Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | May 10, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-37347 | |
Entity Registrant Name | XBIOTECH INC. | |
Entity Incorporation, State or Country Code | CA | |
Entity Address, Address Line One | 5217 Winnebago Ln | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78744 | |
City Area Code | 512 | |
Local Phone Number | 386-2900 | |
Title of 12(b) Security | Common Stock, no par value | |
Trading Symbol | XBIT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 30,457,531 | |
Entity Central Index Key | 0001626878 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 201,039 | $ 200,023 |
Accrued interest receivable | 870 | 860 |
Income tax receivable | 75 | 75 |
Prepaid expenses and other current assets | 1,072 | 760 |
Total current assets | 203,056 | 201,718 |
Property and equipment, net | 24,802 | 24,897 |
Total assets | 227,858 | 226,615 |
Current liabilities: | ||
Accounts payable | 2,607 | 2,516 |
Accrued expenses | 4,194 | 3,501 |
Income tax payable | 83 | 83 |
Convertible loan, related party | 10,000 | 0 |
Total current liabilities | 16,884 | 6,100 |
Long-term liabilities: | ||
Income tax payable | 1,694 | 1,669 |
Total liabilities | 18,578 | 7,769 |
Shareholders’ equity: | ||
Preferred stock, no par value, unlimited shares authorized, no shares outstanding | 0 | 0 |
Common stock, no par value, unlimited shares authorized, 30,450,881 and 30,436,964 shares issued and outstanding at March 31, 2024 and December 31, 2023 | 271,588 | 271,152 |
Accumulated deficit | (62,308) | (52,306) |
Total shareholders’ equity | 209,280 | 218,846 |
Total liabilities and shareholders’ equity | $ 227,858 | $ 226,615 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares $ / shares in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Preferred stock, no par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | Unlimited | Unlimited |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | Unlimited | Unlimited |
Common Stock, Shares, Outstanding (in shares) | 30,450,881 | 30,436,964 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Operating expenses: | ||
Research and development | $ 9,825 | $ 6,230 |
General and administrative | 1,028 | 915 |
Total operating expenses | 10,853 | 7,145 |
Loss from operations | (10,853) | (7,145) |
Interest income | 2,658 | 2,779 |
Other (expense) income | (200) | 130 |
Foreign exchange (loss) gain | (1,582) | 383 |
Total other income | 876 | 3,292 |
Loss before income taxes | (9,977) | (3,853) |
Income tax expense | (25) | (37) |
Net loss | $ (10,002) | $ (3,816) |
Net loss per share—basic and diluted (in dollars per share) | $ (0.33) | $ (0.13) |
Shares used to compute basic and diluted net loss per share (in shares) | 30,443,973 | 30,439,275 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Net loss | $ (10,002) | $ (3,816) |
Foreign currency translation adjustment | 0 | (386) |
Comprehensive loss | $ (10,002) | $ (4,202) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Common Stock Including Additional Paid in Capital [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Total |
Balance (in shares) at Dec. 31, 2022 | 30,439 | |||
Balance at Dec. 31, 2022 | $ 267,325 | $ (27,749) | $ 826 | $ 240,402 |
Net loss | 0 | (3,816) | 0 | (3,816) |
Share-based compensation expense | $ 705 | 0 | 0 | 705 |
Balance (in shares) at Mar. 31, 2023 | 30,439 | |||
Balance at Mar. 31, 2023 | $ 268,030 | (31,565) | 440 | 236,905 |
Foreign currency translation adjustment | $ 0 | 0 | $ (386) | (386) |
Balance (in shares) at Dec. 31, 2023 | 30,437 | |||
Balance at Dec. 31, 2023 | $ 271,152 | (52,306) | 218,846 | |
Net loss | $ 0 | (10,002) | (10,002) | |
Issuance of common stock under stock option plan (in shares) | 14 | |||
Issuance of common stock under stock option plan | $ 55 | 0 | 55 | |
Share-based compensation expense | $ 381 | 0 | 381 | |
Balance (in shares) at Mar. 31, 2024 | 30,451 | |||
Balance at Mar. 31, 2024 | $ 271,588 | $ (62,308) | $ 209,280 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Operating activities | ||
Net loss | $ (10,002) | $ (3,816) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||
Depreciation | 432 | 443 |
Foreign exchange (gain) loss | 1,582 | (383) |
Share-based compensation expense | 381 | 705 |
Changes in operating assets and liabilities: | ||
Accrued interest receivable | (10) | (1,155) |
Prepaid expenses and other current assets | (312) | (103) |
Accounts payable | 8 | (1,064) |
Accrued expenses | 694 | 602 |
Income tax payable | 25 | 22 |
Deferred tax liability | 0 | (59) |
Net cash (used in) operating activities | (7,202) | (4,808) |
Investing activities | ||
Purchase of property and equipment | (255) | (6) |
Net cash (used in) investing activities | (255) | (6) |
Financing activities | ||
Proceeds from convertible loan, related party | 10,000 | 0 |
Proceeds from issuance of common stock under stock option plan | 55 | 0 |
Net cash provided by financing activities | 10,055 | 0 |
Effect of foreign exchange rate on cash and cash equivalents | (1,582) | (8) |
Net change in cash and cash equivalents | 1,016 | (4,822) |
Cash and cash equivalents, beginning of period | 200,023 | 157,306 |
Cash and cash equivalents, end of period | 201,039 | 152,484 |
Supplemental information: | ||
