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Item 7. Management’s Discussion and Analysis

2023-02-27 compared with 2022-02-24 · 206 added, 136 removed, 313 unchanged (52% of the section changed)

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The Fc domain is constant and interchangeable among antibodies, and our engineered Fc domains can be readily substituted for natural Fc domains.

Our protein engineering capabilities and Fc technologies enable us and our partners to develop XmAb antibodies and biotherapeutic drug candidates with improved properties and function, which can provide innovative approaches to treating disease and potential clinical advantage over other treatment options.

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treating disease and potential clinical advantage over other treatment options.

For example, we developed an antibody scaffold to rapidly create novel bispecific antibodies that bind two different targets simultaneously, creating entirely new biological mechanisms.

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The medicines are marketed by our partners and, are generating royalty revenues for us, which partially offset our internal development costs.

Refer to Part I, Item 1, "XmAb Bispecific Technologies"

and "Other XmAb Fc Technologies"

in the description of our business included in this Annual Report on Form 10-K for a discussion of our core Fc technology platforms.

Refer to Part I, Item 1, "XmAb Bispecific Technologies" and "Other XmAb Fc Technologies" in the description of our business included in this Annual Report on Form 10-K for a discussion of our core Fc technology platforms.

We are closely monitoring the COVID-19 pandemic and continue to evaluate its impact on all aspects of our business, including how it will affect our partners, collaborations, supply chains and research and development operations.

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Other countries and states where we conduct manufacturing of our drug product, testing activities and clinical sites where patients are enrolled in our clinical trials have enacted similar restrictions that could affect our ability to conduct our drug candidate development and clinical operations.

Our primary vendor for manufacturing drug substance and drug product for our clinical programs is located in China which continues to be affected by the COVID-19 pandemic.

The potential impacts on our business, revenue, clinical studies and research and development activities of the COVID-19 pandemic include:

Our broad protein engineering capabilities and technologies are uniquely suited to provide us with opportunities to identify and enhance compounds that may target the novel coronavirus and potentially treat patients with COVID-19.

For example, sotrovimab, an antibody that targets the SARS-CoV-2 virus, received an EUA from the FDA for the treatment of mild-to-moderate COVID-19 in high-risk adults and pediatric patients, and is made available by Vir and its partner GlaxoSmithKline Plc.

For example, in 2021 sotrovimab, an antibody that targets the SARS-CoV-2 virus, received an EUA from the FDA for the treatment of mild-to-moderate COVID-19 in high-risk adults and pediatric patients, and is made available by Vir and its partner GlaxoSmithKline Plc.

The FDA deauthorized sotrovimab in the first quarter 2022, but it is still approved in the European Union and other countries.

Sotrovimab incorporates our Xtend Fc technology for longer duration of action.

VIR-7832, a second antibody licensed to Vir, which also targets the SARS-CoV-2 virus, incorporates Xtend technology and other XmAb Fc technologies, and it is currently enrolling patients in a Phase 1b/2a study.

We are eligible to receive a mid-single digit percentage royalty on the net sales of both sotrovimab and VIR-7832.

Our partner Bristol-Myers Squibb (BMS) has also licensed our Xtend technology to improve the half-life of antibodies that target SARS-CoV-2 and is supporting a Phase 2 study for a combination of two half-life-extended antibodies.

We are eligible to receive royalties on net sales of the BMS candidate.

We are eligible to receive a mid-single digit percentage royalty on the net sales of sotrovimab.

We receive upfront payments, milestone payments and royalties from licensing our XmAb technologies and drug candidates.

The COVID-19 pandemic has not adversely affected the amount of revenue we generate from such partnerships and collaborations for the year ended December 31, 2022.

During the year, we received $204.9 million from our partnerships and collaborations including those with Vir, MorphoSys, Alexion, Janssen, and Viridian.

During the year, we received $198.7 million from our partnerships and collaborations including those with Vir, MorphoSys, Alexion, Astellas and Janssen.

Our ability to earn revenue from these and other partnerships is dependent on the ability of our partners to generate sales from products, such as sotrovimab, Ultomiris®, and Monjuvi®, the ability of our partners to advance our partnered programs through regulatory approval, and the ability of our partners to advance our partnered programs into later stages of development, which would entitle us to potential milestone payments.

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• Clinical studies:

We are currently enrolling patients into multiple trials evaluating our drug candidates, and our partner Genentech is enrolling patients in the Phase 1 study of XmAb306 (also known as RG6323), our co-development program with Genentech.

We are currently enrolling patients into multiple trials evaluating our drug candidates, and our partner Genentech is enrolling patients in multiple Phase 1 studies of XmAb306 (also known as RG6323), our co-development program with Genentech.

Many partners are also enrolling patients in clinical trials with drug candidates that incorporate one or more of our XmAb technologies.

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These delays have not broadly affected the status of our portfolio programs and have been limited to specific trials and specific sites.

Many clinical sites have delayed starting new clinical trials and others have postponed enrollment to address the pandemic.

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clinical sites have delayed starting new clinical trials and others have postponed enrollment to address the pandemic.

• Research, development, and administrative activities:

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As of December 31, 2022, these activities have continued without interruption from the pandemic.

Our development activities include initiating a Phase 1 study of XmAb819, our first 2+1 CD3 bispecific candidate that targets ENPP3, and conducting IND-enabling studies for XmAb808, our first tumor selective CD28 bispecific candidate that targets B7-H3, and XmAb662, our reduced-potency engineered IL12 cytokine candidate.

Our development activities include initiating a Phase 1 study of XmAb662, our reduced-potency engineered IL12 cytokine candidate, and completing IND-enabling activities for XmAb541, our CLDN6 x CD3 2+1 bispecific antibody candidate.

Several other bispecific antibody and cytokine programs are in earlier stages of development.

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Our modular XmAb bispecific technology and protein engineering capabilities enable us to rapidly advance multiple drug candidates into clinical development.

We and our partners are currently enrolling Phase 1 or Phase 2 studies for seven wholly owned or co-development candidates to treat patients with many different types of cancer and autoimmune diseases, and an eighth, to be developed for patients with kidney cancer, is expected to enter clinical development in early 2022.

We and our partners are currently enrolling Phase 1 or Phase 2 studies for seven wholly owned or co-development candidates to treat patients with many different types of cancer and autoimmune diseases, and an eighth, to be developed for patients with advanced solid tumors, is planned to enter clinical development in mid-2023.

