Document and Entity Information	3 Months Ended
Document and Entity Information	Sep. 30, 2014	Nov. 06, 2014
Document and Entity Information
Entity Registrant Name	Xencor Inc
Entity Central Index Key	0001326732
Document Type	10-Q
Document Period End Date	Sep. 30, 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		31,395,626
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

Condensed Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets
Cash	$ 60,923	$ 77,975
Accounts receivable	20	59
Prepaid expenses and other current assets	162	60
Total current assets	61,105	78,094
Property and equipment
Computers, software and equipment	4,053	3,514
Furniture and fixtures	97	89
Leasehold improvements	3,083	3,081
Less accumulated depreciation and amortization	(6,489)	(6,377)
Property and equipment, net	744	307
Other assets
Patents, licenses, and other intangible assets, net	8,957	8,814
Other assets	60	100
Total other assets	9,017	8,914
Total assets	70,866	87,315
Current liabilities
Accounts payable	2,098	2,633
Accrued expenses	1,764	1,393
Current portion of deferred revenue	6,066	3,444
Current portion of capital lease obligations	2	9
Total current liabilities	9,930	7,479
Deferred revenue, less current portion	1,227	6,302
Capital lease obligations, less current portion		1
Total liabilities	11,157	13,782
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value: 200,000,000 authorized shares at September 30, 2014 and December 31, 2013; 31,395,626 issued and outstanding at September 30, 2014 and 31,354,467 issued and outstanding shares at December 31, 2013	314	314
Additional paid-in capital	302,039	300,790
Accumulated deficit	(242,644)	(227,571)
Total stockholders' equity	59,709	73,533
Total liabilities and stockholders' equity	$ 70,866	$ 87,315

Condensed Balance Sheets (Parenthetical) (USD $)	Sep. 30, 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	31,395,626	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		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenue
Collaborations, licenses and milestones	$ 848	$ 3,162	$ 3,856	$ 8,428
Operating expenses
Research and development	4,953	4,163	13,464	12,857
General and administrative	2,182	842	5,499	2,381
Total operating expenses	7,135	5,005	18,963	15,238
Loss from operations	(6,287)	(1,843)	(15,107)	(6,810)
Other income (expenses)
Interest income	2	4	31	7
Interest expense	(2)		(7)	(1,212)
Other (expense) income	9	4	10	15
Loss on settlement of notes				(48,556)
Total other income (expense), net	9	8	34	(49,746)
Net loss	(6,278)	(1,835)	(15,073)	(56,556)
Deemed contribution (distribution) on exchange of preferred stock		(2,349)		144,765
Net income (loss) attributable to common stockholders	$ (6,278)	$ (4,184)	$ (15,073)	$ 88,209
Net income (loss) per share attributable to common shareholders:
Basic (in dollars per share)	$ (0.20)	$ (57.87)	$ (0.48)	$ 1,220.01
Diluted (in dollars per share)	$ (0.20)	$ (57.87)	$ (0.48)	$ (4.10)
Weighted average shares used to compute net loss per share attributable to common stockholders:
Basic (in shares)	31,395,626	72,302	31,376,502	72,302
Diluted (in shares)	31,395,626	72,302	31,376,502	13,794,138

Condensed Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities
Net loss	$ (15,073)	$ (56,556)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	621	433
Stock-based compensation	1,110	54
Abandonment of capitalized intangible assets	496	241
Gain on disposal of assets	(1)	(16)
Accrued interest on convertible promissory notes (See Note 3)		1,211
Loss on exchange of notes for preferred stock		48,556
Changes in operating assets and liabilities:
Accounts receivable	40	354
Prepaid expenses and other assets	(62)	(981)
Accounts payable	(536)	2,046
Accrued expenses	372	(497)
Deferred revenue	(2,454)	3,850
Net cash used in operating activities	(15,487)	(1,305)
Cash flows from investing activities
Purchase of intangible assets	(1,137)	(1,147)
Purchase of property and equipment	(560)	(136)
Proceeds from sale of property and equipment	1	16
Net cash used in investing activities	(1,696)	(1,267)
Cash flows from financing activities
Proceeds from issuance of common stock upon exercise of stock awards	8
Proceeds from issuance of common stock under the Employee Stock Purchase Plan	130
Proceeds from the sale of Series A-1 preferred		10,000
Preferred stock issuance cost		(116)
Payments on capital lease obligations	(7)	(3)
Net cash provided by financing activities	131	9,881
Net increase (decrease) in cash	17,052	(7,309)
Cash, beginning of period	77,975	2,312
Cash, end of period	$ 60,923	$ 9,621

Description of Business	9 Months Ended
Description of Business	Sep. 30, 2014
Description of Business
Description of Business	Xencor, Inc. Notes to Condensed Financial Statements September 30, 2014 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 and San Diego, California. We operate in one segment. Unaudited Interim Financial Information The accompanying unaudited interim financial statements for Xencor, Inc. have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. 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, 2014. The accompanying Condensed Financial Statements do not include all the disclosures required by generally accepted accounting principles in the United States of America (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

9 Months Ended

Sep. 30, 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, impairment of long-lived 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, accounts payable and accrued expenses. The fair value of cash, trade accounts receivable, accounts payable and accrued expenses closely approximate their carrying value due to their short maturities.

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.

