XBiotech Inc. (XBIT) stock intrinsic value fair value estimate & owner earnings analysis

XBiotech is a clinical-stage antibody developer based in Austin, Texas. It sold its lead drug, bermekimab, to Janssen in 2019 for $675 million in cash, received a further $75 million from escrow in June 2021 and paid shareholders a $75 million dividend in July 2021. Since then it has had no product revenue. Its contract manufacturing and clinical services work for a large pharmaceutical customer ended at the close of 2023, and the company says it does not expect further revenue under that agreement. What the company owns today: cash of $109.5 million at June 30, 2026 against total liabilities of $5.2 million, and about 30.5 million shares outstanding. That is roughly $3.42 of net cash per share. It also owns its Austin research and manufacturing site (net book value $22.5 million at June 30, 2026), which we do not add to value. The convertible loan from founder John Simard was repaid in January 2025, so the company carries no debt. Pipeline. Natrunix (an antibody against IL-1 alpha) showed fewer hospitalizations, fewer serious adverse events and longer progression-free survival than placebo in a 60-patient pancreatic cancer study, but the company is still in discussions with the FDA about a regulatory path. A 233-patient rheumatoid arthritis study reported in December 2024 was judged uninterpretable by the company because of enrollment irregularities at major clinical sites. A stroke study for Hutrukin has been on hold. Infectious disease programs (shingles, influenza, C. difficile, MRSA) are earlier stage. None of this is contracted, approved or generating revenue, so we assign the pipeline no value. Earnings. On our owner-earnings measure (operating cash flow less working-capital swings, stock compensation and capital spending) the company has been negative every year since its sale: about -$20.7 million in 2022, -$24.5 million in 2023, -$33.1 million in 2024 and -$46.8 million in 2025, or -$1.54 per share in 2025. 2020 and 2021 are excluded from the comparison because they were dominated by the Janssen sale, its taxes and the escrow collection. The median of 2022 to 2025 is about -$0.94 per share. Cash spending is easing: operating cash outflow was $13.5 million in the first half of 2026 versus $12.7 million in the first half of 2025, and stock compensation fell to $0.3 million from $3.4 million. Research spending was $47.4 million in 2025 and $10.5 million in the first half of 2026. We treat one half-year as too short to reset the level. How we value it. With no earnings power we can name and evidence, the business is worth the cash left after the spending we expect, discounted at 6%. Cash falling from $172.7 million to $125.6 million during 2025 shows how quickly spending erodes value. Bear case, about $0.70 per share: spending continues at the 2025 pace ($40.2 million a year of operating cash outflow plus capital spending) for two years with no approvable outcome. Net cash of $104.3 million (cash less liabilities) falls to about $23.9 million, worth about $21.3 million today. Base case, about $2.39 per share: spending runs at the first-half 2026 pace ($27.0 million annualized) for one more year, leaving $77.3 million, worth about $72.9 million today. Bull case, about $2.89 per share: management stops spending within six months, after roughly $13.5 million, and the remaining $90.8 million is kept, in line with the 2021 precedent of paying out $75 million to holders. Worth about $88.2 million today. What we left out: any value for Natrunix or other candidates, since no approval path, contract or revenue exists yet, and the Austin facility. What would make this wrong: a successful FDA path for Natrunix in oncology would be worth far more than these cases; equally, faster spending or a poor use of cash would leave less than the base case. Interest income on the cash is already reflected in the operating cash flow figures. The filings state that cash is sufficient for at least 12 months from the date of the annual report.