Vudalimab (PD-1 x CTLA-4) :

Vudalimab is a bispecific antibody that targets PD-1 and CTLA-4, two immune checkpoint receptors, to selectively activate the tumor microenvironment, and it is being developed for patients with metastatic castration-resistant prostate cancer (mCRPC) and other solid tumor types.

Data from a Phase 1 study that enrolled heavily pretreated patients with multiple solid tumor types indicated that vudalimab was generally well-tolerated with encouraging clinical activity.

We are conducting a Phase 2 study of vudalimab in patients with mCRPC, as a monotherapy or in combination with chemotherapy or a PARP inhibitor depending on the tumor's molecular subtype, as these patients represent a high unmet medical need.

Early data from the safety run-in portion of the study were presented at the Annual Meeting of the Society for Immunotherapy of Cancer (SITC) in November 2022.

Clinical activity, including multiple prostate-specific antigen (PSA) reductions of more than 50% from baseline (PSA50) had been observed in three of nine patients.

A patient with an 89% reduction in PSA from baseline experienced a partial response at week 18 and was continuing on treatment.

Review of safety data guided us to revise the chemotherapy dosing regimens in the combination cohorts in the study.

Dosing of vudalimab was unchanged.

We are also conducting a second Phase 2 study in patients with advanced gynecologic malignancies, and the study includes a cohort to evaluate vudalimab in patients with clinically-defined high-risk mCRPC.

XmAb104 (PD-1 x ICOS):

XmAb104 is a bispecific antibody that targets PD-1, an immune checkpoint receptor, and ICOS, an immune co-stimulatory receptor, to selectively activate the tumor microenvironment.

We reported initial dose-escalation data from the Phase 1 study at the American Society of Clinical Oncology in June 2022.

XmAb104 was well tolerated and exhibited a distinct safety profile compared to other clinical-stage ICOS programs.

Anti-tumor activity was observed in patients, and biomarker activity was consistent with engagement with T cells.

We are evaluating XmAb104 as a monotherapy and in combination with ipilimumab, in the expansion portion of a Phase 1 clinical study for the treatment of patients with advanced solid tumors.

XmAb564 (IL2-Fc Cytokine):

XmAb564 is a wholly owned, monovalent, interleukin-2 Fc (IL-2-Fc) fusion protein, engineered to selectively activate and expand regulatory T cells (Tregs) for the potential treatment of patients with autoimmune diseases.

XmAb564 is engineered with reduced binding affinity for IL-2's beta receptor and increased binding affinity for its alpha receptor.

In preclinical studies, XmAb564 was well-tolerated, promoted the selective and sustained expansion of Tregs and exhibited a favorable pharmacokinetic profile.

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In November 2022, we presented data from a randomized, double-blind, placebo-controlled Phase 1a study to evaluate the safety and tolerability of a single dose of XmAb564 administered subcutaneously in healthy volunteers.

The study enrolled 48 subjects, with six dose-level cohorts each randomizing six subjects to XmAb564 and two subjects to placebo.

The study demonstrated that a single dose of XmAb564 is well tolerated and generates a durable, dose-dependent and selective expansion of Tregs.

In the highest dose cohort (0.065 mg/kg;

Cohort 6), a 117-fold mean peak expansion over baseline in CD25bright cells was observed, with an 8-fold expansion in the bulk Treg population.

The ratio of Tregs to conventional T cells also increased significantly in a dose-dependent manner.

At day 21, both CD25bright and total Treg counts remained markedly elevated, potentially supporting a multi-week dosing profile.

All adverse events (AEs) were either Grade 1 or 2 and resolved without intervention.

Injection site reaction was the most reported AE.

In the fourth quarter of 2022, we dosed the first patient in a newly initiated Phase 1b, multiple-ascending dose study of XmAb564 in patients with atopic dermatitis and psoriasis.

XmAb819 (ENPP3 x CD3):

XmAb819 is a first-in-class, tumor-targeted, T-cell engaging XmAb 2+1 bispecific antibody in development for patients with renal cell carcinoma (RCC).

XmAb819 engages the immune system and activates T cells for highly potent and targeted tumor cells expressing ENPP3, an antigen highly expressed on kidney cancers.

ENPP3 is a differentially expressed target, with high level expression in RCC and low level expression on normal tissues.

With two tumor-antigen binding domains and one T-cell binding domain, our XmAb 2+1 format enables antibodies to bind more avidly to, and selectively kill, tumor cells with higher antigen density, potentially sparing normal cells.

In 2022 we initiated a Phase 1 study to evaluate XmAb819 in patients with advanced RCC.

XmAb808 (B7-H3 x CD28):

XmAb808 is a tumor-selective, co-stimulatory XmAb 2+1 bispecific antibody designed to bind to the broadly expressed tumor antigen B7-H3 and selectively to the CD28 T-cell co-receptor, only when bound to tumor cells.

In the fourth quarter of 2022, we dosed the first patient in a Phase 1 study to evaluate XmAb808 in combination with pembrolizumab in patients with advanced solid tumors.

Co-development Programs

Plamotamab (CD20 x CD3):

Plamotamab is a bispecific antibody that targets CD20, an antigen on B-cell tumors, and CD3, an activating receptor on T cells.

At the ASH Annual Meeting in December 2021, we presented updated safety and anti-tumor activity data from the Phase 1 dose-escalation study of plamotamab in B-cell malignancies, including from patients with relapsed or refractory NHL.

The results indicated that plamotamab monotherapy was generally well tolerated and demonstrated encouraging clinical activity in heavily pretreated patients at the recommended intravenous Phase 2 dose.

We are currently enrolling patients with non-Hodgkin lymphoma in the monotherapy dose expansion cohorts to further evaluate the safety and efficacy of plamotamab monotherapy at the Phase 2 recommended dose, and we plan to present data from these cohorts in the second half of 2022.

Additionally, pharmacokinetic modeling supports subcutaneous administration, which we plan to incorporate into our ongoing Phase 1 monotherapy study.

In October 2021, we entered a global collaboration and license agreement with Janssen Biotech, Inc.

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Under the collaboration, we will develop B-cell targeted CD28 bispecific antibodies to selectively enhance T-cell cytotoxic activity in combination with plamotamab.

In 2022, we plan to initiate a potentially registration-enabling Phase 2 study to evaluate the chemotherapy-free triple combination of plamotamab, tafasitamab and lenalidomide in patients with relapsed or refractory DLBCL Plamotamab, which redirects T cells to tumors, and tafasitamab, a CD19-directed XmAb antibody, combine powerful and distinct immune pathways, and the study is designed to generate new clinical insights and accelerate development timelines for the program.

