Xencor Inc (XNCR): auditor change — Xencor restates FY2023 and Q1-Q3 2024 results; errors in royalty accounting and tax

Xencor Inc

Royalty transaction with OMERS Life Sciences misclassified as deferred income instead of debt; impacted balance sheet by ~$168.5M debt understatement.
Estimated FY2023 impact: revenue understated by $6.3M, interest expense understated by $5.5M; operating cash flow overstated by $163M.
Additional tax errors: R&D expense under Section 174 and state tax lead to ~$7.8M shareholder equity overstatement for FY2023.
Material weaknesses identified in internal control over financial reporting related to both royalty and tax errors.
RSM US LLP recalls its audit reports on 2023 financials and internal controls; company will file amendments before 2024 10-K.

item 4.02 item 9.01

Key facts

Extracted from this filing and checked against the source text.

Auditor Changes SEC 8-K Item 4.01/4.02 confidence 0.9

Xencor Inc reported that prior financial statements should not be relied upon.

Action: non reliance
Auditor: RSM US LLP

Exact text from the filing

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

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Source: SEC EDGAR

accession 0001326732-25-000005

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