XBiotech Inc

Previous wording

Following the Janssen Transaction in December 2019, the tender offer in February 2020, and the dividends paid in July 2021, the accumulated deficit as of June 30, 2024 was ($75.3) million. We had net losses before income tax of $13.0 million and $23.0 million for the three months and six months ended June 30, 2024, respectively, compared to $8.7 million and $12.6 million for the three months and six months ended June 30, 2023, respectively. During the next year, we don’t expect any revenues. In addition, we expect to incur significant and increasing operating losses for the foreseeable future as we advance our drug candidates from discovery through preclinical testing and clinical. In addition to these increasing research and development expenses, we expect general and administrative costs to increase, particularly in consideration of current inflationary trends. We will need to generate significant revenues to achieve or sustain profitability, and we may never do so. As of June 30, 2024, we had 94 employees.

Current wording

Following the Janssen Transaction in December 2019, the tender offer in February 2020, and the dividends paid in July 2021, the accumulated deficit as of September 30, 2024 was ($80.3) million. We had net losses before income tax of $5.0 million and $28.0 million for the three months and nine months ended September 30, 2024, respectively, compared to $7.1 million and $19.6 million for the three months and nine months ended September 30, 2023, respectively. During the next year, we don’t expect any revenues. In addition, we expect to incur significant and increasing operating losses for the foreseeable future as we advance our drug candidates from discovery through preclinical testing and clinical. In addition to these increasing research and development expenses, we expect general and administrative costs to increase, particularly in consideration of current inflationary trends. We will need to generate significant revenues to achieve or sustain profitability, and we may never do so. As of September 30, 2024, we had 92 employees.

Previous wording

Clinical development timelines, likelihood of success and total costs vary widely. We do not currently track our internal research and development costs or our personnel and related costs on an individual drug candidate basis. We use our research and development resources, including employees and our drug discovery technology, across multiple drug development programs. As a result, we cannot state precisely the costs incurred for each of our research and development programs or our clinical and preclinical drug candidates. From inception through June 30, 2024, we have recorded total research and development expenses, including share-based compensation, of $296.6 million. Our total research and development expenses for the three months and six months ended June 30, 2024 were $13.0 million and $22.8 million, respectively, compared to $11.3 million and $17.5 million for the three months and six months ended June 30, 2023, respectively. Share-based compensation accounted for $0.2 million and $0.5 million for the three months and six months ended June 30, 2024, respectively, compared to $0.8 million and $1.4 million for the three months and six months ended June 30, 2023, respectively, related to research and development.

Current wording

Clinical development timelines, likelihood of success and total costs vary widely. We do not currently track our internal research and development costs or our personnel and related costs on an individual drug candidate basis. We use our research and development resources, including employees and our drug discovery technology, across multiple drug development programs. As a result, we cannot state precisely the costs incurred for each of our research and development programs or our clinical and preclinical drug candidates. From inception through September 30, 2024, we have recorded total research and development expenses, including share-based compensation, of $303.7 million. Our total research and development expenses for the three months and nine months ended September 30, 2024 were $7.1 million and $29.9 million, respectively, compared to $7.5 million and $25.05 million for the three months and nine months ended September 30, 2023, respectively. Share-based compensation related to research and development accounted for $0.2 million and $0.7 million for the three months and nine months ended September 30, 2024, respectively, compared to $0.8 million and $2.2 million for the three months and nine months ended September 30, 2023, respectively.

Previous wording

Research and development expenses, as a percentage of total operating expenses for the three months and six months ended June 30, 2024 were 87% and 89%, respectively, compared to 85% and 86% for the three months and six months ended June 30, 2023, respectively. The percentages, excluding share-based compensation, for the three months and six months ended June 30, 2024 were 85% and 86%, respectively, compared to 85% and 86% for the three months and six months ended June 30, 2023.