MorphoSys AG and Incyte Corporation will provide tafasitamab for the studies.

Vudalimab (PD-1 x CTLA-4) :

Vudalimab is a bispecific antibody that targets PD-1 and CTLA-4, two immune checkpoint receptors, to selectively activate the tumor microenvironment, and it is being developed for patients with castration-resistant prostate cancer, as well as for patients with other types of solid tumors.

In November 2021, we presented updated data from the Phase 1 study of vudalimab in patients with multiple types of advanced solid tumors at the SITC Annual Meeting.

Data from the Phase 1 study indicate that vudalimab was generally well-tolerated in heavily pretreated patients with encouraging clinical activity.

We have initiated a Phase 2 study of vudalimab in patients with certain molecular subtypes of CRPC, as a monotherapy or in combination depending on the molecular subtype, as these patients represent a high unmet medical need.

We plan to present initial data from the Phase 2 study in mCRPC in the second half of 2022.

We are initiating a second Phase 2 study for patients with advanced gynecologic and genitourinary malignancies, and the study will include a cohort to evaluate vudalimab in patients with clinically-defined high-risk mCRPC.

Tidutamab (SSTR2 x CD3):

Tidutamab is a bispecific antibody that targets somatostatin receptor 2, (SSTR2), a target on many neuroendocrine-like tumor types, and CD3.

Dose-escalation and expansion data from the Phase 1 study in patients with neuroendocrine tumors (NET) indicates that tidutamab was generally well tolerated at the recommended dose identified for the expansion portion of the study.

Tidutamab induced sustained activation of cytotoxic T cells and engagement of the SSTR2 target and demonstrated an encouraging safety profile.

We are enrolling patients in a Phase 2 clinical study for tidutamab in patients with Merkel cell carcinoma and small cell lung cancer, which are SSTR2-

expressing tumor types known to be responsive to immunotherapy.

XmAb306/RO7310729 (IL15/IL15Rα-Fc Cytokine) :

XmAb306 is a reduced-potency IL15/IL15Rα-Fc fusion protein that incorporates our Xtend extended half-life technology, and we are co-developing this program in collaboration with Genentech.

In November 2021, we announced encouraging early preliminary data from an ongoing Phase 1 study in patients with advanced solid tumors, while further dose escalation in both study arms continues.

At the ASH Annual Meeting in December 2022, we presented additional safety and anti-tumor activity data from expansion cohorts in the Phase 1 study of plamotamab in patients with relapsed or refractory non-Hodgkin lymphoma (NHL).

The results indicated that plamotamab monotherapy was well tolerated and demonstrated encouraging clinical activity in heavily pretreated patients at the recommended intravenous Phase 2 dose.

In the fourth quarter of 2022, we began dosing patients in the study with subcutaneously administered plamotamab.

XmAb306/RG6323 (IL15/IL15Rα-Fc Cytokine) :

XmAb306 is a reduced-potency IL15/IL15Rα-Fc fusion protein that incorporates our Xtend extended half-life technology, and we are co-developing this program in collaboration with Genentech, a member of the Roche Group.

We share in 45 percent of worldwide development and commercialization costs for XmAb306 and will receive a share of net profits or net losses from product sales at the same percentage rate.

We retain the right to perform clinical studies with XmAb306, as well as with other collaboration programs developed in combination with other therapeutic agents, subject to certain restrictions and at our sole expense.

Additional studies of XmAb306 in combination with other agents, such as NK- or T-cell recruiting therapies, are being planned.

XmAb564 (IL2-Fc Cytokine):

XmAb564 is a wholly owned, monovalent, reduced-potency IL2-Fc fusion protein that we are developing for the treatment of patients with autoimmune diseases.

XmAb564 is engineered to selectively activate and expand regulatory T cells (Tregs), with reduced binding affinity for IL-2's beta receptor and increased binding affinity for its alpha receptor.

In preclinical studies, XmAb564 was well-tolerated, promoted the selective and sustained expansion of Tregs and exhibited a favorable pharmacokinetic profile.

In April 2021, the first subject was dosed in a randomized, double-blind, placebo-controlled, single-ascending dose (SAD) Phase 1 clinical study to evaluate the safety and tolerability of XmAb564, administered subcutaneously in healthy adult volunteers.

In 2022, we plan to present tolerability, durability, and biomarker data from the Phase 1 SAD study, and we plan to initiate a multiple-ascending dose study in patients with autoimmune diseases.

Additional wholly owned XmAb bispecific antibody programs in Phase 1 clinical studies include XmAb841 (CTLA-4 x LAG-3) and XmAb104 (PD-1 x ICOS).

We have completed the dose escalation portions of these studies and are enrolling patients with advanced solid tumors.

XmAb968 (CD38 x CD3):

XmAb968 is a bispecific antibody that targets CD38 and CD3.

We are supporting a Phase 1 investigator sponsored trial, which is evaluating XmAb968 in patients with T-cell acute lymphoblastic leukemia, T-cell lymphoblastic lymphoma and acute myeloid leukemia.

Vibecotamab is a bispecific antibody that targets CD123 and CD3.

In August 2021, Novartis notified us it was terminating its rights with respect to the vibecotamab program, effective February 2022.

We do not intend any further internal development of this program.

Genentech is conducting a Phase 1 study of XmAb306 as a single agent and in combination with atezolizumab in patients with advanced solid tumors.

In 2022, Genentech initiated two additional Phase 1 studies, evaluating XmAb306 in patients with relapsed/refractory multiple myeloma, either in combination with daratumumab (anti-CD38 antibody) or in combination with cevostamab (FcRH5 x CD3 bispecific antibody).

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Advancements Expanding XmAb Bispecific Platforms

We conduct further research into the function and application of antibody Fc domains in order to expand the scope of our XmAb technology platforms and identify additional XmAb drug candidates.

We use the modularity of our XmAb bispecific Fc technology to build bispecific antibodies and cytokines in a variety of formats, and we recently introduced CD3 bispecific antibodies of a mixed valency format, the XmAb 2+1 bispecific antibody.

We use the modularity of our XmAb bispecific Fc technology to build bispecific antibodies and cytokines in a variety of formats, such as T cell engaging bispecific antibodies of a mixed valency format, the XmAb 2+1 bispecific antibody.

XmAb 2+1 bispecific antibodies may preferentially kill tumor cells with high target expression, which may be especially beneficial in designing antibodies that target solid tumors.

