What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2025-03-18 compared with 2024-03-15 · 33 added, 42 removed, 156 unchanged (32% of the section changed)

3 unchanged sentences

Holders of record

There were 11 record holders of our common stock as of February 26, 2024.

There were 11 record holders of our common stock registered with the transfer agent as of March 18, 2025.

The actual number of shareholders is greater than this number of record holders and includes shareholders who are the beneficial owner of shares registered in the name of brokers, banks or other agents.

In July 2021, we paid $2.50 per share in dividends to shareholders.

3 unchanged sentences

Issuer Purchases of Equity Securities

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements for the year ended December 31, 2024 and related notes thereto, which have been prepared in accordance with U.S.

12 unchanged sentences

XBiotech is focused on developing its True Human™ pipeline and manufacturing system.

Following the Janssen Transaction in December 2019, the tender offer in February 2020, and the dividends paid in July 2021, retained accumulated deficit earnings as of December 31, 2023 was ($52.3) million.

Following the Janssen Transaction in December 2019, the tender offer in February 2020, and the dividends paid in July 2021, our accumulated deficit as of December 31, 2024 was ($90.8) million.

We had a net loss of $38.5 million for the year ended December 31, 2024, compared to a net loss of $24.6 million for the year ended December 31, 2023.

During the fiscal year of 2024, we don’t expect to generate any revenues.

During the fiscal year of 2025, we don’t expect to generate any revenue.

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.

11 unchanged sentences

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, share-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.

These expenses consist primarily of salaries and related expenses, share-based compensation, 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.

13 unchanged sentences

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 was $4.7 million for the year ended December 31, 2023, and $6.3 million for the year ended December 31, 2022.

Our total general and administration expenses was $4.7 million for both the year ended December 31, 2024, and December 31, 2023.

Share-based compensation accounted for $0.6 million for the year ended December 31, 2024, and $0.5 million for the year ended December 31, 2023.

23 unchanged sentences

Dividend yield

With the exception of the dividend paid in 2021, we have assumed no dividend yield because we do not expect to pay dividends in the foreseeable future.

With the exception of the dividend paid in 2021, we have not historically paid dividends.

We have assumed no dividend yield because we do not expect to pay dividends in the foreseeable future.

The risk-free interest rate assumption is based on observed interest rates for U.S.

13 unchanged sentences

This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction.

To date, we have provided a valuation allowance against our deferred tax assets as we believe the objective and verifiable evidence of our historical pretax net losses outweighs any positive evidence of our forecasted future results.

To date, with the exception of certain Canada deferred tax assets that will reverse in a period in which they may be carried back, we have provided a valuation allowance against our deferred tax assets as we believe the objective and verifiable evidence of our historical pretax net losses outweighs any positive evidence of our forecasted future results.

Although we believe that our tax estimates are reasonable, the ultimate tax determination involves significant judgment.

3 unchanged sentences

Clinical Trial Accruals

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.

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.

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.

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.

Results of Operations

Revenue during the years ended December 31, 2023, and 2022 are summarized as follows (in thousands):

Year Ended December 31,

Manufacturing revenue

Clinical Trial revenue

Total revenue

We had not generated any revenue before the year 2020.

Under the clinical manufacturing agreement with Janssen and the addendum, for the year ended December 31, 2022, we have recorded $4.0 million as manufacturing revenue.

Cost of Goods Sold

Cost of goods sold during the years ended December 31, 2023, and 2022 are summarized as follows (in thousands):

Year Ended December 31,

Cost of goods sold

Manufacturing cost

Clinical trial cost

Total cost of goods sold

We had not incurred any cost of goods sold before the year 2020.The manufacturing cost for the year ended December 31, 2022, represents period expense for manufacturing, quality assurance and quality control departments.

Research and Development

8 unchanged sentences

Research and development expenses increased 15% to $37.8 million for the year ended December 31, 2024 compared to $32.8 million for the year ended December 31, 2023.

The rise was mainly due to the increase in clinical trials 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 the $4.5 million bonus to the Chief Executive Officer in June 2023 compared to the $3.8 million bonus in June 2022, in which 85% was allocated to research and development expenses in 2023 compared to 60% in 2022.

In addition, the decrease of laboratory and manufacturing supplies was primary caused by a reduction in raw material purchasing for clinical trial drug manufacturing.

The rise was mainly due to the increase in salaries and related expenses, resulting from the company-wide bonuses distributed during the year and the growth in the number of R&D employees from 79 in 2023 to 89 in 2024.

The increase in clinical trial and sponsored research was primarily due to a new study being initiated in the second quarter of 2023.

