Document and Entity Information	3 Months Ended
Document and Entity Information	Mar. 31, 2014	Apr. 30, 2014
Document and Entity Information
Entity Registrant Name	Xencor Inc
Entity Central Index Key	0001326732
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		31,361,493
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1

Condensed Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current assets
Cash	$ 72,536	$ 77,975
Accounts receivable	511	59
Prepaid expenses and other current assets	159	60
Total current assets	73,206	78,094
Property and equipment
Computers, software and equipment	3,580	3,514
Furniture and fixtures	89	89
Leasehold improvements	3,081	3,081
Less accumulated depreciation and amortization	(6,410)	(6,377)
Property and equipment, net	340	307
Other assets
Patents, licenses, and other intangible assets, net	8,899	8,814
Other assets	50	100
Total other assets	8,949	8,914
Total assets	82,495	87,315
Current liabilities
Accounts payable	2,104	2,633
Accrued expenses	1,465	1,393
Current portion of deferred revenue	3,251	3,444
Current portion of capital lease obligations	7	9
Total current liabilities	6,827	7,479
Deferred revenue, less current portion	5,603	6,302
Capital lease obligations, less current portion		1
Total liabilities	12,430	13,782
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value: 200,000,000 authorized shares at March 31, 2014 and December 31, 2013; 31,361,444 issued and outstanding at March 31, 2014 and 31,354,467 issued and outstanding shares at December 31, 2013	314	314
Additional paid-in capital	301,073	300,790
Accumulated deficit	(231,322)	(227,571)
Total stockholders' equity	70,065	73,533
Total liabilities and stockholders' equity	$ 82,495	$ 87,315

Condensed Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Condensed Balance Sheets
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized	200,000,000	200,000,000
Common Stock, shares issued	31,361,444	31,354,467
Common Stock, shares outstanding	31,361,444	31,354,467

Condensed Statements of Operations (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenue
Collaborations, licenses and milestones	$ 2,184	$ 1,345
Operating expenses
Research and development	4,228	4,560
General and administrative	1,723	746
Total operating expenses	5,951	5,306
Loss from operations	(3,767)	(3,961)
Other income (expenses)
Interest income	18	1
Interest expense	(2)	(661)
Other (expense) income		9
Total other income (expense), net	16	(651)
Net loss	$ (3,751)	$ (4,612)
Basic and diluted net loss per common share (in dollars per share)	$ (0.12)	$ (63.78)
Weighted average shares used to compute basic and diluted net loss per common share (in shares)	31,360,879	72,302

Condensed Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities
Net loss	$ (3,751)	$ (4,612)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	320	139
Stock-based compensation	278	5
Abandonment of capitalized intangible assets	10	168
Gain on disposal of assets		(9)
Accrued interest on convertible promissory notes (See Note 3)		660
Changes in operating assets and liabilities:
Accounts receivable	(452)	(172)
Prepaid expenses and other current assets	(99)
Other assets	50
Accounts payable	(529)	1,610
Accrued expenses	72	(565)
Deferred revenue	(892)	4,422
Net cash (used in) provided by operating activities	(4,993)	1,646
Cash flows from investing activities
Purchase of intangible assets	(382)	(521)
Purchase of property and equipment	(66)	(36)
Proceeds from sale of property and equipment		9
Net cash used in investing activities	(448)	(548)
Cash flows from financing activities
Proceeds from issuance of common stock upon exercise of stock awards	4
Payments on capital lease obligations	(2)	(2)
Net cash provided by (used in) financing activities	2	(2)
Net increase (decrease) in cash	(5,439)	1,096
Cash, beginning of period	77,975	2,312
Cash, end of period	72,536	3,408
Cash paid for:
Interest	$ 2

Description of Business	3 Months Ended
Description of Business	Mar. 31, 2014
Description of Business
Description of Business	1. Description of Business Xencor, Inc. (we, us, our, or the Company) was incorporated in California in 1997 and reincorporated in Delaware in September 2004. We are a clinical-stage biopharmaceutical company focused on discovering and developing engineered monoclonal antibodies to treat severe and life-threatening diseases with unmet medical needs. We use our proprietary XmAb technology platform to create next-generation antibody product candidates designed to treat autoimmune and allergic diseases, cancer, and other conditions. Our engineered Fc domains, the XmAb technology, are applied to our pipeline of antibody-based drug candidates to increase immune inhibition, improve cytotoxicity, or extend half-life. We also enter into collaborations with pharmaceutical companies to allow them to use our XmAb technology in their drug development activities. Our operations are based in Monrovia, California and we operate in one segment. *Unaudited Interim Financial Information* The accompanying financial information as of March 31, 2014 is unaudited. The Condensed Financial Statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that our management considers necessary for the fair statement of results of operations for the interim periods covered and of the financial condition of the Company at the date of the interim balance sheet. December 31, 2013 balances were derived from the audited Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on March 31, 2104. The accompanying Condensed Balance Sheet does not include all the disclosures required by generally accepted accounting principles in the United States of America, or GAAP. The results for interim periods are not necessarily indicative of the results for the entire year or any other interim period. The accompanying Condensed Financial Statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K. *Initial Public Offering* We completed our initial public offering (IPO) in December 2013, pursuant to which we issued 14,639,500 shares of common stock which included shares we issued pursuant to our underwriters’ exercise of their over-allotment option, and received net proceeds of $72.5 million, after underwriting discounts, commissions and estimated offering expenses. In addition, in connection with the completion of our IPO, all then outstanding convertible preferred stock converted into common stock.

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2014

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of the financial statements in accordance with GAAP requires the Company to make estimates and judgments in certain circumstances that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, fair values of assets, convertible preferred stock and common stock, income taxes, pre-clinical study and clinical trial accruals and other contingencies. Management bases its estimates on historical experience or on various other assumptions that it believes to be reasonable under the circumstances. Actual results could materially differ from these estimates.

Reverse Stock Split

On November 1, 2013, the Company affected a 1 for 3.1 reverse stock split. All information in this report relating to the number of shares, price per share and per share amounts of stock prior to November 1, 2013 gives retroactive effect to the 1 for 3.1 reverse stock split of the Company’s stock.

Research and Development Expenses

Costs incurred in research and development activities are expensed as incurred, including expenses that may or may not be reimbursed under research and development collaboration agreements. Research and development costs include, but are not limited to, salaries, benefits, stock-based compensation, laboratory supplies and equipment, allocated overhead, fees for professional service providers and costs associated with product development efforts, including preclinical studies and clinical trials.

The Company estimates preclinical study and clinical trial expenses based on the services performed, pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on its behalf. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered.

Fair Value of Financial Instruments

Our financial instruments primarily consist of cash, trade accounts receivable, convertible promissory notes, accounts payable and accrued expenses. The fair value of cash and cash equivalents, trade accounts receivable, convertible promissory notes, accounts payable and accrued expenses closely approximate their carrying value due to their short maturities. The carrying amounts of convertible promissory notes approximate their fair value, as the interest rates, in consideration of the conversion feature, approximate the interest rates presently available to us.

We determine the fair value of the principal amount of financial and nonfinancial assets and liabilities using the fair value hierarchy, which describes three levels of inputs that may be used to measure fair value, as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities;

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Level 1 assets consist of highly-liquid money market funds. There were no transfers between Level 1 and Level 2 assets during the periods presented.

The assets recorded at fair value are classified within the hierarchy as follows for the periods reported (in millions):

	March 31, 2014				March 31, 2013
	Total				Total
	Fair Value		Level 1		Fair Value		Level 1

Money Market Funds	$	—	$	—	$	3.3	$	3.3

For disclosure purposes at March 31, 2014 and March 31, 2013 the fair value of the principal amount of our outstanding convertible promissory notes are classified within the hierarchy as follows (in millions):

	March 31, 2014				March 31, 2013
	Total				Total
	Fair Value		Level 3		Fair Value		Level 3

Convertible Promissory Notes	$	—	$	—	$	15.1	$	15.1

These convertible promissory notes were originally issued during 2009 and 2010. Considering 1) the lack of time value, 2) the absence of an established market for the convertible promissory notes, and, 3) our knowledge of the terms, rates, risk and returns provided by the convertible promissory notes as compared to financing available for privately-held biopharmaceutical companies, we determined that the carrying value of the convertible promissory notes approximates their fair value. There were no transfers between Level 3, Level 2 and, Level 1 during the periods presented.

Net Loss Per Share of Common Stock

We compute net loss per common share by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Potentially dilutive securities consisting of stock options, convertible preferred stock and convertible promissory notes are not included in the diluted net loss per common share calculation for all periods presented, because the inclusion of such shares would have had an antidilutive effect.

	Three Months Ended March 31,
	2014			2013
	(in thousands, except per share amounts)
Basic and diluted numerator:
Net loss attributable to common stockholders	$	(3,751	)	$	(4,612	)
Denominator:
Weighted-average common shares outstanding- basic and diluted	31,360,879			72,302
Basic and diluted net loss per common share	$	(0.12	)	$	(63.78	)

For the three months ended March 31, 2014 and March 31, 2013, we excluded the following securities from the calculation of diluted net loss per share as the effect would have been antidilutive.

	As of March 31,
	2014	2013
	(in thousands)
Convertible preferred stock	—	12,189
Convertible promissory notes	—	2,845
Employee stock purchase plan shares	45	—
Options to purchase common stock	1,213	1,277
	1,258	16,311

Revenue Recognition

We have, to date, earned revenue from research collaborations, which may include research and development services, licenses of our internally-developed technologies, or a combination of both. We recognize revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; transfer or access of technology has been completed or services have been rendered; our price to the customer is fixed or determinable and collectability is reasonably assured.

The terms of our licensing and research and development agreements include non-refundable upfront fees, licensing fees, contingent payment and contractual obligations for the achievement of pre-defined preclinical, clinical, regulatory and sales based events. The agreements also include royalties on sales of any commercialized products.

Multiple-Element Revenue Arrangements. Certain of our collaboration and license agreements represent multiple-element revenue arrangements. To account for such transactions, we determine the elements, or deliverables, included in the arrangement and determine which deliverables are separate units for accounting purposes. We consider delivered items to be separate units of accounting if the delivered items have stand-alone value to the customer. If the delivered items are separate units we allocate the consideration received or due under the arrangement to the various elements based on each elements’ relative selling price.

Milestone Revenue. Our collaboration and license agreements generally include contingent contractual payments related to achievement of specific research, development and regulatory milestones and sales-based milestones that are based solely upon the performance of the licensor or collaborator. Research, development and regulatory contingent contractual payments and milestone payments are typically payable under our collaborations when our collaborator selects a compound, or initiates or advances a covered product candidate in preclinical or clinical development, upon submission for marketing approval of a covered product with regulatory authorities, upon receipt of actual marketing approvals of a covered product or for additional indications, or upon the first commercial sale of a covered product. Sales-based contingent contractual payments are typically payable when annual sales of a covered product reach specific levels.