This selectivity potentially empowers CD3 bispecifics to address an expanded set of tumor antigens.

Our lead XmAb 2+1 bispecific antibody candidate is XmAb819, a first-in-class ENPP3 x CD3 bispecific antibody.

ENPP3 is a tumor-associated antigen in renal cell carcinoma (RCC) and exhibits low level expression on normal tissues.

We are currently initiating a Phase 1 study to evaluate XmAb819 in patients with RCC.

This selectivity potentially empowers T cell engaging bispecifics (e.g., CD3, CD28) to address an expanded set of tumor antigens.

Four clinical-stage programs utilize our XmAb 2+1 format:

XmAb819, XmAb808, AMG 509 and ASP2138.

We are currently completing IND-enabling activities for an additional XmAb 2+1 bispecific antibody candidate, XmAb541 (Claudin-6 x CD3), which we are developing for patients with ovarian cancer.

We plan to submit an IND application for XmAb541 in 2023.

Additionally, we have engineered CD28 bispecific antibodies to provide conditional CD28 co-stimulation of T cells, activating them when bound to tumor cells.

Targeted CD28 bispecific antibodies may provide conditional co-stimulation of T cells, for example, to T cells recognizing neoantigens or in concert with CD3 T-cell engaging bispecific antibodies.

We are advancing wholly owned CD28 candidates including our lead candidate, XmAb808, a B7-H3 x CD28 bispecific antibody designed to be evaluated for the treatment of patients with a range of solid tumors, which is currently advancing in IND-enabling studies.

We plan to submit an IND application for XmAb808 in the first half of 2022 and initiate a Phase 1 study in the second half of 2022.

Our CD28 platform is also the subject of two collaborations with Janssen.

In addition to our first clinical-stage CD28 program, XmAb808, our CD28 platform is the subject of two collaborations with Janssen.

The first collaboration was announced in 2020 and involves our research efforts to create and characterize CD28 bispecific antibody candidates against a prostate tumor target specified by Janssen.

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The second Janssen collaboration was announced in October 2021 and includes conducting research activities with Janssen to create and characterize CD28 bispecific antibody candidates against B-cell targets during a two-year period, with Janssen having an exclusive worldwide license to develop selected molecules from the research activities and also selected molecules in combination with plamotamab and other agents, such as other CD3 bispecific antibodies.

In November 2021, we presented emerging preclinical data from early-stage programs that highlighted several of our platform technologies at the Annual Meeting of the Society for Immunotherapy of Cancer, with poster presentations with data from our IL-12-Fc cytokine program, PD-L1 x CD28 bispecific antibody program, TGFβR2 bispecific program, and bispecific NK cell engager platform.

In January 2023, Janssen selected a CD28 candidate that we developed under the second collaboration for further development.

In November 2022, we presented emerging preclinical data from early-stage programs that highlighted several of our platform technologies at the Annual Meeting of the Society for Immunotherapy of Cancer, with poster presentations with data from our IL18-Fc cytokine program, LAG3-targeted IL15-Fc cytokine program, PDL1 x PDL2 x CD28 trispecific antibody program, and bispecific NK cell engager platform.

Progress Across Partnerships

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The FDA approved Monjuvi® (tafasitamab-cxix) under accelerated approval in July 2020.

Monjuvi is a CD19-directed cytolytic antibody indicated in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) not otherwise specified, including DLBCL arising from low grade lymphoma, and who are not eligible for autologous stem cell transplant (ASCT).

Monjuvi is a humanized Fc-modified CD19 targeting immunotherapy indicated in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) not otherwise specified, including DLBCL arising from low grade lymphoma, and who are not eligible for autologous stem cell transplant (ASCT).

This indication is approved under accelerated approval based on overall response rate.

Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial(s).

In August 2021, the European Commission granted conditional marketing authorization for Minjuvi® (tafasitamab) in combination with lenalidomide, followed by tafasitamab monotherapy, for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplantation (ASCT).

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large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplantation (ASCT).

Tafasitamab was created and initially developed by us.

Tafasitamab is co-marketed by Incyte and MorphoSys under the brand name Monjuvi in the U.S.

and is marketed by Incyte under the brand name Minjuvi in the E.U.

and is marketed by Incyte under the brand name Minjuvi in Europe and Canada.

Incyte has exclusive commercialization rights to tafasitamab outside the U.S.

Monjuvi® and Minjuvi® are registered trademarks of MorphoSys AG.

In April 2021, MorphoSys and Incyte announced the initiation of a Phase 3 study (inMIND) evaluating the addition of tafasitamab to lenalidomide and rituximab in patients with relapsed or refractory follicular lymphoma or marginal zone lymphoma.

In May 2021, MorphoSys and Incyte announced the initiation of a pivotal Phase 3 study (frontMIND) evaluating tafasitamab and lenalidomide in addition to rituximab, cyclophosphamide, doxorubicin, vincristine and prednisone (R-CHOP) compared to R-CHOP alone as first-line treatment for high-intermediate and high-risk patients with untreated DLBCL.

In 2021, we earned $12.5 million for the development milestone related to the inMind trial, and we recognized royalty revenue of $5.9 million on net sales of Monjuvi.

In March 2021, our two-year research collaboration with Genentech to discover new targeted IL-15 cytokine candidates concluded, and we may independently advance into development targeted IL-15 programs not previously

nominated under the agreement.

A targeted IL-15 program was identified as a development candidate under the Genentech Agreement in October 2020, and we were sharing in 45% of development costs for this candidate.

In August 2021, Genentech and Xencor ceased development of the targeted IL-15 program due to observations in preclinical studies that suggested an undesirable clinical profile.

No additional development of this candidate is planned by Genentech or us.

Genentech and we are planning to study additional combination agents with XmAb306.

In October 2017, we entered into an agreement with INmune, pursuant to which we provided INmune with an exclusive license to our XPro1595 drug candidate.

INmune is currently conducting or planning Phase 2 studies in patients with Alzheimer’s disease, mild cognitive impairment and treatment resistant depression.

In connection with the license, we received shares of INmune common stock and an option to acquire up to 10% of the outstanding common stock of INmune for $10.0 million.

In June 2021, we sold the option to INmune for $15.0 million in cash and $3.3 million in additional shares of INmune common stock.

In September 2021, we exercised an option to acquire an additional 108,000 shares of INmune common stock for $0.8 million.

In 2022, we recognized royalty revenue of $7.8 million on net sales of Monjuvi.

