View Filing Data

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2018	Aug. 09, 2018
Document Information [Line Items]
Entity Registrant Name	XBiotech Inc.
Entity Central Index Key	0001626878
Trading Symbol	xbit
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		35,819,772
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 24,849	$ 31,768
Prepaid expenses and other current assets	917	1,564
Total current assets	25,766	33,332
Property and equipment, net	28,524	29,640
Total assets	54,290	62,972
Current liabilities:
Accounts payable	1,455	1,730
Accrued expenses	1,301	1,062
Total current liabilities	2,756	2,792
Long-term liabilities:
Deferred rent	12	18
Total liabilities	2,768	2,810
Shareholders’ equity:
Preferred stock, no par value, unlimited shares authorized, no shares outstanding	0	0
Common stock, no par value, unlimited shares authorized, 35,819,772 and 35,439,272 shares outstanding at June 30, 2018 and December 31, 2017, respectively	278,441	277,492
Accumulated other comprehensive loss	(381)	(768)
Accumulated deficit	(226,538)	(216,562)
Total shareholders’ equity	51,522	60,162
Total liabilities and shareholders’ equity	$ 54,290	$ 62,972

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares $ / shares in Thousands	Jun. 30, 2018	Dec. 31, 2017
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares outstanding (in shares)	35,819,772	35,439,272

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Operating expenses:
Research and development	$ 3,949	$ 7,399	$ 6,941	$ 15,587
General and administrative	1,672	2,289	2,829	4,372
Total operating expenses	5,621	9,688	9,770	19,959
Loss from operations	(5,621)	(9,688)	(9,770)	(19,959)
Other income (loss):
Interest income	107	114	170	164
Foreign exchange gain (loss)	(393)	441	(376)	99
Total other income (loss)	(286)	555	(206)	263
Net loss	$ (5,907)	$ (9,133)	$ (9,976)	$ (19,696)
Net loss per share—basic and diluted (in dollars per share)	$ (0.16)	$ (0.26)	$ (0.28)	$ (0.57)
Shares used to compute basic and diluted net loss per share (in shares)	35,819,772	35,320,499	35,783,738	34,311,690

Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net loss	$ (5,907)	$ (9,133)	$ (9,976)	$ (19,696)
Foreign currency translation adjustment	381	(493)	388	(383)
Comprehensive loss	$ (5,526)	$ (9,626)	$ (9,588)	$ (20,079)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating activities
Net loss	$ (9,976)	$ (19,696)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,198	592
Share-based compensation expense	747	896
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	647	1,255
Accounts payable	(275)	(1,167)
Accrued expenses	240	(2,254)
Deferred rent	(7)	(2)
Net cash used in operating activities	(7,426)	(20,376)
Investing activities
Purchase of property and equipment	(82)	(890)
Net cash used in investing activities	(82)	(890)
Financing activities
Issuance of common stock and warrants, net		32,620
Issuance of common stock under stock option plan	201	654
Net cash provided by financing activities	201	33,274
Effect of foreign exchange rate on cash and cash equivalents	388	(383)
Net change in cash and cash equivalents	(6,919)	11,625
Cash and cash equivalents, beginning of period	31,768	34,324
Cash and cash equivalents, end of period	24,849	45,949
Supplemental Information:
Accrued purchases of property and equipment		$ 122

Note 1 - Organization

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Organization

XBiotech Inc. (“XBiotech” or “the Company”) was incorporated in Canada on

March

22,

2005.

XBiotech USA, Inc., a wholly-owned subsidiary of the Company, was incorporated in Delaware, United States (“U.S.”) in

November

2007.

XBiotech Switzerland AG, a wholly-owned subsidiary of the Company, was incorporated in Zug, Switzerland in

August

2010.

XBiotech Japan K.K., a wholly-owned subsidiary of the Company, was incorporated in Tokyo, Japan in

March 2013.

XBiotech Germany GmbH, a wholly-owned subsidiary of the Company, was incorporated in Germany in

January 2014.

The Company’s headquarters are located in Austin, Texas.

