XBIO 10-K & 10-Q changes, risk factors and insider trading

Our business will substantially dependdepends on the successful successful clinical development, regulatory approval and commercialization of the DNase technology. It will require substantial clinical development and regulatory approval efforts before we are permitted to commence its commercialization, if ever. We have, and plan to continue to pursue our clinical development strategy through academic and strategic collaborations. If we have difficulty maintaining, obtaining, or are unable to obtain these collaborations and additional academic collaborations as planned, we may need to delay, limit or terminate any ongoing or planned clinical development, which would have an adverse effect on our business. The clinical trials and manufacturing and marketing of DNase and any other product candidates will be subject to extensive and rigorous review and regulation by numerous government authorities in the U.S., the European Union and other jurisdictions where we intend to test and, if approved, market our product candidates. Before obtaining regulatory approvals for the commercial sale of any product candidate, we must demonstrate through preclinical testing and clinical trials that the product candidate is safe and effective for use in each target indication and potentially in specific patient populations. This process can take many years and may include post-marketing studies and surveillance, which would require the expenditure of substantial resources beyond the proceeds we have currently raised. Of the large number of drugs in development for approval in the U.S. and the European Union, only a small percentage successfully complete the FDA or European Medicines Agency regulatory-approval processes, processes, as applicable, and are commercialized. Accordingly, even if we are able to obtain the requisite financing or identify an academic or strategic collaboration partner to continue to fund our research, development and clinical programs, we cannot assure you that DNase or any of our other product candidates will be successfully developed or commercialized.

Furthermore, there have been and continue to be a a number of initiatives at the federal and state level that seek to reduce healthcare costs. Most significantly, in March 2010, the Patient Protection and Affordable Health Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”), was signed into law, which includes measures that significantly change the way healthcare is financed by both governmental and private insurers. In January 2017, Congress voted to adopt a budget resolution for fiscal year 2017, or the Budget Resolution, that authorizes the implementation of legislation that would repeal portions of the ACA. In addition, on January 20, 2017, President Trump signed an executive order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. Further, on October 12, 2017, President Trump issued another executive order requiring the Secretaries of HHA and the Departments of Labor and Treasury to consider proposing regulations or revising existing guidance to allow more employers to form association health plans that would be allowed to provide coverage across state lines, increase the availability of short-term, limited-duration health insurance plans, which are generally not subject to the requirements of the ACA, and increase the availability and permitted use of health reimbursement arrangements. On October 13, 2017, the Department of Justice announced that the United States Department of Health and Human Services (“HHS”) was immediately stopping its cost sharing reduction payments to insurance companies based on the determination that those payments had not been appropriated by Congress. Furthermore, on December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (the “TCJA”) into law that, in addition to overhauling the federal tax system, also, effective as of January 1, 2019, repealed the penalties associated with the individual mandate. Congress or the President of the United States also could consider subsequent legislation or executive action to replace, eliminate or reaffirm elements of the ACA. We will continue to evaluate the effect that the ACA and any future measures to modify, repeal, replace or reaffirm the ACA have on our business.

We are not able to provide any assurance that the the continued healthcare reform debate will not result in legislation, regulation, litigation or executive action by the President of the the United States that is adverse to our business. Moreover, we are not, at this time, able to evaluate any potential legislative, regulatory or Executive Order actions that the newcurrent presidential administration may take which could have a material impact on our business.

We are a party to,to certain collaboration agreements, and may enter into one or more collaborations in the future, pursuant to which we may be required to relinquish important rights to and control over the development of our drug candidates or otherwise be subject to unfavorable terms.

Our ability to use potential future operating losses and our federal and state net operating loss (“NOL”) carryforwards to offset taxable income from revenue generated from operations or corporate collaborations could be limited.

We are a biopharmaceutical company focused on advancing advancing innovative immune-oncologyimmuno-oncology technologies addressing difficult to treat cancers. Our Deoxyribonucleaseproprietary (“DNase”) technology is designed to improve outcomes of existing treatments, including immunotherapies, by targeting neutrophilNETs, extracellular traps (“NETs”), which are involved in cancer progression. We are currently focused on advancing our systemic DNase program into the clinic as an adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors.