In November 2021, we entered into an agreement with Zenas BioPharma (Cayman) Limited (Zenas), to which we licensed the exclusive worldwide rights to develop and commercialize obexelimab, a bifunctional antibody that targets CD19 with its variable domain and uses our XmAb Immune Inhibitor Fc Domain.

Zenas issued a warrant giving us the right to acquire additional Zenas equity, such that our total equity in Zenas would be 15% of its fully diluted capitalization following the closing of Zenas’ next round of equity financing, subject to certain requirements.

In November 2022, Zenas completed a financing transaction and we received additional shares in Zenas in exchange for the warrant.

The total shares received increases our ownership in Zenas to 15% of the fully diluted shares outstanding.

We are eligible to receive up to $470.0 million based on the achievement of certain clinical development, regulatory and commercial milestones and are eligible to receive tiered, mid-single digit to mid-teen percent royalties upon commercialization of obexelimab, dependent on geography.

In January 2023, Zenas initiated a Phase 3 study of obexelimab in an autoimmune disease.

Novel Bispecific Antibody Collaborations

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Other XmAb bispecific antibodies being developed by our partners include Amgen's AMG 509, a STEAP1 x CD3 XmAb 2+1 bispecific antibody, which is being evaluated in a Phase 1 study for patients with prostate cancer;

Astellas’ ASP2138, a CLDN18.2 x CD3 bispecific antibody, which is entering Phase 1 development for patients with gastric/GEJ adenocarcinomas and pancreatic adenocarcinoma and an undisclosed bispecific antibody candidate being developed by Novartis, which is also in Phase 1 development.

Astellas’ ASP2138, a CLDN18.2 x CD3 bispecific antibody, which is in Phase 1 studies to treat patients with gastric/GEJ adenocarcinomas and pancreatic adenocarcinoma and an undisclosed bispecific antibody candidate being developed by Novartis, which is also in Phase 1 development.

Technology License Agreements

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Alexion is also evaluating Ultomiris in a broad late-stage development program across many indications in neurology and nephrology.

In April 2022, Ultomiris was approved by the FDA for the treatment of adult patients with generalized myasthenia gravis (gMG) who are anti-acetylcholine receptor (AChR) positive.

In 2022, we earned $29.4 million in royalties from Alexion.

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Vir has advanced two programs under this agreement.

In the second quarter of 2021, Vir announced plans to initiate a Phase 2 trial of VIR-3434 in combination with an siRNA drug candidate as a potential treatment for patients with chronic hepatitis B virus infection, and we earned $0.5 million for the development milestone.

In the second quarter of 2021, Vir announced plans to

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initiate a Phase 2 trial of VIR-3434 in combination with an siRNA drug candidate as a potential treatment for patients with chronic hepatitis B virus infection, and we earned $0.5 million for the development milestone.

In March 2020, we entered a second agreement with Vir Biotechnology, Inc., under which Vir has non-exclusive access to our Xtend Fc technology to extend the half-life of novel antibodies being investigated as potential treatments for patients with COVID-19.

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In December 2021, the EU granted a temporary authorization for sotrovimab, and several other countries have also provided temporary or conditional authorizations for its use.

A second drug candidate, VIR-7832, is in a Phase 1b/2a trial of adults with mild-to-moderate COVID-19.

In 2021, we earned estimated $52.2 million in royalties from Vir.

In May 2021, we entered into a technology license agreement with Bristol-Myers Squibb Company (BMS) under which BMS has access to Xtend Fc technology to extend the half-life of a novel antibody combination therapy that is intended to neutralize the SARS-CoV-2 virus for the treatment or prevention of COVID-19.

Phase 2 and 3 studies are planned as part of the NIH ACTIV-2 trial examining treatment of infected outpatients.

Under the terms of the agreement, BMS is solely responsible for the activities and costs related to research, development, regulatory, and commercial activities for their COVID-19 drug candidates, and we are eligible to receive royalties on net sales.

In 2022, we earned $114.9 million in royalties from Vir.

In December 2021, we entered into an agreement with Viridian Therapeutics, inc.

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Viridian is responsible for all further development of the selected antibodies.

We received an upfront payment of 394,737 shares of Viridian common stock valued at $7.5 million and are eligible to receive development, regulatory and sales milestones in addition to royalties on net sales of approved products under the agreement.

In connection with our June 2016 collaboration and license agreement with Novartis, we granted Novartis a non-exclusive license to certain non-bispecific Fc technologies to apply against up to ten targets.

In 2021, Novartis exercised its right to incorporate our Xtend Fc domain into a drug candidate.

In 2021, we earned $3.0 million in milestones for a development milestone related to an undisclosed XmAb antibody program that Novartis has advanced into Phase 1 clinical studies.

We received shares of Viridian common stock valued at $7.5 million as an upfront payment and are eligible to receive development, regulatory and sales milestones in addition to royalties on net sales of approved products under the agreement.

Strategic Collaborations

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Through these arrangements we seek to create new drug candidates, investigate novel combination therapies and potentially identify additional indications for our portfolio of XmAb drug candidates.

In February 2021, we announced an agreement with the University of California, Los Angeles (UCLA) to develop therapeutic antibodies, pairing novel targets proposed by scientists at UCLA and utilizing our XmAb Fc domains.

UCLA’s Technology Development Group will work with faculty to propose potential antibody drug candidates, and for selected candidates, we will use a streamlined framework with predefined terms to enter sponsored research agreements and potential license agreements.

Refer to Part IV, Item 15, Note 10, "Collaboration and Licensing Agreements"

of the notes to our financial statements included in this Annual Report on Form 10-K for a description of the key terms of our arrangements.

In 2020, we entered into an agreement with Atreca, Inc.

to research, develop and commercialize novel CD3 bispecific antibody candidates as potential therapeutics in oncology.

During a three-year research term, Atreca will provide antibodies against novel tumor targets through its discovery platform from which we will engineer XmAb bispecific antibodies that bind to the CD3 receptor on T cells.

The two companies will share research costs equally during the research term.

In January 2023, we and Atreca selected an antibody from the collaboration for development.

We and Atreca will share development costs with Atreca conducting development activities for the bispecific candidate.

In January 2023, we and Atreca selected an antibody candidate from the collaboration to advance into development.

The University of Texas MD Andersen Cancer Center

In September 2020, we entered into an agreement with MD Andersen, in which we will provide funding over a five year period and MD Andersen will collaborate to design and execute additional clinical studies with our portfolio of XmAb drug candidates, including novel bispecific antibody and cytokine candidates.

