Note 7 - Common Stock Options

12 Months Ended

Dec. 31, 2025

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

7. 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”). On March 24, 2015, the board of directors of the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”) and on August 29, 2025, the board of directors of the Company adopted the 2025 Equity Incentive Plan (the “2025 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 the 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’ expiration 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.

A summary of changes in common stock options issued under the 2015 Plan and under the 2025 Plan is as follows:

		Options				Exercise Price				Weighted-Average Exercise Price
Options outstanding at December 31, 2023			5,039,518			$2.71-$21.74				$	9.46
Granted			262,000				4.05-11.81				6.31
Exercised			(50,767	)			3.38-5.62				3.92
Forfeitures			(919,166	)			3.84-19.92				11.52
Options outstanding at December 31, 2024			4,331,585			$2.71-$21.74				$	8.89
Granted			1,373,747				2.64-3.89				3.34
Exercised			-				-				-
Forfeitures			(231,425	)			3.16-19.00				10.01
Options outstanding at December 31, 2025			5,473,907			$2.64-$21.74				$	7.45

The weighted average fair value of the options issued to directors, employees and consultants during the fiscal years ended December 31, 2025, and 2024, was $2.68 and $3.96, respectively. The total fair value of options vested during the years ended December 31, 2025, and 2024 was $3.9 million, and $1.6 million, respectively.

A summary of the activity in the Company’s nonvested shares is as follows:

		Year Ended December 31,
		2025								2024
		Shares				Weighted Average Granted Date Fair Value				Shares				Weighted Average Granted Date Fair Value
Nonvested at January 1,			257,500			$	3.35				571,925			$	3.30
Granted during the period			1,373,747				2.68				262,000				3.96
Vested during the period			(1,295,946	)			2.98				(502,675	)			3.42
Forfeited during the period			(10,850	)			4.19				(73,750	)			4.42
Nonvested at end of period			324,451			$	1.98				257,500			$	3.35

As of December 31, 2025, there was approximately $0.4 million of unrecognized compensation cost, related to stock options granted under the Plan which will be amortized to stock compensation expense over the next 1.0 years. As of December 31, 2025, no outstanding options had intrinsic value.

The weighted-average remaining contractual term of outstanding options as of December 31, 2025 is 5.6 years. Total exercisable stock options as of December 31, 2025 is 5.1 million. The weighted-average exercise price of options exercisable as of December 31, 2025 is $7.7 per share and the weighted-average remaining contractual term is 5.4 years.