XBiotech Inc. is a pre-market biopharmaceutical company engaged in discovering and developing True Human™ monoclonal antibodies for treating a variety of diseases. True Human™ monoclonal antibodies are those which occur naturally in human beings—as opposed to being derived from animal immunization or otherwise engineered. The Company believes that naturally occurring monoclonal antibodies have the potential to be safer and more effective than their non-naturally occurring counterparts. XBiotech is focused on developing its True Human™ pipeline and manufacturing system. The Company’s pipeline consists of product candidates at various stages of development across an array of indications including oncology, dermatology, other inflammatory conditions, such as peripheral vascular disease, type

diabetes, and infectious diseases.

Note 2 - Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

Significant Accounting Policies

Basis of Presentation

These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“US GAAP”). In the opinion of management, the accompanying consolidated financial statements reflect all adjustments (consisting only of normal recurring items) considered necessary to present fairly the Company’s financial position at

June 30, 2018

and

December 31, 2017,

the results of its operations and comprehensive loss for the

three

month and

six

month periods ended

March 31

and

June 30, 2018

and

2017,

and the cash flows for the

six

month period ended

June 30, 2018

and

2017.

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

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.

Share-Based Compensation

The Company accounts for its share-based compensation awards in accordance with ASC Topic

718,

Compensation-Stock Compensation

(“ASC

718”

). ASC

718

requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statements of operations based on their grant date fair values. For stock options granted to employees and to members of the board of directors for their services on the board of directors, the Company estimates the grant date fair value of each option award using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. To determine the fair value of its common stock, the Company uses the closing price of the Company’s common stock as reported by NASDAQ. For awards subject to service-based vesting conditions, the Company recognizes share-based compensation expense, equal to the grant date fair value of stock options on a straight-line basis over the requisite service period. The Company accounts for forfeitures as they occur rather than on an estimated basis.

Share-based compensation expense recognized for the

three

and

six

months ended

June 30, 2018

and

2017

was included in the following line items on the Consolidated Statements of Operations (in thousands).

	Three Months Ended June 30,					Six Months Ended June 30,
	2018		2017			2018		2017
Research and development	$	162	$	(273	)	$	250	$	21
General and administrative		475		1,171			497		1,601
Total share-based compensation expense	$	637	$	898		$	747	$	1,622

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 June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Dividend yield		-			-			-			-
Expected volatility		80%			67%		67%	-	80%	65%	-	67%
Risk-free interest rate	2.58%	-	2.90%	1.83%	-	1.97%	2.38%	-	2.90%	1.83%	-	2.41%
Expected life (in years)	5.38	-	10	5.38	-	6	5.38	-	10	5.38	-	10
Weighted-average grant date fair value per share		4.52			4.66			4.53			4.85

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., German, Swiss, Japanese and Canadian banks. Cash and cash equivalents are stated at cost which approximates fair value.

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

off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

Fair Value Measurements

The Company follows ASC Topic

820,

Fair Value Measurements and Disclosures

, which establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market date (observable inputs) and the Company’s own assumptions (unobservable inputs). The hierarchy consists of

three

levels:

•

Level

1—Unadjusted

quoted prices in active markets for identical assets or liabilities.

•

Level

2—Quoted

prices for similar assets and liabilities in active markets, quoted prices in markets that are

not

active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

•

Level

3—Unobservable

inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

June 30, 2018

and

December 31, 2017,

the Company did

not

have any assets or liabilities that are measured at fair value on a recurring basis. The carrying amounts reflected in the balance sheets for cash and cash equivalents, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate their fair values at

June 30, 2018

and

December 31, 2017,

due to their short-term nature.

Property and Equipment

Property and equipment, which consists of land, construction in process, furniture and fixtures, computers and office equipment, scientific equipment, leasehold improvements, 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

• Leasehold improvements	Shorter of asset’s useful life or remaining lease term

• Scientific equipment	5 years

• Vehicles	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

. Potential impairment is assessed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recovered. Recoverability of these assets is assessed based on undiscounted expected future cash flows from the assets, considering a number of factors, including past operating results, budgets and economic projections, market trends and product development cycles. If impairments are identified, assets are written down to their estimated fair value. The Company has

not

recognized any impairment through

June 30, 2018.

