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

We are a pre-market pharmaceutical company with a limited operating history. We had no net income prior to the fourth quarter of 2019, when we sold certain assets to Janssen Biotech, Inc. and entered into certain related commercial agreements (the “Janssen Transaction”). Investment in pharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval or become commercially viable. We do not have any products approved by regulatory authorities for marketing or commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research, development and other expenses related to our ongoing operations. As a result, we incurred losses in every reporting period from our inception in 2005 through the third quarter of 2019. Although we were profitable during the fourth quarter and fiscal year ended December 31, 2019, due to the cash received in the Janssen Transaction, that was an extraordinary transaction outside of normal business operations that had never previously occurred and may not be repeated. We incurred a net loss for the fiscal year endedending December 31, 2024.2025.

The pharmaceutical and biotechnology industry is one of the most regulated industries on a state, federal and international level. There are a number ofnumberous laws, regulations, and court decisions which impact the daily activities of our business. As a result, we must ensure that strategies and planning in relation to our product candidates are in line with the current regulations governing our industry. When there are changes in leadership, whether within the U.S., or elsewhere, we must anticipate the possibility of shifts in regulatory policies as they pertain to our business. New or modified regulations may impact our ability to quickly respond with updates to our programs. While we may be able to anticipate certain changes, policy statements often are not always translated into actionable legislation. We continue to track updates and changes internally to ensure we are in compliance with regulatory authority guidelines and expectations. Court decisions at both the state and federal level can also impact the way in which we operate and make specific product related program decisions. New laws, regulations, or court orders could materially alter or impact our ability to receive necessary approvals from regulatory authorities to market and commercialize our product candidates.

Success in preclinical testing and early clinical trials does not ensure that later clinical trials will generate adequate data to demonstrate the efficacy and safety of an investigational drug. A number of companies in the pharmaceutical and biotechnology industries, including those with greater resources and experience, have suffered significant setbacks in clinical trials, even after seeing promising results in earlier clinical trials. We dohave notalso knowexperienced whetherprior thesetbacks in clinical trials weand arecannot conducting,assure orthat mayfuture conduct,clinical outcomes will demonstrate adequate efficacy and safety to justify further development efforts or to result in regulatory approval to market any of our product candidates in any particular jurisdiction. Even if we believe that we have adequate data to support an application for regulatory approval to market our product candidates, the FDA or other comparable foreign regulatory authorities may not agree and could require us to conduct additional research studies, including late-stage clinical trials. If late-stage clinical trials do not produce favorable results, our ability to achieve regulatory approval for any of our product candidates may be adversely impacted.

Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of subjects to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, ability to obtain and maintain patient consents, risk that enrolled subjects will drop out before completion, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating. Furthermore, we rely on clinical trial sites to ensure the proper and timely conduct of our clinical trials, and while we have agreements governing their committed activities, we have limited influence over their actual, day-to-day performance. We have experience of previous difficulties with clinical sites and patient enrollment and cannot assure that such difficulties will not occur in future clinical trials. We may experience delays in starting-up clinical trial sites in a timely manner, enrolling subjects in our trials, and may not be able to enroll a sufficient number of subjects to complete the trials.

As part of the Janssen Transaction, we are eligible to receive milestone payments of $150 million for each instance that Janssen, in its sole and absolute discretion, develops pharmaceutical products that contain Bermekimab and that are for non-dermatological indications, provided that Janssen receives certain required commercial authorizations for such products within a specified timeframe. We are entitled to earn up to four milestone payments, for a maximum of $600 million.million set to expire after twelve years in 2031. However, because the payment of these funds is subject to Janssen’s business decisions and discretion, as well as regulatory approvals and other factors outside our control, we may never receive any of these amounts. If we do not receive all or any of the milestone payments, we may be required to seek additional funding from other sources, which may not be available on terms acceptable to us or at all.

In addition to the continued services of Mr. Simard, weWe believe that our future success is also highly dependent on the contributions of ourother significant employees,Company personnel, as well as our ability to attract and retain highly skilled and experienced sales, research and development and other personnel in the United States and abroad. Some of our significant employees include our Chief Scientific Officer and interim Chief Executive Officer, Dr. Sushma Shivaswamy, as well as our Vice President of Quality Assurance, our Vice President of QualityManufacturing, Control,our Senior Vice President of Clinical Operations and Analytical Quality, and our Principal Financial Officer and Principal Accounting Officer. Changes in our management team may be disruptive to our business.operations and may adversely affect our business, financial condition and operating results.

AllOur of our employees, including our Chief Executive Officer,employees are free to terminatedepart theirthe employment relationship with usCompany at any time, subject to any applicable notice requirements, and their knowledge of our business and industry may be difficult to replace. If one or more of our executive officers or significant employees leaves,were to depart the Company, we may not be able to fully integrate new personnel or replicate the prior working relationships, and our operations could suffer. Qualified individuals with the breadth of skills and experience in the pharmaceutical industry that we require are in high demand, and we may incur significant costs to attract them. Many of the other pharmaceutical companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Our failure to attract and retain key personnel could impede the achievement of our research, development and commercialization objectives.objectives and may adversely affect our business, financial condition and operating results.

Our operations could be subject to earthquakes, power shortages or outages, telecommunications failures, water shortages, floods, hurricanes, typhoons,tornado, fires, extreme weather conditions, medical epidemics such as contagious disease outbreaks, and other natural or manmade disasters or business interruptions, for which we are predominantly self-insured. We do not carry insurance for all categories of risk that our business may encounter. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. We rely on third-parties to supply various items which are critical for producing our product candidates. Our ability to produce clinical supplies of product candidates could be disrupted, if the operations of these suppliers are affected by a man-made or natural disaster, a public health crisis or other business interruption. For example, the ongoing coronavirus threat has spread to a number of countries, including the United States and various countries in Europe, resulting in the declaration by the World Health Organization of a global pandemic and the announcement of extended travel restrictions, business shutdowns, cancellations and prohibitions of large public gatherings and declarations of states of emergency in cities, states and countries around the world. The imposition of any of these restrictions in one of the regions where our facilities or those of our third-party suppliers are located would have a disproportionately negative impact on us. The extent of the ultimate impact to us, our significant suppliers and our general infrastructure resulting from concentration in certain geographical areas is unknown and cannot be estimated, but our operations and financial condition would likely suffer in the event of a major earthquake, fire or other natural disaster or public health threat such as the coronavirus pandemic in one or more of those areas. Further, any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our business, results of operations, financial condition and cash flows from future prospects.

ThePolicy transitionand totrade adecisions newby presidentialgovernment administration in the United States,entities, including the potential use and effects of tariffs to address the administration’s policy goals,tariffs, could materially impact the macroeconomic framework in which we operate.

ThePolicy transitionand totrade adecisions newmade presidentialby administrationgovernments in the jurisdictions where we operate, including the United States and Canada, could impactaffect the macroeconomic framework in which we operate,operate and wecould areimpact unableour tobusiness preciselyand predictfinancial what actions the new administration will take. For example, on February 1, 2025, the current U.S. presidential administration announced the implementation of a 25% additional tariff on imports from Canada.condition. It is possiblepossible, therefor couldexample, be furtherthat modifications of tariff policy and other U.S. governmental policies that could impact our financial performance. Any trade wars,disputes or significant changes in trade policies, through the implementation of tariffs or otherwise, hashave the potential to adversely affect us, including by impacting (a) the supply chains for our operations as well as the third parties with whom we engage, and (b) the macroeconomic markets at large.

We do not believe XBiotech is an “Investment Company”; instead, we believe it is a bona fide biopharmaceutical entity engaged in active pharmaceutical R&D, evidenced by the recent sale of its drug candidate Bermekimab for $750 million and up to $600 million in potential milestone payments and our extensive ongoing R&D activity. However, arbitrary definitions used to define a passive foreign investment company (PFIC) for US tax purposes have made some financial analysts suggest we are a PFIC. Particularly, based on the blind criteria that if 75% or more of gross income is passive income, with nothing else considered, then a company may be held to be a PFIC. Some years we don’t have income, since we only will have income when for example we sell one of our drugs or when we get a drug to market and generate sales. But we do keep the company’s cash in an interest bearing bank account or interest earning instruments. This generates interest income (or passive income) on our funds. We believe that to suggest that such bank account interest makes us a PFIC is absurd; this would suggest that we cannot keep our cash in a bank account and that interest on the Company’s funds supersedes any other consideration in defining the actual operations and essential nature of the Company. XBiotech will never accept an arbitrary and erroneous definition that could potentially penalize the Company and its shareholders and will oppose any effort to do so by the tax authorities. There is a risk that that tax authorities could successfully assert our PFIC status, and in such event shares held by a US person in that year will be PFIC shares for that year and all for subsequent years in which they are held by that person. PFIC rules can apply differently to different US shareholders depending on whether a specific shareholder has made certain elections with respect to the ownership of PFIC shares. Because these rules are complex and apply differently based upon whether and when a US shareholder has made certain elections, new and existing US shareholders should consult with their tax advisors as to the potential tax implications of acquiring, owning and disposing of our stock.

In the future, we may issue additional common stock or other equity or debt securities convertible into common stock in connection with a financing, acquisition, litigation settlement, employee arrangements or otherwise. Any such issuance could result in substantial dilution to our existing shareholders and could cause our common share price to decline.

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$8.3 million for both the year ended December 31, 2024,2025, and $4.7 million for the year ended December 31, 2023.2024. Share-based compensation accounted for $0.9 million for the year ended December 31, 2025, and $0.6 million for the year ended December 31, 2024, and $0.5 million for the year ended December 31, 2023.2024.

The interestInterest income for the years ended December 31, 20242025 and 20232024 was mainlyprimarily generated from the Company’s Canadian bank accounts and decreased due to lower interest bearingrates timeand deposits.a Thelower interestcash balance. Interest expense for the years ended December 31, 2025 and 2024 wasrelated to interest on the interest for theCompany’s convertible loans. The other income during the year ended December 31, 2025 was primarily attributable to the receipt of the Employee Retention Credit from the Internal Revenue Service and the cancellation of a penalty by the Canada Revenue Agency related to the 2020 tax year. 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 moreprior thanto 3 years ago2022 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 induring the yearreporting ended December 31, 2024 compared to 2023.periods.

The Company’s income tax expense for the tax year ended December 31, 2025 of $0.23 million was primarily driven by state gross margin taxes and current year uncertain tax positions. The Company’s income tax benefit for the tax periodyear 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 expects to maintain its full valuation allowance on all jurisdictions during 2025.

Since our inception on March 22, 2005 through December 31, 2024,2025, we have funded our operations principally through private placements and public offerings of equity securities, which have provided aggregate cash proceeds of approximately $118.2$276.3 million.million, excluding the February 2020 tender offer cash payment. We received $675 million in cash proceeds from the Janssen Transaction in the year ended December 31, 2019. In June 2021, we received the remaining $75 million in cash from the escrow receivable from the same transaction. In July 2021, we paid $75 million in dividends to shareholders. In July 2022, we purchased interest bearing time deposits in the amount of $59.5 million for a one-year term, and upon maturity in July 2023, both the principal amount and the accrued interest were returned. At December 31, 2024,2025, we had cash and cash equivalents of $172.7$125.6 million as compared to cash and cash equivalents of $200.0$172.7 million at December 31, 2023.2024. The following table summarizes our sources and uses of cash (in thousands):

During the years ended December 31, 20242025 and 20232024 net cash used in operating activities was $31.0$39.9 million and $18.7$31.0 million, respectively. Net cash used in the years ended December 31, 20242025 and 20232024 primarily resulted from our net losses. The rise in net losses was mainly due to the increase in salaries and related expenses and clinical trial expenses.

During the years ended December 31, 20242025 and 2023,2024, our investing activities used net cash of $1.3$0.3 million and generated net cash of $61.5$1.3 million, respectively. InThe July 2022, we purchased interest bearing time deposits in the amountuse of $63.3cash million.was Uponfor maturityfixed inasset July 2023, we obtained both the principal amountpurchases and the accruedpreparation interest.for a new facility.

During the year ended December 31, 2025 and 2024, the net cash (used in) provided by our financing activities providedwas netmainly cashrelated ofto $10.5the million.convertible loan. On January 3, 2024, we entered into a Convertibleconvertible Loanloan Agreementagreement (the “Loan”) with John Simard, the Company’s Founder, President,Chairman and former President and Chief Executive Officer and Chairman,Officer, which provided $10 million net cash for the construction of a newnew, facility.state-of-the-art research and development facility at the Company's property at 5217 Winnebago Lane in Austin, Texas. On January 31, 2025, the Loan was terminated upon full repayment of the principal and interest by the Company. Additionally, during the 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. 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, as the clinical manufacturing agreement terminated in November 2022.Janssen. Further, we may not receive any product revenue until a drug candidate has been approved by the FDA, EMA or similar regulatory agencies in other countries and successfully commercialized. As of December 31, 2024,2025, our principal sources of liquidity were our cash and cash equivalents, which totaled approximately $172.7$125.6 million.

Following the Janssen Transaction in December 2019, the tender offer in February 2020, and the dividends paid in July 2021, the accumulated deficit as of MarchJune 31,30, 2026 was ($141.9$148.6) million. We had net losses of $5.5$6.7 million and $10.9$12.2 million for the three months and six months ended MarchJune 31,30, 20262026, respectively, compared to $1.8 million and $12.6 million for the three months and six months ended June 30, 2025, respectively. We do not expect to generate any revenue in 2026. In addition, we expect to incur significant and increasing operating losses for the foreseeable future as we advance our drug candidates from discovery through preclinical testing and clinical.clinical testing. In addition to these increasing research and development expenses, we expect general and administrative costs to increase, particularly in consideration of current inflationary trends. We will need to generate significant revenues to achieve or sustain profitability, and we may never do so. As of MarchJune 31,30, 2026, we had 87 employees. Subsequent to June 30, 2026, the Company implemented a workforce reduction. Management does not expect the related costs to be material to the Company's financial position, results of operations, or cash flows.

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

Clinical development timelines, likelihood of success and total costs vary widely. We do not currently track our internal research and development costs or our personnel and related costs on an individual drug candidate basis. We use our research and development resources, including employees and our drug discovery technology, across multiple drug development programs. As a result, we cannot state precisely the costs incurred for each of our research and development programs or our clinical and preclinical drug candidates. From inception through MarchJune 31,30, 2026, we have recorded total research and development expenses, including share-based compensation, of $402.3$407.6 million. Our total research and development expenses for the three months and six months ended MarchJune 31,30, 2026 and 2025 were $5.2$5.3 million and $11.6$10.5 million, respectively, compared to $5.3 million and $17.0 million for the three months and six months ended June 30, 2025, respectively. Share-based compensation accounted for $8$6 thousand and $14.5 thousand for the three months and six months ended June 30, 2026, respectively, compared to $19 thousand and $2.7 million for the three months and six months ended MarchJune 31,30, 20262025, respectively, related to research and 2025, respectively.development.

Research and development expenses, as a percentage of total operating expenses for the three months and six months ended MarchJune 31,30, 2026 and 2025 were 83%86% and 86%,85%, respectively, compared to 84% and 85% for the three months and six months ended June 30, 2025, respectively. The percentages, excluding stock-basedshare-based compensation, for the three months and six months ended MarchJune 31,30, 2026 were 89% and 2025,87%, wererespectively, compared to 85% and 88%.87% for the three months and six months ended June 30, 2025.

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, stockshare–based compensation, and professional fees for legal services. Our total general and administration expenses for the three months and six months ended MarchJune 31,30, 2026 and 2025 were $1.1$0.9 million and $1.9 million, respectively, compared to $1.0 million and $2.9 million for the three months and six months ended June 30, 2025, respectively. Share-based compensation accounted for $164$166 thousand and $668$330 thousand for the three months and six months ended MarchJune 31,30, 20262026, respectively, and $88 thousand and $0.8 million for the three months and six months ended June 30, 2025, respectively.respectively, related to general and administrative expenses.

General and administrative expense,expenses, as a percentage of total operating expenses for the three months and six months ended MarchJune 31,30, 2026 and 2025 were 17%14% and 14%,15%, respectively, compared to 16% and 15% for the three months and six months ended June 30, 2025, respectively. The percentages, excluding stock-basedshare-based compensation, for the three months and six months ended MarchJune 31,30, 2026 were 11% and 2025,13%, wererespectively, compared to 15% and 12%.13% for the three months and six months ended June 30, 2025.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our financial statements, which have been prepared in conformity with generally accepted accounting principles in the United States (USU.S. GAAP). The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and expenses incurred during the reported periods.

While our significant accounting policies are more fully described in the notes to our unaudited condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q, we believe that the following accounting policies are the most critical to understanding and evaluating our reported financial results.

We account for income taxes under the asset and liability method. We record deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences. We recognize the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date. We assess the likelihood that deferred tax assets will be realized, and we recognize a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction. To date, with the exceptionAs of certainJune Canada30, deferred2026 taxand assetsDecember that31, will reverse in a period in which they may be carried back,2025, 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. We will continue to monitor the positive and negative evidence and will adjust the valuation allowance as sufficient objective positive evidence becomes available.

Research and development expenses decreased by $6.4$6.5 million to $5.2$10.5 million for the threesix months ended MarchJune 31,30, 2026, compared to $11.6$17.0 million for the threesix months ended MarchJune 31,30, 2025. The decrease of salaries and related expenses was mainly due to the $4.0 million bonus to the former Chief Executive Officer Mr. Simard in March 2025 in which 85%, or $3.4 million was allocated to research and development expenses. Stock-based compensation decreased due to the issuance of stock options with immediate vesting and grant date fair value atof $3.0 million to the former Chief Executive Officer Mr. Simard in March 2025, with 85% or $2.5 million of the expense allocated to research and development.

GeneralCompared to the six months ended June 30, 2025, the decrease in the general and administrative expensesexpense decreased by $0.9 million to $1.1 million forin the threesix months ended MarchJune 31,30, 2026,2026 comparedwas also primarily due to $1.9 million for the threedecrease monthsin endedsalaries Marchand 31,related 2025.expenses and shared-based compensation. The decrease in salaries and related expenses was primarily due to the $4.0 million bonus to the former Chief Executive Officer Mr. Simard in March 2025, in which 15% or $0.6 million was allocated to general and administrative expenses. Stock-based compensation decreased due to the issuance of $3.0 million in stock options to the former Chief Executive Officer Mr. Simard in March 2025, with 15% or $0.5 million of the expenses allocated to general and administrative department.

InterestThe interest income for the three months and six months ended MarchJune 31,30, 2026 and 2025 was primarilyfrom the interest generated from the Company’s Canadian bank accounts and decreased due to lower interest rates and a lower cash balance.accounts. The interest expensesexpense for the threesix months ended MarchJune 31,30, 2025 was the interest for the convertible loans. The other income forduring the threesix monthmonths ended MarchJune 31,30, 2026 was primarily attributable to the receipt of thean Employee Retention Credit from the Internal Revenue Service. The other income during the threesix months ended MarchJune 31,30, 2025 was the cancellation of a penalty by the Canada Revenue Agency for the 2020 tax year. Foreign exchange (loss) gain was mainly due to the fluctuation between the US dollar and the Canadian dollar in the three months and six months ended MarchJune 31,30, 2026 andcompared March 31,to 2025.

Since our inception on March 22, 2005 through MarchJune 31,30, 2026,2025, we have funded our operations principally through private placements and public offerings of equity securities, which have provided aggregate cash proceeds of approximately $278.6 million, excluding the February 2020 tender offer cash payment. We received $675 million in cash proceeds from the Janssen Transaction in the year ended December 31, 2019. In June 2021, we received the remaining $75 million in cash from the escrow receivable from the same transaction. In July 2021, we paid $75 million in dividends to shareholders. AsAt ofJune March 31,30, 2026, we had cash and cash equivalents of $115.5$109.5 million as compared to cash and cash equivalents of $155.9$152.9 million at MarchJune 31,30, 2025. The following table summarizes our sources and uses of cash (in thousands):

During the threesix months ended MarchJune 31,30, 2026 and 2025, our operating activities used net cash $9.0of $13.5 million and $6.7$12.7 million, respectively. The use of net cash in each of these periods primarily resulted from our net losses. The increase in net cash used in operations for the threesix months ended MarchJune 31,30, 2026 asin comparedcomparison to the threesix months ended March 31,June, 2025 was mainly due to the $4.5 million payment for Mr. Simard’s 2025 annual bonus in January 2026.

During the threesix months ended MarchJune 31,30, 2026 and 2025, our investing activities receivedprovided $9net cash of $5 thousand and used net cash of $94$145 thousand, respectively. The differenceuse of cash was duefor tofixed asset purchases and the preparation for the construction of a new facility. We received a refund from City of Austin related to the new facility’s permit during the threesix months ended MarchJune 31,30, 2026.

During the threesix months ended MarchJune 31,30, 2025, the net cash fromused in our financing activities was mainly related to the related party Convertible Loan. On January 3, 2024, we entered into a Convertible Loan Agreement (the “Loan”) with John Simard, the Company’s Founder, President, Chief Executive Officer and Chairman, who provided $10 million net cash for the construction of a new, state-of-the-art research and development facility at the Company's property at 5217 Winnebago Lane in Austin, Texas. On January 31, 2025, the Loan was terminated upon full repayment of the principal and the interest by the Company.

We expect to continue to incur operating losses in the future. We do not expect to receive any additional revenue under the clinical manufacturing agreement with Janssen. Further, we may not receive any product revenue until a drug candidate has been approved by the FDA, EMA or similar regulatory agencies in other countries and successfully commercialized. As of MarchJune 31,30, 2026, our principal sources of liquidity were our cash and cash equivalents, which totaled approximately $115.5$109.5 million.