We own all rights to the programs and results generated from these studies.

MD Andersen is currently conducting studies with our vudalimab drug candidate.

Caris Life Sciences

In July 2022, we entered into an agreement with Caris Life Sciences (Caris), under which Caris will apply its proprietary end-to-end discovery platform to identify novel targets for XmAb bispecific antibody drug candidates for the treatment of patients with cancer.

We received exclusive options to research, develop and commercialize products directed against up to three targets.

Caris received an upfront payment and will be eligible to receive licensing fees, discovery, development, regulatory and sales-based milestones and royalty payments on net sales of each product commercialized by us and future rights for molecular profiling and companion diagnostics for drug candidates developed under the collaboration.

In December 2022, we entered into a second agreement with Caris.

The second agreement increased the number of targets that Caris will provide and also the tumor types that are being evaluated.

We paid Caris an upfront payment, and Caris is eligible for additional licensing fees, milestones and royalty payments on net sales of each product commercialized by us.

Refer to Part IV, Item 15, Note 10, "Collaboration and Licensing Agreements" of the notes to our financial statements included in this Annual Report on Form 10-K for a description of the key terms of our arrangements.

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Financial Operations Overview

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The following is a comparison of collaboration, product licensing, and technology licensing revenue for the years ended December 31, 2022 and 2021 (in millions):

Alexion $ 29.4 $ 22.2

Astellas 5.0 —

Genentech — 2.5

Janssen 7.0 113.8

MorphoSys 7.8 18.4

Novartis — 43.1

Vir 115.4 52.7

Viridian — 7.5

Total $ 164.6 $ 275.1

Research and Development Expenses

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Stock-based compensation 31.6 24.2

Total $ 199.6 $ 192.5

Internal research and development expenses consist primarily of salaries, benefits, related personnel costs, supplies, and allocated overhead including facility costs.

External research and development expenses include preclinical testing costs, clinical trial costs and fees paid to external service providers.

External service providers include CROs and

contract manufacturing organizations (CMOs) to conduct clinical trials, manufacturing and process development, IND-enabling toxicology testing and formulation of clinical drug supplies.

External service providers include CROs and contract manufacturing organizations (CMOs) to conduct clinical trials, manufacturing and process development, IND-enabling toxicology testing and formulation of clinical drug supplies.

We expense research and development expenses as incurred.

We account for nonrefundable advance payments for goods and services that will be used in future research and development activities as expense when the service has been performed or when the goods have been received.

We estimate contract manufacturing, preclinical study and clinical trial expenses based on the services performed pursuant to the contracts with manufacturing, research institutions and clinical research organizations that manufacture and conduct and manage preclinical studies and clinical trials on our behalf based on the actual time and expenses incurred by them.

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and manage preclinical studies and clinical trials on our behalf based on the actual time and expenses incurred by them.

We accrue expenses related to clinical trials based on the level of patient enrollment and activity according to the related agreement.

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We allocate research management, overhead, commonly used laboratory supplies and equipment, and facility costs based on the percentage of time of full-time research personnel efforts on each program.

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The following is a comparison of research and development expenses for the years ended December 31, 2022 and 2021 (in millions):

Product programs:

Obexelimab (XmAb5871)

Bispecific programs:

CD3 programs:

Vibecotamab* (1)

Tidutamab (2)

XmAb819 (ENPP3 x CD3) 10.5 16.4

XmAb541 (CLDN6 X CD3) 7.1 —

Total CD3 programs 52.4 73.2

CD28 program:

XmAb808 (B7H3 x CD2) 17.7 9.3

Tumor microenvironment (TME) activator programs:

Vudalimab (XmAb717) 22.8 25.6

XmAb104 21.3 15.4

Total TME activator programs 52.8 53.2

Cytokine programs:

XmAb306/RG6323 and a targeted IL-15 candidate*

XmAb662 IL-12 15.5 5.9

XmAb306/RG6323* 13.2 15.3

XmAb143-IL18 5.7 —

XmAb564 17.2 13.1

Total cytokine programs 51.6 34.3

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*Includes net payments to, and reimbursements from, our partners pursuant to agreements that include cost-sharing arrangements.

(1) Represents wind down costs of the program:

Novartis and the Company stopped development of the vibecotomab program in 2021.

(2) Represents wind down costs of the program;

the Company stopped development of the tidutamab program in the second quarter of 2022.

(3) Represents wind down costs of the program;

the Company stopped development of the XmAb841 program in the second quarter of 2022.

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General and Administrative Expenses

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Other Income, Net

For the year ended December 31, 2021, other income, net, consists primarily of realized and unrealized gain on equity securities during the year, while for the year ended December 31, 2020, other income, net, consists primarily of interest income from our investments during the year.

For the year ended December 31, 2022, other income, net, consists primarily of unrealized gain on equity securities during the year, while for the year ended December 31, 2021, other income, net, consists primarily of unrealized and realized gains on equity securities during the year.

Critical Accounting Policies, Significant Judgments, and Estimates

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Actual results could differ materially from those estimates.

Our management believes judgment is

involved in determining revenue recognition, the fair value-based measurement of stock-based compensation, the fair value estimate of marketable securities, the capitalization and recoverability of intellectual property costs, valuation of deferred tax assets and accruals.

Our management believes judgment is involved in determining revenue recognition, the fair value-based measurement of stock-based compensation, the fair value estimate of marketable securities, the capitalization and recoverability of intellectual property costs, valuation of deferred tax assets and accruals.

Our management evaluates estimates and assumptions as facts and circumstances dictate.

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We capitalize and amortize third-party intellectual property costs such as amounts paid to outside patent counsel for filing, prosecuting and obtaining patents for our internally developed technologies and product candidates, to the extent such patents are deemed to have probable future economic benefit.

We also capitalize amounts paid to third parties for licenses that we acquire for intellectual property or for research and development purposes where the technology has alternative uses.

We also capitalize amounts paid to third parties for licenses that we acquire for intellectual property or for research and development purposes where the technology has

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alternative uses.

The net capitalized patents, licenses, and other intangible assets as of December 31, 2022 and 2021 were $18.5 million and $16.5 million, respectively.

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On a regular basis we review the capitalized intellectual property portfolio and determine if there have been changes in the scientific or patent landscape that leads us to decide to abandon an in-process patent application or abandon a previously issued patent.

While we confer with outside patent counsel, the decision to continue prosecuting certain patent claims or abandon other claims are made by us based on our judgment and existing knowledge of our

technology, current U.S.