Income Taxes

The Company makes estimates and judgments in determining the need for a provision for income taxes, including the estimation of its taxable income or loss for the full fiscal year. The Company has accumulated significant deferred tax assets that reflect the tax effects of net operating losses and tax credit carryovers and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of certain deferred tax assets is dependent upon future earnings. The Company is uncertain about the timing and amount of any future earnings. Accordingly, the Company offsets these deferred tax assets with a valuation allowance. The Company

may

in the future determine that certain deferred tax assets will likely be realized, in which case the Company will reduce its valuation allowance in the period in which such determination is made. If the valuation allowance is reduced, the Company

may

recognize a benefit from income taxes in its consolidated statements of operations in that period.

The GAAP guidance requires recognition of the impact of a tax position in our financial statements only if that position is more likely than

not

to be sustained upon examination by taxing authorities, based on the technical merits of the position. Any interest and penalties related to uncertain tax positions will be reflected in income tax expense. Determining the consolidated provision for income taxes involves judgments, estimates and the application of complex tax regulations. We are required to provide for income taxes in each of the jurisdictions where we operate, including estimated liabilities for uncertain tax positions. Although we believe that we have provided adequate liabilities for uncertain tax positions, the actual liability resulting from examinations by taxing authorities could differ from the recorded income tax liabilities and could result in additional income tax expense having a material impact on our consolidated results of operations. Changes of estimates in our income tax liabilities are reflected in our income tax provision in the period in which the factors resulting in the change to our estimate become known to us. We benefit from the tax credit incentives under the U.S. research and experimentation tax credit extended to taxpayers engaged in qualified research and experimental activities while carrying on a trade or business.

December 22, 2017,

the President of the United States signed into law the Tax Cuts and Jobs Act, or TCJA, tax reform legislation. The TCJA makes significant changes in U.S. tax law including a reduction in the corporate tax rates, changes to net operating loss carryforwards and carrybacks, and a repeal of the corporate alternative minimum tax. The TCJA reduced the U.S. corporate tax rate from the current rate of

percent down to

percent starting on

January 1, 2018.

As a result of the TCJA, the Company was required to revalue deferred tax assets and liabilities at

percent. As of and for the year ended

December 31, 2017,

this revaluation resulted in a provision of

$4.5

million to income tax expense in continuing operations and a corresponding reduction in the valuation allowance. As a result, there was

impact to the Company’s consolidated statements of comprehensive loss as a result of the reduction in tax rates.

As the Company does

not

have all of the necessary information to analyze all income tax effects of the TCJA, the Company will continue to make and refine calculations and estimates as additional information is obtained, which could potentially affect the provisional amounts relating to the deferred income taxes, including but

not

limited to deferred tax assets related to share-based compensation expenses. Where the Company has

not

yet been able to make reasonable estimates of the impact of certain elements, the Company has

not

recorded any amounts related to those elements and has continued accounting for them in accordance with ASC

740

on the basis of the tax laws in effect immediately prior to the enactment of the TCJA. The Company expects to complete a detailed analysis

later than the

fourth

quarter of

2018.

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. 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

, requires that all components of comprehensive income (loss), including net income (loss), be reported in the financial statements in the period in which they are recognized. Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on investments and foreign currency translation adjustments.

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

operating segment. Substantially all of the Company’s operations are in the U.S. geographic segment.

Net Loss Per Share

Net 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 loss by the weighted average number of common shares and common share equivalents outstanding (if dilutive) during each period. The number of common share equivalents, which include stock options, is computed using the treasury stock method.

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. The Company has evaluated subsequent events through the date of filing this Form

-Q.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

February 2016,

the FASB issued final guidance that will change the accounting for leases, Accounting Standards Update (ASU)

No.

2016

02,

“Leases.” The FASB issued final guidance that requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. The guidance also eliminates today’s real estate-specific provisions for all entities. The pronouncement will also require additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. For calendar-year public business entities and certain calendar-year

not

-for-profit entities and employee benefit plans, the guidance is effective in

2019,

and interim periods within that year, and early adoption is permitted. The adoption of this standard will require the Company to record its operating leases on the balance sheet. The Company is currently evaluating the impact of this pronouncement on the Company's consolidated financial statements.