Accrued purchases of property and equipment | $ 82 | $ 14 |
Note 1 - Organization
Note 1 - Organization | 3 Months Ended |
Mar. 31, 2024 | |
Notes to Financial Statements | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | 1. Organization XBiotech Inc. (“XBiotech” or the “Company”) was incorporated in Canada on March 22, 2005. The Company’s headquarters are located in Austin, Texas. XBiotech USA, Inc., a wholly-owned subsidiary of the Company, was incorporated in Delaware, United States in November 2007. XBiotech Germany GmbH, a wholly-owned subsidiary of the Company, was incorporated in Germany in January 2014. XBiotech Germany GmbH was dissolved in February 2023. Since its inception, XBiotech has focused on advancing technology to rapidly identify and clone antibodies from individuals that have resistance to disease. At the heart of the Company is a proprietary technical knowhow to translate natural human immunity into therapeutic product candidates. The Company has in its pipeline both anti-infective and anti-inflammatory candidate therapeutics derived from this technology. An area of medical focus for XBiotech are therapies that block a potent substance naturally produced by body, known as interleukin-1 alpha (IL-1a), that mediates tissue breakdown, angiogenesis, the formation of blood clots and inflammation. IL-1a is a protein that is on or in cells of the body and is involved in the body’s response to injury or trauma. In almost all chronic (arthritis, cancer) and in some acute injury scenarios (stroke or heart attack), IL-1a can mediate harmful disease-related activity. At the end of 2019, XBiotech sold a True Human™ antibody that blocked IL-1a activity for $750 million in cash and up to $600 million in potential milestone payments (the “Janssen Transaction”). As part of the Janssen Transaction, XBiotech maintained the right to develop new antibodies that block IL-1a and develop these therapeutics in all areas of medicine except dermatology. Moreover, Janssen agreed that they would assert all patents they acquired relating to IL-1a for the benefit of XBiotech to protect our future IL-1a-related therapies in all non-dermatological indications. XBiotech is using its True Human™ antibody discovery technology to identify and develop new IL-1a targeting product candidates and has already brought one such candidate into a clinical studies in oncology and rheumatology; and another unique anti-IL-1a antibody into a Phase I study in neurology. The Company continues to be subject to a number of risks common to companies in similar stages of development. Principal among these risks are the uncertainties of technological innovations, dependence on key individuals, development of the same or similar technological innovations by the Company’s competitors and protection of proprietary technology. The Company’s ability to fund its planned clinical operations, including completion of its planned trials, is expected to depend on the amount and timing of cash receipts from future collaboration or product sales and/or financing transactions. The Company believes that its cash and cash equivalents of $201.0 million at March 31, 2024, will enable the Company to achieve several major inflection points, including potential new clinical studies with lead product candidates. The Company expects to have sufficient cash through at least 12 months from the date of this report. |
Note 2 - Significant Accounting
Note 2 - Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Notes to Financial Statements | |
Significant Accounting Policies [Text Block] | 2. Significant Accounting Policies Basis of Presentation The condensed consolidated balance sheet as of March 31, 2024, the condensed consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the three months ended March 31, 2024 and 2023 were prepared by management without audit. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, except as otherwise disclosed, necessary for the fair presentation of the financial position, results of operations, and changes in financial position for such periods, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2023. The results of operations for the period ended March 31, 2024 are not necessarily indicative of the operating results that may be expected for a full year. The condensed consolidated balance sheet as of December 31, 2023 contains financial information taken from the audited XBiotech Inc. consolidated financial statements as of that date. Basis of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated upon consolidation. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported values of amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. Research and Development Costs All research and development costs are charged to expense as incurred. Research and development costs include salaries and personnel-related costs, consulting fees, fees paid for contract clinical trial research services, the costs of laboratory consumables, equipment and facilities, license fees and other external costs. Costs incurred to acquire licenses for intellectual property to be used in research and development activities with no alternative future use are expensed as incurred as research and development costs. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed. 