Xencor Reports Third Quarter 2022 Financial Results -- XmAb564, engineered IL-2 cytokine, is well-tolerated and generates a durable, dose-dependent and selective expansion of Tregs in single-dose, healthy volunteer study

Xencor Reports Third Quarter 2022 Financial Results

-- XmAb564, engineered IL-2 cytokine, is well-tolerated and generates a durable, dose-dependent and selective expansion of Tregs in single-dose, healthy volunteer study --

-- Management to host conference call at 4:30 p.m. ET Today --

MONROVIA, Calif.-- Nov. 7, 2022-- Xencor, Inc. (NASDAQ:XNCR), a clinical-stage biopharmaceutical company developing engineered antibodies and cytokines for the treatment of cancer and autoimmune diseases, today reported financial results for the third quarter ended September 30, 2022 and provided a review of recent business and clinical highlights.

"Xencor's XmAb technologies and protein engineering capabilities enable us to address challenging areas of biology and to continually grow our portfolio, both internally and together with our many partners. Today we presented very encouraging data from our second clinical-stage cytokine program, XmAb564, a regulatory T-cell targeting IL2-Fc fusion protein for development in autoimmune disease. The selective T-cell increases, their durability and the tolerability in our data provide us additional clinical validation for Xencor's long-acting, low-potency approach to cytokine engineering and offers a potentially differentiated profile for this autoimmune program," said Bassil Dahiyat, Ph.D., president and chief executive officer at Xencor. "In the coming weeks, we will also present new data from two additional clinical programs-for vudalimab, data from the safety run-in portion of our Phase 2 prostate cancer study at SITC and, for plamotamab, updated Phase 1 expansion data in patients with lymphoma at ASH-as well as preclinical data from emerging platforms."

Dr. Dahiyat continued, "Altogether, these updates reflect Xencor's steady commitment to the priorities we laid out at the beginning of this year: to execute on development plans for our mid-stage bispecific antibodies, vudalimab and plamotamab; to advance potency-reduced cytokines for oncology and autoimmune disease; and to expand our portfolio with novel formats enabled by our protein engineering expertise and suite of leading XmAb technologies."

Recent Portfolio Highlights

Progress Across Partnerships

Corporate: In September, Xencor appointed Nancy Valente, M.D., to its board of directors. Dr. Valente is a recognized and accomplished biotechnology executive with broad expertise in late-stage oncology clinical development, and she served a critical role for numerous product launches. She most recently served as a senior vice president at Genentech, a member of the Roche Group, and as its global head and co-lead of global product development of its oncology and hematology therapeutic area.

Xevudy is a registered trademark of the GSK group of companies.

Financial Results for the Third Quarter Ended September 30, 2022

Cash, cash equivalents, receivables and marketable debt securities totaled $654.6 million as of September 30, 2022, compared to $664.1 million on December 31, 2021. During the first nine months of 2022, the Company received royalty and milestone payments from partners of $140.9 million, which offset net spending on operations of $170.3 million through September 30, 2022.

Total revenue for the third quarter ended September 30, 2022 was $27.3 million, compared to $19.7 million for the same period in 2021. Revenues earned in the third quarter of 2022 were primarily royalties from the Alexion and Vir agreements, compared to the same period in 2021, which were primarily from the Janssen collaboration, and royalty revenue from Alexion and Vir. Revenues for the nine months ended September 30, 2022 were $143.0 million, compared to $121.1 million for the same period in 2021. Revenues for the nine-month period in 2022 were primarily from milestone revenue from Astellas and royalty revenue from Alexion, MorphoSys and Vir, compared to the same period in 2021, which were earned primarily from the collaborations with Janssen and Novartis, milestone revenue from MorphoSys and the royalties from Alexion and Vir.

Research and development (R&D) expenses for the third quarter ended September 30, 2022 were $53.3 million, compared to $50.6 million for the same period in 2021. Increased R&D spending for third quarter of 2022 compared to 2021 reflects increased spending on IL-12 and IL-18 cytokine programs offset by lower spending on CD3 programs. R&D expenses for the nine months ended September 30, 2022 were $148.1 million, compared to $141.5 million for the same period in 2021. Increased R&D spending for the first nine months of 2022 reflects additional spending on XmAb808 (B7-H3 x CD28) and cytokine programs offset by lower spending on CD3 programs.