Note 3 - Common Stock

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Common Stock

Pursuant to its Articles, the Company has an unlimited number of shares available for issuance with

par value.

From

January

through

December 2016,

204

thousand shares of common stock were issued upon the exercise of stock options at a price of

$0.74

$19.09

per share for total proceeds of

$1.1

million.

From

November

through

December 2016,

under the Common Stock Sales Agreement with H.C. Wainwright & Co. LLC, the Company sold

145

thousand shares of common stock at a price between

$13.60

$14.17

per share for total proceeds of

$1.8

million.

February 2017,

under the Common Stock Sales Agreement with H.C. Wainwright & Co. LLC, the Company sold

thousand shares of common stock at a price between

$12.09

$12.37

per share for total proceeds of

$1.0

million.

March 2017,

the Company sold

2.4

million shares of common stock at a net price of

$13.00

for total proceeds of approximately

$31.6

million from investors.

From

January

through

December 2017,

290

thousand shares of common stock were issued upon the exercise of stock options at a price of

$2.50

$14.71

per share for a total of

$703

thousand.

From

January

through

March 2018,

thousand shares of common stock were issued upon the exercise of stock options at a price of

$2.50

per share for total proceeds of

$201

thousand.

Note 4 - Common Stock Options

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Common Stock Options

November

11,

2005

and

April 1, 2015,

the board of directors of the Company adopted stock option plans (“the Plans”) pursuant to which the Company

may

grant incentive 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 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

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 Plans shall

not,

in aggregate, exceed

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 Plans is as follows:

	Options			Exercise Price				Weighted-Average Exercise Price
Options outstanding at December 31, 2017		5,303,624			$2.5	-	$21.99		7.69
Granted		822,500			4.01	-	5.13		4.45
Exercised		(80,500	)			2.5			2.50
Forfeitures		(606,075	)		2.50	-	19.09		5.72
Options outstanding at June 30, 2018		5,439,549			$2.5	-	$21.99		7.44

As of

June 30, 2018,

there was approximately

$3.2

million of unrecognized compensation cost, related to stock options granted under the Plans which will be amortized to stock compensation expense over the next

2.3

years.

Note 5 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Commitments Disclosure [Text Block]

Commitments and Contingencies

January

12,

2008,

the Company entered a lease agreement to lease a facility in Austin, Texas, U.S. On

September

15,

2010,

the Company entered into a

second

lease agreement to lease additional space in Austin, Texas, U.S. On

March

20,

2013,

the company extended the lease for another

months with the same terms and rental rates as the current leases. On

February 28, 2015,

the Company extended the leases for another

four

years with

two

years early termination right. The future minimum lease payments are as follows as of

June 30, 2018 (

in thousands):

2018		$	236
2019		$	79

Rent expense for the

three

months and

six

months ended

June 30, 2018

were

$193

thousand and

$393

thousand, respectively, compared to

$186

thousand and

$372

thousand for the

three

months and

six

months ended

June 30, 2017,

respectively.

December 1, 2015,

a purported securities class action complaint captioned Yogina Rezko v. XBiotech Inc., John Simard, Queena Han and WR Hambrecht & Co., LLC was filed against the Company, certain of its officers and directors and the underwriter for its initial public offering in the Superior Court for the State of California, Los Angeles County. On

December 2, 2015,

a purported securities class action complaint captioned Linh Tran v. XBiotech Inc., John Simard and Queena Han was filed against the Company and certain of its officers and directors in U.S. District Court for the Western District of Texas. The lawsuits are based on substantially similar factual allegations and purport to be class actions brought on behalf of purchasers of the Company's securities during the period from

April 15, 2015

through

November 23, 2015.