We incorporate our patented and proprietary technologies into drug candidates currently under development with biotechnology and pharmaceutical industry collaborators to create what we believe will be the next-generation biologic drugs with improved pharmacological properties over existing therapeutics. Our drug candidates have resulted from our research activities or that of our collaborators and are in the development stage. As a result, we continue to commit a significant amount of our resources to our research and development activities and anticipate continuing to do so for the near future. To date, none of our drug candidates have received regulatory marketing authorization or approval in the UnitedU.S. States (“U.S.”) by the Food and Drug Administration (“FDA”) nor in any other countries or territories by any applicable agencies. We are receiving ongoing royalties pursuant to a license of our legacy PolyXen technology to an industry partner. Although we hold a broad patent portfolio, the focus of our internal efforts during the yearyears ended December 31, 2025 and 2024, was on the advancement of our DNase technology.

Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits, facilities expenses, overhead expenses, pre-clinical development, clinical trial and related clinical manufacturing expenses, fees paid to contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”) and other outside expenses. We expense research and development costs as incurred. We expense upfront, non-refundable payments made for research and development services as obligations are incurred, except when deposits are made for specifically identified future services. The value ascribed to intangible assets acquired but which have not met capitalization capitalization criteria is expensed as research and development at the time of acquisition. Upfront payments under license agreements are expensed upon receipt of the license. Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.

We are required to estimate accrued research and development development expenses at each reporting period. This process involves reviewing open contracts and purchase orders, communicating with our personnel and consultants to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met. However, some require advanced payments. We make estimates of accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments, if necessary. Examples of estimated accrued research and development expenses include fees paid to:

We base our expenses related to research and development, pre-clinical activities, manufacturing and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple research institutions, CMOs and CROs that conduct and manage exploratory studies and clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or prepaid accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

The short and long-term implications of Russia’sgeopolitical invasionevents ofand global conflicts, including those in Ukraine and conflict in the Middle East are difficult to predict at this time. The imposition of current and future sanctions and counter sanctions may have an adverse effect on the economic markets generally and could impact our business, financial condition, and results of operations.

Overall, R&D expenses for the year ended December 31, 20242025 decreased by approximately $0.2 million, or 5.9%,6.8%, to $3.3$3.1 million from $3.5$3.3 million in the comparable period in 20232024 primarily due to decreased spending in connection with our DNase process development efforts. During the year ended December 31, 2024, the Company expensed approximately $0.7 million of expense related to the impairment of long-lived assets associated with our legacy PSA technology.technology incurred in 2024. There was no similar expense in 2023.2025. Excluding the $0.7 million impairment charge from total R&D expense of $3.3 million for the year ended December 31, 2024, adjusted R&D expenses for the year ended December 31, 20242025 decreasedincreased approximately $0.9 $0.5 million, or 26.1%,18.6%, to $2.6 $3.1 million, from $3.5$2.6 million for the year ended December 31, 2023.2024. The table below sets forth the R&D costs incurred by us, by category of expense, for the years ended December 31, 20242025 and 20232024:

The decreaseincrease in outside services services and contract research organizations expense was primarily due to theincreased aforementionedconsulting, decreasedpre-clinical spendingand manufacturing development efforts as well as costs incurred in connection with our processthe developmentcommencement efforts, partially offset by increased third-party pre-clinical development efforts related to ourof DNase technology.exploratory studies during the year ended December 31, 2025. The The increasedecrease in personnelsalaries costsand iswages dueand share-based expense during the year ended December 31, 2025 was related to certain severance and benefits expensed expensedduring the year ended December 31, 2024 in connection with a separation agreement entered into during the second quarter of 2024 with our former Chief Scientific Officer.Officer, for which there were none in 2025.

