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Changed Risks for XENCOR INC (XNCR)

Even if we receive regulatory approval for any of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense Additionally, our product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products

Risks Related to Employee Matters and Managing Growth and Other Risks Related to Our Business

Risks Relating to Our Intellectual Property

 Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited

Holders of Record

 We rely upon third‑party contractors and service providers for the execution of most aspects of our development programs Failure of these collaborators to provide services of a suitable quality and within acceptable timeframes may cause the delay or failure of our development programs

 Provisions in our amended and restated certificate of incorporation and bylaws, as well as provisions of Delaware law, could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders or remove our current management

Our principal stockholders, directors and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval

If we are not able to prevent disclosure of our trade secrets and other proprietary information, the value of our technology and products could be significantly diminished

Except for the historical information contained herein or incorporated by reference, this Annual Report and the information incorporated by reference contains forward‑looking statements that involve risks and uncertainties These statements include projections about our accounting and finances, plans and objectives for the future, future operating and economic performance and other statements regarding future performance These statements are not guarantees of future performance or events Our actual results may differ materially from those discussed here Factors that could cause or contribute to differences in our actual results include those discussed in the following section, as well as those discussed in Part II, Item 7 entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere throughout this Annual Report and in any other documents incorporated by reference into this Annual Report You should consider carefully the following risk factors, together with all of the other information included or incorporated in this Annual Report Each of these risk factors, either alone or taken together, could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our common stock There may be additional risks that we do not presently know of or that we currently believe are immaterial which could also impair our business and financial position

Market Information

Our products could infringe patents and other property rights of others, which may result in costly litigation and, if we are not successful, could cause us to pay substantial damages or limit our ability to commercialize our products, which could have a material adverse effect on our business

 Our current and future relationships with healthcare professionals, principal investigators, consultants, customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, physician payment transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to penalties

 We are subject to competition for our skilled personnel and may experience challenges in identifying and retaining key personnel that could impair our ability to conduct and grow our operations effectively

We may be vulnerable to disruption, damage and financial obligation as a result of system failures

 Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain

Dividend Policy

 Even if we are able to commercialize any product candidates, our product candidates may be subject to unfavorable pricing regulations, third-party coverage and reimbursement policies or healthcare reform initiatives

 Our existing partnerships are important to our business, and future partnerships may also be important to us If we are unable to maintain any of these partnerships, or if these partnerships are not successful, our business could be adversely affected

We may be required to reduce the scope of our intellectual property due to third‑party intellectual property claims

 We will require additional financing and may be unable to raise sufficient capital, which could lead us to delay, reduce or abandon research and development programs or commercialization

We may become subject to the risk of product liability claims

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading

If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented

We intend to rely on third parties to manufacture commercial supplies of our product candidate If we are unable to enter into commercial supply agreements with third‑party suppliers or if any such third‑party supplier fails to provide us with sufficient quantities or fails to comply with regulatory requirements, commercialization of such products could be delayed or stopped

Our business involves the controlled use of hazardous materials and as such we are subject to environmental and occupational safety laws Continued compliance with these laws may incur substantial costs and failure to maintain compliance could result in liability for damages that may exceed our resources

We rely on third parties to manufacture supplies of our preclinical and clinical product candidates The development of such candidates could be stopped or delayed if any such third party fails to provide us with sufficient quantities of product or fails to do so at acceptable quality levels or prices or fails to maintain or achieve satisfactory regulatory compliance

Adverse side effects or other safety risks associated with our product candidates could delay or preclude approval, cause us to suspend or discontinue clinical trials, abandon product candidates, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any

We face significant competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively

 Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of uncertainty We have never generated any revenue from product sales and may never be profitable

 Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall

 We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties

Risks Related to Ownership of Our Common Stock

 We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future

 The market price of our common stock is likely to be highly volatile, and you could lose all or part of your investment

 Requirements associated with being a public reporting company will continue to increase our costs significantly, as well as divert significant company resources and management attention

The manufacture of biopharmaceutical products, including XmAb‑engineered antibodies, is complex and manufacturers often encounter difficulties in production If we or any of our third‑party manufacturers encounter any loss of our master cell banks or if any of our third‑party manufacturers encounter other difficulties, or otherwise fail to comply with their contractual obligations, our ability to provide product candidates for clinical trials or our products to patients, once approved, the development or commercialization of our product candidates could be delayed or stopped

Sales of a substantial number of shares of our common stock by our existing stockholders in the public market could cause our stock price to fall

 The development and commercialization of biologic products is subject to extensive regulation, and we may not obtain regulatory approvals for any of our product candidates

Our intellectual property may be infringed upon by a third party

 We may not be successful in our efforts to use and expand our XmAb technology platform to build a pipeline of product candidates and develop marketable products