SEC Filing | Xencor, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 001-36182

Xencor, Inc.

(Exact name of registrant as specified in its charter)


Delaware		20-1622502
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

111 West Lemon Avenue, Monrovia, CA		91016
(Address of principal executive offices)		(Zip Code)

(626) 305-5900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Stock, par value $0.01 per share	XNCR	The Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ⌧ Accelerated filer ◻ Non-accelerated filer ◻ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class		Outstanding at November 1, 2021
Common stock, par value $0.01 per share		58,481,559

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Xencor, Inc.

Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2021

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		Page

	SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	3
PART I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements	5
	Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020	5
	Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	6
	Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	7
	Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)	8
	Notes to Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43

PART II.	OTHER INFORMATION	44
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 6.	Exhibits	45

Signatures		46

In this report, unless otherwise stated or the context otherwise indicates, references to “Xencor,” “the Company,” “we,” “us,” “our” and similar references refer to Xencor, Inc. The Xencor logo is a registered trademark of Xencor, Inc. This report also contains registered marks, trademarks, and trade names of other companies. All other trademarks, registered marks and trade names appearing in this report are the property of their respective holders.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). You should not place undue reliance on these statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below under Part II, Item 1A, “Risk Factors” in this Quarterly Report. These statements, which represent our current expectations or beliefs concerning various future events, may contain words such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” the negative of such terms or other words indicating future results.

These forward-looking statements should, therefore, be considered in light of various important factors, including but not limited to, the following:

●

the effects of the ongoing COVID-19 pandemic on our financial condition, results of operations, cash flows and performance;

●

our ability to execute on our plans to research, develop and commercialize our product candidates;

●

the success, cost, and timing of our ongoing and planned clinical trials;

●

the timing of and our ability to obtain and maintain regulatory approvals for our product candidates;

●

our ability to accurately estimate expenses, future revenue, capital requirements and needs for additional financing;

●

our ability to identify additional products or product candidates with significant commercial potential that are consistent with our business objectives;

●

our ability to receive research funding and achieve anticipated milestones under our collaborations;

●

our ability to attract collaborators with development, regulatory, and commercial expertise;

●

our ability to protect our intellectual property position;

●

the rate and degree of market acceptance and clinical utility of our products;

●

costs of compliance and our failure to comply with new and existing governmental regulations;

●

the capabilities and strategy of our suppliers and vendors including key manufacturers of our clinical drug supplies;

●

significant competition in our industry;

●

costs of litigation and the failure to successfully defend lawsuits and other claims against us;

●

the potential loss or retirement of key members of management;

●

our failure to successfully execute our growth strategy, including any delays in our planned future growth;

●

our failure to maintain effective internal controls; and

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●

our ability to accurately estimate expenses, future revenues, capital requirements and needs for additional financing.

The factors, risks and uncertainties referred to above and others are more fully described under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and this Quarterly Report on Form 10-Q. Forward-looking statements should be regarded solely as our current plans, estimates and beliefs. We cannot guarantee future results, events, levels of activity, performance, or achievements. We do not undertake and specifically decline any obligation to update, republish or revise forward-looking statements to reflect future events or circumstances or to reflect the occurrences of unanticipated events.

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PART I — FINANCIAL INFORMATION

Item1. Financial Statements

Xencor, Inc.

Balance Sheets

(in thousands, except share and per share data)


	September 30,		December 31,
	2021		2020
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	41,200	$	163,544
Marketable debt securities		199,423		434,156
Equity securities		47,578		5,303
Accounts receivable		20,545		11,443
Contract asset		—		12,500
Prepaid expenses and other current assets		20,883		10,726
Total current assets		329,629		637,672
Property and equipment, net		24,179		21,682
Patents, licenses, and other intangible assets, net		16,675		15,977
Marketable debt securities - long term		276,743		1,030
Equity securities - long term		16,583		16,071
Other assets		33,455		10,812
Total assets	$	697,264	$	703,244
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	9,131	$	8,954
Accrued expenses		22,108		17,603
Lease liabilities		128		1,889
Deferred revenue		12,950		92,615
Total current liabilities		44,317		121,061
Lease liabilities, net of current portion		34,087		9,739
Total liabilities		78,404		130,800
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value: 10,000,000 authorized shares; -0- issued and outstanding shares at September 30, 2021 and December 31, 2020		—		—
Common stock, $0.01 par value: 200,000,000 authorized shares at September 30, 2021 and December 31, 2020; 58,454,811 issued and outstanding at September 30, 2021 and 57,873,444 issued and outstanding at December 31, 2020		585		580
Additional paid-in capital		974,514		937,525
Accumulated other comprehensive income (loss)		(74)		74
Accumulated deficit		(356,165)		(365,735)
Total stockholders’ equity		618,860		572,444
Total liabilities and stockholders’ equity	$	697,264	$	703,244