Current wording

Research and development expenses, as a percentage of total operating expenses for the three months and nine months ended September 30, 2024 were 90% and 89%, respectively, compared to 89% and 87% for the three months and nine months ended September 30, 2023, respectively. The percentages of research and development expenses compared to total operating expenses, excluding share-based compensation, for the three months and nine months ended September 30, 2024 were 91% and 90%, respectively, compared to 89% and 87% for the three months and nine months ended September 30, 2023.

Previous wording

General and administrative expense consists primarily of salaries and related expenses for personnel in administrative, finance, business development and human resource functions, as well as the legal costs of pursuing patent protection of our intellectual property and patent filing and maintenance expenses, share–based compensation, and professional fees for legal services. Our total general and administration expenses for the three months and six months ended June 30, 2024 were $2.0 million and $3.0 million, respectively, compared to $2.0 million and $2.9 million for the three months and six months ended June 30, 2023, respectively. Share-based compensation accounted for $0.1 million and $0.3 million for the three months and six months ended June 30, 2024, respectively, and $0.1 million and $0.2 million for the three months and six months ended June 30, 2023, respectively, related to general and administrative expenses.

Current wording

General and administrative expense consists primarily of salaries and related expenses for personnel in administrative, finance, business development, and human resource functions, as well as the legal costs of pursuing patent protection of our intellectual property and patent filing, maintenance expenses, share–based compensation, and professional fees for legal services. Our total general and administration expenses for the three months and nine months ended September 30, 2024 were $0.8 million and $3.8 million, respectively, compared to $1.0 million and $3.9 million for the three months and nine months ended September 30, 2023, respectively. Share-based compensation related to general and administration accounted for $0.1 million and $0.7 million for the three months and nine months ended September 30, 2024, respectively, and $0.1 million and $0.4 million for the three months and nine months ended September 30, 2023, respectively.

Previous wording

General and administrative expenses, as a percentage of total operating expenses for the three months and six months ended June 30, 2024 were 13% and 12%, respectively, compared to 15% and 14% for the three months and six months ended June 30, 2023, respectively. The percentages, excluding share-based compensation, for the three months and six months ended June 30, 2024 were 13% and 11%, respectively, compared to 15% and 14% for the three months and six months ended June 30, 2023.

Current wording

General and administrative expenses, as a percentage of total operating expenses for the three months and nine months ended September 30, 2024 were 10% and 11%, respectively, compared to 11% and 13% for the three months and nine months ended September 30, 2023, respectively. The percentages of general and administrative expense compared to total operating expenses, excluding share-based compensation, for the three months and nine months ended September 30, 2024 were 9% and 10%, respectively, compared to 11% and 13% for the three months and nine months ended September 30, 2023.

Previous wording

Expense accruals related to clinical trials are based on the Company’s estimates of services received and efforts expended pursuant to contracts with third party service providers conduct and manage clinical trials on the Company’s behalf. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing costs, the Company estimates the period over which services will be performed and the level of effort to be expended in each period based upon patient enrollment, clinical site activations, or information provided to the Company by its vendors on their actual costs incurred. Any estimates of the level of services performed or the costs of these services could differ from actual results.

Current wording

Expense accruals related to clinical trials are based on actual services received and efforts expended pursuant to contracts with third party service providers which conduct and manage clinical trials on the Company’s behalf. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. The Company accrues costs based on the actual services rendered in the period over which services were performed and the level of effort expended in each period based upon patient enrollment, clinical site activations, or information provided to the Company by its vendors on their actual costs incurred. Any estimates of the level of services performed or the costs of these services could differ from actual results.

Previous wording

Research and development expenses increased $5.3 million to $22.8 million for the six months ended June 30, 2024, compared to $17.5 million for the six months ended June 30, 2023. The increase was primarily due to the rise in the clinical trial activities, related to the new study being initiated in the second quarter of 2023. The increase of salaries and related expenses was mainly due to a company-wide bonus distributed in January 2024 and the bonus to the Chief Executive Officer. In addition, there is a decrease in share-based compensation, which was due to the decreased stock option expense per share of new grants compared to the expense of fully amortized grants.

