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 September 30, 2025 was $(109.5) million. We had net losses before income tax of $6.0 million and $18.6 million for the three months and nine months ended September 30, 2025, respectively, compared to $5.0 million and $28.0 million for the three months and nine months ended September 30, 2024, respectively. We do not expect to generate any revenue in 2025. 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, 2025, we had 88 employees.

Current wording

Following the Janssen Transaction in December 2019, the tender offer in February 2020, and the dividends paid in July 2021, accumulated deficit as of March 31, 2026 was ($141.9) million. We had net losses of $5.5 million and $10.9 million for the three months ended March 31, 2026 and 2025, respectively. We do not expect to generate any revenue in 2026. 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 March 31, 2026, we had 87 employees.

Previous wording

Research and development expenses consist of expenses incurred in connection with identifying and developing our drug candidates. These expenses consist primarily of salaries and related expenses, stock-based compensation, the purchase of equipment, laboratory and manufacturing supplies, facility costs, costs for preclinical and clinical research, development of quality control systems, quality assurance programs and manufacturing processes. We charge all research and development expenses to operations as incurred.

Current wording

Research and development expense consists of expenses incurred in connection with identifying and developing our drug candidates. These expenses consist primarily of salaries and related expenses, stock-based compensation, the purchase of equipment, laboratory and manufacturing supplies, facility costs, costs for preclinical and clinical research, development of quality control systems, quality assurance programs and manufacturing processes. We charge all research and development expenses to operating expenses as incurred.

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 September 30, 2025, we have recorded total research and development expenses, including share-based compensation, of $371.7 million. Our total research and development expenses for the three months and nine months ended September 30, 2025 were $5.1 million and $22.0 million, respectively, compared to $7.1 million and $29.9 million for the three months and nine months ended September 30, 2024, respectively. Share-based compensation related to research and development accounted for $17 thousand and $2.7 million for the three months and nine months ended September 30, 2025, respectively, compared to $0.2 million and $0.7 million for the three months and nine months ended September 30, 2024, respectively.

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 March 31, 2026, we have recorded total research and development expenses, including share-based compensation, of $402.3 million. Our total research and development expenses for the three months ended March 31, 2026 and 2025 were $5.2 million and $11.6 million, respectively. Share-based compensation accounted for $8 thousand and $2.7 million for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Research and development expenses, as a percentage of total operating expenses for the three months and nine months ended September 30, 2025 were 84% and 85%, respectively, compared to 90% and 89% for the three months and nine months ended September 30, 2024, 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, 2025 were 84% and 86%, respectively, compared to 91% and 90% for the three months and nine months ended September 30, 2024.

Current wording

Research and development expenses, as a percentage of total operating expenses for the three months ended March 31, 2026 and 2025 were 83% and 86%, respectively. The percentages, excluding stock-based compensation, for the three months ended March 31, 2026 and 2025, were 85% and 88%.

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, 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, 2025 were $1.0 million and $3.9 million, respectively, compared to $0.8 million and $3.8 million for the three months and nine months ended September 30, 2024, respectively. Share-based compensation related to general and administrative accounted for $7 thousand and $0.8 million for the three months and nine months ended September 30, 2025, respectively, and $0.1 million and $0.4 million for the three months and nine months ended September 30, 2024, 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 and maintenance expenses, stock–based compensation, and professional fees for legal services. Our total general and administration expenses for the three months ended March 31, 2026 and 2025 were $1.1 million and $1.9 million, respectively. Share-based compensation accounted for $164 thousand and $668 thousand for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

General and administrative expenses, as a percentage of total operating expenses for the three months and nine months ended September 30, 2025 were 16% and 15%, respectively, compared to 10% and 11% for the three months and nine months ended September 30, 2024, 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, 2025 were 16% and 14%, respectively, compared to 9% and 10% for the three months and nine months ended September 30, 2024.

Current wording

General and administrative expense, as a percentage of total operating expenses for the three months ended March 31, 2026 and 2025 were 17% and 14%, respectively. The percentages, excluding stock-based compensation, for the three months ended March 31, 2026 and 2025, were 15% and 12%.

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 decreased $7.9 million to $22.0 million for the nine months ended September 30, 2025, compared to $30.0 million for the nine months ended September 30, 2024. The decrease was primarily due to clinical trials and sponsored research expenses, as no trials were in progress during the nine months ended September 30, 2025. The decrease in salaries and related expenses was mainly due to the $4.0 million bonus to the Chief Executive Officer in March 2025, compared to $5.0 million in June 2024, in which 85% was allocated to research and development expenses. In addition, stock-based compensation increased due to the issuance of stock options with immediate vesting and grant date fair value at $3.0 million to the Chief Executive Officer in March 2025, with 85% of the expense allocated to research and development.