See accompanying notes.

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Xencor, Inc.

Statements of Comprehensive Income (Loss)

(unaudited)

(in thousands, except share and per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020

Revenue
Collaborations, licenses, milestones, and royalties	$	19,683	$	35,366	$	121,096	$	80,840
Operating expenses
Research and development		50,610		44,452		141,519		121,853
General and administrative		10,373		7,636		27,462		22,086
Total operating expenses		60,983		52,088		168,981		143,939
Loss from operations		(41,300)		(16,722)		(47,885)		(63,099)
Other income (expenses)
Interest income, net		196		1,423		558		6,552
Other income (expense), net		(593)		(23)		(610)		111
Gain on equity securities, net		1,506		2,772		57,507		794
Total other income, net		1,109		4,172		57,455		7,457
Net income (loss)		(40,191)		(12,550)		9,570		(55,642)

Other comprehensive income (loss)
Net unrealized loss on marketable debt securities		(59)		(916)		(149)		(594)
Comprehensive income (loss)	$	(40,250)	$	(13,466)	$	9,421	$	(56,236)

Basic net income (loss) per common share	$	(0.69)	$	(0.22)	$	0.16	$	(0.97)
Diluted net income (loss) per common share	$	(0.69)	$	(0.22)	$	0.16	$	(0.97)

Basic weighted average common shares outstanding		58,350,647		57,266,112		58,199,928		57,091,452

Diluted weighted average common shares outstanding		58,350,647		57,266,112		60,346,480		57,091,452

See accompanying notes.

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Xencor, Inc.

Statements of Stockholders’ Equity

(unaudited)

(in thousands, except share data)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
Stockholders’ Equity	Shares	Amount		Capital		Income (Loss)		Deficit		Equity
Balance, December 31, 2020	57,873,444	$	580	$	937,525	$	74	$	(365,735)	$	572,444
Issuance of common stock upon exercise of stock awards	230,701		2		5,337		—		—		5,339
Issuance of restricted stock units	117,808		1		(1)		—		—		—
Comprehensive income (loss)	—		—		—		23		(2,487)		(2,464)
Stock-based compensation	—		—		8,293		—		—		8,293
Balance, March 31, 2021	58,221,953		583		951,154		97		(368,222)		583,612

Issuance of common stock upon exercise of stock awards	52,790		1		902		—		—		903
Issuance of restricted stock units	10,190		—		—		—		—		—
Issuance of common stock under the Employee Stock Purchase Plan	30,552		—		937		—		—		937
Comprehensive income (loss)	—		—		—		(112)		52,248		52,136
Stock-based compensation	—		—		9,350		—		—		9,350
Balance, June 30, 2021	58,315,485		584		962,343		(15)		(315,974)		646,938

Issuance of common stock upon exercise of stock awards	132,709		1		3,228		—		—		3,229
Issuance of restricted stock units	6,617		—		—		—		—		—
Comprehensive loss	—		—		—		(59)		(40,191)		(40,250)
Stock-based compensation	—		—		8,943		—		—		8,943
Balance, September 30, 2021 (unaudited)	58,454,811	$	585	$	974,514	$	(74)	$	(356,165)	$	618,860