While we confer with outside patent counsel, the decision to continue prosecuting certain patent claims or abandon other claims are made by us based on our judgment and existing knowledge of our technology, current U.S.

and foreign patent authority rulings and expected rulings, and scientific advances and patent filings by competitors operating in our technology or drug development field.

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Our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in our reporting changes in estimates in any particular period.

Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

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the differences are expected to reverse.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that such tax rate changes are enacted.

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corporate rate from a maximum rate of 35% to 21% effective January 1, 2018.

The TCJA also allowed net operating losses incurred after January 1, 2018 to be carried forward indefinitely.

The other material change in our tax provision from the TCJA is elimination of the U.S.

corporate alternative minimum tax (AMT) system and allowance for a tax refund for AMT credit carryovers as of December 31, 2017, which do not expire.

We received a tax refund of $0.8 million in each of 2020 and 2019 related to federal AMT credit carryovers.

The TCJA also allowed net operating losses (NOLs) incurred after January 1, 2018 to be carried forward indefinitely subject to limitations on the amount of NOLs that could be applied against taxable income each year.

The TCJA also requires capitalization of certain research and development expenses beginning effective January 1, 2022.

We recorded net deferred tax assets of $115.0 million as of December 31, 2022, which was fully offset by a valuation allowance due to uncertainties surrounding our ability to realize these tax benefits.

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and federal tax credit carryforwards begin to expire starting in 2034.

Approximately $0.5 million of federal tax credits will expire if unused from 2021 through 2024.

No income tax expense or benefit was recorded for the year ended December 31, 2021 or 2020.

We recorded an income tax expense of $0.7 million for the year ended December 31, 2022.

No income tax expense or benefit was recorded for the year ended December 31, 2021.

Valuation of Stock-Based Compensation

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• Expected Dividend Yield —We have never declared or paid dividends and have no plans to do so in the foreseeable future.

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• Risk-Free Interest Rate —This is the U.S.

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The following table summarizes our results of operations for the years ended December 31, 2022 and 2021 (in millions):

Year ended December 31,

2022 2021 Change

Research collaboration $ 7.0 $ 93.0 $ (86.0)

Milestone 5.5 21.0 (15.5)

Licensing — 80.8 (80.8)

Royalties 152.1 80.3 71.8

Total revenues 164.6 275.1 (110.5)

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Other income, net 28.0 38.8 (10.8)

Income tax expense 0.7 — 0.7

Net income (loss) $ (55.2) $ 82.6 $ (137.8)

Increased research collaboration revenues in 2021 is primarily revenue recognized under our Janssen and Novartis agreements, while research collaboration revenues in 2020 is primarily revenue recognized under our Genentech agreement.

Milestone payments decreased by $29.2 million in 2021 over 2020 amounts primarily due to milestones received from Janssen and MorphoSys in 2021, compared to milestones received from Alexion and MorphoSys in 2020.

Licensing revenues in 2021 primarily consist of revenues recognized from Janssen, Viridian, and Zenas, and licensing revenues in 2020 primarily consist of revenues recognized from various technology and product license agreements entered throughout the year.

Increased royalty revenues for 2021 is primarily due to revenue recognized from our Alexion, MorphoSys, and Vir agreements over royalty amounts in 2020, which is primarily revenue recognized from our Alexion agreement.

Research collaboration revenues in 2022 are primarily revenue recognized under our second Janssen agreement, while research collaboration revenues in 2021 are primarily revenue recognized under our first Janssen agreement and our Novartis agreement.

Milestone payments decreased by $15.5 million in 2022 from 2021 amounts primarily due to milestones received from Astellas in 2022, compared to milestones received from MorphoSys, Janssen and Novartis in 2021.

Licensing revenues decreased in 2022 from the amounts reported for the same period in 2021.

Licensing revenue in 2021 primarily consists of revenues recognized from the second Janssen agreement and Zenas.

Increased royalty revenues for 2022 are primarily due to additional revenue recognized from our Vir agreement over 2021 royalty amounts.

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Research and Development Expenses

The following table summarizes our research and development expenses for the years ended December 31, 2022 and 2021 (in millions):

2022 2021 Change

Product programs:

Obexelimab (XmAb5871)

Bispecific programs:

CD3 programs:

Vibecotamab* (1)

$ 4.0 $ 8.3 $ (4.3)

19.8 33.2 (13.4)

Tidutamab (2)

11.0 15.3 (4.3)

XmAb819 (ENPP3 x CD3) 10.5 16.4 (5.9)

XmAb541 (CLDN6 X CD3) 7.1 — 7.1

Total CD3 programs 52.4 73.2 (20.8)

CD28 program:

XmAb808 (B7H3 x CD2) 17.7 9.3 8.4

Tumor microenvironment (TME) activator programs:

Vudalimab (XmAb717) 22.8 25.6 (2.8)

XmAb104 21.3 15.4 5.9

8.7 12.2 (3.5)

Total TME activator programs 52.8 53.2 (0.4)

Cytokine programs:

XmAb306/RG6323 and a targeted IL-15 candidate*

XmAb662 IL-12 15.5 5.9 9.6

XmAb306/RG6323* 13.2 15.3 (2.1)

XmAb143-IL18 5.7 — 5.7

XmAb564 17.2 13.1 4.1

Total cytokine programs 51.6 34.3 17.3

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*Includes net reimbursements from our partners pursuant to agreements that include cost-sharing arrangements.

(1) Represents wind down costs of the program;

Novartis and the Company stopped development of the vibecotomab program in 2021.

(2) Represents wind down costs of the program;

the Company stopped development of the tidutimab program in the second quarter of 2022.

(3) Represents wind down costs of the program;

the Company stopped development of the XmAb841 program in the second quarter 2022.

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Research and development expenses increased by $7.1 million in 2022 over 2021 amounts as we continue to expand our pipeline of bispecific antibody and cytokine candidates.

Increased research and development spending in 2021 was primarily driven by increased spending on our XmAb819 program and other early-stage programs including IND enabling studies for our B7-H3 x CD28 program and early development work on XmAb662, our IL-12 cytokine program, during the year.

Increased research and development spending in 2022 was primarily driven by increased spending on our CD3, CD28 and cytokine programs including XmAb808 which we advanced into clinical studies in 2022, XmAb662 for which we completed IND-enabling activities in 2022 and have an open IND, and XmAb541 for which we are conducting IND-enabling activities.