We recognize any payment that is contingent upon the achievement of a substantive milestone entirely in the period in which the milestone is achieved. A milestone is defined as an event that can only be achieved based in whole or in part either on our performance, or the performance of our collaborators, or the occurrence of a specific outcome resulting from our past performance for which there is a substantive uncertainty at the date the arrangement is entered into that the event will be achieved.

Long-Lived Assets

Management reviews long-lived and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value for our long-lived assets is determined using the expected cash flows discounted at a rate commensurate with the risks involved.

Stock-Based Compensation

We recognize compensation expense using a fair-value-based method for costs related to all share-based payments, including stock options and stock issued under our 2013 Employee Stock Purchase Plan (ESPP). Stock-based compensation cost related to employees and directors is measured at the grant date, based on the fair-value—based measurement of the award using the Black-Scholes method, and is recognized as expense over the requisite service period on a straight-line basis. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. We recorded stock-based compensation expense for stock-based awards to employees and directors of approximately $278,000 and $5,000 for the three months ended March 31, 2014 and 2013, respectively.

The expected term for purchases under the ESPP was based on the purchase periods included in the offering. The expected volatility is determined using historical volatilities of similar peer companies based on stock prices over a look-back period corresponding to the expected term. The risk-free interest rate was determined using the yield available for zero-coupon U.S. government issues with a remaining term equal to the expected term. The forfeiture rate was determined to be zero as there is insufficient historical pre-vesting forfeiture rate information since the inception of the plan. The Company has never paid a dividend, and as such, the dividend yield is zero. See Note 4 for further information on the ESPP.

Options granted to individual service providers that are not employees or directors are accounted for at estimated fair value using the Black-Scholes option-pricing method and are subject to periodic re-measurement over the period during which the services are rendered.

Concentrations of Risk

Cash is maintained at financial institutions and, at times, balances may exceed federally insured limits. Amounts on deposit in excess of federally insured limits at March 31, 2014 approximated $72.0 million.

A significant portion of our revenue was earned from four partners for the three months ended March 31, 2014 and from three partners for the three months ended March 31, 2013. The following table represents the amounts (in millions) and the percentage of all significant revenue earned in the periods indicated:

	Three Months Ended March 31,
	2014				2013
	Amounts		Percentages		Amounts		Percentages
Alexion	$	0.3	11.4	%	$	0.1	12.4	%
Amgen	0.6		25.6	%	0.6		41.5	%
CSL	0.7		32.5	%	0.6		43.7	%
Merck	0.5		22.9	%	—		—
Other	0.1		7.6	%	0.03		2.4	%

As of March 31, 2014, $0.5 million in accounts receivable was due from one partner; as of March 31, 2013, $0.5 million in accounts receivable was due from another partner.

Patents, Licenses, and Other Intangible Assets

The cost of acquiring licenses is capitalized and amortized on the straight-line basis over the shorter of the term of the license or its estimated economic life, ranging from five to 25 years. Third-party costs incurred for acquiring patents are capitalized. Capitalized costs are accumulated until the earlier of the period that a patent is issued or we abandon the patent claims. Cumulative capitalized patent costs are amortized on a straight-line basis from the date of issuance over the shorter of the patent term or the estimated useful economic life of the patent, ranging from 13 to 20 years. The carrying value of intangible assets is evaluated when indicators of impairment are identified. We review the license arrangements and the amortization period on a regular basis and adjust the carrying value or the amortization period of the licensed rights if there is evidence of a change in the carrying value or useful life of the asset.

Convertible Promissory Notes and Conversion of Convertible Preferred Stock	3 Months Ended
	Mar. 31, 2014
Convertible Promissory Notes and Conversion of Convertible Preferred Stock
Convertible Promissory Notes and Conversion of Convertible Preferred Stock	3. Convertible Promissory Notes and Conversion of Convertible Preferred Stock As of March 31, 2013, the Company had $21.6 million in outstanding convertible promissory notes which included $15.1 million in principal and $6.5 million in accrued interest. The notes carried an accrued interest rate of 12.5% and included contingent redemption features which provided that the notes would convert into preferred stock upon certain liquidation or change of control events. During June 2013, the convertible promissory notes were exchanged for convertible preferred stock. In connection with the completion of the Company’s IPO in December 2013, all outstanding shares of convertible preferred stock converted into 16,620,274 shares of common stock.

Equity Incentive Plans

3 Months Ended

Mar. 31, 2014

Equity Incentive Plans

Equity Incentive Plans

4. Equity Incentive Plans

Our Board of Directors and the requisite stockholders previously approved the Amended and Restated 2000 Stock Incentive Plan, or the 2000 Plan, and the 2010 Equity Incentive Plan, or the 2010 Plan, and collectively with the 2000 Plan the Prior Plans. The 2000 Plan terminated August 2010. In November 2013, our Board of Directors and stockholders approved the 2013 Equity Incentive Plan, or the 2013 Plan. The 2013 Plan became effective as of December 3, 2013 the date of the Company’s IPO. As of December 2, 2013, we suspended the 2010 Plan and no additional awards may be granted under the 2010 Plan. Any shares of common stock covered by awards granted under the Prior Plans that terminate after December 2, 2013 by expiration, forfeiture, cancellation or other means without the issuance of such shares will be added to the 2013 Plan reserve.

As of March 31, 2014, the total number of shares of common stock available for issuance under the 2013 Plan was 5,418,943, which includes 2,662,065 of common stock that were available for issuance under the Prior Plans as of the effective date of the 2013 Plan. Unless otherwise determined by the Board, beginning January 1, 2014, and continuing until the expiration of the 2013 Plan, the total number of shares of common stock available for issuance under the 2013 Plan will automatically increase annually on January 1 by 4% of the total number of issued and outstanding shares of common stock as of December 31 of the immediate preceding year. On January 1, 2014, the total number of shares of common stock available for issuance under the 2013 Plan was automatically increased by 1,254,179 shares, which number is included in the number of shares available for issuance above. As of March 31, 2014 715,500 options had been issued under the 2013 Plan.

In November 2013, our Board of Directors and stockholders approved the 2013 Employee Stock Purchase Plan, or the ESPP, which became effective as of December 5, 2013. Under the ESPP our employees may elect to have between 1-15% of their compensation withheld to purchase Company stock at a discount. The ESPP has an initial two year term that includes four six month purchase periods and employee withholding amounts may be used to purchase Company stock during each six month purchase period. The total number of shares that can be purchased with the withholding amounts are based on the lower of 85% of the Company’s stock price at the initial offering date or, 85% of the Company’s stock price at each purchase date. We have reserved a total of 581,286 shares of common stock for issuance under the ESPP. Unless otherwise determined by our Board, beginning on January 1, 2014, and continuing until the expiration of the ESPP, the total number shares of common stock available for issuance under the ESPP will automatically increase annually on January 1 by the lesser of (i) 1% of the total number of issued and outstanding shares of common stock as of December 31 of the immediately preceding year, or (ii) 621,814 shares of common stock. On January 1, 2014, the total number of shares of common stock available for issuance under the ESPP was automatically increased by 313,545 shares, which number is included in the number of shares reserved for issuance above. As of March 31, 2014, we have not issued any shares of common stock under the ESPP.

The following table summarizes option activity under our 2013 Plan and related information:

			Weighted Average
	Number of Shares subject to outstanding options		Exercise Price (Per Share)
Balances at December 31, 2013	1,794,214		$	1.66
Options granted	700,500		$	11.20
Options forfeited	—		—
Options exercised	(6,977	)	$	0.59
Balance at March 31, 2014	2,487,737		$	4.34

As of March 31, 2014, options to purchase 1,212,950 shares of common stock were outstanding that are vested and therefore exercisable with a weighted-average exercise price of $0.59 per share and a weighted-average remaining contractual life of 3.7 years. The aggregate intrinsic value of options outstanding was $18.4 million. The aggregate intrinsic value of outstanding options that are exercisable was $13.5 million and the intrinsic value of options exercised during the three months ended March 31, 2014 was $78,000. We calculate the intrinsic value as the difference between the exercise price of the options and the closing price of common stock of $11.73 per share as of March 31, 2014.

Total employee, director and non-employee stock-based compensation expense recognized was as follows (in thousands):

	Three Months Ended March 31,
	2014		2013
General and administrative	$	128.0	$	3.0
Research and development	150.0		2.0
	$	278.0	$	5.0

Weighted average fair value of options granted during the period ended March 31, 2014 was $7.44 per share; there were no options granted during the period ended March 31, 2013. We estimated the fair value of each stock option using the Black-Scholes option-pricing model based on the date of grant of such stock option with the following weighted average assumptions for the three months ended March 31, 2014 and 2013:

	Options				ESPP
	Three Months Ended March 31,				Three Months Ended March 31,
	2014		2013		2014		2013
Expected term (years)	6.0		6.0		0.5-2.0		—
Expected volatility	75.2	%	75.2-86.7	%	70.6	%	—
Risk-free interest rate	2.0 1	%	2.19	%	0.07-0.46	%	—
Expected dividend yield	0.00	%	0.00	%	0.00	%	—

At March 31, 2014, the Company had $4.8 million of total unrecognized compensation expense, net of estimated forfeitures, related to outstanding stock options that will be recognized over the next 3.5 years.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References+ Details