						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
Stockholders’ Equity	Shares	Amount		Capital		Income (Loss)		Deficit		Equity
Balance, December 31, 2019	56,902,301	$	569	$	887,873	$	1,161	$	(296,402)	$	593,201
Issuance of common stock upon exercise of stock awards	79,930		1		1,470		—		—		1,471
Issuance of restricted stock units	19,022		—		—		—		—		—
Comprehensive loss	—		—		—		(105)		(8,074)		(8,179)
Stock-based compensation	—		—		6,512		—		—		6,512
Balance, March 31, 2020	57,001,253		570		895,855		1,056		(304,476)		593,005

Issuance of common stock upon exercise of stock awards	181,856		2		3,273		—		—		3,275
Issuance of restricted stock units	2,800		—		—		—		—		—
Issuance of common stock under the Employee Stock Purchase Plan	28,344		—		725		—		—		725
Comprehensive income (loss)	—		—		—		427		(35,018)		(34,591)
Stock-based compensation	—		—		8,231		—		—		8,231
Balance, June 30, 2020	57,214,253		572		908,084		1,483		(339,494)		570,645

Issuance of common stock upon exercise of stock awards	130,784		1		2,985		—		—		2,986
Issuance of restricted stock units	29,900		—		—		—		—		—
Issuance of common stock under the Employee Stock Purchase Plan	—		—				—		—		—
Comprehensive loss	—		—		—		(916)		(12,550)		(13,466)
Stock-based compensation	—		—		8,318		—		—		8,318
Balance, September 30, 2020 (unaudited)	57,374,937	$	573	$	919,387	$	567	$	(352,044)	$	568,483

See accompanying notes.

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Xencor, Inc.

Statements of Cash Flows

(unaudited)

(in thousands)


	Nine Months Ended
	September 30,
	2021		2020
Cash flows from operating activities
Net income (loss)	$	9,570	$	(55,642)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		5,384		4,262
Amortization of premium (accretion of discount) on marketable securities		2,632		(981)
Stock-based compensation		26,586		23,061
Abandonment of capitalized intangible assets		727		403
Equity received in connection with license agreement		—		(4,589)
Equity received in connection with sale of financial assets		(3,300)		—
Change in fair value of equity securities		(39,206)		(794)
Impairment on equity securities		563		—
Loss on disposal of assets		17		4
Gain on sale of marketable securities available for sale		—		(153)
Changes in operating assets and liabilities:
Accounts receivable		(9,102)		12,040
Interest receivable		182		1,135
Contract asset and deposits		12,059		53
Prepaid expenses and other assets		(10,158)		(3,629)
Accounts payable		177		2,920
Accrued expenses		4,505		2,386
Income taxes		—		895
Lease liabilities and right of use (ROU) assets		386		(168)
Deferred revenue		(79,665)		(3,291)
Net cash used in operating activities		(78,643)		(22,088)
Cash flows from investing activities
Purchase of marketable securities		(387,826)		(477,310)
Purchase of equity securities		(842)		—
Proceeds from sale of property and equipment		4		—
Purchase of intangible assets		(2,348)		(2,143)
Purchase of property and equipment		(6,979)		(7,390)
Proceeds from maturities and sale of marketable securities		343,882		508,256
Net cash (used in) provided by investing activities		(54,109)		21,413
Cash flows from financing activities
Proceeds from issuance of common stock upon exercise of stock awards		9,471		7,732
Proceeds from issuance of common stock under the Employee Stock Purchase Plan		937		725
Net cash provided by financing activities		10,408		8,457
Net (decrease) increase in cash and cash equivalents		(122,344)		7,782
Cash and cash equivalents, beginning of period		163,544		50,312
Cash and cash equivalents, end of period	$	41,200	$	58,094

Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest	$	13	$	15
Supplemental disclosures of non-cash investing activities
Unrealized loss on marketable securities	$	(149)	$	(594)

See accompanying notes.

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Xencor, Inc.

Notes to Financial Statements

(unaudited)

September 30, 2021

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim financial statements for Xencor, Inc. (the Company, Xencor, we or us) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the management of the Company believes are necessary for a fair presentation of the periods presented. The preparation of interim financial statements requires the use of management’s estimates and assumptions that affect reported amounts of assets and liabilities at the date of the interim financial statements and the reported revenues and expenditures during the reported periods. These interim financial results are not necessarily indicative of the results expected for the full fiscal year or for any subsequent interim period.

