Xencor IPO Is Rated Negative

Nov.13.13 | About: Xencor, Inc. (XNCR)

Xencor Inc (NASDAQ:XNCR), a clinical-stage biopharmaceutical firm focused on discovering and developing engineered monoclonal antibodies to treat severe diseases, plans to raise $75 million in its upcoming IPO. The Monrovia, California-based firm will offer 5 million shares at an expected price range of $14-$16 per share. At the midpoint of that range at $15 per share, XNCR will command a market value of $325 million. See S-1 here.

XNCR filed on October 11, 2013.

Lead Underwriters: Credit Suisse Securities (USA) LLC, Leerink Swann

Underwriter: Wedbush Securities Inc


XNCR is a clinical-stage biopharmaceutical firm that uses its proprietary XmAb technology platform to create antibody product candidates to treat autoimmune and allergic diseases, among others. Whereas most antibody design focuses on the portion of antibodies that interact with target antigens, XNCR focuses on the portion of the antibody that interacts with multiple segments of the immune system, known as the Fc domain.

The firm believes its Fc domains can enhance antibody performance while retaining over 99.5% of identity in structure and sequence to natural antibodies. Xencor has generated some revenue streams by licensing its XmAb technology for limited use by other firms, including Boehringer Ingelheim, CSL, Janssen, Merck (NYSE:MRK) and Alexion (NASDAQ:ALXN); there are currently five antibody product candidates in clinical trials engineered with XmAb technology, including four advanced by licensees and development partners. Xencor is in the process of advancing its own XmAb-based drugs as well, though Amgen (NASDAQ:AMGN) holds an option to acquire its most advanced candidate.


XNCR offers the following figures in its S-1 balance sheet for the nine months ending September 30, 2013:

  • Revenue: $8,428,000
  • Net Loss: ($56,556,000)
  • Total Assets: $20,206,000
  • Total Liabilities: $15,634,000
  • Stockholders' Equity: ($75,029,000)


Xencor may face the intense competition of the pharmaceutical world, which includes many well-established firms with better capitalization and resources. Some chief competitors include GlaxoSmithKline (NYSE:GSK), AbbVie Inc (NYSE:ABBV), Janssen Pharmaceuticals, Inc., Genentech Inc. and Amgen.


President and CEO Bassil I. Dahiyat, Ph.D. has served in his positions since February 2005, and previously served as CEO between the firm's 1997 inception and 2003. In the interlude between 2003 and 2005, he served as the firm's Chief Scientific Officer. Dr. Dahiyat has been recognized as a technology pioneer by the World Economic Forum. as one of 2003's Top 100 Young Innovators by MIT's Technology Review magazine. Dr. Dahiyat holds a Ph.D. in Chemistry from the California Institute of Technology and B.S. and M.S.E. degrees in Biomedical Engineering from Johns Hopkins University.


We're cautious on this IPO and rate it negative at the price range of $14 to $16.

Though Xencor does appear to have found something special in its XmAb platform, it isn't yet clear that the firm will ever be able to turn the technology to significant profit; it needs to advance its own candidates through clinical trial process if it's ever going to make much money, but that seems unlikely to happen in the near future, given that it only has a single candidate in the earlier clinical phases and that Amgen has an option to acquire that candidate if it seems promising.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.