Current wording

Research and development expenses increased $4.9 million to $29.9 million for the nine months ended September 30, 2024, compared to $25.0 million for the nine months ended September 30, 2023. The increase was primarily due to the rise in the clinical trial activities, related to the new study being initiated in the second quarter of 2023. The increase of salaries and related expenses was mainly due to a company-wide bonus distributed in January 2024 and the bonus to the Chief Executive Officer. In addition, there is a decrease in share-based compensation, which was due to the decreased stock option expense per share of new grants compared to the expense of fully amortized grants.

Previous wording

General and administrative expenses decreased $10 thousand to $2.0 million for the three months ended June 30, 2024 compared to $2.0 million for the three months ended June 30, 2023. General and administrative expenses increased $103 thousand to $3.0 million for the six months ended June 30, 2023 compared to $2.9 million for the six months ended June 30, 2023.

Current wording

General and administrative expenses decreased $196 thousand to $0.8 million for the three months ended September 30, 2024 compared to $1.0 million for the three months ended September 30, 2023. General and administrative expenses decreased $92 thousand to $3.8 million for the nine months ended September 30, 2024 compared to $3.9 million for the nine months ended September 30, 2023.

Previous wording

The three months decrease was primarily related to the decrease of professional fees, mainly caused by the service fees associated with the tender offer in June 2023. In addition, salaries and related expenses increased as the bonus to the Chief Executive Officer in June 2024 was $5.0 million compared to the $4.5 million bonus in June 2023, in which 15% was allocated to general and administrative expenses.

Current wording

The three months decrease was primarily due to the decrease of professional fees, related to the stock service and the tax service.

Previous wording

Compared to the six months ended June 30, 2023, the increase in the general and administrative expense in the six months ended June 30, 2024 was also primarily due to the decrease in professional fees. The increase of salaries and related expenses was mainly due to a company-wide bonus distributed in January 2024 and the bonus to the Chief Executive Officer. In addition, the patent filing expense increased mainly due to the transfer of patents from Janssen to XBiotech.

Current wording

Compared to the nine months ended September 30, 2023, the decrease in the general and administrative expense in the nine months ended September 30, 2024 was also primarily caused by the service fees associated with the tender offer in June 2023 and tax service. The increase of salaries and related expenses was due to a company-wide bonus distributed in January 2024 and the bonus to the Chief Executive Officer. In addition, the patent filing expense increased mainly due to the transfer of patents from Janssen to XBiotech.

Previous wording

The following table summarizes other income (loss) (in thousands):

Current wording

The following table summarizes other income (in thousands):

Previous wording

The interest income for the three months and six months ended June 30, 2024 and 2023 was from the interest generated from the Company’s Canadian bank account and interest bearing time deposit. The other expense during the three months and six months ended June 30, 2024, was the accrued interest for the convertible loan. In June 2023, the Company received a sum of $750 thousand from American Stock Transfer & Trust Company, LLC which was recorded as other income, in accordance with the terms outlined in the settlement agreement. Foreign exchange gain (loss) was mainly due to the fluctuation between the US dollar and the Canadian dollar in the three months and six months ended June 30, 2024 compared to 2023.

Current wording

The interest income for the three months and nine months ended September 30, 2024 and 2023 was from the interest generated from the Company’s Canadian bank account and interest bearing time deposit. The interest expense for the three months and nine months ended September 30, 2024, was the interest for the related party convertible loan. In June 2023, the Company received a sum of $750 thousand from American Stock Transfer & Trust Company, LLC which was recorded as other income, in accordance with the terms outlined in the settlement agreement. Foreign exchange gain (loss) was mainly due to the fluctuation between the US dollar and the Canadian dollar in the three months and nine months ended September 30, 2024 compared to 2023.