The accompanying unaudited interim financial statements and related notes should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 24, 2021.

Use of Estimates

The preparation of interim financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, other comprehensive gain (loss) and the related disclosures. On an ongoing basis, management evaluates its estimates, including estimates related to its accrued clinical trial and manufacturing development expenses, stock-based compensation expense, evaluation of intangible assets, investments, leases and other assets for evidence of impairment, fair value measurements, and contingencies. Significant estimates in these interim financial statements include estimates made for royalty revenue, accrued research and development expenses, stock-based compensation expenses, intangible assets, incremental borrowing rate for right-of-use asset and lease liability, estimated standalone selling price of performance obligations, estimated time for completing delivery of performance obligations under certain arrangements, the likelihood of recognizing variable consideration, the carrying value of equity instruments without a readily determinable fair value, and recoverability of deferred tax assets.

Intangible Assets

The Company maintains definite-lived intangible assets related to certain capitalized costs of acquired licenses and third-party costs incurred in establishing and maintaining its intellectual property rights to its platform technologies and development candidates. These assets are amortized over their useful lives, which are estimated to be the remaining patent life or the contractual term of the license. The straight-line method is used to record amortization expense. The Company assesses its intangible assets for impairment if indicators are present or changes in circumstances suggest that impairment may exist. During the three and nine months ended September 30, 2021, the Company recorded an impairment charge of $0.4 million related to an acquired license. There were no impairment charges recorded for the three and nine months ended September 30, 2020.

The Company capitalizes certain in-process intangible assets that are then abandoned when they are no longer pursued or used in current research activities. There was no material abandonment of in-process intangible assets during the three and nine months ended September 30, 2021 and 2020.

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Marketable Debt and Equity Securities

The Company has an investment policy that includes guidelines on acceptable investment securities, minimum credit quality, maturity parameters, and concentration and diversification. The Company invests its excess cash primarily in marketable debt securities issued by investment grade institutions.

The Company considers its marketable debt securities to be available-for-sale because it is not more likely than not that the Company will be required to sell the securities before recovery of the amortized cost. These assets are carried at fair value and any impairment losses and recoveries related to the underlying issuer’s credit standing are recognized within other income (expense), while non-credit related impairment losses and recoveries are recognized within accumulated other comprehensive income (loss). There were no impairment losses or recoveries recorded for the three and nine months ended September 30, 2021 and 2020. Accrued interest on marketable debt securities is included in the marketable securities’ carrying value. Each reporting period, the Company reviews its portfolio of marketable debt securities, using both quantitative and qualitative factors, to determine if each security’s fair value has declined below its amortized cost basis.

The Company receives equity securities in connection with certain licensing transactions with its partners. These investments in equity securities are carried at fair value with changes in fair value recognized each period and reported within other income (expense). For equity securities with a readily determinable fair value, the Company re-measures these equity investments at each reporting period until such time that the investment is sold or disposed. If the Company sells an investment, any realized gain or loss on the sale of the securities will be recognized within other income (expense) in the Statements of Comprehensive Income (Loss) in the period of sale.

The Company also has investments in equity securities without readily determinable fair values, where the Company elects the measurement alternative to record the investment at its initial cost minus impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. During the three and nine months ended September 30, 2021, the Company recorded an impairment charge of $0.6 million in connection with an equity security without a readily determinable fair value.

Recent Accounting Pronouncements

Pronouncements Adopted in 2021

Effective January 1, 2021, the Company adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes specific exceptions to the general principles in Topic 740 and simplifies the accounting for income taxes. The adoption of this standard did not have a significant impact on the Company’s financial statements.

Effective January 1, 2021, the Company adopted ASU No. 2020-01, which clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investment – Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321, Investments – Equity Securities immediately before applying or upon discontinuing the equity method. The adoption of this standard did not have a significant impact on the Company’s financial statements.

Effective January 1, 2021, the Company adopted ASU No. 2020-10, Codification Improvements, which amends a variety of topics in the Accounting Standards Codification to improve consistency and clarify guidance. The adoption of this standard did not have a significant impact on the Company’s financial statements.