General and Administrative Expenses

General and administrative expenses increased by $9.1 million in 2021 over 2020 amounts primarily due to increased general and administrative staffing, and additional spending on facilities and intellectual property costs including licensing fees.

General and administrative expenses increased by $8.7 million in 2022 over 2021 amounts primarily due to increases in general and administrative compensation costs, and additional spending on facilities and licensing fees.

Other Income, Net

Other income, net increased by $31.3 million in 2021 over 2020 amounts reflecting the gain realized from the sale of the INmune option, and the unrealized gain recognized from the change in accounting for our investments in equity securities in connection with our licensing transactions.

Other income, net decreased by $10.8 million in 2022 from 2021 amounts.

We recognized an unrealized gain from remeasuring equity securities in connection with our licensing transactions.

In 2021, we realized gain from the sale of the INmune option offset by unrealized losses from the change in accounting estimate for equity securities in connection with our licensing transactions.

Liquidity and Capital Resources

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We have incurred substantial operating losses since our inception, and we expect to continue to incur operating losses into the foreseeable future as we advance the ongoing development of our bispecific antibody and cytokine product candidates, evaluate opportunities for the potential clinical development of our other preclinical programs, and continue our research efforts.

In 2021, we received a total of $204.9 million in upfront payments, milestones, and royalties in connection with licensing of our technologies and products.

In 2022, we received a total of $198.7 million in milestone payments and royalties in connection with licensing of our technologies and products.

At December 31, 2022, we had $613.5 million of cash, cash equivalents, marketable debt securities, and receivables compared to $664.1 million at December 31, 2021.

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We have based these estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

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The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below (in thousands):

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Operating Activities

Net cash used by operating activities for the years ended December 31, 2021 and December 31, 2020 reflect the operating expenses incurred in each year offset by the upfront, milestone, and royalty payments received during the respective year.

Net cash provided by operating activities for the year ended December 31, 2022 reflects royalty payments received during the year in excess of operating expenses while net cash used in operating activities for the year ended December 31, 2021 reflects the operating expenses incurred during the year offset by upfront, milestone, and royalty payments received.

Investing Activities

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In 2022, we purchased $81.3 million of marketable securities, net of $306.6 million of proceeds from sales and maturities.

In 2020, we redeemed $114.0 million of marketable securities, net of $643.7 million of purchase.

In 2021, we purchased $24.4 million of marketable securities, net of $485.2 million of proceeds from sales and maturities.

We acquired $4.9 million and $2.7 million of intangible assets in the years ended December 31, 2022 and 2021, respectively.

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Financing Activities

Net cash provided by financing activities during the year ended December 31, 2021 consists primarily of proceeds from issuance of common stock in connection with our Janssen collaboration, stock option exercises, and proceeds from the sales of shares under our Employee Stock Purchase Plan (ESPP).

Net cash provided by financing activities during the year ended December 31, 2020 consists primarily of cash from stock option exercises and the sales of shares under the ESPP.

Net cash provided by financing activities during the years ended December 31, 2022 and 2021 consists primarily of cash from stock option exercises and the sales of shares under the Employee Stock Purchase Plan (ESPP).

Net cash provided by financing activities decreased during 2022 from amounts reported for 2021 primarily from proceeds received from issuance of common stock in connection with our Janssen collaboration in 2021.

Contractual Obligations and Commitments

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We have also entered into agreements with third-party vendors which will require us to make future payments upon the delivery of goods and services in future periods.

In February 2015, we entered into a license agreement with BIO-TECHNE Corporation (BIO-TECHNE) for a non-exclusive license to certain antibody technology including monoclonal antibodies which recognize human somatostatin receptor 2 (SSTR2).

The variable domain of this antibody is incorporated in our tidutamab drug candidate.

Under this license agreement, we may be required to make $3.8 million in additional contingent payments which include $0.8 million of clinical milestones and $3.0 million of regulatory milestones, in addition to royalties upon commercial sales of products of less than 1%.

We made an upfront payment of $0.2 million in connection with this license and made a Phase 1 milestone payment of $0.1 million in 2018.

We made a Phase 2 milestone payment of $0.2 million in 2021.

We entered into a second agreement with BIO-TECHNE, effective February 2018, for a non-exclusive license to a certain recombinant monoclonal antibody reactive with human programmed death protein, PD-1.

In February 2018, we entered into a license agreement with BIO-TECHNE Corporation (BIO-TECHNE) for a non-exclusive license to a certain recombinant monoclonal antibody reactive with human programmed death protein, PD-1.

Under this license agreement, we may be required to make $22.0 million in additional contingent payments which include $1.5 million of clinical milestones, $4.5 million of regulatory milestones and milestones on the achievement of certain sales of $16.0 million, in addition to royalties upon commercial sales of products of 1%.

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In connection with the license, we may be required to make CHF 1.7 million in additional contingent obligations which include CHF 500,000 in development milestones, CHF 400,000 in regulatory milestones and CHF 800,000 in sales milestones, in addition to royalties upon commercial sales of products of less than 1%.

In December 2017, we entered into worldwide exclusive commercial license agreements with Selexis to develop and commercialize products produced from the Selexis cell line that was manufactured for each of our bispecific

antibody and cytokine drug candidates:

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tidutamab, vudalimab, XmAb841, XmAb104, XmAb306, XmAb564 and XmAb819.

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In 2021, we recorded a milestone payment due of CHF 170,000 upon an initiation of Phase 2.

In December 2012, we entered into a Cross-License Agreement with MedImmune, LLC (MedImmune) for a non-exclusive license to certain MedImmune patents related to half-life technology.

Under the terms of the agreement, we made payments in connection with the use of our Xtend™ technology, including use by us in our development candidates and also for use by our licensees.

Our obligations to make payments under this agreement expired in December 2021.

We made milestone payments under this agreement of $375,000 and $1,275,000 for 2020 and 2021, respectively.

In September 2020, we entered into an agreement with MD Andersen in which we agreed to provide up to $10 million in funding over a five-year period in exchange for MD Andersen conducting clinical studies with our drug candidates.

In December 2021, we amended the agreement to extend it an additional year at the same level of funding.

In August 2022 and in December 2022, we entered into agreements with Caris to license novel targets identified from their technology platform.

The terms for the agreements provide that we may be obligated to pay development, regulatory and sales milestones for each target we elect to license in addition to royalties on net sales of approve products.

As the amount and timing of sublicense fees and the achievement and timing of these milestones are not probable and estimable, such commitments have not been included on our balance sheet or in the contractual obligations and commitment tables above.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis