Xencor bets its kidney cancer drug on strong data from 11 patients

Xencor designs antibodies with its own XmAb technology, and more than 20 drug candidates built with it are in clinical trials. Its revenue comes mostly from partners, as royalties and milestone payments. Second-quarter 2026 revenue was $51.2 million, and revenue for the first half was $55.7 million.¹ The biggest royalty has been a low single-digit share of sales of Ultomiris, a drug sold by Alexion. On March 4, 2026, Alexion said it owed no more royalties on American sales. On July 29, 2026, the two settled: Alexion pays $105.0 million in two equal $52.5 million payments and owes no more American royalties.²

Years earlier, Xencor sold part of its future royalties to the investor OMERS for upfront cash: $192.5 million for Ultomiris royalties and $22.5 million for royalties on Monjuvi, a partner's lymphoma drug. OMERS is paid first, taking up to $35.0 million a year of Ultomiris royalties from 2026 through 2028. Xencor books both sales as debt.¹ That liability stood at $104.9 million at the end of the second quarter, and the effective interest rate on the Ultomiris part is 19.0%.²

Xencor's slides say no guideline-recommended treatment exists for kidney cancer patients whose disease has grown after an immune checkpoint drug and at least two pills that block tumor blood-vessel growth. The company puts that group at about 9,200 American patients. It sizes the whole kidney cancer drug market at about $11.7 billion a year worldwide.¹ By the slides' count, approved later-line drugs shrink tumors in 17% to 23% of patients.²

XmAb819 is a two-armed antibody: one arm grabs ENPP3, a protein on kidney cancer cells, and the other grabs CD3 on T cells, the immune system's killer cells. ENPP3 showed up in 93.3% of the tested tumor samples, and Xencor owns 100% of the drug.¹ The Phase 1 trial has treated 119 patients, 68 of them at the expansion doses of 100, 200 and 400 mcg/kg, and its main goal is safety. Patients had a median of three earlier treatments.²

The new data use two cut-off dates. Most results stop on September 1, 2026, but the 400 mcg/kg numbers were updated to October 1, 2026. On the later date, 5 of 11 evaluable patients had confirmed partial responses, and one more had an unconfirmed response, for 55%.¹ Median progression-free survival, the time until half the patients' cancers grow or they die, has not been reached, and more than 70% of patients were still on the drug. The six-month estimate was 82%. But median follow-up at this dose was only six months, so the estimate rests on early data.²

The dose picture is less clean than the headline. Confirmed response rates were 30% at 100 mcg/kg, 44% at 200 mcg/kg and 45.5% at 400 mcg/kg, and the 400 mcg/kg figure's confidence range runs from 16.8% to 76.6%. With 11 patients, one response more or less moves the rate by about 9 points.¹ A sturdier number comes from 42 patients across doses whose cancer had grown after an immune checkpoint drug and at least two blood-vessel blockers: 45% had confirmed responses, with a 95% confidence range of 29.9% to 61.3%. All responses were judged by the trial's own doctors.²

Xencor set its results beside tivozanib's in a similar subgroup of another trial: 10.5% confirmed responses, a median progression-free survival of 5.4 months and a six-month estimate of 41%. The company itself says that comparison is for illustration only and is not a head-to-head test.¹ That is why its planned randomized trial assigns patients at random to one drug or the other.²

Side effects are heavy. Among the 68 expansion patients, 82.4% had a side effect of grade 3 or worse from any cause, and 72.1% had one tied to the drug.¹ Liver enzyme rises of that grade hit 35.3%, but mostly early: after day 29 the grade 3 or worse ALT rate was 10.3%, and the dose delays they caused (14.7% of patients) led to no discontinuations.² Cytokine release syndrome, an immune overreaction, hit 67.6% at any grade but 5.9% at grade 3 or worse; those figures leave out one patient who got about 10 times the intended dose in one of three suspected dose-preparation errors among 69 expansion patients, all before a new formulation, and who developed grade 4 CRS.³ No side effect led to death, and 5.9% stopped the drug because of drug-related side effects. Xencor plans test groups with dosing every three weeks and fewer hospital stays, which suggests the current schedule needs hospital time.⁴

Xencor's forward case is a set of goals, not results. It plans to discuss a possible accelerated approval with the Food and Drug Administration in the first half of 2027, for patients who have run out of standard treatments. That kind of approval can be conditional: the 10-Q notes that continued approval of one partner drug may depend on a confirming trial.¹ Xencor also plans a global trial that assigns patients at random to XmAb819 or tivozanib, to start by the end of 2027. Its main measures would be progression-free survival judged by blinded outside reviewers, and overall survival, and it is sized to detect a hazard ratio of about 0.70, roughly 30% less risk of the cancer growing. Subject to more talks with the agency, a win could support full approval in second- and third-line treatment.² By the first half of 2027, Xencor also expects data on at least 20 patients at 400 mcg/kg and first results from a version of the drug injected under the skin.³