Previous wording

Since our inception on March 22, 2005 through June 30, 2024, we have funded our operations principally through private placements and public offerings of equity securities, which have provided aggregate cash proceeds of approximately $118.2 million. We received $675 million in cash proceeds from the Janssen Transaction in the year ended December 31, 2019. In June 2021, we received the remaining $75 million in cash from the escrow receivable from the same transaction. In July 2021, we paid $75 million in dividends to shareholders. At June 30, 2024, we had cash and cash equivalents of $188.5 million as compared to cash and cash equivalents of $143.4 million at June 30, 2023. The following table summarizes our sources and uses of cash (in thousands):

Current wording

Since our inception on March 22, 2005, we have funded our operations principally through private placements and public offerings of equity securities, which have provided aggregate cash proceeds of approximately $118.4 million as of September 30, 2024. We received $675 million in cash proceeds from the Janssen Transaction in the year ended December 31, 2019. In June 2021, we received the remaining $75 million in cash from the escrow receivable from the same transaction. In July 2021, we paid $75 million in dividends to shareholders. At September 30, 2024, we had cash and cash equivalents of $183.1 million as compared to cash and cash equivalents of $202.2 million at September 30, 2023. The following table summarizes our sources and uses of cash (in thousands):

Previous wording

During the six months ended June 30, 2024 and 2023, our operating activities used net cash of $18.6 million and $13.8 million, respectively. The use of net cash in each of these periods primarily resulted from our net losses. The increase in net cash used in operations for the six months ended June 30, 2024 in comparison to the six months ended June, 2023 was mainly due to the increase in salaries and related expenses and clinical trial expense.

Current wording

During the nine months ended September 30, 2024 and 2023, our operating activities used net cash of $24.4 million and $15.2 million, respectively. The use of net cash in each of these periods primarily resulted from our net losses. The increase in net cash used in operations for the nine months ended September 30, 2024 in comparison to the nine months ended September 30, 2023 was mainly due to the increase in salaries and related expenses and clinical trial expense.

Previous wording

During the six months ended June 30, 2024, our financing activities provided net cash of $10.1 million. On January 3, 2024, we entered into a Convertible Loan Agreement (the “Loan”) with John Simard, the Company’s Founder, President, Chief Executive Officer and Chairman, which provided $10 million net cash for the construction of a new, state-of-the-art research and development facility at the Company's property at 5217 Winnebago Lane in Austin, Texas. Additionally, during the six months ended June 30, 2024, employees exercised stock options to purchase 26,192 shares of our common stock for approximately $103 thousand in net proceeds. On June 20, 2023, we used approximately $14 thousand to purchase 3,561 common shares at a price of $4.00 per share, relating to the tender offer completed in June 2023.

Current wording

During the nine months ended September 30, 2024, our financing activities provided net cash of $10.2 million. On January 3, 2024, we entered into a Convertible Loan Agreement (the “Loan”) with John Simard, the Company’s Founder, President, Chief Executive Officer and Chairman, which provided $10 million net cash for the construction of a new, state-of-the-art research and development facility at the Company's property at 5217 Winnebago Lane in Austin, Texas. Additionally, during the nine months ended September 30, 2024, employees exercised stock options to purchase 42,442 shares of our common stock for approximately $167 thousand in net proceeds. On June 20, 2023, we used approximately $14 thousand to purchase 3,561 common shares at a price of $4.00 per share, relating to the tender offer completed in June 2023. During the nine months ended September 30, 2023, employees exercised stock options to purchase 1,250 shares of our common stock for approximately $5 thousand in net proceeds.

Previous wording

We expect to continue to incur operating losses in the future. We do not expect to receive any additional revenue under the clinical manufacturing agreement with Janssen. Further, we may not receive any product revenue until a drug candidate has been approved by the FDA, EMA or similar regulatory agencies in other countries and successfully commercialized. As of June 30, 2024, our principal sources of liquidity were our cash and cash equivalents, which totaled approximately $188.5 million.

Current wording

We expect to continue to incur operating losses in the future. We do not expect to receive any additional revenue under the clinical manufacturing agreement with Janssen. Further, we may not receive any product revenue until a drug candidate has been approved by the FDA, EMA or similar regulatory agencies in other countries and successfully commercialized. As of September 30, 2024, our principal sources of liquidity were our cash and cash equivalents, which totaled approximately $183.1 million.