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 and its marketing partner, GSK, began recording sales for sotrovimab beginning in June 2021. The Company recognized $0.1 million of revenue for the six months ended June 30, 2024, and the Company recognized $0.1 million and $1.5 million of royalty revenue for the three and six months ended June 30, 2023, respectively. As of June 30, 2024, there is no receivable related to estimated royalty due under this agreement, and there is no deferred revenue related to this agreement. Zenas BioPharma, Inc. In November 2020, the Company entered into a License Agreement (the Zenas Agreement) with Zenas, pursuant to which the Company received an equity interest in Zenas in exchange for the exclusive, worldwide rights to develop and commercialize drug candidates from the Company. The equity in Zenas is recorded at the fair value as of the date of the Zenas Agreement and is reviewed each reporting period for impairment or other evidence of change in value. In November 2021, the Company entered into a second License Agreement (Second Zenas Agreement) with Zenas, pursuant to which the Company received additional equity in Zenas in exchange for the exclusive worldwide rights to develop and commercialize the Company’s obexelimab (XmAb5871) drug candidate. Under the license, the Company is eligible to receive development, regulatory and sales milestones in connection with the development of obexelimab and royalties on net sales of approved products. The original equity received for the second license was a warrant to acquire additional shares of Zenas. The warrant was exchanged for additional preferred stock in Zenas in November 2022. The warrant in Zenas was recorded at its fair value as of the date of the Second Zenas Agreement and was reviewed each reporting period for impairment or other evidence of change in value. The preferred shares received in exchange for the warrant were recorded at their fair value at the date of the exchange and is reviewed each reporting period for impairment or other evidence of change in value. In 2023, Zenas initiated a Phase 3 clinical study with obexelimab and also dosed a second patient in the study. The Company received a development milestone in the form of additional preferred stock in Zenas with a fair value of $10.0 million. The Company recognized an impairment charge of $20.4 million in the six months ended June 30, 2024 due to an impairment analysis resulting from the Zenas Series C financing transaction. The Company did not record an impairment charge or change in the value of the Zenas equity in the three and six months ended June 30, 2023. The Company did not recognize any revenue for the three and six months ended June 30, 2024. The Company recognized $10.0 million of milestone revenue for the three and six months ended June 30, 2023, and there is no deferred revenue related to this agreement. Third-Party Licensee In May 2024, the Company entered into a Patent License Agreement (Third-Party Licensee Agreement) with a third-party licensee. The Company completed delivery of the performance obligation under the agreement, and the Company will receive a payment of $7.0 million. The Company recognized $7.0 million of license revenue for the three and six months ended June 30, 2024, and there is a receivable of $7.0 million. There is no deferred revenue related to this agreement. Gale Therapeutics Inc. In the fourth quarter of 2023, the Company formed a subsidiary, Gale Therapeutics Inc. (Gale), to develop novel drug candidates with its Fc technologies. In December 2023, the Company entered into a Technology License Agreement (Gale License Agreement) with Gale in which Gale received an exclusive worldwide, royalty-bearing, non-transferable license to preclinical assets in exchange for royalties on future sales and an option for future drug candidates that Gale will develop. Concurrently, the Company entered into a Service Agreement (Gale Services Agreement) to provide research and development services and administrative support for Gale. In exchange for $7.5 million of funding, the Company acquired a majority stake in Gale. Total charges of $4.6 million and $8.0 million under the Gale Services Agreement for the three and six months ended June 30, 2024, respectively, were eliminated in consolidation. In July 2024, the Company entered into a preferred stock purchase agreement to purchase additional shares in Gale for $3.0 million. Revenues earned The revenues recorded for the three and six months ended June 30, 2024 and 2023 were earned principally from the following licensees (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
| (As Restated) |  |  |  | (As Restated) |  |
Alexion | $ | 13.8 |  |  | $ | 11.2 |  |  | $ | 26.4 |  |  | $ | 21.6 |
Janssen | — |  |  | 22.2 |  |  | — |  |  | 27.5 |
Mabgeek | $ | 1.5 |  |  | $ | — |  |  | $ | 1.5 |  |  | $ | — |
MorphoSys | 1.6 |  |  | 2.0 |  |  | 4.4 |  |  | 3.9 |
Vega | — |  |  | — |  |  | 0.5 |  |  | — |
Vir | — |  |  | 0.1 |  |  | 0.1 |  |  | 1.5 |
Viridian | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Zenas | $ | — |  |  | $ | 10.0 |  |  | $ | — |  |  | $ | 10.0 |
Third Party Licensee | $ | 7.0 |  |  | $ | — |  |  | $ | 7.0 |  |  | $ | — |
Total | $ | 23.9 |  |  | $ | 45.5 |  |  | $ | 39.9 |  |  | $ | 64.5 |
The table below summarizes the disaggregation of revenue recorded for the three and six months ended June 30, 2024 and 2023 (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
| (As Restated) |  |  |  | (As Restated) |  |
Research collaboration | $ | — |  |  | $ | 22.2 |  |  | $ | — |  |  | $ | 22.5 |
License | 8.5 |  |  | — |  |  | 8.5 |  |  | — |
Milestone | — |  |  | 10.0 |  |  | 0.5 |  |  | 15.0 |
Royalties | — |  |  | 13.3 |  |  | 0.1 |  |  | 27.0 |
Non-cash royalties | 15.4 |  |  | — |  |  | 30.8 |  |  | — |
Total | $ | 23.9 |  |  | $ | 45.5 |  |  | $ | 39.9 |  |  | $ | 64.5 |
Remaining Performance Obligations and Deferred Revenue The Company does not have any remaining performance obligation as of June 30, 2024. As of June 30, 2023, the Company had deferred revenue of $7.9 million for conducting research activities pursuant to the Second J&J Agreement. All deferred revenue as of June 30, 2023 was classified as current liabilities as the Company’s obligations to perform services are due on demand when requested by J&J under the Second J&J Agreement.

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- Definition The entire disclosure for collaborative arrangements in which the entity is a participant, including a) information about the nature and purpose of such arrangements; b) its rights and obligations thereunder; c) the accounting policy for collaborative arrangements; and d) the income statement classification and amounts attributable to transactions arising from the collaborative arrangement between participants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -SubTopic 10 -Topic 808 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479402/808-10-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b) -SubTopic 10 -Topic 808 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479402/808-10-50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 808 -Publisher FASB -URI https://asc.fasb.org/808/tableOfContent + Details
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