Current wording

Research and development expenses decreased by $6.4 million to $5.2 million for the three months ended March 31, 2026, compared to $11.6 million for the three months ended March 31, 2025. The decrease of salaries and related expenses was mainly due to the $4.0 million bonus to the former Chief Executive Officer Mr. Simard in March 2025 in which 85%, or $3.4 million was allocated to research and development expenses. Stock-based compensation decreased due to the issuance of stock options with immediate vesting and grant date fair value at $3.0 million to the former Chief Executive Officer Mr. Simard in March 2025, with 85% or $2.5 million of the expense allocated to research and development.

Previous wording

Compared to the nine months ended September 30, 2024, the increase in the general and administrative expenses in the nine months ended September 30, 2025 was primarily due to stock-based compensation. The increase resulted from the issuance of stock options with immediate vesting and grant date fair value at $3.0 million to the Chief Executive Officer in March 2025, with 15% of the expense allocated to general and administrative expenses. The decrease in salaries and related expenses was mainly due to the bonus to the Chief Executive Officer, in which 15% was allocated to general and administrative expenses.

Current wording

General and administrative expenses decreased by $0.9 million to $1.1 million for the three months ended March 31, 2026, compared to $1.9 million for the three months ended March 31, 2025. The decrease in salaries and related expenses was primarily due to the $4.0 million bonus to the former Chief Executive Officer Mr. Simard in March 2025, in which 15% or $0.6 million was allocated to general and administrative expenses. Stock-based compensation decreased due to the issuance of $3.0 million in stock options to the former Chief Executive Officer Mr. Simard in March 2025, with 15% or $0.5 million of the expenses allocated to general and administrative department.

Previous wording

The following table summarizes other income (in thousands):

Current wording

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

Previous wording

The interest income for the three months and nine months ended September 30, 2025 and 2024 was from the interest generated from the Company’s Canadian bank accounts. The interest expense for the three months ended September 30, 2024 and nine months ended September 30, 2025 and 2024 was the interest for the convertible loans. The other expense during the three months ended September 30, 2025 was mainly the donation to non-profit organizations. The other income during the nine months ended September 30, 2025 was the cancellation of a penalty by the Canada Revenue Agency for the 2020 tax year. In accordance with the settlement agreement, a portion of the cancelled amount was allocated to American Stock Transfer & Trust Company, LLC. 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, 2025 compared to 2024.

Current wording

Interest income for the three months ended March 31, 2026 and 2025 was primarily generated from the Company’s Canadian bank accounts and decreased due to lower interest rates and a lower cash balance. The interest expenses for the three months ended March 31, 2025 was the interest for the convertible loans. The other income for the three month ended March 31, 2026 was primarily attributable to the receipt of the Employee Retention Credit from the Internal Revenue Service. The other income during the three months ended March 31, 2025 was the cancellation of a penalty by the Canada Revenue Agency for the 2020 tax year. Foreign exchange (loss) gain was due to the fluctuation between the US dollar and the Canadian dollar in the three months ended March 31, 2026 and March 31, 2025.

Previous wording

Since our inception on March 22, 2005 through September 30, 2025, we have funded our operations principally through private placements and public offerings of equity securities, which have provided aggregate cash proceeds of approximately $276.3 million, excluding the February 2020 tender offer cash payment. 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, 2025, we had cash and cash equivalents of $147.4 million as compared to cash and cash equivalents of $183.1 million at September 30, 2024. The following table summarizes our sources and uses of cash (in thousands):

Current wording

Since our inception on March 22, 2005 through March 31, 2026, we have funded our operations principally through private placements and public offerings of equity securities, which have provided aggregate cash proceeds of approximately $278.6 million, excluding the February 2020 tender offer cash payment. 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. As of March 31, 2026, we had cash and cash equivalents of $115.5 million as compared to cash and cash equivalents of $155.9 million at March 31, 2025. The following table summarizes our sources and uses of cash (in thousands):

Previous wording

During the nine months ended September 30, 2025 and 2024, our operating activities used net cash of $17.0 million and $24.4 million, respectively. The use of net cash in each of these periods primarily resulted from our net losses. The decrease in net cash used in operations for the nine months ended September 30, 2025 in comparison to the nine months ended September 30, 2024 was mainly due to the decrease in clinical trial expenses.

Current wording

During the three months ended March 31, 2026 and 2025, our operating activities used net cash $9.0 million and $6.7 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 three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was mainly due to the $4.5 million payment for Mr. Simard’s 2025 annual bonus in January 2026.

Previous wording

During the nine months ended September 30, 2025 and 2024, the net cash (used in) provided by our financing activities was mainly related to the Convertible Loan. 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. On January 31, 2025, the Loan was terminated upon full repayment of the principal and interest by the Company. 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.

Current wording

During the three months ended March 31, 2025, the net cash from our financing activities was mainly related to the related party Convertible Loan. 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, who 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. On January 31, 2025, the Loan was terminated upon full repayment of the principal and the interest by the Company.

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 September 30, 2025, our principal sources of liquidity were our cash and cash equivalents, which totaled approximately $147.4 million.

Current wording

We expect to continue to incur operating losses in the future. 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 March 31, 2026, our principal sources of liquidity were our cash and cash equivalents, which totaled approximately $115.5 million.