There have been no other material changes to the significant accounting policies previously disclosed in the Company’s 2020 Annual Report on Form 10-K.

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2. Fair Value of Financial Instruments

Financial instruments included in the financial statements include cash and cash equivalents, marketable debt and equity securities, accounts receivable, accounts payable, and accrued expenses. Marketable debt securities, equity securities, and cash equivalents are carried at fair value. The fair value of the other financial instruments closely approximates their fair value due to their short-term maturities.

The Company accounts for recurring and non-recurring fair value measurements in accordance with FASB Accounting Standards Codification 820, Fair Value Measurements and Disclosures (ASC 820). ASC 820 defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and requires expanded disclosure about fair value measurements. The ASC 820 hierarchy ranks the quality of reliable inputs, or assumptions, used in the determination of fair value and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

Level 1—Fair value is determined by using unadjusted quoted prices that are available in active markets for identical assets or liabilities.

Level 2—Fair value is determined by using inputs other than Level 1 quoted prices that are directly or indirectly observable. Inputs can include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active. Related inputs can also include those used in valuation or other pricing models, such as interest rates and yield curves that can be corroborated by observable market data.

Level 3—Fair value is determined by inputs that are unobservable and not corroborated by market data. Use of these inputs involves significant and subjective judgments to be made by the reporting entity – e.g. determining an appropriate discount factor for illiquidity associated with a given security.

The Company measures the fair value of financial assets using the highest level of inputs that are reasonably available as of the measurement date. The assets recorded at fair value are classified within the hierarchy as follows for the periods reported (in thousands):


	September 30, 2021
	(unaudited)								December 31, 2020
	Total								Total
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Available-for-Sale Debt Securities:
Money Market Funds	$	23,218	$	23,218	$	—	$	—	$	158,937	$	158,937	$	—	$	—
Corporate Securities		103,610		—		103,610		—		119,833		—		119,833		—
Government Securities		372,556		—		372,556		—		315,353		—		315,353		—
Equity Securities:
Securities with Readily Determinable Fair Value		47,578		47,578		—		—		5,303		5,303		—		—
Securities without Readily Determinable Fair Value		16,583		—		—		16,583		16,071		—		—		16,071
	$	563,545	$	70,796	$	476,166	$	16,583	$	615,497	$	164,240	$	435,186	$	16,071

Our policy is to record transfers of assets between Level 1 and Level 2 at their fair values as of the end of each reporting period, consistent with the date of the determination of fair value. During the three and nine months ended September 30, 2021 and 2020, there were no transfers between Level 1 and Level 2. During the nine months ended September 30, 2021, an equity investment without a readily determinable fair value was transferred to Level 1 from Level 3.

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The following table provides a roll-forward account balance for recurring Level 3 fair value measurements (in thousands):


	Securities without Readily Determinable Fair Value
Balance at December 31, 2020	$	16,071
Issuance		12,148
Impairment		(563)
Transfer out of Level 3		(11,073)
Balance at September 30, 2021	$	16,583

The Company held equity securities without a readily determinable fair value at September 30, 2021 and December 31, 2020, respectively. The Company elects the measurement alternative to record at its initial cost minus impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. During the three and nine months ended September 30, 2021, the Company recorded an impairment charge of $0.6 million related to an equity security without a readily determinable value. This impairment charge was recorded as other income (expense).

3. Net Income (Loss) Per Common Share

Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period without consideration of common stock equivalents. Diluted net income (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common stock equivalents outstanding for the period. Potentially dilutive securities consisting of stock issuable pursuant to outstanding options and restricted stock units (RSUs), and stock issuable pursuant to the 2013 Employee Stock Purchase Plan (ESPP) are not included in the per common share calculation in periods when the inclusion of such shares would have an anti-dilutive effect.

Basic and diluted net income (loss) per common share is computed as follows:

Three Months Ended

Nine Months Ended

September 30,

2021

2020

2021

2020

(in thousands, except share and per share data)

Numerator:

Net income (loss) attributable to common stockholders

(40,191)

(12,550)

9,570

(55,642)

Denominator:

Weighted-average common shares outstanding used in computing basic net income (loss)