Xencor Restates Financials Due to Collaboration Accounting

TL;DR

Xencor's financials are toast, don't trust old numbers.

AI Summary

Xencor Inc. announced on February 7, 2025, that it will not rely on previously issued financial statements for the fiscal year ended December 31, 2024, and interim periods thereafter. This decision stems from an ongoing internal review of its accounting for certain collaborations and the related impact on its financial reporting.

Why It Matters

Investors should be aware that previously reported financial figures may be inaccurate, potentially impacting investment decisions until corrected statements are issued.

Risk Assessment

Risk Level: medium — The non-reliance on previously issued financial statements indicates potential accounting errors that could affect the company's reported performance and valuation.

Key Players & Entities

• Xencor Inc. (company) — Registrant
• February 7, 2025 (date) — Date of earliest event reported
• December 31, 2024 (date) — Fiscal year end for which statements are not relied upon
• 465 North Halstead Street, Suite 200, Pasadena, California 91107 (address) — Principal Executive Offices

FAQ

Key Financial Figures

• $0.01 — ich Registered Common Stock, par value $0.01 per share XNCR Nasdaq Global Market I
• $12.4 m — accounts receivable was understated by $12.4 million, deferred income was overstated b
• $156.9 m — lion, deferred income was overstated by $156.9 million, debt was understated by $168.5 m
• $168.5 m — $156.9 million, debt was understated by $168.5 million, and shareholders' equity was und
• $0.8 million — shareholders' equity was understated by $0.8 million; the estimated impact on the consolidat
• $6.3 million — 023 was that revenue was understated by $6.3 million and interest expense was understated by
• $5.5 million — and interest expense was understated by $5.5 million; and the estimated impact on the consol
• $163.0 m — operating activities was overstated by $163.0 million, while cash flow provided by fina
• $5.6 million — uncertain tax position estimated to be $5.6 million owed for the year ended December 31, 20
• $2.2 m — ate income tax expense by approximately $2.2 million, net of the federal benefit, for
• $7.7 m — tax position payable was understated by $7.7 million, income tax payable was understat
• $0.1 million — , income tax payable was understated by $0.1 million and shareholders' equity was overstated
• $7.8 million — shareholders' equity was overstated by $7.8 million. Management further determined that the

Filing Documents

• xncr-20250207.htm (8-K) — 39KB
• xencor8-krsmresponse_fin.htm (EX-7.1) — 1KB
• xencor8-krsmresponse_fin001.jpg (GRAPHIC) — 63KB
• 0001326732-25-000005.txt ( ) — 252KB
• xncr-20250207.xsd (EX-101.SCH) — 2KB
• xncr-20250207_lab.xml (EX-101.LAB) — 21KB
• xncr-20250207_pre.xml (EX-101.PRE) — 12KB
• xncr-20250207_htm.xml (XML) — 3KB

02 NonReliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

Item 4.02 NonReliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. (a) On February 11, 2025, the Audit Committee of the Board of Directors (the "Audit Committee") of Xencor, Inc. (the "Company"), after consultation with the Company's management and RSM US LLP, the Company's independent registered public accounting firm ("RSM") concluded that the following financial statements should no longer be relied upon because of errors in such financial statements as addressed in FASB ASC Topic 250, Accounting Changes and Error Corrections : (i) the Company's audited consolidated financial statements for the fiscal year ended December 31, 2023, contained in its Annual Report on Form 10-K for the year ended December 31, 2023, originally filed with the Securities and Exchange Commission (the "SEC") on February 29, 2024 (the "2023 Form 10-K"); (ii) the Company's unaudited consolidated financial statements for the three months ended March 31, 2024, contained in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, originally filed with the SEC on May 9, 2024 (the "Q1 Form 10-Q"); (iii) the Company's unaudited consolidated financial statements for the three and six months ended June 30, 2024, contained in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, originally filed with the SEC on August 8, 2024 (the "Q2 Form 10Q"); and (iv) the Company's unaudited consolidated financial statements for the three and nine months ended September 30, 2024, contained in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, originally filed with the SEC on November 6, 2024 (the "Q3 Form 10-Q" and, together with the 2023 Form 10-K, the Q1 Form 10-Q and the Q2 Form 10-Q, the "Prior Filings"). In addition, the Audit Committee concluded that management's report on the effectiveness of internal control over financial reporting as of December 31, 2023, and RSM's report on the consolidated ba

Forward-Looking Statements

Forward-Looking Statements This Current Report on Form 8-K contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding the Company's expectations and preliminary estimates of the impact of the restatement on the Company's Affected Financial Statements and the Prior Filings; the scope of the restatement and the controls and procedures deficiencies; the timing of the completion of the restatement and the filing of the Amendments; plans to remediate the deficiencies, including the material weaknesses, with respect to the Company's internal control over financial reporting and disclosure controls and procedures; the impact of these matters on the Company's performance and outlook; expectations concerning the Company's performance and financial outlook; and any statements or assumptions underlying any of the foregoing. You can identify forwardlooking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "if," "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future events. We cannot assure you that future developments affecting us will be those that we have anticipated. Important risks and uncertainties that could cause actual results to differ materially from our expectations include, among others, risks related to the timely and correct completion of the restatement and the Amendments; identification of errors in our financial reporting in the future that require us to restate previously issued financial statements, which may subject us to unanticipated costs or regulatory penalties and could cause investors to lose confidence in the accuracy and completeness of our financial statements; the risk that additional information may become known prior to th

01. Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits. (d) Exhibits. Exhibit No. Description 7.1 L etter fr om RSM US LLP, dated February 13, 2025. 104 Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL).

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: February 13, 2025 XENCOR, INC. By: /s/ Celia Eckert Celia Eckert General Counsel & Corporate Secretary

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