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


	September 30, 2014				September 30, 2013
	Total				Total
	Fair Value		Level 1		Fair Value		Level 1

Money Market Funds	$	—	$	—	$	6.9	$	6.9

There were no transfers between Level 1, Level 2 or Level 3 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 issuable under options, convertible preferred stock and our 2013 Employee Stock Purchase Plan (ESPP) are not included in the diluted net loss per common share calculation where the inclusion of such shares would have had an antidilutive effect. The unaudited diluted (loss) income per share calculation assumes the conversion of outstanding shares of convertible preferred stock into common stock using the as-if converted method.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(in thousands, except
	per share data)
Basic numerator:
Net loss	$	(6,278)	$	(1,835)	$	(15,073)	$	(56,556)
Deemed contribution (dividend) on exchange of preferred stock		—		(2,349)		—		144,765
Net income (loss) attributable to common stockholders for basic income (loss) per share	$	(6,278)	$	(4,184)	$	(15,073)	$	88,209
Denominator:
Weighted-average common shares outstanding		31,395,626		72,302		31,376,502		72,302
Basic net income (loss) per common share	$	(0.20)	$	(57.87)	$	(0.48)	$	1,220.01


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(in thousands, except
	per share data)
Diluted numerator:
Net income (loss) attributable to common stockholders for basic income (loss) per share	$	(6,278)	$	(4,184)	$	(15,073)	$	88,209
Deemed contribution		—		—		—		(144,765)
Net loss attributable to common stockholders for diluted net loss per share	$	(6,278)	$	(4,184)	$	(15,073)	$	(56,556)
Denominator:
Weighted-average common shares outstanding used in computing basic net income (loss)		31,395,626		72,302		31,376,502		72,302
Dilutive effect of conversion of convertible preferred stock		—		—		—		13,721,836
		31,395,626		72,302		31,376,502		13,794,138
Diluted net loss per common share	$	(0.20)	$	(57.87)	$	(0.48)	$	(4.10)

The following shares of outstanding potentially dilutive securities have been excluded from the calculation of diluted net loss per common share as the effect of including such securities would have been antidilutive.


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
	(in thousands)		(in thousands)
Employee stock purchase plan shares	34	—	34	—
Options to purchase common stock	1,361	1,189	1,361	1,189
	1,395	1,189	1,395	1,189

The loss for the three months ended September 30, 2013 was adjusted, for purposes of the diluted net loss per share calculation, to reflect the deemed dividend from the sale of Series A-1 convertible preferred stock of $2.35 million and the loss for the nine months ended September 30, 2013 was adjusted, for purposes of the diluted net income per share calculation, to reflect the deemed contribution from the exchange of convertible preferred stock of $148.1 million and a deemed dividend from the sale of Series A-1 convertible preferred stock of $3.35 million (See Note 3).`

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 element’s 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 into preclinical or clinical development, upon submission for marketing approval of a covered product with regulatory authorities, upon receipt of 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 ESPP. Stock-based compensation cost related to employees and directors is measured at the grant date, based on the fair-value 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 published surveys of employee retention rates of similar peer companies 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, directors and independent contractors of approximately $1,110,000 and $54,000 for the nine months ended September 30, 2014 and 2013, respectively and approximately $491,000 and $44,000 for the three months ended September 30, 2014 and 2013, respectively.

Stock based compensation expense for shares issued under our ESPP is based on the fair value of the shares at the beginning of the purchase period. 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 estimated 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 September 30, 2014 approximated $60 million.

A significant portion of our revenue was earned from four partners for the nine months ended September 30, 2014 and from five partners for the nine months ended September 30, 2013. The following table represents the amounts (in millions) and the percentage of all significant revenue earned in the periods indicated:


	Three Months Ended September 30,
	2014				2013
	Amounts		Percentages		Amounts		Percentages
Alexion	$	0.2	33.3	%	$	0.3	7.9	%
Amgen		0.6	66.7	%		0.6	17.7	%
MorphoSys		—	—	%		—	—	%
CSL		—	—	%		1.3	42.3	%
Merck		—	—	%		1.0	31.6	%
Other		—	—	%		—	0.5	%


	Nine Months Ended September 30,
	2014				2013
	Amounts		Percentages		Amounts		Percentages
Alexion	$	0.8	19.4	%	$	0.7	7.9	%
Amgen		1.7	43.5	%		1.7	20.0	%
MorphoSys		—	—	%		3.0	35.8	%
CSL		0.7	18.4	%		2.0	23.9	%
Merck		0.5	13.6	%		1.0	11.9	%
Other		0.2	5.1	%		—	0.5	%

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.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which establishes principles for reporting revenue and cash flows arising from an entity’s contracts with customers. The new pronouncement is effective for reporting periods beginning after December 15, 2016 and will replace most of the existing revenue recognition guidance within the United States GAAP. The new pronouncement permits the use of either the retroactive or cumulative effect transition method. Early adoption is not permitted.

The Company is evaluating the effect that ASU 2014-09 will have on its financial statements and related disclosures.

Convertible Promissory Notes and Conversion of Convertible Preferred Stock	9 Months Ended
	Sep. 30, 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 In 2009 and 2010, the Company issued a total of $15.1 million in convertible promissory notes (the Notes) to existing investors. The Notes carried an 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 Notes were exchanged for Series A-1 convertible preferred stock. Effective as of June 13, 2013, the total outstanding principal due on the Notes was exchanged for 45,902,321 shares of Series A-1 convertible preferred stock, 5,303,597 of which were subsequently converted into 1,766,097 shares of Series A-2 preferred stock. We determined that the per share value of the series A-1 convertible preferred stock issued was $1.54 and the total fair value of the issued shares under the Note Conversion Agreement was $70.7 million and we recognized a loss on the exchange of $48.6 million for the difference in the fair value of the Series A-1 convertible preferred stock and the carrying value of the Notes as of June 13, 2013. The $48.6 million loss is reported on our Statement of Operations as a Loss on Settlement of Notes as an Other Income (Expense) for the nine months ended September 30, 2013. Associated transaction costs of $41,000 related to the exchange were expensed. In June 2013 after the exchange of the Notes, all of the outstanding shares of Series A-E convertible preferred stock were exchanged for an aggregate of 1,977,137 shares of Series A-1 convertible preferred stock, 257,409 of which were subsequently converted into 85,717 shares of Series A-2 convertible preferred stock. We recorded a deemed contribution to equity of $140.6 million equal to the difference in the fair value of the shares issued and the carrying value of the existing shares of Series A-E convertible preferred stock. We record issuance costs related to our preferred stock sales as a reduction to additional paid-in capital at the time the securities are issued. The deemed contribution was reduced by $3.0 million of issuance costs. We determined that the value of the series A-2 convertible preferred stock to be $0.58 per share. A total of 1,851,814 shares of Series A-2 convertible preferred stock with a fair value of $1.1 million were issued in exchange for 5,561,006 shares of Series A-1 convertible preferred stock with the fair value of $8.6 million. We recognized a deemed contribution of $7.5 million for the difference in the fair value of the shares of Series A-2 convertible preferred stock issued in exchange for the shares of Series A-1 convertible preferred stock. On June 26, 2013, we sold 5,586,510 shares of Series A-1 convertible preferred stock to existing stockholders at a purchase price of $1.36 per share for an aggregate purchase price of $7.6 million. We determined that the fair value of the shares sold in June 2013 to be $8.6 million and we recorded a deemed dividend of $1.0 million for the difference in the sales price of the Series A-1 convertible preferred stock and the fair value of the shares. The $40,000 of transaction costs related to the sale was recorded against Additional Paid-in Capital and the shares of A-1 convertible preferred stock issued were recorded at their fair value on our balance sheet as of September 30, 2013.We determined that the fair value of the Series A-1 and Series A-2 convertible preferred stock as of June 26, 2013 to be $1.54 per share and $0.58 per share, respectively. On September 23, 2013, we sold 1,766,430 additional shares of Series A-1 convertible preferred stock for gross proceeds of $2.4 million at a purchase price of $1.36 per share. We determined the fair value of the shares of Series A-1 convertible preferred stock sold to be $4.7 million and we recorded a deemed dividend of $2.3 million for the difference in the sales price of the Series A-1 convertible preferred stock and the fair value of the shares. Transaction costs of $34,000 related to the sale were recorded against Additional Paid in Capital and the shares of Series A-1 convertible preferred stock were recorded at their fair value on our balance sheet as of September 30, 2013. 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

9 Months Ended

Sep. 30, 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 (the 2000 Plan), and the 2010 Equity Incentive Plan (the 2010 Plan, and collectively with the 2000 Plan the Prior Plans). The 2000 Plan terminated August 2010. In October 2013, our Board of Directors approved the 2013 Equity Incentive plan (the 2013 Plan) and in November 2013 our stockholders approved 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 September 30, 2014, the total number of shares of common stock available for issuance under the 2013 Plan was 5,413,225, 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 September 30, 2014 a total of 1,034,000 options had been issued under the 2013 Plan.

In November 2013, our Board of Directors and stockholders approved the 2013 Employee Stock Purchase Plan (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 September 30, 2014, we have issued a total of 27,927 shares of common stock under the ESPP.

The following table summarizes option activity under our stock plans and related information:


		Weighted		Weighted
		Average		Average
	Number of	Exercise		Remaining		Aggregate
	Shares subject	Price		Contractual		Intrinsic
	to outstanding	(Per		Term		Value
	options	Share)		(in years)		(in thousands)
Balances at December 31, 2013	1,794,214	$	1.66
Options granted	1,019,021	$	10.99
Options forfeited	(500)	$	11.05
Options exercised	(13,195)	$	0.59
Balance at September 30, 2014	2,799,540	$	5.06		6.64	$	13,650
Exercisable	1,360,825	$	0.95		3.81	$	11,381

We calculate the intrinsic value as the difference between the exercise price of the options and the closing price of common stock of $9.31 per share as of September 30, 2014.

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
General and administrative	$	276	$	20	$	575	$	26
Research and development		215		24		535		28
	$	491	$	44	$	1,110	$	54

Weighted average fair value of options granted during the nine-month period ended September 30, 2014 and 2013 was $7.11 and $4.25 per share, respectively. There were 502,062 options granted during the period ended September 30, 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 nine months ended September 30, 2014 and 2013:


	Options				Options
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Expected term (years)	6.0		5.4		6.0		5.4
Expected volatility	77.4	%	56.8	%	77.4	%	56.8	%
Risk-free interest rate	2.02	%	1.96	%	2.02	%	1.96	%
Expected dividend yield	—	%	—	%	—	%	—	%


	ESPP				ESPP
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014			2013	2014		2013
Expected term (years)		0.5 - 2.0		—	0.5 - 2.0		—
Expected volatility		70.6	%	—	70.6	%	—
Risk-free interest rate		.06% - .46	%	—	.06% - .46	%	—
Expected dividend yield		—	%	—	—	%	—

At September 30, 2014, the Company had $7.6 million of total unrecognized compensation expense, net of estimated forfeitures, related to outstanding stock options that will be recognized over the next 3.57 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	9 Months Ended
Collaboration Research and Licensing Agreements	Sep. 30, 2014
Collaboration Research and Licensing Agreements
Collaboration Research and Licensing Agreements	5. Collaboration Research and Licensing Agreements Following is a summary description of the arrangements that generated revenue in the nine-month period ended September 30, 2014 and September 30, 2013. Amgen, Inc. In December 2010, we entered into a Collaboration and Option Agreement (Collaboration Agreement) with Amgen, Inc. (Amgen), pursuant to which we agreed to collaborate with Amgen on development of XmAb5871 in rheumatoid arthritis (“RA”) through completion of a Phase 2 proof-of-concept (“POC”) trial. The overall plan of development through the Phase 2 POC trial was agreed to by both companies in the Collaboration Agreement. During development and through completion of the POC trial, we would continue to own and would control and pay for all development activities. After completion of the POC trial, we would deliver a data package to Amgen and they would have 90 days to review and decide whether to exercise an option to obtain worldwide rights to XmAb5871. Upon exercise of the option and payment of a $50 million option fee, Amgen would own all rights to the compound and be responsible for further development. In addition to the option fee, upon exercise of the option we would be eligible to receive $437 million in future development, regulatory and sales milestones as Amgen advanced XmAb5871 into later stages of development. We received a nonrefundable upfront payment of $11.0 million upon execution of the Collaboration Agreement and a $2 million milestone in January 2013 upon the initiation of a Phase 1b clinical trial. We were also eligible to receive an additional $12 million in pre-option payments upon continued development of XmAb5871 through completion of the Phase 2 POC trial and delivery of the clinical study reports to Amgen. During each of the three and nine months ended September 30, 2014 and September 30, 2013 we recognized $0.6 million and $1.7 million of revenue under this arrangement, respectively. As of September 30, 2014, we have deferred revenue related to this agreement of $5.2 million. In October 2014, we entered into an agreement with Amgen to terminate the Collaboration Agreement pursuant to which all worldwide rights to develop and commercialize XmAb5871 reverted back to us. Our obligations to continue development of XmAb5871 under the terms of the Collaboration Agreement terminated effective as of the date of the termination agreement. As a result of and effective as of the date of the termination agreement, all of Amgen’s rights to XmAb5871 terminated including the right to exercise an exclusive option to acquire the worldwide rights to XmAb5871. Amgen’s obligations to make any further payments to us are also terminated. In connection with the termination, we granted Amgen a right of first negotiation (ROFN) to obtain an exclusive license to develop and commercialize any XmAb5871 product. The ROFN requires us to notify Amgen if we decide to pursue a licensing transaction with a third party involving XmAb5871. Upon receipt of the notification, Amgen will have a limited time to review the data from XmAb5871 and enter into negotiations to obtain an exclusive license to develop and commercialize any future XmAb5871 product. The ROFN will expire upon the earlier of: (1) October 27, 2019, (2) initiation by us of a Phase 3 clinical trial with XmAb5871 or (3) the transfer or sale to a third party of substantially all of our business. We have determined that the termination results in a cancellation of all our obligations to Amgen under the Collaboration Agreement. We have evaluated the terms of the ROFN and determined that it has de minimis value because Amgen’s rights under the ROFN are limited to an exclusive negotiating period of a short duration and there is no bargain element in the ROFN. Therefore, as result of the termination, we have classified the entire $5.2 million in deferred revenue related to the Amgen arrangement as a current liability as of September 30, 2014. Since we have no remaining obligation to Amgen as of the date of the termination agreement, the $5.2 million in deferred revenue will be recognized as revenue in the fourth quarter of this year. See Note 6, Subsequent Events for additional information. 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 $0.5 million milestone payment to us. During the three and nine months ended September 30, 2013, we recognized $1.0 million of revenue under the arrangement and during the three and nine months ended September 30, 2014 we recognized $25,000 and $0.5 million of revenue respectively under this arrangement. As of September 30, 2014, there is $0.1 million of 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 the third quarter of 2014, Alexion initiated a Phase 1 clinical trial with an undisclosed molecule to be used against an undisclosed target. It is the first human clinical trial with a molecule incorporating our Xtend Fc Domain technology. During the three and nine months ended September 30, 2014 we recognized $0.2 million and $0.8 million of revenue respectively under this arrangement and during the three and nine months ended September 30, 2013 we recognized $0.3 million and $0.7 million of revenue respectively under this arrangement. As of September 30, 2014, we have deferred revenue related to this arrangement of $1.8 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. 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 were recognized into income over the remaining period of the research term. During the three and nine months ended September 30, 2014, we recognized zero and $0.7 million of revenue respectively under this arrangement and during the three and nine months ended September 30, 2013 we recognized $1.3 million and $2.0 million of revenue respectively under this arrangement. As of September 30, 2014, we have no deferred revenue related to this arrangement. MorphoSys Ag In September 2010, we entered into a Collaboration and License agreement with MorphoSys AG (MorphoSys), which we subsequently amended in March 2012. The agreement provided us an upfront payment in exchange for an exclusive worldwide license to our patents and know-how to research, develop and commercialize our XmAb5574 product candidate with the right to sublicense under certain conditions and we are eligible to receive future milestones and royalties upon further development by MorphoSys of the compound. Under the agreement, we agreed to collaborate with Morphosys to develop and commercialize XmAb5574. We determined that the arrangement was one with multiple deliverables and we identified the multiple elements in the agreement as the license of XmAb5574/MOR 208 and the research and development services provided by us for the initial Phase 1 clinical trial. We determined that the future milestone payments were substantive and contingent and we did not allocate any of the upfront consideration to these. In April and May 2013, MorphoSys initiated two phase 2 clinical trials and we received a milestone payment of $3 million. We have recognized the payment under the milestone method and recorded it into income during the period that the milestone event occurred. During the three and nine month periods ended September 30, 2014 we recognized zero revenue under this arrangement, respectively. During the three and nine month periods ended September 30, 2013 we recognized zero and $3.0 million of revenue under this arrangement respectively. As of September 30, 2014, we have no deferred revenue related to this arrangement.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2014
Subsequent Events [Abstract]
Subsequent Events	6. Subsequent Events Termination of Amgen Collaboration Agreement Pursuant to a request by us, Amgen agreed to terminate our Collaboration Agreement with them effective October 27, 2014. The provisions of the termination are governed by the Collaboration Agreement as termination for convenience by Amgen. As a result of the termination, all obligations by each Company are terminated as of the effective date. All rights to XmAb5871 are returned to us. Amgen’s rights to exercise an option to obtain exclusive worldwide rights to XmAb5871 are also terminated. Amgen’s obligations to make any additional payment to us, including pre-option milestone payments also terminate. In connection with the termination we granted Amgen a ROFN to obtain an exclusive license to develop and commercialize any future XmAb5871 product. We requested a termination of the Collaboration Agreement from Amgen to allow us to advance development of XmAb5871 in other indications. Under the Collaboration Agreement, we were obligated to continue development of the compound in RA including completing a Phase 2 POC trial. We have announced plans not to pursue a Phase 2 POC trial in RA and to initiate development of XmAb5871 in treating IgG4-related diseases and are also considering alternative autoimmune diseases. In connection with the termination we granted Amgen a ROFN which provides that we will notify Amgen if we decide to pursue a licensing transaction with a third party involving XmAb5871. Upon notification by us, Amgen has a limited period to review the XmAb5871 data and enter into negotiations to obtain an exclusive license to develop and commercialize any future XmAb5871 product. The ROFN will expire upon the earlier of October 27, 2019, initiation by us of a Phase 3 clinical trial with XmAb5871 or, upon the acquisition of the Company. We have evaluated the terms of the ROFN and determined that it does not create a separate deliverable to Amgen. The ROFN does not include a bargain or discount and the Amgen’s exclusive negotiation period is limited. Accordingly, we have determined that the potential value of the ROFN is de minimis. Since our obligations to Amgen under the Collaboration Agreement are terminated and we have determined that the ROFN is not a separate deliverable, the $5.2 million balance in deferred revenue at September 30, 2014 will be recognized in revenue in the fourth quarter of 2014 when the termination became effective.

Summary of Significant Accounting Policies (Polices)

9 Months Ended

Sep. 30, 2014

Summary of Significant Accounting Policies

Use of Estimates

Reverse Stock Split

Research and Development Expenses

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.

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


	September 30, 2014				September 30, 2013
	Total				Total
	Fair Value		Level 1		Fair Value		Level 1

Money Market Funds	$	—	$	—	$	6.9	$	6.9

There were no transfers between Level 1, Level 2 or Level 3 during the periods presented.

Net Loss Per Share of Common Stock


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(in thousands, except
	per share data)
Basic numerator:
Net loss	$	(6,278)	$	(1,835)	$	(15,073)	$	(56,556)
Deemed contribution (dividend) on exchange of preferred stock		—		(2,349)		—		144,765
Net income (loss) attributable to common stockholders for basic income (loss) per share	$	(6,278)	$	(4,184)	$	(15,073)	$	88,209
Denominator:
Weighted-average common shares outstanding		31,395,626		72,302		31,376,502		72,302
Basic net income (loss) per common share	$	(0.20)	$	(57.87)	$	(0.48)	$	1,220.01


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(in thousands, except
	per share data)
Diluted numerator:
Net income (loss) attributable to common stockholders for basic income (loss) per share	$	(6,278)	$	(4,184)	$	(15,073)	$	88,209
Deemed contribution		—		—		—		(144,765)
Net loss attributable to common stockholders for diluted net loss per share	$	(6,278)	$	(4,184)	$	(15,073)	$	(56,556)
Denominator:
Weighted-average common shares outstanding used in computing basic net income (loss)		31,395,626		72,302		31,376,502		72,302
Dilutive effect of conversion of convertible preferred stock		—		—		—		13,721,836
		31,395,626		72,302		31,376,502		13,794,138
Diluted net loss per common share	$	(0.20)	$	(57.87)	$	(0.48)	$	(4.10)


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
	(in thousands)		(in thousands)
Employee stock purchase plan shares	34	—	34	—
Options to purchase common stock	1,361	1,189	1,361	1,189
	1,395	1,189	1,395	1,189

Revenue Recognition

Long-Lived Assets

Stock-Based Compensation

Concnetrations of Risk

Concentrations of Risk


	Three Months Ended September 30,
	2014				2013
	Amounts		Percentages		Amounts		Percentages
Alexion	$	0.2	33.3	%	$	0.3	7.9	%
Amgen		0.6	66.7	%		0.6	17.7	%
MorphoSys		—	—	%		—	—	%
CSL		—	—	%		1.3	42.3	%
Merck		—	—	%		1.0	31.6	%
Other		—	—	%		—	0.5	%


	Nine Months Ended September 30,
	2014				2013
	Amounts		Percentages		Amounts		Percentages
Alexion	$	0.8	19.4	%	$	0.7	7.9	%
Amgen		1.7	43.5	%		1.7	20.0	%
MorphoSys		—	—	%		3.0	35.8	%
CSL		0.7	18.4	%		2.0	23.9	%
Merck		0.5	13.6	%		1.0	11.9	%
Other		0.2	5.1	%		—	0.5	%

Patents, Licenses, and Other Intangible Assets

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2014

Summary of Significant Accounting Policies

Schedule of assets recorded at fair value


	September 30, 2014				September 30, 2013
	Total				Total
	Fair Value		Level 1		Fair Value		Level 1

Money Market Funds	$	—	$	—	$	6.9	$	6.9

Schedule of calculation of basic loss per share


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(in thousands, except
	per share data)
Basic numerator:
Net loss	$	(6,278)	$	(1,835)	$	(15,073)	$	(56,556)
Deemed contribution (dividend) on exchange of preferred stock		—		(2,349)		—		144,765
Net income (loss) attributable to common stockholders for basic income (loss) per share	$	(6,278)	$	(4,184)	$	(15,073)	$	88,209
Denominator:
Weighted-average common shares outstanding		31,395,626		72,302		31,376,502		72,302
Basic net income (loss) per common share	$	(0.20)	$	(57.87)	$	(0.48)	$	1,220.01

Schedule of calculation of diluted loss per share


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(in thousands, except
	per share data)
Diluted numerator:
Net income (loss) attributable to common stockholders for basic income (loss) per share	$	(6,278)	$	(4,184)	$	(15,073)	$	88,209
Deemed contribution		—		—		—		(144,765)
Net loss attributable to common stockholders for diluted net loss per share	$	(6,278)	$	(4,184)	$	(15,073)	$	(56,556)
Denominator:
Weighted-average common shares outstanding used in computing basic net income (loss)		31,395,626		72,302		31,376,502		72,302
Dilutive effect of conversion of convertible preferred stock		—		—		—		13,721,836
		31,395,626		72,302		31,376,502		13,794,138
Diluted net loss per common share	$	(0.20)	$	(57.87)	$	(0.48)	$	(4.10)

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


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
	(in thousands)		(in thousands)
Employee stock purchase plan shares	34	—	34	—
Options to purchase common stock	1,361	1,189	1,361	1,189
	1,395	1,189	1,395	1,189

Schedule of percentage of all significant revenue earned


	Three Months Ended September 30,
	2014				2013
	Amounts		Percentages		Amounts		Percentages
Alexion	$	0.2	33.3	%	$	0.3	7.9	%
Amgen		0.6	66.7	%		0.6	17.7	%
MorphoSys		—	—	%		—	—	%
CSL		—	—	%		1.3	42.3	%
Merck		—	—	%		1.0	31.6	%
Other		—	—	%		—	0.5	%


	Nine Months Ended September 30,
	2014				2013
	Amounts		Percentages		Amounts		Percentages
Alexion	$	0.8	19.4	%	$	0.7	7.9	%
Amgen		1.7	43.5	%		1.7	20.0	%
MorphoSys		—	—	%		3.0	35.8	%
CSL		0.7	18.4	%		2.0	23.9	%
Merck		0.5	13.6	%		1.0	11.9	%
Other		0.2	5.1	%		—	0.5	%

- Definition

Tabular disclosure of the effect of income (loss) on an entity's diluted earnings per share.

+ 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)

9 Months Ended

Sep. 30, 2014

Equity Incentive Plans

Summary of stock option activity


		Weighted		Weighted
		Average		Average
	Number of	Exercise		Remaining		Aggregate
	Shares subject	Price		Contractual		Intrinsic
	to outstanding	(Per		Term		Value
	options	Share)		(in years)		(in thousands)
Balances at December 31, 2013	1,794,214	$	1.66
Options granted	1,019,021	$	10.99
Options forfeited	(500)	$	11.05
Options exercised	(13,195)	$	0.59
Balance at September 30, 2014	2,799,540	$	5.06		6.64	$	13,650
Exercisable	1,360,825	$	0.95		3.81	$	11,381

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
General and administrative	$	276	$	20	$	575	$	26
Research and development		215		24		535		28
	$	491	$	44	$	1,110	$	54

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


	Options				Options
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Expected term (years)	6.0		5.4		6.0		5.4
Expected volatility	77.4	%	56.8	%	77.4	%	56.8	%
Risk-free interest rate	2.02	%	1.96	%	2.02	%	1.96	%
Expected dividend yield	—	%	—	%	—	%	—	%

Schedule of weighted average assumptions used for estimation of fair value of ESPP


	ESPP				ESPP
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014			2013	2014		2013
Expected term (years)		0.5 - 2.0		—	0.5 - 2.0		—
Expected volatility		70.6	%	—	70.6	%	—
Risk-free interest rate		.06% - .46	%	—	.06% - .46	%	—
Expected dividend yield		—	%	—	—	%	—

Description of Business (Details) (USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended	3 Months Ended
	Dec. 31, 2013	Sep. 30, 2014 segment
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	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Reverse Stock Split and Conversion of Preferred Stock
Reverse stock split ratio	3.1
Number of shares issued for conversion of each share of preferred stock			16,620,274
Fair value of financial instruments
Transfers between Level 3, Level 2 and, Level 1		$ 0		$ 0
Money Market Funds
Fair value of financial instruments
Assets recorded at fair value				$ 6,900,000

Summary of Significant Accounting Policies (Details 2) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Basic numerator:
Net loss	$ (6,278,000)	$ (1,835,000)	$ (15,073,000)	$ (56,556,000)
Deemed contribution (distribution) on exchange of preferred stock		(2,349,000)		144,765,000
Net income (loss) attributable to common stockholders for basic net income (loss) per share	(6,278,000)	(4,184,000)	(15,073,000)	88,209,000
Denominator:
Weighted average common shares outstanding	31,395,626	72,302	31,376,502	72,302
Basic net income (loss) per common share (in dollars per share)	$ (0.20)	$ (57.87)	$ (0.48)	$ 1,220.01
Diluted numerator:
Net income (loss) attributable to common stockholders for basic net income (loss) per share	(6,278,000)	(4,184,000)	(15,073,000)	88,209,000
Deemed contribution				(144,765,000)
Net loss attributable to common stockholders for diluted net loss per share	(6,278,000)	(4,184,000)	(15,073,000)	(56,556,000)
Denominator
Weighted average common shares outstanding	31,395,626	72,302	31,376,502	72,302
Dilutive effect of conversion of convertible preferred stock				13,721,836
Weighted Average Number of Shares Outstanding, Diluted	31,395,626	72,302	31,376,502	13,794,138
Diluted net loss per common share	$ (0.20)	$ (57.87)	$ (0.48)	$ (4.10)
Outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share
Anti-dilutive securities (in shares)	1,395,000	1,189,000	1,395,000	1,189,000
Deemed dividend (in dollars)		2,350,000		3,350,000
Deemed contribution				148,100,000
Stock-Based Compensation
Stock-based compensation expense	$ 491,000	$ 44,000	$ 1,110,000	$ 54,000.00
Forfeiture rate (as a percent)			0.00%
Dividend yield (as a percent)			0.00%
Employee stock purchase plan
Outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share
Anti-dilutive securities (in shares)	34,000		34,000
Options to purchase common stock
Outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share
Anti-dilutive securities (in shares)	1,361,000	1,189,000	1,361,000	1,189,000