Collaboration Research and Licensing Agreements	3 Months Ended
Collaboration Research and Licensing Agreements	Mar. 31, 2014
Collaboration Research and Licensing Agreements
Collaboration Research and Licensing Agreements	5. Collaboration Research and Licensing Agreements Following are a summary description of the arrangements that generated revenue in the three month periods ended March 31, 2014 and March 31, 2013. Amgen, Inc. In December 2010, we entered into a Collaboration and Option Agreement with Amgen, Inc. (Amgen), pursuant to which we agreed to collaborate with Amgen to research, develop and commercialize XmAb5871. Under the agreement, we granted to Amgen an option to acquire an exclusive license to research, develop, manufacture and commercialize XmAb5871. The term of the option began at the effective date of the Agreement and expires 90 days after delivery of the data from a Phase 2 proof-of-concept (POC) clinical trial. During the option period and prior to Amgen exercising its option under the agreement, we retain ownership of the compound and are responsible for all clinical development of the compound through completion of the Phase 2 POC clinical trial and delivery of the clinical study data for the POC clinical trial. We received a nonrefundable upfront payment of $11.0 million upon execution of the agreement. We are eligible to receive milestone payments through the option period and following the exercise of the option by Amgen, additional milestone payments and royalties. We determined that substantially all of the future milestones and related payments were substantive and contingent and we did not allocate any of the upfront consideration to the milestones. We determined that the arrangement is one with multiple deliverables and we identified the multiple elements at the inception of the agreement. We determined that the deliverables under the arrangement were the research and development services and the option to acquire the rights to XmAb5871. Since the option is a contingent and a substantive element, no portion of the upfront fee was allocated to it. The upfront payment was allocated to the research and development services and is being recognized ratably over the estimated service period to complete the Phase 2 POC trial and delivery of the clinical study reports to Amgen. We have estimated that the term of the service period to be 72 months from inception of the agreement through completion of the POC trial. During the first quarter of 2013, we initiated a Phase 1b clinical trial under the arrangement and we received a milestone payment of $2.0 million. We are recognizing that payment over the term in which service under the agreement relate. During the three months ended March 31, 2014 we recognized $0.6 million of revenue under this arrangement and during the three months ended March 31, 2013 we recognized $0.6 million of revenue under this arrangement. As of March 31, 2014 we have deferred revenue related to this agreement of $6.3 million. Merck Sharp & Dohme Corp. In July 2013, we entered into a License Agreement with Merck Sharp & Dohme Corp (Merck). Under the terms of the agreement, we provided Merck with a non-exclusive commercial license to certain patent rights to our Fc domains to apply to one of their compounds. We also provided Merck with contingent options to take additional non-exclusive commercial licenses. The contingent options provide Merck an opportunity to take non-exclusive commercial licenses at an amount less than the amount paid for the original license. The agreement provided for an upfront payment of $1.0 million and annual maintenance fees totaling $0.5 million. We are also eligible to receive future milestones and royalties as Merck advances the compound into clinical development. We determined that the deliverables under this agreement were the non-exclusive commercial license and the options. The options are considered substantive and contingent and no amount of the upfront payment was allocated to these options. We also determined that the future milestones and related payments were substantive and contingent and did not allocate any of the upfront payment to the milestones. In the first quarter of 2014, Merck initiated a Phase 1 clinical trial which triggered a milestone payment to us. During the three months ended March 31, 2014 we recognized $0.5 million of revenue under this arrangement. As of March 31, 2014 there is no deferred revenue related to this arrangement. Alexion Pharmaceuticals, Inc. In January 2013, we entered into an option and license agreement with Alexion Pharmaceuticals, Inc. (Alexion). Under the terms of the agreement, we granted to Alexion an exclusive research license, with limited sublicensing rights, to make and use our Xtend technology to evaluate and advance compounds against six different target programs during a five-year research term under the agreement, up to completion of the first multi-dose human clinical trial for each target compound. Alexion may extend the research term for an additional three years upon written notice to us and payment of an extension fee of $2.0 million. Alexion is responsible for conducting all research and development activities under the agreement at its own expense. In addition, we granted to Alexion an exclusive option, on a target-by-target basis, to obtain an exclusive commercial, worldwide, royalty-bearing license, with sublicensing rights, under our Xtend technology to develop and commercialize products that contain the target for which the option is exercised. In order to exercise this option, Alexion must pay a $4.0 million option fee with respect to each target for which the option is exercised. Alexion may exercise this option at any time during the research term. Under the agreement, we received an upfront payment of $3.0 million. Alexion is also required to pay an annual maintenance fee of $0.5 million during the research term of the agreement and $1.0 million during any extension of the research term. In addition, if certain development, regulatory and commercial milestones are achieved, we are eligible to receive up to $66.5 million for the first product to achieve such milestones on a target-by-target basis. If licensed products are successfully commercialized, we are also entitled to receive royalties based on a percentage of net sales of such products sold by Alexion, its affiliates or its sublicensees, which percentage is in the low single digits. During the three months ended March 31, 2014 we recognized $0.3 million of revenue under this arrangement and during the three months ended March 31, 2013 we recognized $0.1 million of revenue under this arrangement. As of March 31, 2014 we have deferred revenue related to this arrangement of $2.3 million. CSL Limited In 2009, we entered into a Research License and Commercialization Agreement with CSL Limited (CSL). Under the agreement, we provided CSL with a research license to one of our technologies and up to five commercial options. The upfront payment of $0.75 million received at inception and the annual research license renewal payments are being recognized as revenue ratably over the five-year term of the research license. We identified the deliverables under the agreement at inception as the five-year research licenses and options to acquire commercial licenses. We determined that the deliverables under this agreement were the non-exclusive commercial license and the options. The options are considered substantive and contingent and no amount of the upfront payment was allocated to these options. We also determined that the future milestones and related payments were substantive and contingent and did not allocate any of the upfront payment to the milestones. The upfront payment and the annual license fees were allocated to the research license and are being recognized into income over the research term and payments for commercial options are being recognized in the period the commercial option was exercised since the options were contingent and substantive. In May 2013, we entered into an amendment to a February 2009 Research License and Commercialization Agreement with CSL, which eliminated a contingent milestone payment requirement and reduced the royalty rate on net sales for the licensed product CSL362. The amendment provided for a payment upon signing of $2.5 million. We determined that the amendment was a material modification to the original agreement and evaluated the remaining deliverables at the date of the amendment. We determined that the remaining deliverables were the research license which expired in February 2014 and four additional options to take commercial licenses through the term of the research period. The options are considered to be substantive and contingent and we did not allocate any of the proceeds received in the amendment to the options. The amendment proceeds are being recognized into income over the remaining period of the research term. During the three months ended March 31, 2014 we recognized $0.7 million of revenue under this arrangement and during the three months ended March 31, 2013 we recognized $0.1 million of revenue under this arrangement. As of March 31, 2014 we have no deferred revenue related to this arrangement.

Summary of Significant Accounting Policies (Polices)

3 Months Ended

Mar. 31, 2014

Summary of Significant Accounting Policies

Use of Estimates

Use of Estimates

Reverse Stock Split

Reverse Stock Split

Research and Development Expenses

Research and Development Expenses

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Level 1—Quoted prices in active markets for identical assets or liabilities;

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Level 1 assets consist of highly-liquid money market funds. There were no transfers between Level 1 and Level 2 assets during the periods presented.

The assets recorded at fair value are classified within the hierarchy as follows for the periods reported (in millions):

	March 31, 2014				March 31, 2013
	Total				Total
	Fair Value		Level 1		Fair Value		Level 1

Money Market Funds	$	—	$	—	$	3.3	$	3.3

	March 31, 2014				March 31, 2013
	Total				Total
	Fair Value		Level 3		Fair Value		Level 3

Convertible Promissory Notes	$	—	$	—	$	15.1	$	15.1

Net Loss Per Share of Common Stock

Net Loss Per Share of Common Stock

	Three Months Ended March 31,
	2014			2013
	(in thousands, except per share amounts)
Basic and diluted numerator:
Net loss attributable to common stockholders	$	(3,751	)	$	(4,612	)
Denominator:
Weighted-average common shares outstanding- basic and diluted	31,360,879			72,302
Basic and diluted net loss per common share	$	(0.12	)	$	(63.78	)

For the three months ended March 31, 2014 and March 31, 2013, we excluded the following securities from the calculation of diluted net loss per share as the effect would have been antidilutive.

	As of March 31,
	2014	2013
	(in thousands)
Convertible preferred stock	—	12,189
Convertible promissory notes	—	2,845
Employee stock purchase plan shares	45	—
Options to purchase common stock	1,213	1,277
	1,258	16,311

Revenue Recognition

Revenue Recognition

Long-Lived Assets

Long-Lived Assets

Stock-Based Compensation

Stock-Based Compensation

Concnetrations of Risk

Concentrations of Risk

	Three Months Ended March 31,
	2014				2013
	Amounts		Percentages		Amounts		Percentages
Alexion	$	0.3	11.4	%	$	0.1	12.4	%
Amgen	0.6		25.6	%	0.6		41.5	%
CSL	0.7		32.5	%	0.6		43.7	%
Merck	0.5		22.9	%	—		—
Other	0.1		7.6	%	0.03		2.4	%

As of March 31, 2014, $0.5 million in accounts receivable was due from one partner; as of March 31, 2013, $0.5 million in accounts receivable was due from another partner.

Patents, Licenses, and Other Intangible Assets

Patents, Licenses, and Other Intangible Assets

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2014

Summary of Significant Accounting Policies

Schedule of assets recorded at fair value

The assets recorded at fair value are classified within the hierarchy as follows for the periods reported (in millions):

	March 31, 2014				March 31, 2013
	Total				Total
	Fair Value		Level 1		Fair Value		Level 1

Money Market Funds	$	—	$	—	$	3.3	$	3.3

Schedule of the fair value of the principal amount of outstanding convertible promissory notes

	March 31, 2014				March 31, 2013
	Total				Total
	Fair Value		Level 3		Fair Value		Level 3

Convertible Promissory Notes	$	—	$	—	$	15.1	$	15.1

Schedule of calculation of diluted loss per share

	Three Months Ended March 31,
	2014			2013
	(in thousands, except per share amounts)
Basic and diluted numerator:
Net loss attributable to common stockholders	$	(3,751	)	$	(4,612	)
Denominator:
Weighted-average common shares outstanding- basic and diluted	31,360,879			72,302
Basic and diluted net loss per common share	$	(0.12	)	$	(63.78	)

Schedule of securities excluded from the calculation of diluted net loss per share as the effect would have been antidilutive

	As of March 31,
	2014	2013
	(in thousands)
Convertible preferred stock	—	12,189
Convertible promissory notes	—	2,845
Employee stock purchase plan shares	45	—
Options to purchase common stock	1,213	1,277
	1,258	16,311

Schedule of percentage of all significant revenue earned

The following table represents the amounts (in millions) and the percentage of all significant revenue earned in the periods indicated:

	Three Months Ended March 31,
	2014				2013
	Amounts		Percentages		Amounts		Percentages
Alexion	$	0.3	11.4	%	$	0.1	12.4	%
Amgen	0.6		25.6	%	0.6		41.5	%
CSL	0.7		32.5	%	0.6		43.7	%
Merck	0.5		22.9	%	—		—
Other	0.1		7.6	%	0.03		2.4	%

- Definition

Tabular disclosure of liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring and/or nonrecurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

+ References+ Details

- Definition

Tabular disclosure of the nature of a concentration, a benchmark to which it is compared, and the percentage that the risk is to the benchmark.

+ References+ Details

Equity Incentive Plans (Tables)

3 Months Ended

Mar. 31, 2014

Equity Incentive Plans

Summary of stock option activity

			Weighted Average
	Number of Shares subject to outstanding options		Exercise Price (Per Share)
Balances at December 31, 2013	1,794,214		$	1.66
Options granted	700,500		$	11.20
Options forfeited	—		—
Options exercised	(6,977	)	$	0.59
Balance at March 31, 2014	2,487,737		$	4.34

Schedule of total employee, director and non-employee stock-based compensation expense recognized

Total employee, director and non-employee stock-based compensation expense recognized was as follows (in thousands):

	Three Months Ended March 31,
	2014		2013
General and administrative	$	128.0	$	3.0
Research and development	150.0		2.0
	$	278.0	$	5.0

Schedule of weighted average assumptions used for estimation of fair value of stock options