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. 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. Income Taxes In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which enhances the transparency and decision usefulness of income tax disclosures. Adjustments to the annual disclosure of income taxes include: (1) A tabular rate reconciliation comprised of eight specific categories, (2) Incomes taxes paid, disaggregated between significant federal, state, and foreign jurisdictions, (3) Eliminates requirements to disclose the nature and estimate of reasonably possible changes to unrecognized tax benefits in the next 12 months or that an estimated range cannot be made, and (4) Adds a requirement to disclose income (or loss) from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) from continuing operations disaggregated between domestic and foreign. The ASU is effective for public business entities for fiscal years beginning on or after December 15, 2024 with early adoption permitted. The amendments in ASU 2023-09 should be applied on a prospective basis and retrospective application is permitted. The Company is in the process of evaluating the impact of adoption of ASU 2023-09 on the Company's consolidated financial statements and disclosures. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company measures deferred tax assets and liabilities using the enacted tax rates for the years and jurisdictions in which the temporary differences are expected to be recovered. A change to the tax rates used to measure the Company’s deferred taxes is recognized in income during the period in which the new rate(s) were enacted. The Company recognizes deferred tax assets to the extent the Company’s assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including the future reversals of existing taxable temporary differences, projected future taxable income exclusive of reversing temporary differences and carryforwards, tax-planning strategies, taxable income in prior carryback years if permitted under tax law, and the results from prior years. If the Company determines it is more likely than not, that all or a portion of a deferred tax asset will not be realized a valuation allowance is recorded with a charge to income tax expense. Alternatively, if the Company determines that all or a portion of a deferred tax asset previously not meeting the more likely than not threshold will be realized, the Company reduces its valuation allowance and recognizes a benefit in income tax expense. Share-Based Compensation The Company accounts for its share-based compensation awards in accordance with ASC Topic 718, Compensation-Stock Compensation Share-based compensation expense recognized for the three months ended March 31, 2024 and 2023 was included in the following line items on the Consolidated Statements of Operations (in thousands). Three Months Ended March 31, 2024 2023 Research and development $ 255 $ 623 General and administrative 126 82 Total share-based compensation expense $ 381 $ 705 The fair value of each option is estimated on the date of grant using the Black-Scholes method with the following assumptions: Three Months Ended March 31, 2024 2023 Dividend yield - - Expected volatility 80 % 82 % Risk-free interest rate 3.8%-4.3 % 3.5%-4.2 % Expected life (in years) 5.38-6.25 5.63-6.25 Weighted-average grant date fair value per share $ 3.91 $ 3.84 Cash and Cash Equivalents The Company considers highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consisted primarily of cash on deposit in U.S. and Canadian banks. Cash and cash equivalents are stated at cost which approximates fair value. Interest Bearing Time Deposit During the three months ended March 31, 2023, the Company held guaranteed investment certificates with a financial institution. The guaranteed investment certificates have a 12 month term at origination with interest payable at maturity. The guaranteed investment certificates matured in July, 2023. Concentrations of Credit Risk Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents. The Company holds these investments in highly-rated financial institutions, and limits the amounts of credit exposure to any one financial institution. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements. Property and Equipment Property and equipment, which consists of land, construction in process, furniture and fixtures, computers and office equipment, scientific equipment, vehicles and building are stated at cost and depreciated over the estimated useful lives of the assets, with the exception of land and construction in process which are not depreciated, using the straight line method. The useful lives are as follows: • Furniture and fixtures 7 years • Office equipment 5 years • Scientific equipment 5 years • Vehicles 5 years • Mobile facility 27.5 years • Building 39 years Costs of major additions and betterments are capitalized; maintenance and repairs, which do not improve or extend the life of the respective assets, are charged to expense as incurred. Upon retirement or sale, the cost of the disposed asset and the related accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized. Impairment of Long-Lived Assets The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, Property, Plant and Equipment