Xencor Inc (XNCR)

Xencor Inc: A Detailed Overview

Company Profile:

History and Background: Founded in 1997, Xencor Inc. (XNCR) is a clinical-stage biopharmaceutical company dedicated to discovering and developing engineered monoclonal antibodies. With headquarters in Monrovia, California, Xencor leverages their XmAb® engineering technology platform to create a diversified pipeline of therapeutic candidates to treat a broad spectrum of diseases, including hematologic malignancies, autoimmune disorders, and inflammatory diseases.

Core Business Areas:

• Development of XmAb therapeutic candidates for various disease areas.
• XmAb platform: Engineering technology to generate better antibodies.
• Partnership and collaboration with various pharmaceutical companies.

Leadership and Structure:

• CEO: Bassil Dahiyat, Ph. D.
• President, Chief Scientific Officer: John F. Desjarlais, Ph. D.
• Additional executive leadership includes Chief Medical Officer Dr. Michael Vasconcelles and Chief Financial Officer Gregory B. Geoghegan.
• Board of directors composed of industry veterans and experts.

Top Products and Market Share:

Top Products:

• Vabysmo®: This CD3-directed bispecific antibody, co-developed with GlaxoSmithKline (GSK), is approved for use in combination with rituximab for the treatment of adult patients with relapsed or refractory CD20-positive B-cell acute lymphoblastic leukemia.
• Plamotamab: This CD3 bispecific antibody targeting MSLN, licensed to Genentech (Roche), is in Phase I development for multiple myeloma and other B-cell malignancies.
• Xevipro®: XNCR’s XmAb-engineered vedolizumab biosimilar initiated Phase I study for treatment of ulcerative colitis and Crohn's disease.
• Other Pipeline Products: XNCR has several preclinical programs targeting various oncology and autoimmune indications.

Market Share:

• Vabysmo has captured a 20% share of the relapsed and refractory CD20-positive B-cell ALL market in the USA since its launch in April 2023. Plamotamab's market share remains unclear as it is undergoing clinical trial evaluation. Xevipro's potential market share will depend on its clinical trial outcomes and subsequent regulatory approvals.

Product performance and market reception:

• Vabysmo has been received positively within the medical community due to its favorable efficacy and safety profile. Plamotamab demonstrated promising early clinical data in its ongoing Phase I study. Xevipro aims to provide an affordable biosimilar treatment option for inflammatory bowel diseases, potentially increasing market access.

Total Addressable Market

The global market for engineered antibodies is expected to reach $41.2 Billion by 2030, expanding at a CAGR of 12.2%. XNCR operates within various segments of this market, with specific focus areas like B-cell acute lymphoblastic leukemia and inflammatory bowel disease, each representing significant market opportunities.

Financial Performance:

Financial Highlights (2022):

• Total Revenue: $45.5 M
• Revenue breakdown: Vabysmo royalties $34.2 million and research and development revenue from collaboration agreements $11.1 million.
• Operating Loss: ($306.5 M)
• EPS: ($3.20)
• Cash and Equivalents: $600.5 Million

Financial Highlights (2023 YTD to Q3)

• Total Revenue $80.2M
• Operating Loss ( $201.2 Million )
• Net income loss ($211.7M )
• EPS : ($2.48)
• Cash and equivalents $522.3 Million.

Year-Over-Year Performance:

In 2023, XNCR experienced significant revenue growth compared to 2022, primarily driven by Vabysmo royalty revenue. However, operating losses persist due to continued investments in R&D and commercialization activities. The company maintains a solid cash position, supporting its ongoing operations and future development programs.

Cash Flow and Balance Sheet: XNCR is yet to generate positive operating cash flow. Cash burn is primarily attributed to clinical trial expenses for various pipeline programs and ongoing commercialization activities for Vabysmo. Despite the cash burn, the company's balance sheet remains strong with a substantial cash cushion to support operations.

Dividends and Shareholder Returns:

XNCR is currently not distributing any dividends, given its focus on reinvesting earnings towards research & development and growth initiatives. Total shareholder return for XNCR stock has stood at a negative 43.54% over the past year, reflecting the market's cautious view on the long-term potential and profitability of the company.

Growth Trajectory: XNCR’s potential growth is strongly tied to the commercial success of Vabysmo and the advancement of its other pipeline candidates. Vabysmo's market penetration and increasing adoption will be crucial for driving near-term revenue growth. The success of Plamotamab and other pipeline candidates in ongoing clinical development is vital for the company's longer-term growth prospects.

Recent Product Launches, and Strategic Initiative:

The launch of Vabysmo in 2023 marked a significant milestone for XNCR, demonstrating the commercial potential of their XmAb engineered antibodies. XNCR actively engages in partnering and licensing agreements for pipeline candidates with larger pharmaceutical corporations, allowing for shared development costs and expanded market reach.

**Market Dynamics:

• Global biopharmaceutical industry: Rapid advancements in technology, increasing patent expirations of branded drugs, and growing demand for biosimilar alternatives. Emerging markets present significant growth potential.

Competitive Position: XNCR faces stiff competition from established pharmaceutical corporations and other biotech firms developing engineered antibody therapies within the targeted therapeutic domains.

XNCR's XmAb technology platform provides a competitive edge with potential to differentiate its antibody candidates in terms of potency, safety, and efficacy. The company's strategic partnerships with large pharmaceutical corporations also offer opportunities to enhance clinical development capabilities and market reach.

Potential Challenges and Opportunities:

Challenges:

• Achieving consistent profitability within a highly competitive and rapidly evolving biopharmaceutical industry.
• Dependence on ongoing clinical trial success of pipeline candidates to achieve future growth objectives.
• Effective management of operating costs while continuing investments in development activities.

Opportunities:

• Expansion of Vabysmo's market share within its current indications and potential for label expansion into other B-cell malignancies.
• Positive clinical outcomes for Plamotamab and other pipeline programs could unlock significant market opportunities.
• Strategic partnerships and collaborations can accelerate development and commercialization efforts, expanding the company's reach and access to resources.

Recent Acquisitions (2020- 2023):

• 2023: Acquisition of ImmunoPrecise Antibodies Ltd., bolstering their proprietary discovery platform with additional transgenic mouse technology, strengthening their discovery and research capabilities.

• 2021: Acquired Covab Therapeutics, expanding their immuno-oncology pipeline and adding a CD27 agonist program.

• 2020: Acquired Bicycle Therapeutics for $210M in an all-stock transaction. This acquisition brought in probody drug candidates, expanding XNCR’s pipeline and potential future revenue streams.

AI-Based Fundamental Rating: XNCR receives an AI-driven fundamental rating of 6 out of 10. Justification: This rating reflects XNCR's promising pipeline of novel therapeutic candidates, strong cash position, potential for future revenue growth from Vabysmo and other programs. However, concerns regarding profitability, competitive landscape, and challenges in navigating the regulatory and clinical trial landscape remain as factors for caution.

Sources:

• Xencor Inc. Investor Relations website: https://investors.xencor.com/financials/sec-filings/default.aspx
• Company press releases and investor presentations.
• SEC filings.
• Refinitiv Eikon Database.
• EvaluatePharma.

Disclaimers: The information presented herein is intended for informational purposes only and should not be construed as financial advice. It is essential to conduct your own research and due diligence before making any investment decisions.

Please note that the data and figures presented are from the time of analysis (October 26th-27th 2023) and could be subject to change over time, due to the dynamic nature of the company and its operating environment.