General and administrative (G&A) expenses for the third quarter ended September 30, 2022 were $12.4 million, compared to $10.4 million for the same period in 2021. G&A expenses for the nine months ended September 30, 2022 were $34.7 million, compared to $27.5 million for the same period of 2021. Increased G&A spending for the third quarter and first nine months of 2022 compared to amounts for the same periods in 2021 reflects additional general and administrative staffing and increased spending on professional services and facility costs.

Other income for the third quarter ended September 30, 2022 was $6.7 million compared to $1.1 million in the same period in 2021. Other income for these periods represents unrealized gain from the change in

fair value of equity securities and interest income earned on investments. Other expenses for the nine months ended September 30, 2022 were $2.2 million, compared to other income of $57.5 million in the same period in 2021. Other expenses for nine months ended September 30, 2022 consists of unrealized losses from the change in the fair value of equity investments and interest income earned, while other income for the first nine months of 2021 includes realized gains on the sale of an investment equity security and an increase in unrealized gains on the Company's marketable equity investments.

Non-cash, stock-based compensation expense for the nine months ended September 30, 2022 was $36.2 million, compared to $26.6 million for the same period in 2021.

Net loss for the third quarter ended September 30, 2022 was $32.8 million, or $(0.55) on a fully diluted per share basis, compared to net loss of $40.2 million, or $(0.69) on a fully diluted per share basis, for the same period in 2021. For the nine months ended September 30, 2021, net loss was $43.1 million, or $(0.72) on a fully diluted per share basis, compared to net income of $9.6 million, or $0.16 on a fully diluted per share basis, for the same period in 2021. Net loss reported for the third quarter ended September 30, 2022 compared to the net loss reported for the same period in 2021 is lower due to increased revenue and interest income in 2022 compared to 2021. Net loss for the first nine months of 2022, compared to the net income reported for the same periods in 2021, is primarily due to realized gain on an equity investment and an increase in unrealized gains on marketable equity securities during the nine months ended September 30, 2021.

The total shares outstanding were 59,773,337 as of September 30, 2022, compared to 58,454,811 as of September 30, 2021.

Based on current operating plans, Xencor expects to have cash to fund research and development programs and operations through the end of 2025. The Company expects to end 2022 with between $575 million and $600 million in cash, cash equivalents, receivables and marketable debt securities.

Conference Call and Webcast

Xencor will host a conference call today at 4:30 p.m. ET (1:30 p.m. PT) to discuss the third quarter 2022 financial results, provide a corporate update and present results from the Phase 1a study of XmAb564.

The live webcast will be available under "Events & Presentations" in the Investors section of the Company's website at investors.xencor.com and will be archived for at least 30 days. Active participants in the conference call may receive credentials for telephone access by registering at the following link: https://register.vevent.com/register/BIb8a7d450f24d42068f4bb86e717257fe.

Xencor is a clinical-stage biopharmaceutical company developing engineered antibodies and cytokines for the treatment of patients with cancer and autoimmune diseases. More than 20 candidates engineered with Xencor's XmAb technology are in clinical development, and three XmAb medicines are marketed by partners. Xencor's XmAb engineering technology enables small changes to a protein's structure that result in new mechanisms of therapeutic action. For more information, please visit www.xencor.com.

Forward-Looking Statements

Certain statements contained in this press release may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements include statements that are not purely statements of historical fact, and can generally be identified by the use of words such as "potential," "can," "will," "plan," "may," "could," "would," "expect," "anticipate," "seek," "look forward," "believe," "committed," "investigational," and similar terms, or by express or implied discussions relating to Xencor's business, including, but not limited to, statements regarding planned presentations of clinical data, planned additional clinical trials, the quotations from Xencor's president and chief executive officer, our projected financial resources and other statements that are not purely statements of historical fact. Such statements are made on the basis of the current beliefs, expectations, and assumptions of the management of Xencor and are subject to significant known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements and the timing of events to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. Such risks include, without limitation, the risks associated with the process of discovering, developing, manufacturing and commercializing drugs that are safe and effective for use as human therapeutics and other risks, including the ability of publicly disclosed preliminary clinical trial data to support continued clinical development and regulatory approval for specific treatments, in each case as described in Xencor's public securities filings. For a discussion of these and other factors, please refer to Xencor's annual report on Form 10-K for the year ended December 31, 2021 as well as Xencor's subsequent filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended to date. All forward-looking statements are qualified in their entirety by this cautionary statement and Xencor undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof, except as required by law.