General and administrative expenses for the year ended ended December 31, 20242025 was $3.4 million, decreasingdecreased by approximately $0.1$0.7 million, or 4.1%, compared19.6%, to approximately $2.7 million from approximately $3.4 million in the samecomparable period in the prior year.2024. The decrease was primarily due to acertain reduction in legalseverance and accountingbenefits costsexpensed during the year ended December 31, 2024 compared to the prior year. These decreases were substantially offset by certain severance and benefits expensed in connection with a separation agreement entered into during the second quarter of 2024 with our former Chief Executive Officer.Officer and, to a lesser extent, a decrease in board of director fees. This decrease was partially offset by an increase in legal and accounting costs.

Other Income (Expense) Income

Other expenseincome was approximately $6,000 for the year year ended December 31, 20242025 compared to otherapproximately income$6,000 of approximatelyother $25,400expense for the samecomparable period in 2023.2024. This decreaseincrease in other income was primarily related to feesfavorable associatedchanges within theforeign Pharmsynthezcurrency Loanexchange recognizedrates during the year ended December 31, 20232025 foras whichcompared there were no similar fees received into the same period in 2024.

Interest income, net decreased to approximately $148,000 $250,000 during the year ended December 31, 20242025 as compared to approximately $356,000$250,000 for the same period in the prior year. This decrease is primarily due to lower average invested funds during the year ended December 31, 20242025 as compared to the priorsame year, as well as a decreaseperiod in interest income received on the Pharmsynthez Loan.2024.

We incurred a net loss of of approximately $4.0$2.7 million for the year ended December 31, 2024.2025. We had an accumulated deficit of approximately $199.9 million at December 31, 2025, as compared to an accumulated deficit of approximately $197.2 million at December 31, 2024,2024. asWorking comparedcapital to an accumulated deficit ofwas approximately $193.2 $7.1 million at December 31, 2023.2025, Working capital wasand approximately $5.7 million at December 31, 2024, and approximately $8.8 million at December 31, 2023, respectively. During the year ended December 31, 2024,2025, our working capital decreasedincreased by approximately $3.1$1.4 million primarily due to net proceeds of approximately $4.0 million from our October 2025 underwritten public offering substantially offset by our net loss for the year ended December 31, 2024.2025.

We evaluate whether there are conditions or events, considered in the aggregate that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. We have incurred substantial losses since our inception, and we expect to continue to incur operating losses in the near-term. We believe that our existing resources will be adequate to fund our operations for a period of at least twelve months from the date of the issuance of these financial statements. In addition, the Company raised net proceeds of approximately $4.0 million in an underwritten public offering of common stock in October 2025. However, we anticipate we will need need additional capital in the long-term to pursue our business initiatives. While we believe that we will continue to have access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations, related party funding, or other means to continue as a going concern, the terms, timing and extent of any future financing will depend upon several factors, including the achievement of progress in our clinicalproduct development programs, our ability to identify and enter into licensing or other strategic arrangements, our continued listing on the Nasdaq Stock Market (“Nasdaq”),Nasdaq, and factors related to financial, economic, geo-political, industry and market conditions, conditions, many of which are beyond our control. The capital markets for the biotech industry can be highly volatile, which make the terms, timing and extent of any future financing uncertain.

Cash flows used in operating activities for the year year ended December 31, 20242025 totaled approximately $2.8$2.3 million, which was primarily due to our net loss for the period, partially offset by by non-cash charges associated with share-based expense. In addition, prepaid expenses and other decreased approximately $0.2 million, other assets decreased by approximately $0.7$0.3 million due to the impairment of long-lived assets and accounts payable, accrued expenses and other current liabilities increased approximately $0.1 million during the year ended December 31, 2024 2025 compared to the prior year. Cash flows used in operating activities for the year ended December 31, 20232024 totaled approximately $4.1 $2.8 million, which was primarily due to our net loss for the period, partially offset by non-cash charges associated with share-based expenseexpense. In and,addition, prepaid expenses and other decreased approximately $0.2 million, other assets decreased by approximately $0.7 million due to athe lesserimpairment extent,of along-lived decrease inassets and accounts payable, accrued expenses and other current liabilities.liabilities increased approximately $0.1 million during the year ended December 31, 2024 compared to the prior year.