not Convertible Loan, Related Party On January 3, 2024, the Company entered into a Convertible Loan Agreement (the “Loan”) with John Simard, the Company’s Founder, President, Chief Executive Officer and Chairman. The Loan provides $10 million in immediate funding 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. The Loan is secured by the real estate and cash holdings of the Company, with interest to accrue at a simple rate equal to eight Foreign Currency Transactions Certain transactions are denominated in a currency other than the Company’s functional currency of the U.S. dollar, and the Company generates assets and liabilities that are fixed in terms of the amount of foreign currency that will be received or paid. At each balance sheet date, the Company adjusts the assets and liabilities to reflect the current exchange rate, resulting in a translation gain or loss. As of March 31, 2024, the only significant assets denominated in a foreign currency were certain cash accounts, which were remeasured into the functional currency (U.S. dollar) as of March 31, 2024, resulting in a foreign exchange loss of $1.6 million.Transaction gains and losses are also realized upon a settlement of a foreign currency transaction in determining net loss for the period in which the transaction is settled. Comprehensive Income (Loss) ASC Topic 220, Comprehensive Income Segment and Geographic Information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company and the chief operating decision maker view the Company’s operations and manage its business as one Net Loss Per Share Net income/loss per share (“EPS”) is computed by dividing net loss by the weighted average number of common shares outstanding during each period. Diluted EPS is computed by dividing net income/loss by the weighted average number of common shares and common share equivalents outstanding (if dilutive) during each period. The Company does not include the potential impact of dilutive securities in diluted net loss per share, as the impact of these items is anti-dilutive. For the three month ended March 31, 2024, 1,002,274 stock options and 1,921,828 shares of common stock issuable upon conversion of a convertible loan, were not included in the computation of diluted net loss per share. Subsequent Events The Company considered events or transactions occurring after the balance sheet date but prior to the date the consolidated financial statements are available to be issued for potential recognition or disclosure in its consolidated financial statements. We have evaluated subsequent events through the date of filing this Form 10-Q. |
Note 3 - Property and Equipment
Note 3 - Property and Equipment | 3 Months Ended |
Mar. 31, 2024 | |
Notes to Financial Statements | |
Property, Plant and Equipment Disclosure [Text Block] | 3. Property and Equipment Property and equipment is presented net of accumulated depreciation. Property and equipment, net, March 31, 2024 December 31, 2023 Manufacturing equipment $ 1,885 $ 2,104 Winnebago building 20,724 20,643 Other fixed assets 2,193 2,150 Total property and equipment $ 24,802 $ 24,897 |
Note 4 - Common Stock
Note 4 - Common Stock | 3 Months Ended |
Mar. 31, 2024 | |
Notes to Financial Statements | |
Equity [Text Block] | 4. Common Stock Pursuant to its Articles, the Company has an unlimited number of shares available for issuance with no On May 17, 2023, XBiotech announced that it had commenced a “modified Dutch auction” tender offer to purchase up to $80.0 million of its common shares, or such lesser number of common shares as are properly tendered and not properly withdrawn, at a price not less than $3.80 nor greater than $4.00 per common share, to the seller in cash. The tender offer expired on June 15, 2023. On June 20, 2023, the Company announced the final results of its “modified Dutch Auction” tender offer. The Company accepted for purchase 3,561 shares of its common stock, at a price of $4.00 per share, for an aggregate cost of approximately $14 thousand, excluding fees and expenses related to the tender offer. These shares represented an immaterial percent of the shares outstanding. The repurchased shares were retired and have been classified to reduce common stock in the accompanying consolidated balance sheet as of December 31, 2023. During the year ended December 31, 2023, 1,250 shares of common stock were issued upon the exercise of stock options at a price of $3.84 per share for total proceeds of $4,800. During the three months ended March 31, 2024, 13,917 shares of common stock were issued upon the exercise of stock options at prices ranging from $3.84 to $5.43 per share for total proceeds of $55 thousand. |
Note 5 - Common Stock Options
Note 5 - Common Stock Options | 3 Months Ended |
Mar. 31, 2024 | |
Notes to Financial Statements | |
Share-Based Payment Arrangement [Text Block] | 5. Common Stock Options On November 11, 2005, the Board of Directors of the Company adopted the XBiotech Inc. 2005 Incentive Stock Option Plan (the “2005 Plan”), and on March 24, 2015, the board of directors of the Company adopted the XBiotech Inc. 2015 Equity Incentive Plan (the 2015 Plan”) pursuant to which the Company may grant incentive stock and non-qualified stock options to directors, officers, employees or consultants of the Company or an affiliate or other persons as the Compensation Committee may approve. All options under both Plans will be non-transferable and may be exercised only by the participant, or in the event of the death of the participant, a legal representative until the earlier of the options’ expiry date or the first anniversary of the participant’s death, or such other date as may be specified by the Compensation Committee. The term of the options is at the discretion of the Compensation Committee, but may not exceed 10 years from the grant date. The options expire on the earlier of the expiration date or the date three months following the day on which the participant ceases to be an officer or employee of or consultant to the Company, or in the event of the termination of the participant with cause, the date of such termination. Options held by non-employee Directors have an exercise period coterminous with the term of the options. The number of common shares reserved for issuance to any one person pursuant to the 2005 Plan shall not, in aggregate, exceed 5% of the total number of outstanding common shares. The exercise price per common share under each option will be the fair market value of such shares at the time of the grant. Upon stock option exercise, the Company issues new shares of common stock. A summary of changes in common stock options issued under the 2005 Plan and under the 2015 Plan is as follows: Options Exercise Price Weighted-Average Options outstanding at December 31, 2023 5,039,518 $2.71-$21.74 $ 9.46 Granted 23,000 $4.05-$6.45 5.59 Exercised (13,917 ) $3.65-$5.43 3.96 Forfeitures (614,750 ) $3.84-$19.22 10.92 Options outstanding at March 31, 2024 4,433,851 $2.71-$21.74 $ 9.25 As of March 31, 2024, there was approximately $1.1 million of unrecognized compensation cost, related to stock options granted under the Plans which will be amortized to stock compensation expense over the next 1.0 years. |
Note 6 - Income Taxes
Note 6 - Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] | 6. Income Taxes The Company's effective tax rates for the three months ended March 31, 2024 and March 31, 2023 were -0.3% and 0.9%, respectively. The effective tax rate for the three month periods ended March 31, 2024 and March 31, 2023 varied from the Canadian statutory rate primarily due to non-deductible compensation and losses in jurisdictions for which a valuation allowance is recorded. |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Insider Trading Arr Line Items | |
Material Terms of Trading Arrangement [Text Block] | Item 5. Other Information. Not |
Rule 10b5-1 Arrangement Adopted [Flag] | false |
Rule 10b5-1 Arrangement Terminated [Flag] | false |
Non-Rule 10b5-1 Arrangement Adopted [Flag] | false |
Non-Rule 10b5-1 Arrangement Terminated [Flag] | false |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The condensed consolidated balance sheet as of March 31, 2024, the condensed consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the three months ended March 31, 2024 and 2023 were prepared by management without audit. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, except as otherwise disclosed, necessary for the fair presentation of the financial position, results of operations, and changes in financial position for such periods, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2023. The results of operations for the period ended March 31, 2024 are not necessarily indicative of the operating results that may be expected for a full year. The condensed consolidated balance sheet as of December 31, 2023 contains financial information taken from the audited XBiotech Inc. consolidated financial statements as of that date. |
Consolidation, Policy [Policy Text Block] | Basis of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated upon consolidation. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported values of amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Research and Development Expense, Policy [Policy Text Block] | Research and Development Costs All research and development costs are charged to expense as incurred. Research and development costs include salaries and personnel-related costs, consulting fees, fees paid for contract clinical trial research services, the costs of laboratory consumables, equipment and facilities, license fees and other external costs. Costs incurred to acquire licenses for intellectual property to be used in research and development activities with no alternative future use are expensed as incurred as research and development costs. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed. |
Clinical Trial Accruals [Policy Text Block] | 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. 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. |