The cash side looks sturdier than the data. Xencor held $486.4 million of cash, cash equivalents and marketable debt securities at June 30, 2026, down from $610.8 million at the end of 2025. It also owned 3,098,380 Zenas shares, held as marketable equity securities worth $78.6 million, which are not in that figure.¹ Operations used $123.3 million of cash in the first half of 2026, against $52.6 million a year earlier, and $22.6 million of that came from a rise in money owed to Xencor. That is about $61.6 million a quarter. In August, Xencor guided to $420 million to $440 million at the end of 2026, with the first $52.5 million Alexion payment expected that month.² The 8-K moves the runway into 2029 but gives no new cash balance. It warns the money could run out sooner if trials cost more or partner payments slip.³

Reported results flatter the trend. Of the $51.2 million of second-quarter revenue, $27.6 million was Ultomiris royalties for the disputed months, booked because of the settlement. The quarter's $21.7 million net loss also included an $18.1 million paper gain on the Zenas stake; without it the loss would have been $39.8 million, and the operating loss was $37.1 million.¹ The third quarter will look much better than the business runs: Xencor will book the remaining $77.4 million of settlement money then, plus a $2.5 million Zenas milestone. Both are one-time items. For the first half, research spending was $136.6 million, the net loss was $150.6 million, and $17.2 million of royalty revenue was non-cash because it went to OMERS.²

Usual debt ratios do not apply. They divide debt by earnings before interest, taxes, depreciation and amortization, and Xencor runs an operating loss. Its main debt-like item is the $104.9 million owed under the royalty sales, which OMERS collects from royalties.¹ Dilution is the bigger watch item. Xencor had 74,353,397 shares outstanding on its 10-Q cover, plus 17.3 million options and restricted stock units at June 30, about 23% more, and pre-funded warrants for up to 1.7 million more shares (3,088,888 sold, 1,388,888 exercised in January 2026).² The options carry an average exercise price of $24.45, below the $29.75 price on October 26.³ Xencor also has a $200.0 million at-the-market program, which lets it sell new shares into the market over time, and none had been sold as of June 30, 2026. At $29.75, that program equals about 9% of the company's value.⁴

The market liked the data. XNCR rose 18.3% from its $25.15 close on October 23 to $29.75 at 13:47 ET on October 26, while the S&P 500 fund rose 0.6%. At that price the company is worth about $2.21 billion.¹ In our price file, which starts in mid-September, its lowest close was $22.83 on October 16 and its highest was $25.86 on October 22, so the new price sits well above that range.²

The bull case: among patients with no guideline treatment left, 45% of 42 responded, roughly double the top of the 17% to 23% range for approved later-line drugs. The early survival estimate is twice tivozanib's in another trial, and Xencor owns the drug outright. Cash of about $6.54 a share backs a stated runway into 2029.

The bear case, strongest point first. One, the dose rests on 11 patients with six months of median follow-up, and 45.5% is barely above the 44% at half the dose. Two, the 41% tivozanib figure comes from a different trial, which Xencor itself calls illustration only.¹ Three, 72.1% of expansion patients had severe drug-related side effects, and Xencor is still testing schedules with fewer hospital stays. Four, cash use of about $61.6 million a quarter and options below the share price point to dilution if the runway slips.²

What would prove the bull case wrong: a full 400 mcg/kg set of at least 20 patients, due in the first half of 2027, showing a response rate falling toward the 30% seen at 100 mcg/kg. The end-of-Phase 1 meeting with the agency, also due in the first half of 2027, could also refuse a faster path.¹ Before then, the next quarterly report will show the cash balance after the first Alexion payment, and Xencor expects an update on its Phase 2b XENITH-UC study around the end of 2026. The second $52.5 million Alexion payment is due within 14 days after the first anniversary of the July 29, 2026 settlement.²

Our call asks whether XNCR will stay above $25.15, its last close before the XmAb819 data.¹ We say YES: at $29.75 it sits 18.3% above that line and above every close since September 15, and the next XmAb819 data are not due until the first half of 2027.²

Xencor gives no budget for the randomized trial against tivozanib, so a reader cannot tell how much of the runway into 2029 it uses. The trial design itself is still subject to more talks with the agency.

No filing or release reports any agency feedback on an accelerated approval. The talk is a plan for the first half of 2027.

The 8-K moves the runway from through 2028 to into 2029, but it gives no cash figure and no reason for the change.

The 10-Q said the first $52.5 million was expected in August 2026. No later filing confirms it came in; the next quarterly report should show it.

The filings do not say whether any of the $105.0 million Alexion settlement goes to OMERS, which has first call on up to $35.0 million a year of Ultomiris royalties from 2026 through 2028.

Our price file starts in mid-September 2026, so the stock's high and low for the past year could not be confirmed.

Xencor held a webcast at 7:00 a.m. ET on October 26, but no transcript was found, and no analyst rating changes turned up.