Summary of Significant Accounting Policies (Details 3) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013 item	Sep. 30, 2014	Sep. 30, 2013 item	Dec. 31, 2013
Concentrations of Risk
Amounts on deposit in excess of federally insured limits approximately	$ 60,000,000		$ 60,000,000
Concentrations of risk
Amounts	848,000	3,162,000	3,856,000	8,428,000
Number of customers		4		4
Accounts receivable	20,000		20,000		59,000
Revenue \| Customers
Concentrations of risk
Number of customers	4		4
Revenue \| Customers \| Alexion
Concentrations of risk
Amounts	200,000	300,000	800,000	700,000
Concentration risk percentage	33.30%	7.90%	19.40%	7.90%
Revenue \| Customers \| Amgen
Concentrations of risk
Amounts	600,000	600,000	1,700,000	1,700,000
Concentration risk percentage	66.70%	17.70%	43.50%	20.00%
Revenue \| Customers \| MorphoSys
Concentrations of risk
Amounts				3,000,000
Concentration risk percentage				35.80%
Revenue \| Customers \| CSL
Concentrations of risk
Amounts		1,300,000	700,000	2,000,000
Concentration risk percentage		42.30%	18.40%	23.90%
Revenue \| Customers \| Merck
Concentrations of risk
Amounts		1,000,000	500,000	1,000,000
Concentration risk percentage		31.60%	13.60%	11.90%
Revenue \| Customers \| Other
Concentrations of risk
Amounts			$ 200,000
Concentration risk percentage		0.50%	5.10%	0.50%

Convertible Promissory Notes and Conversion of Convertible Preferred Stock (Details) (Convertible Promissory Notes, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Jun. 30, 2013
Convertible Promissory Notes
Convertible Promissory Notes
Amount of debt issued	$ 15.1	$ 15.1
Interest rate (as a percent)			12.50%

Convertible Promissory Notes and Conversion of Convertible Preferred Stock (Details 2) (USD $)	3 Months Ended	9 Months Ended		0 Months Ended						3 Months Ended	6 Months Ended			0 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2013	Jun. 26, 2013 Series A2 Converted To Series A1 Member	Jun. 13, 2013 Preferred Stock [Member]	Sep. 23, 2013 Series A1 Convertible Preferred Stock Member	Jun. 26, 2013 Series A1 Convertible Preferred Stock Member	Jun. 26, 2013 Series A1 Convertible Preferred Stock Member	Jun. 13, 2013 Series A1 Convertible Preferred Stock Member	Sep. 30, 2013 Series A1 Convertible Preferred Stock Member	Jun. 30, 2013 Series A1 Convertible Preferred Stock Member	Sep. 23, 2013 Series A1 Convertible Preferred Stock Member	Jun. 13, 2013 Series A1 Convertible Preferred Stock Member	Jun. 13, 2013 Series A1 Convertible Preferred Stock Member Converted Preferred Series AE Convertible Shares Member	Jun. 26, 2013 Series A2 Convertible Preferred Stock Member	Jun. 13, 2013 Series A2 Convertible Preferred Stock Member	Jun. 13, 2013 Series A2 Convertible Preferred Stock Member Converted Preferred Series AE Convertible Shares Member
Convertible Promissory Notes
Number of shares issued on conversion of notes									45,902,321
Number of preferred stock converted (in shares)									5,303,597					257,409
Number of stock issued upon conversion of preferred stock (in shares)			16,620,274					5,561,006					1,977,137		1,851,814	1,766,097	85,717
Loss on extinguishment of debt (in dollars)		$ (48,556,000)
Associated transaction costs (in dollars)						34,000					41,000
Deemed contribution (distribution) on exchange of preferred stock	(2,349,000)	144,765,000		7,500,000										140,600,000
Reduction in deemed contribution due to issuance cost		116,000			3,000,000					40,000
Fair value of stock issued (in dollars)								8,600,000				4,700,000	70,700,000		1,100,000
Fair value of stock converted (in dollars)								8,600,000
Convertible preferred stock issued (in shares)								5,586,510				1,766,430
Share Price								$ 1.36				$ 1.36	$ 1.54		$ 0.58
Aggregate purchase price of convertible preferred stock (in dollars)		10,000,000				2,400,000	7,600,000
Deemed dividend (in dollars)	$ 2,350,000	$ 3,350,000				$ 2,300,000				$ 1,000,000
Fair value of convertible preferred stock (in dollars per share)								$ 1.54							$ 0.58

Equity Incentive Plans (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		3 Months Ended	9 Months Ended		0 Months Ended	3 Months Ended		0 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Options to purchase common stock	Sep. 30, 2014 Options to purchase common stock	Sep. 30, 2013 Options to purchase common stock	Jan. 02, 2014 The 2013 Plan	Sep. 30, 2014 The 2013 Plan	Sep. 30, 2014 Prior Plans	Jan. 02, 2014 Employee stock purchase plan	Dec. 05, 2013 Employee stock purchase plan	Sep. 30, 2014 Employee stock purchase plan	Dec. 05, 2013 Employee stock purchase plan item	Dec. 05, 2013 Employee stock purchase plan Minimum	Dec. 05, 2013 Employee stock purchase plan Maximum
Stock-based compensation
Total number of shares of common stock available for issuance							5,413,225	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)							1,034,000
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)			1,019,021		0
Options canceled (in shares)				(500)
Options exercised (in shares)			(13,195)
Balance at the end of the period (in shares)			2,799,540	2,799,540
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)			$ 10.99
Options canceled (in dollars per share)				$ 11.05
Options exercised (in dollars per share)			$ 0.59
Balance at the end of the period (in dollars per share)			$ 5.06	$ 5.06
Awards exercisable (in shares)			1,360,825	1,360,825
Weighted-average exercise price of awards exercisable (in dollars per share)			$ 0.95	$ 0.95
Weighted-average remaining contractual life of awards outstanding	6 years 7 months 21 days
Weighted-average remaining contractual life of awards exercisable	3 years 9 months 22 days
Aggregate intrinsic value of options outstanding	$ 13,650
Aggregate intrinsic value of options exercisable	$ 11,381
Closing price of common stock (in dollars per share)			$ 9.31	$ 9.31
Common Stock, shares issued	31,395,626	31,354,467									27,927

Equity Incentive Plans (Details 2) (USD $)	3 Months Ended		9 Months Ended
Equity Incentive Plans (Details 2) (USD $)	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Employee, director and non-employee stock-based compensation expense recognized
Total employee, director and non-employee stock-based compensation expense	$ 491,000	$ 44,000	$ 1,110,000	$ 54,000.00
Weighted average assumptions for estimated fair value of employee stock options
Expected dividend yield (as a percent)			0.00%
Options to purchase common stock
Employee, director and non-employee stock-based compensation expense recognized
Weighted average fair value of options granted (in dollars per share)			$ 7.11	$ 4.25
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	6 years	5 years 4 months 24 days	6 years	5 years 4 months 24 days
Expected volatility (as a percent)	77.40%	56.80%	77.40%	56.80%
Risk-free interest rate (as a percent)	2.02%	1.96%	2.02%	1.96%
Total unrecognized compensation expense, net of estimated forfeitures	7,600,000		7,600,000
Period to recognize total unrecognized compensation expense	3 years 6 months 26 days
Employee stock purchase plan
Weighted average assumptions for estimated fair value of employee stock options
Expected volatility (as a percent)	70.60%		70.60%
Employee stock purchase plan \| Minimum
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	6 months		6 months
Risk-free interest rate (as a percent)	0.06%		0.06%
Employee stock purchase plan \| Maximum
Weighted average assumptions for estimated fair value of employee stock options
Expected term (years)	2 years		2 years
Risk-free interest rate (as a percent)	0.46%		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	276,000	20,000	575,000	26,000.00
Research and development
Employee, director and non-employee stock-based compensation expense recognized
Total employee, director and non-employee stock-based compensation expense	$ 215,000	$ 24,000	$ 535,000	$ 28,000.00

Collaboration Research and Licensing Agreements (Details) (USD $)	3 Months Ended		9 Months Ended			2 Months Ended	3 Months Ended		9 Months Ended		1 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	1 Months Ended	3 Months Ended		9 Months Ended		1 Months Ended	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		12 Months Ended		1 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	May 31, 2013 Collaboration And License Agreement Member MorphoSys item	Sep. 30, 2014 Collaboration And License Agreement Member MorphoSys	Sep. 30, 2013 Collaboration And License Agreement Member MorphoSys	Sep. 30, 2014 Collaboration And License Agreement Member MorphoSys	Sep. 30, 2013 Collaboration And License Agreement Member MorphoSys	Jan. 31, 2013 Collaboration and Option Agreement Amgen, Inc.	Dec. 31, 2010 Collaboration and Option Agreement Amgen, Inc.	Sep. 30, 2014 Collaboration and Option Agreement Amgen, Inc.	Sep. 30, 2014 Collaboration and Option Agreement Amgen, Inc.	Dec. 31, 2014 Collaboration and Option Agreement Amgen, Inc. Subsequent Event [Member]	Sep. 30, 2014 Collaboration and Option Agreement Amgen, Inc. Subsequent Event [Member]	Jul. 31, 2013 License Agreement Merck Sharp & Dohme Corp.	Sep. 30, 2014 License Agreement Merck Sharp & Dohme Corp.	Sep. 30, 2013 License Agreement Merck Sharp & Dohme Corp.	Sep. 30, 2014 License Agreement Merck Sharp & Dohme Corp.	Sep. 30, 2013 License Agreement Merck Sharp & Dohme Corp.	Jan. 31, 2013 Option and license agreement Alexion Pharmaceuticals, Inc. item	Sep. 30, 2014 Option and license agreement Alexion Pharmaceuticals, Inc.	Sep. 30, 2013 Option and license agreement Alexion Pharmaceuticals, Inc.	Sep. 30, 2014 Option and license agreement Alexion Pharmaceuticals, Inc.	Sep. 30, 2013 Option and license agreement Alexion Pharmaceuticals, Inc.	Sep. 30, 2014 2009 Research License and Commercialization Agreement CSL Limited	Sep. 30, 2013 2009 Research License and Commercialization Agreement CSL Limited	Sep. 30, 2014 2009 Research License and Commercialization Agreement CSL Limited	Sep. 30, 2013 2009 Research License and Commercialization Agreement CSL Limited	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
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
Milestone payment received						3,000,000					2,000,000									500,000
Additional pre-option payments												12,000,000
Revenue recognized	848,000	3,162,000	3,856,000	8,428,000			0	0	0	3,000,000			600,000	1,700,000	5,200,000	5,200,000		25,000	1,000,000	500,000	1,000,000		200,000	300,000	800,000	700,000	0	1,300,000	700,000	2,000,000
Deferred revenue							0		0				5,200,000	5,200,000				100,000		100,000			1,800,000		1,800,000		0		0
Current portion of deferred revenue	6,066,000		6,066,000		3,444,000								5,200,000	5,200,000
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												50,000,000										4,000,000
Milestone payment to be received for first product upon achievement of certain development, regulatory and commercial milestones												$ 437,000,000
Number of technologies to which research license is provided																															1
Number of commercial options																																5	4
Number of clinical trials initiated						2

Summary of Significant Accounting Policies (Details 4)	9 Months Ended
Summary of Significant Accounting Policies (Details 4)	Sep. 30, 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

Subsequent Events (Details) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
Subsequent Events (Details) (USD $)	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Amgen, Inc. Collaboration and Option Agreement	Sep. 30, 2014 Amgen, Inc. Collaboration and Option Agreement	Dec. 31, 2014 Subsequent Event [Member] Amgen, Inc. Collaboration and Option Agreement	Sep. 30, 2014 Subsequent Event [Member] Amgen, Inc. Collaboration and Option Agreement
Termination of collaborative arrangement
Revenue recognized	$ 848,000	$ 3,162,000	$ 3,856,000	$ 8,428,000	$ 600,000	$ 1,700,000	$ 5,200,000	$ 5,200,000