Income Tax, Policy [Policy Text Block] | Income Taxes In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which enhances the transparency and decision usefulness of income tax disclosures. Adjustments to the annual disclosure of income taxes include: (1) A tabular rate reconciliation comprised of eight specific categories, (2) Incomes taxes paid, disaggregated between significant federal, state, and foreign jurisdictions, (3) Eliminates requirements to disclose the nature and estimate of reasonably possible changes to unrecognized tax benefits in the next 12 months or that an estimated range cannot be made, and (4) Adds a requirement to disclose income (or loss) from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) from continuing operations disaggregated between domestic and foreign. The ASU is effective for public business entities for fiscal years beginning on or after December 15, 2024 with early adoption permitted. The amendments in ASU 2023-09 should be applied on a prospective basis and retrospective application is permitted. The Company is in the process of evaluating the impact of adoption of ASU 2023-09 on the Company's consolidated financial statements and disclosures. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company measures deferred tax assets and liabilities using the enacted tax rates for the years and jurisdictions in which the temporary differences are expected to be recovered. A change to the tax rates used to measure the Company’s deferred taxes is recognized in income during the period in which the new rate(s) were enacted. The Company recognizes deferred tax assets to the extent the Company’s assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including the future reversals of existing taxable temporary differences, projected future taxable income exclusive of reversing temporary differences and carryforwards, tax-planning strategies, taxable income in prior carryback years if permitted under tax law, and the results from prior years. If the Company determines it is more likely than not, that all or a portion of a deferred tax asset will not be realized a valuation allowance is recorded with a charge to income tax expense. Alternatively, if the Company determines that all or a portion of a deferred tax asset previously not meeting the more likely than not threshold will be realized, the Company reduces its valuation allowance and recognizes a benefit in income tax expense. |
Share-Based Payment Arrangement [Policy Text Block] | Share-Based Compensation The Company accounts for its share-based compensation awards in accordance with ASC Topic 718, Compensation-Stock Compensation Share-based compensation expense recognized for the three months ended March 31, 2024 and 2023 was included in the following line items on the Consolidated Statements of Operations (in thousands). Three Months Ended March 31, 2024 2023 Research and development $ 255 $ 623 General and administrative 126 82 Total share-based compensation expense $ 381 $ 705 The fair value of each option is estimated on the date of grant using the Black-Scholes method with the following assumptions: Three Months Ended March 31, 2024 2023 Dividend yield - - Expected volatility 80 % 82 % Risk-free interest rate 3.8%-4.3 % 3.5%-4.2 % Expected life (in years) 5.38-6.25 5.63-6.25 Weighted-average grant date fair value per share $ 3.91 $ 3.84 |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents The Company considers highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consisted primarily of cash on deposit in U.S. and Canadian banks. Cash and cash equivalents are stated at cost which approximates fair value. |
Investment, Policy [Policy Text Block] | Interest Bearing Time Deposit During the three months ended March 31, 2023, the Company held guaranteed investment certificates with a financial institution. The guaranteed investment certificates have a 12 month term at origination with interest payable at maturity. The guaranteed investment certificates matured in July, 2023. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | |
Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment Property and equipment, which consists of land, construction in process, furniture and fixtures, computers and office equipment, scientific equipment, vehicles and building are stated at cost and depreciated over the estimated useful lives of the assets, with the exception of land and construction in process which are not depreciated, using the straight line method. The useful lives are as follows: • Furniture and fixtures 7 years • Office equipment 5 years • Scientific equipment 5 years • Vehicles 5 years • Mobile facility 27.5 years • Building 39 years Costs of major additions and betterments are capitalized; maintenance and repairs, which do not improve or extend the life of the respective assets, are charged to expense as incurred. Upon retirement or sale, the cost of the disposed asset and the related accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized. |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Impairment of Long-Lived Assets The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, Property, Plant and Equipment not |
Debt, Policy [Policy Text Block] | Convertible Loan, Related Party On January 3, 2024, the Company entered into a Convertible Loan Agreement (the “Loan”) with John Simard, the Company’s Founder, President, Chief Executive Officer and Chairman. The Loan provides $10 million in immediate funding 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. The Loan is secured by the real estate and cash holdings of the Company, with interest to accrue at a simple rate equal to eight |
Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign Currency Transactions Certain transactions are denominated in a currency other than the Company’s functional currency of the U.S. dollar, and the Company generates assets and liabilities that are fixed in terms of the amount of foreign currency that will be received or paid. At each balance sheet date, the Company adjusts the assets and liabilities to reflect the current exchange rate, resulting in a translation gain or loss. As of March 31, 2024, the only significant assets denominated in a foreign currency were certain cash accounts, which were remeasured into the functional currency (U.S. dollar) as of March 31, 2024, resulting in a foreign exchange loss of $1.6 million.Transaction gains and losses are also realized upon a settlement of a foreign currency transaction in determining net loss for the period in which the transaction is settled. |
Comprehensive Income, Policy [Policy Text Block] | Comprehensive Income (Loss) ASC Topic 220, Comprehensive Income |
Segment Reporting, Policy [Policy Text Block] | Segment and Geographic Information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company and the chief operating decision maker view the Company’s operations and manage its business as one |
Earnings Per Share, Policy [Policy Text Block] | Net Loss Per Share Net income/loss per share (“EPS”) is computed by dividing net loss by the weighted average number of common shares outstanding during each period. Diluted EPS is computed by dividing net income/loss by the weighted average number of common shares and common share equivalents outstanding (if dilutive) during each period. The Company does not include the potential impact of dilutive securities in diluted net loss per share, as the impact of these items is anti-dilutive. For the three month ended March 31, 2024, 1,002,274 stock options and 1,921,828 shares of common stock issuable upon conversion of a convertible loan, were not included in the computation of diluted net loss per share. |
Subsequent Events, Policy [Policy Text Block] | Subsequent Events The Company considered events or transactions occurring after the balance sheet date but prior to the date the consolidated financial statements are available to be issued for potential recognition or disclosure in its consolidated financial statements. We have evaluated subsequent events through the date of filing this Form 10-Q. |
Note 2 - Significant Accounti_2
Note 2 - Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Notes Tables | |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block] | Three Months Ended March 31, 2024 2023 Research and development $ 255 $ 623 General and administrative 126 82 Total share-based compensation expense $ 381 $ 705 |
Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | Three Months Ended March 31, 2024 2023 Dividend yield - - Expected volatility 80 % 82 % Risk-free interest rate 3.8%-4.3 % 3.5%-4.2 % Expected life (in years) 5.38-6.25 5.63-6.25 Weighted-average grant date fair value per share $ 3.91 $ 3.84 |
Note 3 - Property and Equipme_2
Note 3 - Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Notes Tables | |
Property, Plant and Equipment [Table Text Block] | March 31, 2024 December 31, 2023 Manufacturing equipment $ 1,885 $ 2,104 Winnebago building 20,724 20,643 Other fixed assets 2,193 2,150 Total property and equipment $ 24,802 $ 24,897 |
Note 5 - Common Stock Options (
Note 5 - Common Stock Options (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Notes Tables | |
Share-Based Payment Arrangement, Option, Activity [Table Text Block] | Options Exercise Price Weighted-Average Options outstanding at December 31, 2023 5,039,518 $2.71-$21.74 $ 9.46 Granted 23,000 $4.05-$6.45 5.59 Exercised (13,917 ) $3.65-$5.43 3.96 Forfeitures (614,750 ) $3.84-$19.22 10.92 Options outstanding at March 31, 2024 4,433,851 $2.71-$21.74 $ 9.25 |
Note 1 - Organization (Details
Note 1 - Organization (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 31, 2024 | Dec. 31, 2023 | |
Cash and Cash Equivalents, at Carrying Value | $ 201,039 | $ 200,023 | |
True Human [Member] | |||
Sale of Product, Consideration Received | $ 750,000 | ||
Potential Milestone Payments | $ 600,000 |
Note 2 - Significant Accounti_3
Note 2 - Significant Accounting Policies (Details Textual) | 3 Months Ended | ||
Jan. 03, 2024 USD ($) $ / shares | Mar. 31, 2024 USD ($) shares | Mar. 31, 2023 USD ($) | |
Impairment of Long-Lived Assets Held-for-use | $ 0 | ||
Proceeds from Convertible Debt | 10,000,000 | $ 0 | |
Gain (Loss), Foreign Currency Transaction, before Tax | $ (1,582,000) | $ 383,000 | |
Number of Operating Segments | 1 | ||
Share-Based Payment Arrangement, Option [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | shares | 1,002,274 | ||
Convertible Debt Securities [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | shares | 1,921,828 | ||
Convertible Loan Agreement [Member] | Chief Executive Officer [Member] | |||
Proceeds from Convertible Debt | $ 10,000,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 8% | ||
Debt Instrument, Convertible, Conversion Price (in dollars per share) | $ / shares | $ 4.048 | ||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 19.90% | ||
Debt Instrument, Convertible, Acceleration Feature, Share Price (in dollars per share) | $ / shares | $ 3 | ||