Contractual obligations represent future cash commitments commitments and liabilities under agreements with third-parties and exclude contingent liabilities for which we cannot reasonably predict future payment. Our contractual obligations result from a property lease for office space. Although we do have obligations for CMO and CRO services, the table below excludes potential payments we may be required to make under our agreements with CMOs and CROs because timing of payments and actual amounts paid under those agreements may be different depending on the timing of receipt of goods or services or changes to agreed-upon terms or amounts for some obligations, and those agreements are cancelable upon written notice by the Company and therefore, therefore, not long-term liabilities. The contracts may also contain variable costs that are hard to predict as they are based on such things as patients enrolled and clinicalexploratory trialstudy sites, which can vary and, therefore, are also not included in the table below. Additionally, the expected timing of payment of the obligations presented below is estimated based on current information.

These forward-looking statements include, but are not limited to, statements concerning: anticipated effects of geopolitical events, including the conflicts in Ukraine and the Middle East and associated sanctions imposed by the United States (“U.S.”) and other countries in response; our plans to develop our proposed drug candidates; the uncertainty surrounding government actions, as well as any changes to existing or newly proposed legislation that may affect the healthcare regulatory space; our expectations regarding the nature, timing and extent of collaboration arrangements; the expected results pursuant to collaboration arrangements, including the receipts of royalty and other future payments that may arise pursuant to collaboration arrangements; the outcome of our plans to obtain regulatory approval of our drug candidates; the outcome of our plans for the commercialization of our drug candidates; our plans to advance innovative immune-oncology technologies addressing difficult to treat oncology indications; expectations regarding our Deoxyribonuclease (“DNase”) technology, such as regarding the DNase technology being in development for the treatment of solid tumors and being aimed at improving outcomes of existing treatments, including immunotherapies, by targeting neutrophil extracellular traps (“NETs”); our expectations to focus our efforts and resources on advancing the DNase technology into the clinic as an adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors; and our expectations regarding our PolyXen®™ platform and any partnerships with respect thereto.

We are a biopharmaceutical company focused on advancing innovative immuno-oncologyimmune-oncology technologies addressing difficult to treat cancers. Our proprietary DNase technology is designed to improve outcomes of existing treatments, including immunotherapies, by targeting NETs, which are involved in cancer progression. We are currently focused on advancing our systemic DNase program into the clinic as an adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors.

We incorporate our patented and proprietary technologies into drug candidates currently under development with biotechnology and pharmaceutical industry collaborators to create what we believe will be the next-generation biologic drugs with improved pharmacological properties over existing therapeutics. Our drug candidates have resulted from our research activities or that of our collaborators and are in the development stage. As a result, we continue to commit a significant amount of our resources to our research and development activities and anticipate continuing to do so for the near future. To date, none of our drug candidates have received regulatory marketing authorization or approval in the U.S. by the Food and Drug Administration nor in any other countries or territories by any applicable agencies. We are receiving ongoing royalties pursuant to a license of our legacy PolyXen technology to an industry partner. Although we hold a broad patent portfolio, the focus of our internal efforts during the threesix months ended MarchJune 31,30, 2026, was on the advancement of our DNase technology.

Comparison of Quarter Ended MarchJune 31,30, 2026 and 2025

The comparison of our historical results of operations for the fiscal quarter ended MarchJune 31,30, 2026 to the fiscal quarter ended MarchJune 31,30, 2025 is as follows:

Revenue for the three months ended MarchJune 31,30, 2026 increased by approximately $0.2$0.1 million, or 36.0%,12.0%, to approximately $0.8$0.7 million from approximately $0.6 million for the three months ended MarchJune 31,30, 2025. This increase represented an increase in royalty revenue related to our sublicense agreement with Takeda Pharmaceuticals Co. Ltd. as compared to the same period in 2025 primarily due to royalties recognized from certain countries during the firstsecond quarter of 2026 compared to the same period in 2025.

Research & development (“R&D”) expenses for the three months ended MarchJune 31,30, 2026 decreased by approximately $0.2$0.1 million, or 24.8%,15.9%, to approximately $0.7$0.6 million from approximately $0.9$0.7 million in the comparable quarter in 2025. The table below sets forth the R&D costs incurred by the Company by category of expense for the quarters ended MarchJune 31,30, 2026 and 2025:

The decrease in outside services and contract research organizations expense was primarily due to a decrease in pre-clinical and exploratory study costs both partially offset by an increase in manufacturing development efforts and, to a lesser extent, a decrease in consulting costs during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025.

General and administrative expenses for the three months ended MarchJune 31,30, 2026 decreasedincreased by approximately $9,000,$0.4 million, or 1.4%,64.2%, to approximately $648,000$1.1 million from approximately $657,000$0.7 million in the comparable quarter in 2025. The decreaseincrease was primarily due to a decrease in personnel costs and share-based expense related to our interim Chief Executive Officer substantially offset by an increase in legal expense related to our strategic review process during the firstsecond quarter of 2026 compared to the same period in 2025.

Other expense was approximately $21$72 for the three months ended June March 31,30, 2026 compared to approximately $78$1,477 of other income for the comparable quarter in 2025. This increase in other expense was primarily related to unfavorable changes in foreign currency exchange rates during the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025.

Interest income, net increased to approximately $46,000$42,000 during the three months ended MarchJune 31,30, 2026 as compared to approximately $39,000$34,000 for the same period in the prior year. ThisThe increase increase is primarily due to higher average invested funds during the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025.

We incurred a net loss of approximately $456,000$1.4 million for the threesix months ended MarchJune 31,30, 2026. We had an accumulated deficit of approximately $200.3$201.3 million at MarchJune 31,30, 2026, as compared to an accumulated deficit of approximately $199.9 million at December 31, 2025. Working capital was approximately $6.6$5.8 million at MarchJune 31,30, 2026, and approximately $7.1 million at December 31, 2025, respectively.2025. During the threesix months ended March 31,June 30, 2026, our working capital decreased by approximately $445,000$1.3 million primarily due to our net loss for the threesix months ended MarchJune 31,30, 2026.

Our principal source of liquidity consists of cash. At MarchJune 31,30, 2026, we had approximately $7.3$6.5 million in cash and $1.0approximately $0.9 million in current liabilities. At At December 31, 2025, we had approximately $7.9 million in cash and $1.0 million in current liabilities. We have historically relied upon sales of our equity securities to fund our operations.

Cash flows used in operating activities for the threesix months ended MarchJune 31,30, 2026 totaled approximately $0.5$1.4 million, which was primarily due to our net loss for the periodperiod, and,partially tooffset by a lessernon-cash extent,charges aassociated decreasewith inshare-based accounts payable, accrued expenses and other liabilities.expense. Cash flows used in operating activities for the threesix months ended MarchJune 31,30, 2025 totaled approximately $1.0$1.4 million, which was primarily due to our net loss for the periodperiod, and,partially offset by non-cash charges associated towith ashare-based lesserexpense extent,during athe period. The decrease in accountsother payable,assets accruedwas due to the reclassification of long-term assets to prepaid expenses and other liabilitiescurrent dueassets toas paymentsof madeJune in30, accordance with severance arrangements.2025.

There were no cash flows from investing activities for the threesix months ended MarchJune 31,30, 2026 and 2025.

Cash FlowsFlow from Financing Activities

There were no cash flows from financing activities for the threesix months ended MarchJune 31,30, 2026 and 2025.

As of MarchJune 31,30, 2026, there were no material changes in our contractual obligations and commitments from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026, as amended on April 24, 2026.