	Options				ESPP
	Three Months Ended March 31,				Three Months Ended March 31,
	2014		2013		2014		2013
Expected term (years)	6.0		6.0		0.5-2.0		—
Expected volatility	75.2	%	75.2-86.7	%	70.6	%	—
Risk-free interest rate	2.0 1	%	2.19	%	0.07-0.46	%	—
Expected dividend yield	0.00	%	0.00	%	0.00	%	—

Description of Business (Details) (USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended	3 Months Ended
	Dec. 31, 2013	Mar. 31, 2014 item
Description of Business
Number of operating segments		1
Initial Public Offering
Common stock sold under initial public offering (in shares)	14,639,500
Net proceeds received from initial public offering	$ 72.5

Summary of Significant Accounting Policies (Details) (USD $)	0 Months Ended
	Nov. 01, 2013	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Reverse Stock Split and Conversion of Preferred Stock
Reverse stock split ratio	3.1
Fair Value of Financial Instruments
Transfers from level 1 to level 2		$ 0	$ 0	$ 0
Transfers from level 2 to level 1		0	0	0
Fair value of financial instruments
Transfers between Level 3, Level 2 and, Level 1		0		0
Total Fair Value \| Convertible Promissory Notes
Fair value of financial instruments
Liabilities recorded at fair value				15,100,000
Total Fair Value \| Money Market Funds
Fair value of financial instruments
Assets recorded at fair value				3,300,000
Level 1 \| Money Market Funds
Fair value of financial instruments
Assets recorded at fair value				3,300,000
Level 3 \| Convertible Promissory Notes
Fair value of financial instruments
Liabilities recorded at fair value				$ 15,100,000

Summary of Significant Accounting Policies (Details 2) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Basic and diluted numerator:
Net loss attributable to common stockholders	$ (3,751,000)	$ (4,612,000)
Denominator:
Weighted-average common shares outstanding- basic and diluted	31,360,879	72,302
Basic and diluted net loss per common share (in dollars per share)	$ (0.12)	$ (63.78)
Outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share
Anti-dilutive securities (in shares)	1,258,000	16,311,000
Stock-Based Compensation
Stock-based compensation expense	$ 278,000	$ 5,000
Forfeiture rate (as a percent)	0.00%
Convertible preferred stock
Outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share
Anti-dilutive securities (in shares)		12,189,000
Convertible Promissory Notes
Outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share
Anti-dilutive securities (in shares)		2,845,000
Employee stock purchase plan shares
Outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share
Anti-dilutive securities (in shares)	45,000
Options
Outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share
Anti-dilutive securities (in shares)	1,213,000	1,277,000

Summary of Significant Accounting Policies (Details 3) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Concentrations of Risk
Amounts on deposit in excess of federally insured limits approximately	$ 72,000,000
Concentrations of risk
Amounts	2,184,000	1,345,000
Accounts receivable	511,000		59,000
Revenue \| Customers
Concentrations of risk
Number of customers	4	3
Revenue \| Customers \| Alexion
Concentrations of risk
Amounts	300,000	100,000
Concentration risk percentage	11.40%	12.40%
Revenue \| Customers \| Amgen
Concentrations of risk
Amounts	600,000	600,000
Concentration risk percentage	25.60%	41.50%
Revenue \| Customers \| CSL
Concentrations of risk
Amounts	700,000	600,000
Concentration risk percentage	32.50%	43.70%
Revenue \| Customers \| Merck
Concentrations of risk
Amounts	500,000
Concentration risk percentage	22.90%
Revenue \| Customers \| Other
Concentrations of risk
Amounts	100,000	30,000
Concentration risk percentage	7.60%	2.40%
Accounts receivable \| Credit concentration
Concentrations of risk
Number of customers	1
Accounts receivable	$ 500,000	$ 500,000

Convertible Promissory Notes and Conversion of Convertible Preferred Stock (Details) (USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended
	Dec. 31, 2013
Convertible Promissory Notes
Shares of common stock issued for conversion of convertible preferred stock	16,620,274
Convertible Promissory Notes
Convertible Promissory Notes
Outstanding debt	$ 21.6
Principal amount	15.1
Accrued interest	$ 6.5
Accrued interest rate	12.50%

- Definition

Number of shares issued during the period as a result of the conversion of convertible securities.

+ References+ Details

Equity Incentive Plans (Details) (USD $)	3 Months Ended		0 Months Ended		3 Months Ended		0 Months Ended
Equity Incentive Plans (Details) (USD $)	Mar. 31, 2014 Options	Mar. 31, 2013 Options	Jan. 02, 2014 The 2013 Plan	Mar. 31, 2014 The 2013 Plan	Mar. 31, 2014 The 2013 Plan Options	Dec. 03, 2013 Prior Plans	Jan. 02, 2014 ESPP	Dec. 05, 2013 ESPP item	Mar. 31, 2014 ESPP	Dec. 05, 2013 ESPP Minimum	Dec. 05, 2013 ESPP Maximum
Stock-based compensation
Total number of shares of common stock available for issuance				5,418,943		2,662,065			581,286
Annual percentage increase in shares of common stock available for issuance			4.00%				1.00%
Increase in shares of common stock available for issuance (in shares)			1,254,179				313,545
Awards issued under the plan (in shares)					715,500
Percentage of employee's compensation withheld to purchase stock at a discount										1.00%	15.00%
Life of options								2 years
Number of six month purchase periods								4
Purchase period								6 months
Percentage of the entity's stock price at the initial offering date								85.00%
Purchase price as percentage of fair market value of the stock								85.00%
Annual increase in shares of common stock available for issuance (in shares)							621,814
Number of Shares subject to outstanding options
Balance at the beginning of the period (in shares)	1,794,214
Options granted (in shares)	700,500	0
Options exercised (in shares)	(6,977)
Balance at the end of the period (in shares)	2,487,737
Weighted Average Exercise Price (per share)
Balance at the beginning of the period (in dollars per share)	$ 1.66
Options granted (in dollars per share)	$ 11.20
Options exercised (in dollars per share)	$ 0.59
Balance at the end of the period (in dollars per share)	$ 4.34
Awards exercisable (in shares)	1,212,950
Weighted-average remaining contractual life of awards exercisable	3 years 8 months 12 days
Aggregate intrinsic value of options outstanding	$ 18,400,000
Aggregate intrinsic value of options exercisable	13,500,000
Intrinsic value of options exercised	$ 78,000
Closing price of common stock (in dollars per share)	$ 11.73