The complaint filed in California state court alleges that the defendants violated the Securities Act of

1933,

as amended (the "Securities Act"), and the complaint filed in federal court alleges that the defendants violated the Securities Exchange Act of

1934,

as amended (the "Exchange Act"), in each case by making materially false and misleading statements concerning the Company's Phase III clinical trial conducted in Europe to assess Xilonix™ as a treatment for colorectal cancer. The California complaint purports to assert claims for violations of Sections

11,

(a)(

) and

of the Securities Act, and the federal complaint purports to assert claims for violation of Sections

(b) and

(a) of the Exchange Act and Rule

10b

promulgated thereunder. Both complaints seek, on behalf of the purported class, an unspecified amount of monetary damages, interest, fees and expenses of attorneys and experts, and other relief.

September 2016,

a stay was granted at the Superior Court for the State of California, Los Angeles County, in Yogina Rezko v. XBiotech Inc., John Simard, Queena Han and WR Hambrecht & Co., LLC, in light of the ongoing case, Linh Tran v. XBiotech Inc., John Simard and Queena Han, in the U.S. District Court for the Western District of Texas, leaving plaintiffs with an opportunity re-file a complaint in Texas. In

October 2016,

the Texas securities class action lawsuit was dismissed with prejudice. At the

June 7, 2017

hearing at the Superior Court for the State of California, Los Angeles County, the Company was granted a motion on the grounds of forum non conveniens. The judge ruled that the case belonged in Texas,

not

in California. The case is nevertheless stayed, due to California procedural rules, and

not

dismissed.

The plaintiffs re-filed their suit in Travis County district court, located in Austin, Texas, on

July 6, 2017.

The Company subsequently removed the case to the U.S. District Court for the Western District of Texas. Following a recent Supreme Court decision holding that the types of claims asserted in this action are non-removable, the suit was remanded back to Travis County district court, where it remains pending. The Company believes the claims asserted in the case are without merit and intends to mount a vigorous defense.

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

June 30, 2018

and

December 31, 2017,

the results of its operations and comprehensive loss for the

three

month and

six

month periods ended

March 31

and

June 30, 2018

and

2017,

and the cash flows for the

six

month period ended

June 30, 2018

and

2017.

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

Research and Development Expense, Policy [Policy Text Block]

Research and Development Costs

alternative future use are expensed as incurred as research and development costs.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Share-Based Compensation

The Company accounts for its share-based compensation awards in accordance with ASC Topic

718,

Compensation-Stock Compensation

(“ASC

718”

). ASC

718

Share-based compensation expense recognized for the

three

and

six

months ended

June 30, 2018

and

2017

was included in the following line items on the Consolidated Statements of Operations (in thousands).

	Three Months Ended June 30,					Six Months Ended June 30,
	2018		2017			2018		2017
Research and development	$	162	$	(273	)	$	250	$	21
General and administrative		475		1,171			497		1,601
Total share-based compensation expense	$	637	$	898		$	747	$	1,622

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 June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Dividend yield		-			-			-			-
Expected volatility		80%			67%		67%	-	80%	65%	-	67%
Risk-free interest rate	2.58%	-	2.90%	1.83%	-	1.97%	2.38%	-	2.90%	1.83%	-	2.41%
Expected life (in years)	5.38	-	10	5.38	-	6	5.38	-	10	5.38	-	10
Weighted-average grant date fair value per share		4.52			4.66			4.53			4.85

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers highly liquid investments with a maturity of

three

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations of Credit Risk

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

off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

The Company follows ASC Topic

820,

Fair Value Measurements and Disclosures

three

levels:

•

Level

1—Unadjusted

quoted prices in active markets for identical assets or liabilities.

•

Level

2—Quoted

prices for similar assets and liabilities in active markets, quoted prices in markets that are

not

active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

•

Level

3—Unobservable

June 30, 2018

and

December 31, 2017,

the Company did

not

June 30, 2018

and

December 31, 2017,

due to their short-term nature.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

not

depreciated, using the straight line method. The useful lives are as follows:


• Furniture and fixtures	7 years

• Office equipment	5 years

• Leasehold improvements	Shorter of asset’s useful life or remaining lease term

• Scientific equipment	5 years

• Vehicles	5 years

• Building	39 years

Costs of major additions and betterments are capitalized; maintenance and repairs, which do

not

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

. Potential impairment is assessed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset

may

not

recognized any impairment through

June 30, 2018.

Income Tax, Policy [Policy Text Block]

Income Taxes

may

recognize a benefit from income taxes in its consolidated statements of operations in that period.

The GAAP guidance requires recognition of the impact of a tax position in our financial statements only if that position is more likely than

not

December 22, 2017,

percent down to

percent starting on

January 1, 2018.

As a result of the TCJA, the Company was required to revalue deferred tax assets and liabilities at

percent. As of and for the year ended

December 31, 2017,

this revaluation resulted in a provision of

$4.5

million to income tax expense in continuing operations and a corresponding reduction in the valuation allowance. As a result, there was

impact to the Company’s consolidated statements of comprehensive loss as a result of the reduction in tax rates.

As the Company does

not

limited to deferred tax assets related to share-based compensation expenses. Where the Company has

not

yet been able to make reasonable estimates of the impact of certain elements, the Company has

not

recorded any amounts related to those elements and has continued accounting for them in accordance with ASC

740

on the basis of the tax laws in effect immediately prior to the enactment of the TCJA. The Company expects to complete a detailed analysis

later than the

fourth

quarter of

2018.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Transactions

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income (Loss)

ASC Topic

220,

Comprehensive Income

Segment Reporting, Policy [Policy Text Block]

Segment and Geographic Information

one

operating segment. Substantially all of the Company’s operations are in the U.S. geographic segment.

Earnings Per Share, Policy [Policy Text Block]

Net Loss Per Share

Subsequent Events, Policy [Policy Text Block]

Subsequent Events

-Q.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

February 2016,

the FASB issued final guidance that will change the accounting for leases, Accounting Standards Update (ASU)

No.

2016

02,

not

-for-profit entities and employee benefit plans, the guidance is effective in

2019,

Note 2 - Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	Three Months Ended June 30,					Six Months Ended June 30,
	2018		2017			2018		2017
Research and development	$	162	$	(273	)	$	250	$	21
General and administrative		475		1,171			497		1,601
Total share-based compensation expense	$	637	$	898		$	747	$	1,622

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Dividend yield		-			-			-			-
Expected volatility		80%			67%		67%	-	80%	65%	-	67%
Risk-free interest rate	2.58%	-	2.90%	1.83%	-	1.97%	2.38%	-	2.90%	1.83%	-	2.41%
Expected life (in years)	5.38	-	10	5.38	-	6	5.38	-	10	5.38	-	10
Weighted-average grant date fair value per share		4.52			4.66			4.53			4.85

Note 4 - Common Stock Options (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Share-based Compensation, Stock Options, Activity [Table Text Block]

	Options			Exercise Price				Weighted-Average Exercise Price
Options outstanding at December 31, 2017		5,303,624			$2.5	-	$21.99		7.69
Granted		822,500			4.01	-	5.13		4.45
Exercised		(80,500	)			2.5			2.50
Forfeitures		(606,075	)		2.50	-	19.09		5.72
Options outstanding at June 30, 2018		5,439,549			$2.5	-	$21.99		7.44

Note 5 - Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

2018		$	236
2019		$	79

Note 2 - Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Impairment of Long-Lived Assets Held-for-use	$ 0
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			34.00%
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability			$ 4,500
Scenario, Forecast [Member]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent		21.00%
Furniture and Fixtures [Member]
Property, Plant and Equipment, Useful Life	7 years
Office Equipment [Member]
Property, Plant and Equipment, Useful Life	5 years
Equipment [Member]
Property, Plant and Equipment, Useful Life	5 years
Vehicles [Member]
Property, Plant and Equipment, Useful Life	5 years
Building [Member]
Property, Plant and Equipment, Useful Life	39 years
Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure	$ 0		0
Financial and Nonfinancial Liabilities, Fair Value Disclosure	$ 0		$ 0

Note 2 - Significant Accounting Policies - Share-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based compensation expense	$ 637	$ 898	$ 747	$ 1,622
Research and Development Expense [Member]
Share-based compensation expense	162	(273)	250	21
General and Administrative Expense [Member]
Share-based compensation expense	$ 475	$ 1,171	$ 497	$ 1,601

Note 2 - Significant Accounting Policies - Stock Option Valuation Assumptions (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Dividend yield
Expected volatility	80.00%	67.00%
Risk-free interest rate
Expected life (in years) (Year)
Weighted-average grant date fair value per share (in dollars per share)	$ 4.52	$ 4.66	$ 4.53	$ 4.85
Minimum [Member]
Dividend yield
Expected volatility			67.00%	65.00%
Risk-free interest rate	2.58%	1.83%	2.38%	1.83%
Expected life (in years) (Year)	5 years 138 days	5 years 138 days	5 years 138 days	5 years 138 days
Weighted-average grant date fair value per share (in dollars per share)
Maximum [Member]
Dividend yield
Expected volatility			80.00%	67.00%
Risk-free interest rate	2.90%	1.97%	2.90%	2.41%
Expected life (in years) (Year)	10 years	6 years	10 years	10 years
Weighted-average grant date fair value per share (in dollars per share)

Note 3 - Common Stock (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		2 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2017	Feb. 28, 2017	Dec. 31, 2016	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Common Stock, No Par Value				$ 0	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period				80,500	290,000	204,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price				$ 2.50
Proceeds from Stock Options Exercised				$ 201	$ 703	$ 1,100
Stock Issued During Period, Shares, New Issues	2,400,000	87,000	145,000
Proceeds from Issuance of Common Stock	$ 31,600	$ 1,000	$ 1,800
Shares Issued, Price Per Share	$ 13
Minimum [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price					$ 2.50	$ 0.74
Share Price			$ 13.60			13.60
Shares Issued, Price Per Share		$ 12.09
Maximum [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price					$ 14.71	19.09
Share Price			$ 14.17			$ 14.17
Shares Issued, Price Per Share		$ 12.37

Note 4 - Common Stock Options (Details Textual) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 3.2
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 109 days
The Plan [Member] \| Any One Person [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Outstanding Stock Maximum	5.00%
The Plan [Member] \| Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years

Note 4 - Common Stock Options - Changes in Common Stock Options Issued (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Options outstanding (in shares)	5,303,624
Options outstanding, exercise price (in dollars per share)
Granted (in shares)	822,500
Granted (in dollars per share)
Exercised (in shares)	(80,500)	(290,000)	(204,000)
Exercised (in dollars per share)	$ 2.50
Forfeitures (in shares)	(606,075)
Forfeitures (in dollars per share)
Options outstanding (in shares)	5,439,549	5,303,624
Options outstanding, exercise price (in dollars per share)
Minimum [Member]
Options outstanding, exercise price (in dollars per share)	2.50
Granted (in dollars per share)	4.01
Exercised (in dollars per share)		2.50	$ 0.74
Forfeitures (in dollars per share)	2.50
Options outstanding, exercise price (in dollars per share)	2.50	2.50
Maximum [Member]
Options outstanding, exercise price (in dollars per share)	21.99
Granted (in dollars per share)	5.13
Exercised (in dollars per share)		14.71	$ 19.09
Forfeitures (in dollars per share)	19.09
Options outstanding, exercise price (in dollars per share)	21.99	21.99
Weighted Average [Member]
Options outstanding, exercise price (in dollars per share)	7.69
Granted (in dollars per share)	4.45
Exercised (in dollars per share)	2.50
Forfeitures (in dollars per share)	5.72
Options outstanding, exercise price (in dollars per share)	$ 7.44	$ 7.69

Note 5 - Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Feb. 28, 2015	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Mar. 20, 2013
Lessee, Operating Lease, Renewal Term	4 years					1 year 270 days
Lessee Leasing Arrangements, Operating Leases, Early Termination Right	2 years
Operating Leases, Rent Expense, Net, Total		$ 193	$ 186	$ 393	$ 372

Note 5 - Commitments and Contingencies - Future Minimum Lease Payments for Operating Leases (Details) $ in Thousands	Jun. 30, 2018 USD ($)
2018	$ 236
2019	$ 79