Debt Instrument, Convertible, Acceleration Feature, Cash Position | $ 65,000,000 | ||
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment, Useful Life (Year) | 7 years | ||
Office Equipment [Member] | |||
Property, Plant and Equipment, Useful Life (Year) | 5 years | ||
Equipment [Member] | |||
Property, Plant and Equipment, Useful Life (Year) | 5 years | ||
Vehicles [Member] | |||
Property, Plant and Equipment, Useful Life (Year) | 5 years | ||
Mobile Facility [Member] | |||
Property, Plant and Equipment, Useful Life (Year) | 27 years 6 months | ||
Building [Member] | |||
Property, Plant and Equipment, Useful Life (Year) | 39 years |
Note 2 - Significant Accounti_4
Note 2 - Significant Accounting Policies - Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 15 Months Ended |
Mar. 31, 2024 | Mar. 31, 2024 | |
Share-based compensation expense | $ 381 | $ 705 |
Research and Development Expense [Member] | ||
Share-based compensation expense | 255 | 623 |
General and Administrative Expense [Member] | ||
Share-based compensation expense | $ 126 | $ 82 |
Note 2 - Significant Accounti_5
Note 2 - Significant Accounting Policies - Stock Option Valuation Assumptions (Details) - $ / shares | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | |
Expected volatility | 80% | 82% | |
Weighted-average grant date fair value per share (in dollars per share) | $ 3.91 | $ 3.84 | |
Minimum [Member] | |||
Risk-free interest rate | 3.80% | 3.50% | |
Expected life (in years) (Year) | 5 years 4 months 17 days | 5 years 7 months 17 days | |
Maximum [Member] | |||
Risk-free interest rate | 4.30% | 4.20% | |
Expected life (in years) (Year) | 6 years 3 months | 6 years 3 months |
Note 3 - Property and Equipme_3
Note 3 - Property and Equipment - Property and Equipment, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Property, Plant and Equipment, Net | $ 24,802 | $ 24,897 |
Manufacturing Equipment [Member] | ||
Property, Plant and Equipment, Net | 1,885 | 2,104 |
Winnebago Building [Member] | ||
Property, Plant and Equipment, Net | 20,724 | 20,643 |
Property, Plant and Equipment, Other Types [Member] | ||
Property, Plant and Equipment, Net | $ 2,193 | $ 2,150 |
Note 4 - Common Stock (Details
Note 4 - Common Stock (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 20, 2023 | May 17, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | |
Common Stock, No Par Value (in dollars per share) | $ 0 | $ 0 | ||
Treasury Stock, Shares Offered to Be Purchased, Value | $ 80,000 | |||
Stock Repurchased and Retired During Period, Shares (in shares) | 3,561 | |||
Stock Repurchased During Period, Price Per Share (in dollars per share) | $ 4 | |||
Stock Repurchased and Retired During Period, Value | $ 14 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period (in shares) | 13,917 | 1,250 | ||
Shares Issued, Price Per Share | $ 3.84 | |||
Proceeds from Stock Options Exercised | $ 4,800 | |||
Proceeds from Issuance of Common Stock | $ 55 | |||
Minimum [Member] | ||||
Treasury Stock, Shares Offered to Be Purchased, Price Per Share (in dollars per share) | $ 3.8 | |||
Shares Issued, Price Per Share | $ 3.84 | |||
Maximum [Member] | ||||
Treasury Stock, Shares Offered to Be Purchased, Price Per Share (in dollars per share) | $ 4 | |||
Shares Issued, Price Per Share | $ 5.43 |
Note 5 - Common Stock Options_2
Note 5 - Common Stock Options (Details Textual) $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $ 1.1 |
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year) | 1 year |
The Plan [Member] | Any One Person [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Percentage of Outstanding Stock Maximum | 5% |
The Plan [Member] | Share-Based Payment Arrangement, Option [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year) | 10 years |
Note 6 - Common Stock Options -
Note 6 - Common Stock Options - Changes in Common Stock Options Issued (Details) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Options outstanding (in shares) | shares | 5,039,518 |
Granted (in shares) | shares | 23,000 |
Exercised (in shares) | shares | (13,917) |
Forfeitures (in shares) | shares | (614,750) |
Options outstanding (in shares) | shares | 4,433,851 |
Minimum [Member] | |
Outstanding, Exercise Price (in dollars per share) | $ 2.71 |
Granted, Exercise Price (in dollars per share) | 4.05 |
Exercised, Exercise Price (in dollars per share) | 3.65 |
Forfeitures, Exercise Price (in dollars per share) | 3.84 |
Outstanding, Exercise Price (in dollars per share) | 2.71 |
Maximum [Member] | |
Outstanding, Exercise Price (in dollars per share) | 21.74 |
Granted, Exercise Price (in dollars per share) | 6.45 |
Exercised, Exercise Price (in dollars per share) | 5.43 |
Forfeitures, Exercise Price (in dollars per share) | 19.22 |
Outstanding, Exercise Price (in dollars per share) | 21.74 |
Weighted Average [Member] | |
Outstanding, Exercise Price (in dollars per share) | 9.46 |
Granted, Exercise Price (in dollars per share) | 5.59 |
Exercised, Exercise Price (in dollars per share) | 3.96 |
Forfeitures, Exercise Price (in dollars per share) | 10.92 |
Outstanding, Exercise Price (in dollars per share) | $ 9.25 |
Note 6 - Income Taxes (Details
Note 6 - Income Taxes (Details Textual) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Effective Income Tax Rate Reconciliation, Percent | (0.30%) | 0.90% |