Equity Incentive Plans (Details 2) (USD $)	3 Months Ended
Equity Incentive Plans (Details 2) (USD $)	Mar. 31, 2014	Mar. 31, 2013
Employee, director and non-employee stock-based compensation expense recognized
Total employee, director and non-employee stock-based compensation expense	$ 278,000	$ 5,000
Options
Employee, director and non-employee stock-based compensation expense recognized
Weighted average fair value of options granted (in dollars per share)	$ 7.44
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	6 years	6 years
Expected volatility (as a percent)	75.20%
Risk-free interest rate (as a percent)	2.01%	2.19%
Expected dividend yield (as a percent)	0.00%	0.00%
Total unrecognized compensation expense, net of estimated forfeitures	4,800,000
Period to recognize total unrecognized compensation expense	3 years 6 months
Options \| Minimum
Weighted average assumptions for estimated fair value of employee stock options
Expected volatility (as a percent)		75.20%
Options \| Maximum
Weighted average assumptions for estimated fair value of employee stock options
Expected volatility (as a percent)		86.70%
ESPP
Weighted average assumptions for estimated fair value of employee stock options
Expected volatility (as a percent)	70.60%
Expected dividend yield (as a percent)	0.00%
ESPP \| Minimum
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	6 months
Risk-free interest rate (as a percent)	0.07%
ESPP \| Maximum
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	2 years
Risk-free interest rate (as a percent)	0.46%
General and administrative
Employee, director and non-employee stock-based compensation expense recognized
Total employee, director and non-employee stock-based compensation expense	128,000	3,000
Research and development
Employee, director and non-employee stock-based compensation expense recognized
Total employee, director and non-employee stock-based compensation expense	$ 150,000	$ 2,000

Collaboration Research and Licensing Agreements (Details) (USD $)	3 Months Ended		1 Months Ended	3 Months Ended		1 Months Ended	3 Months Ended	1 Months Ended	3 Months Ended		1 Months Ended	12 Months Ended		1 Months Ended	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2010 Collaboration and Option Agreement Amgen, Inc.	Mar. 31, 2014 Collaboration and Option Agreement Amgen, Inc.	Mar. 31, 2013 Collaboration and Option Agreement Amgen, Inc.	Jul. 31, 2013 License Agreement Merck Sharp & Dohme Corp.	Mar. 31, 2014 License Agreement Merck Sharp & Dohme Corp.	Jan. 31, 2013 Option and license agreement Alexion Pharmaceuticals, Inc. item	Mar. 31, 2014 Option and license agreement Alexion Pharmaceuticals, Inc.	Mar. 31, 2013 Option and license agreement Alexion Pharmaceuticals, Inc.	Jan. 31, 2013 Option and license agreement Alexion Pharmaceuticals, Inc. Maximum	Dec. 31, 2009 2009 Research License and Commercialization Agreement CSL Limited item	Dec. 31, 2009 2009 Research License and Commercialization Agreement CSL Limited Maximum item	May 31, 2013 May 2013 Research License and Commercialization Agreement CSL Limited item	Mar. 31, 2014 May 2013 Research License and Commercialization Agreement CSL Limited	Mar. 31, 2013 May 2013 Research License and Commercialization Agreement CSL Limited
Collaboration research and licensing agreements
Option term after delivery of the data from a Phase 2 proof-of-concept (POC) clinical trial			90 days
Nonrefundable upfront payment			$ 11,000,000			$ 1,000,000		$ 3,000,000				$ 750,000		$ 2,500,000
Annual maintenance fees						500,000		500,000
Estimated term of service period of research and development services			72 months
Portion of nonrefundable upfront payment allocated to option			0			0						0
Milestone payment received					2,000,000
Revenue recognized	2,184,000	1,345,000		600,000	600,000		500,000		300,000	100,000					700,000	100,000
Deferred revenue				6,300,000			0		2,300,000						0
Number of different target programs								6
Research license term								5 years				5 years
Additional research term								3 years
Extension fee								2,000,000
Annual maintenance fees payable during any extension of research term								1,000,000
Option fee								4,000,000
Milestone payment to be received for first product upon achievement of certain development, regulatory and commercial milestones											$ 66,500,000
Number of technologies to which research license is provided												1
Number of commercial options													5	4

Summary of Significant Accounting Policies (Details 4)	3 Months Ended
Summary of Significant Accounting Policies (Details 4)	Mar. 31, 2014
Acquired licenses \| Minimum
Patents, licenses, and other intangible assets
Estimated economic life	5 years
Acquired licenses \| Maximum
Patents, licenses, and other intangible assets
Estimated economic life	25 years
Patents \| Minimum
Patents, licenses, and other intangible assets
Estimated economic life	13 years
Patents \| Maximum
Patents, licenses, and other intangible assets
Estimated economic life	20 years