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.

General and Administrative

4 unchanged sentences

Professional fees

General and administrative expenses decreased 26% to $4.7 million for the year ended December 31, 2023 compared to $6.3 million for the year ended December 31, 2022.

The decrease was primarily driven by the salaries and related expenses.

The bonus to the Chief Executive Officer in June 2023 was $4.5 million compared to the $3.8 million bonus in June 2022, in which 15% was allocated to general and administrative expenses in 2023 compared to 40% in 2022.

Share-based compensation decreased $1.0 million mainly due to the termination of VP of Finance and HR in February 2023, which resulted in the forfeiture of unvested awards, and the stock option expense per share of new grants decreased compared to the expense of fully amortized grants.

In addition, professional fees increased $0.4 million mainly caused by the service fees related to the tender offer in June 2023.

General and administrative expenses increased 1% to $4.7 million for the year ended December 31, 2024.

The decrease in professional fees was caused by the service fees associated with the tender offer in June 2023, and a decrease in expense associated with tax services.

The increase in salaries and related expenses was due to the company-wide bonuses.

In addition, the patent filing expense increased mainly due to the transfer of patents from Janssen to XBiotech.

The following table summarizes other income (in thousands):

1 unchanged sentence

Interest income

Other income (expense)

Interest expense

Foreign exchange gain (loss)

The interest income for the years ended December 31, 2024 and 2023 was mainly generated from the Company’s Canadian bank accounts and interest bearing time deposits.

The other income during the year ended December 31, 2023 was primarily from American Stock Transfer & Trust Company, LLC in accordance with the terms outlined in the settlement agreement.

The interest expense for the years ended December 31, 2024 was the interest for the convertible loans.

The other income during the year ended December 31, 2024 was mainly from the reversal of the previous clinical trial accrual associated with visits that occurred more than 3 years ago for which the Company has not received an invoice.

In June 2023, the Company received a sum of $750 thousand from American Stock Transfer & Trust Company, LLC which was recorded as other income during 2023.

Foreign exchange gain (loss) was due to the fluctuation between the US dollar and the Canadian dollar in the year ended December 31, 2024 compared to 2023.

The Company’s income tax benefit for the tax period ended December 31, 2024 of $0.03 million was primarily driven by uncertain tax position activity and the estimated 2024 Canadian loss carryback to 2023.

The Company’s income tax expense for the tax period ended December 31, 2023 of $0.24 million was primarily driven by adjustments related to prior periods and current year uncertain tax positions.

The Company's income tax benefit for the tax period ended December 31, 2022 of $0.7 million, was primarily driven by the estimated 2022 Canadian loss carrybacks to 2019.

The Company expects to maintain its full valuation allowance in all jurisdictions during 2024.

The Company expects to maintain its full valuation allowance on all jurisdictions during 2025.

Liquidity and Capital Resources

16 unchanged sentences

During the years ended December 31, 2024 and 2023 net cash used in operating activities was $31.0 million and $18.7 million, respectively.

Net cash used in the years ended December 31, 2023 and 2022 primarily resulted from our net losses, whereas for the year ended December 31, 2022 the company received $4 million in revenue from the clinical manufacturing agreement with Janssen and the addendum.

Net cash used in the years ended December 31, 2024 and 2023 primarily resulted from our net losses.

The rise was mainly due to the increase in salaries and related expenses and clinical trial expenses.

Investing Activities

During the years ended December 31, 2023 and 2022, our investing activities generated net cash of $61.5 million and used net cash of $63.9 million, respectively.

During the years ended December 31, 2024 and 2023, our investing activities used net cash of $1.3 million and generated net cash of $61.5 million, respectively.

In July 2022, we purchased interest bearing time deposits in the amount of $63.3 million.

1 unchanged sentence

Financing Activities

During the year ended December 31, 2024, our financing activities provided net cash of $10.5 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 facility.

Additionally, during the year ended December 31, 2024, employees exercised stock options to purchase 50,767 shares of our common stock for approximately $200 thousand in net proceeds.

During the year ended December 31, 2023, our financing activities used net cash of $9 thousand.

We purchased 3,561 shares of our common stock, at a price of $4.00 per share, for an aggregate cost of approximately $14 thousand.

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 year ended December 31, 2023, employees exercised stock options to purchase 1,250 shares of our common stock for approximately $5 thousand in net proceeds.

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.

We do not expect to receive any additional revenue under the clinical manufacturing agreement with Janssen, as the clinical manufacturing agreement terminated in November 2022.

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.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity