What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-09-20 · 368 added, 237 removed, 680 unchanged (47% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

Current assets:

Cash and cash equivalents

Marketable securities

Prepaid expenses and other current assets

Total current assets

Deferred offering costs

Other non-current assets

Liabilities, Convertible Preferred Stock and Stockholders’

Equity (Deficit)

Current liabilities:

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Convertible preferred stock (Series A, B and C) $ 0.0001 par value;

16,944,484 shares authorized, issued and outstanding at June 30, 2021;

no shares authorized, issued and outstanding at September 30, 2021;

12,647,934 shares authorized, issued and outstanding at December 31, 2020;

aggregate liquidation preference of $ 505,399 and $ 169,900 at June 30, 2021 and December 31, 2020, respectively

aggregate liquidation preference of $ 0 and $ 169,900 at September 30, 2021 and December 31, 2020, respectively

Stockholders’

equity (deficit):

Preferred stock:

Undesignated preferred stock, $ 0.0001 par value;

10,000,000 shares authorized at September 30, 2021;

no shares authorized at December 31, 2020;

no shares issued and outstanding at September 30, 2021 and December 31, 2020

Common stock, $ 0.0001 par value;

150,000,000 shares authorized at June 30, 2021 and December 31, 2020;

5,599,240 shares issued and outstanding at June 30, 2021;

1,000,000,000 shares authorized at September 30, 2021;

150,000,000 shares authorized at December 31, 2020;

111,251,660 shares issued and outstanding at September 30, 2021;

28,193,240 shares issued and 5,593,240 shares outstanding at December 31, 2020

Treasury stock, at cost;

0 shares and 22,600,000 shares at June 30, 2021 and December 31, 2020, respectively

no shares and 22,600,000 shares at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

Total stockholders’

equity (deficit)

Total liabilities, convertible preferred stock and stockholders’

equity (deficit)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(In thousands, except share and per share amounts)

September 30,

(Inception) to

September 30,

Operating expenses:

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Total other income (expense), net

Net loss and comprehensive loss

Net loss per share attributable to common stockholders, basic and

Other comprehensive income (loss)

Unrealized gain on available-for-sale securities, net of tax

Comprehensive loss

Net loss per share attributable to common stockholders, basic and diluted

Weighted-average common shares outstanding, basic and diluted

(1) Includes related-party amounts of $ 247 for the three months ended June 30, 2021 , $ 435 for the six months ended June 30, 2021 and $ 0 for the period from June 3, 2020 (inception) to June 30, 2020 (see Note 14).

(2) Includes related-party amounts of $ 2,500 for the three months ended June 30, 2021 , $ 3,500 for the six months ended June 30, 2021 and $ 0 for the period from June 3, 2020 (inception) to June 30, 2020 (see Note 14).

(3) The results for the period from June 3, 2020 (inception) to June 30, 2020 are the same for the three and six months ended June 30, 2020;

accordingly, the related financial information is presented once within the Form 10-Q.

(1) Includes related-party amounts of $ 1,826 and $ 2,261 for the three and nine months ended September 30, 2021, respectively, and $ 291 for both the three months ended September 30, 2020 and for the period from June 3, 2020 (inception) to September 30, 2020 (see Note 15).

(2) Includes related-party amounts of $ 4,000 and $ 7,500 for the three and nine months ended September 30, 2021, respectively, and $ 39,915 for both the three months ended September 30, 2020 and for the period from June 3, 2020 (inception) to September 30, 2020 (see Note 15).

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PREFERRED STOCK AND STOCKHOLDERS’

EQUITY (DEFICIT)

(In thousands, except share amounts)

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Treasury Stock

Accumulated Other Comprehensive

Stockholders’

Equity (Deficit)

Balances at June 3, 2020 (Inception)

1 unchanged sentence

Issuance of restricted common stock upon early exercise of stock options

Net loss and comprehensive loss

Balances at June 30, 2020

Issuance of Series A convertible preferred stock in exchange for license and common stock

Issuance of Series A convertible preferred stock, net of issuance costs of $ 194

Stock-based compensation expense

Balances at September 30, 2020

Convertible Preferred Stock

Treasury Stock

Accumulated Other Comprehensive

Stockholders’

Equity (Deficit)

Balances at December 31, 2020

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Balances at June 30, 2021

Issuance of common stock upon completion of initial public offering, net of commissions, underwriting discounts and offering costs

Conversion of convertible preferred stock to common stock

Stock-based compensation expense

Vesting of restricted common stock from early-exercised options

Unrealized gain on available-for-sale securities, net of tax

Balances at September 30, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(In thousands)

June 30, 2021

September 30, 2021

(Inception) to

June 30, 2020

September 30, 2020

Cash flows from operating activities:

1 unchanged sentence

Stock-based compensation expense

Non-cash acquired in-process research and development

Net amortization of premiums and accretion of discounts on marketable securities

Non-cash payments

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Accrued expenses

Other non-current assets

Net cash used in operating activities

Cash flows from investing activities:

Purchase of marketable securities

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of convertible preferred stock, net of issuance costs paid

Proceeds from issuance of common stock, net of commissions and underwriting discounts

Proceeds from early exercises of stock options

Payments of initial public offering costs

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Deferred offering and issuance costs included in accounts payable and accrued expenses

Issuance of Series A convertible preferred stock in exchange for assigned rights, license and repurchased common stock

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Nature of the Business and Basis of Presentation

Adagio Therapeutics, Inc., together with its consolidated subsidiary (the “Company”), is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of antibody-based solutions for infectious diseases with pandemic potential.

The Company’s initial focus is on the virus SARS-CoV-2, its variants and the disease caused by this virus, which is known as coronavirus disease 2019 (“COVID-19”).

The Company’s initial focus is on the virus SARS-CoV-2, its variants and the disease caused by this virus, which is known as COVID-19.

The Company initiated clinical trials for its lead product candidate, ADG20, in February 2021.

ADG20 is designed to be a potent, long-acting and broadly neutralizing antibody for both the treatment and prevention of COVID-19 as either a single or combination agent.

ADG20 is designed to be a potent, long-acting and broadly neutralizing antibody for both the prevention and treatment of COVID-19 as either a single or combination agent.

The Company was incorporated in the State of Delaware in June 2020.

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The Company is subject to a number of risks and uncertainties common to early-stage companies in the biopharmaceutical industry, including, but not limited to, completing clinical trials, the ability to raise additional capital to fund operations, obtaining regulatory approval for product candidates, market acceptance of products, competition from substitute products, protection of proprietary intellectual property, compliance with government regulations, the impact of COVID-19, dependence on key personnel, the ability to attract and retain qualified employees, and reliance on third-party organizations for the manufacturing, clinical and commercial success of its product candidates.

On July 30, 2021, the Company effected a five-for-one stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios of each series of the Company’s preferred stock (see Note 9).

Accordingly, all share and per share amounts for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this stock split and adjustment of the preferred stock conversion ratios.

On August 10, 2021, the Company completed its initial public offering (“IPO”) pursuant to which it issued and sold 20,930,000 shares of its common stock, including 2,730,000 shares pursuant to the full exercise of the underwriters’

option to purchase additional shares.

The aggregate net proceeds received by the Company from the IPO were approximately $ 330.9 million, after deducting underwriting discounts and commissions of $ 24.9 million, but before deducting offering expenses payable by the Company, which are estimated to be $ 3.8 million.

Upon the closing of the IPO, all shares of the Company’s convertible preferred stock then outstanding converted into 84,722,420 shares of common stock (see Note 10).

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Since inception, the Company has funded its operations primarily with proceeds from sales of convertible preferred stock, and most recently, with proceeds from the IPO.

The Company has incurred recurring losses since inception, including net losses of $ 83.4 million for six months ended June 30, 2021 and $ 65.3 million for the period from inception through December 31, 2020.

As of June 30, 2021 , the Company had an accumulated deficit of $ 148.7 million.

The Company has incurred recurring losses since inception, including net losses of $ 143.7 million f or the nine months ended September 30, 2021 and $ 65.3 million for the period from inception through December 31, 2020.

As of September 30, 2021, the Company had an accumulated deficit of $ 209.1 million.

The Company expects to continue to generate operating losses for the foreseeable future.

As of September 20, 2021, the issuance date of these interim condensed consolidated financial statements, the Company expects that its cash, cash equivalents, and short-term investments will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of the interim condensed consolidated financial statements.

As of November 15, 2021, the issuance date of these interim condensed consolidated financial statements, the Company expects that its cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of the interim condensed consolidated financial statements.

The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its operations.

The Company expects to seek additional funding through private equity financings, government or private-party grants, debt financings or other capital sources, including collaborations with other companies or other strategic transactions.

The Company expects to seek additional funding through private equity financings, public offerings, government or private-party grants, debt financings or other capital sources, including collaborations with other companies or other strategic transactions.

The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborations or other arrangements.

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In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic.

The evolving and constantly changing impact of the pandemic will directly affect the potential commercial prospects of ADG20 for the treatment and prevention of COVID-19.

The severity of the COVID-19 pandemic and the continued emergence of variants of concern, the availability, administration and acceptance of vaccines, monoclonal antibodies and other treatment modalities and the potential development of “herd immunity”

The evolving and constantly changing impact of the pandemic will directly affect the potential commercial prospects of ADG20 for the prevention and treatment of COVID-19.

The severity of the COVID-19 pandemic and the continued emergence of variants of concern (such as the widespread Delta variant), the availability, administration and acceptance of vaccines, monoclonal antibodies, antiviral agents and other therapeutic modalities, the introduction of local, national and/or employer vaccine mandates, and the potential development of “herd immunity”

by the global population will affect the design and enrollment of the Company’s clinical trials, the potential regulatory authorization or approval of the Company’s product candidates and the commercialization of the Company’s product candidates, if approved.

In addition, the Company’s business and operations may be more broadly adversely affected by the COVID-19 pandemic.

The COVID-19 outbreak and government measures taken in response have had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred, supply chains have been disrupted, facilities and production have been suspended and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen.

The ultimate extent of the impact of the COVID-19 pandemic on the Company’s business, financial condition, operations and product development timelines and plans remains highly uncertain and will depend on future developments, including the duration and spread of the outbreak and the continued emergence of variants (such as the Delta variant) and the impact on the Company’s clinical trial design and enrollment, trial sites, contract research organizations, contract manufacturing organizations and other third parties with which it does business, as well as its impact on regulatory authorities and the Company’s key scientific and management personnel.

To date, the Company has not experienced significant delays or disruptions in its development activities as a result of the COVID-19 pandemic but may in the future as the outbreak progresses and some of its contract research organizations, contract manufacturing organizations and other service providers continue to be impacted.

The global COVID-19 pandemic continues to evolve rapidly, and the Company will continue to monitor it closely.

The ultimate extent of the impact of the COVID-19 pandemic on the Company’s business, financial condition, operations and product development timelines and plans remains highly uncertain and will depend on future developments, including the duration and spread of outbreaks and the continued emergence of variants, and the impact on the Company’s clinical trial design and enrollment, trial sites, contract research organizations, contract manufacturing organizations and other third par ties with which it does business, as well as its impact on regulatory authorities and the Company’s key scientific and management personnel.

To date, the Company has experienced some delays and disruptions in its development activities as a result of the COVID-19 pandemic.

Some of the Company's contract research organizations, contract manufacturing organizations and other service providers also continue to be impacted.

The Company will continue to monitor developments as it addresses the disruptions, delays and uncertainties relating to the COVID-19 pandemic.

These developments and the impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain and may materially adversely affect the Company’s results and operations and its ability to raise capital.

These developments and the impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain and cannot be predicted.

If the financial markets and/or the overall economy are impacted for an extended period, the Company's results and operations may be materially adversely affected and may affect the Company’s ability to raise capital.

Basis of Presentation

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Summary of Significant Accounting Policies

As of September 30, 2021, the Company’s significant accounting policies and estimates, which are detailed in the Company’s final prospectus related to the IPO filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, on August 6, 2021, have not changed except as discussed below.

Marketable Securities

Marketable securities represent holdings of available-for-sale marketable debt securities in accordance with the Company’s investment policy.

The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation at each balance sheet date.

The Company classified all of its marketable securities at September 30, 2021 as "available-for-sale”

pursuant to ASC320, Investments –

Debt and Equity Securities.

Investments not classified as cash equivalents are presented as either short-term or long-term investments based on both their maturities as well as the time period the Company intends to hold such securities.

Available-for-sale securities are maintained by an investment manager and consist of U.S.

treasury securities.

Available-for-sale securities are carried at fair value with the unrealized gains and losses included in other comprehensive income (loss) as a component of stockholders’

equity (deficit) until realized.

Any premium or discount arising at purchase is amortized or accreted to interest expense or income over the life of the instrument.

Realized gains and losses are determined using the specific identification method and are included in other income (expense).

There were no material realized gains or losses on marketable securities recognized for the three or nine months ended September 30, 2021.

The Company reviews marketable securities for other-than-temporary impairment whenever the fair value of a marketable security is less than the amortized cost and evidence indicates that a marketable security’s carrying amount is not recoverable within a reasonable period of time.

Other-than-temporary impairments of investments are recognized in the consolidated statements of operations and comprehensive loss if the Company has experienced a credit loss, has the intent to sell the marketable security, or if it is more likely than not that the Company will be required to sell the marketable security before recovery of the amortized cost basis.

Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’s investment policy, the severity and

duration of the impairment and changes in value subsequent to the end of the period.

There were no other-than-temporary impairments of investments recognized for the three or nine months ended September 30, 2021.

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of December 31, 2020 was derived from audited financial statements but does not include all disclosures required by U.S.

The accompanying unaudited condensed consolidated financial statements as of June 30, 2021 and for the three and six months ended June 30, 2021 and for the period from June 3, 2020 (inception) to June 30, 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements.

The period from June 3, 2020 (inception) to June 30, 2020 is the same for the three and six month period ended June 30, 2020 and therefore the related financial information is presented once within the Form 10-Q.

The accompanying unaudited condensed consolidated financial statements as of September 30, 2021, for the three and nine months ended September 30, 2021, for the three months ended September 30, 2020, and for the period from June 3, 2020 (inception) to September 30, 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements.

Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted pursuant to such rules and regulations.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s final prospectus for the IPO filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, on August 6, 2021.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position as of June 30, 2021 and consolidated results of operations for the three and six months ended June 30, 2021 and for the period from June 3, 2020 (inception) to June 30, 2020 and the consolidated cash flows for the six months ended June 30, 2021 and for the period from June 3, 2020 (inception) to June 30, 2020 have been made.

The Company’s consolidated results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 which are included in the Company’s final prospectus related to the IPO filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, on August 6, 2021.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position as of September 30, 2021 and condensed consolidated results of operations for the three and nine months ended September 30, 2021, for the three months ended September 30, 2020, and for the period from June 3, 2020 (inception) to September 30, 2020, and the condensed consolidated cash flows for the nine months ended September 30, 2021 and for the period from June 3, 2020 (inception) to September 30, 2020 have been made.

The Company’s condensed consolidated results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting periods.

Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, research and development expenses and related prepaid or accrued costs and the valuation of common stock and resulting stock-based compensation expense.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting periods.

Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, research and development expenses and related prepaid or accrued costs and the valuation of common stock and resulting stock-based compensation expense.

The Company bases its estimates on historical experience, known trends and other market-specific or relevant factors it believes to be reasonable under the circumstances.

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Entities are required to adopt ASC 842 using a modified retrospective transition method.

The Company is currently evaluating the potential impact that the adoption of this standard may have on its consolidated financial statements and related disclosures.

The Company will recognize its lease on the balance sheet on the adoption date of January 1, 2022, by recording a right-of-use asset and a corresponding lease liability.

The Company does not expect the adoption of ASC 842 to have a material impact on the Company’s consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No.

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ASU 2018-15 is applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

The Company is currently evaluating the potential impact that the adoption of this standard may have on its consolidated financial statements and related disclosures.

The Company does not expect the adoption of ASU 2018-15 to have a material impact on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU No.

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The Company is currently evaluating the potential impact that the adoption of this standard may have on its consolidated financial statements and related disclosures.

Marketable Securities

Treasury securities held by the Company are classified as available-for-sale pursuant to ASC 320, Investments –

Debt and Equity Securities, and carried at fair value in the accompanying condensed consolidated balance sheet on a settlement date basis.

The following tables summarize the gross unrealized gains and losses of the Company’s marketable securities as of September 30, 2021 (in thousands):

Amortized Cost

Unrealized Gains

Unrealized Losses

September 30, 2021

treasury securities

No available-for-sale securities held as of September 30, 2021 had remaining maturities greater than twelve months.

The Company did no t hold any available-for-sale securities as of December 31, 2020.

Fair Value Measurements

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Fair Value Measurements at

June 30, 2021:

September 30, 2021:

Cash equivalents:

Money market fund

Marketable securities:

treasury securities

Fair Value Measurements at

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The money market fund was valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy.

There were no changes to the valuation methods during the three and six months ended June 30, 2021 and for the period from June 3, 2020 (inception) to June 30, 2020.

The U.S treasury securities were valued by the Company based on Level 1 inputs.

In determining the fair value of the U.S.

treasury securities, the Company relied on quoted prices for identical securities in active markets.

There were no changes to the valuation methods during the three and nine months ended September 30, 2021, during the three months ended September 30, 2020, and for the period from June 3, 2020 (inception) to September 30, 2020.

The Company evaluates transfers between levels at the end of each reporting period.

There were no transfers into or out of Level 3 fair value measurements during the three and six months ended June 30, 2021 and for the period from June 3, 2020 (inception) to June 30, 2020.

There were no transfers into or out of Level 3 fair value measurements during the three and nine months ended September 30, 2021, during the three months ended September 30, 2020, and for the period from June 3, 2020 (inception) to September 30, 2020.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

September 30,

Prepaid external research, development and manufacturing costs

Prepaid insurance

Prepaid compensation and related expenses

Interest receivable

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

September 30,

Accrued external research, development and manufacturing costs

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Adimab Assignment Agreement

In July 2020, the Company entered into an Assignment and License Agreement with Adimab (“Adimab Assignment Agreement”).

In July 2020, the Company entered into an Assignment and License Agreement with Adimab (the “Adimab Assignment Agreement”).

Under the terms of the agreement, Adimab assigned to the Company all rights, title and interest in and to certain of its coronavirus-specific antibodies (“CoV Antibodies”), including modified or derivative forms thereof, and related intellectual property (“Adimab CoV Assets”).

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In July 2020, in consideration for the rights assigned and license conveyed under the Adimab Assignment Agreement, the Company issued 5,000,000 shares of its Series A convertible preferred stock (the “Series A Preferred Stock”), then having a fair value of $ 40.0 million, to Adimab.

Concurrently, Adimab relinquished 21,250,000 shares of the Company’s common stock to the Company, then having a fair value of $ 85,000 .

Concurrently, the Company repurchased 21,250,000 shares of the Company’s common stock from Adimab, then having a fair value of $ 85,000 .

Additionally, the Company is obligated to pay Adimab up to $ 16.5 million upon the achievement of specified development and regulatory milestones for the first Product under the agreement that achieves such specified milestones and up to $ 8.1 million upon the achievement of specified development and regulatory milestones for the second Product under the agreement that achieves such specified milestones.

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however, milestone payments do not accrue for certain in vitro diagnostic devices consisting of or containing CoV Antibodies.

In February 2021, the Company achieved the first specified milestone under the agreement upon dosing of the first patient in a Phase 1 clinical trial evaluating ADG20, which obligated the Company to make a $ 1.0 million milestone payment to Adimab.

In April 2021, the Company achieved the second specified milestone under the agreement upon dosing of the first patient in a Phase 2 clinical trial evaluating ADG20 for the prevention of COVID-19, which obligated the Company to make a $ 2.5 million milestone payment.

The Company recognized the expense related to the expected achievement of the first milestone in February.

The Company recognized the expense related to the expected achievement of the second milestone in early April, when certain Phase 1 clinical trial data was submitted to the FDA for review and the second milestone under the agreement became probable of achievement.

In August 2021, the Company dosed the first patient in a Phase 3 clinical trial evaluating ADG20 for the prevention of COVID-19, which resulted in a milestone payment of $ 4.0 million being due by the Company under the Adimab Assignment Agreement.

During the three and six months ended June 30, 2021, the Company recognized $ 2.5 million and $ 3.5 million, respectively, as in-process research and development (“IPR&D”) expense in connection with contingent consideration payable under the Adimab Assignment Agreement.

For the period from June 3, 2020 (inception) to June 30, 2020 the Company did no t recognize any IPR&D expense.

The Company is also obligated to pay Adimab royalties of a mid single-digit percentage based on net sales of any Products, once commercialized.

In February 2021, the Company achieved the first specified milestone under the agreement upon dosing of the first patient in a Phase 1 global clinical trial evaluating ADG20, which obligated the Company to make a $ 1.0 million milestone payment to Adimab.

April 2021, the Company achieved the second specified milestone under the agreement upon dosing of the first patient in a Phase 2 global clinical trial evaluating ADG20 for the prevention of COVID-19, which obligated the Company to make a $ 2.5 million milestone payment to Adimab.

In August 2021, the Company achieved the third specified milestone under the agreement upon dosing of the first patient in a Phase 3 global clinical trial evaluating ADG20 for the prevention of COVID-19, which obligated the Company to make a $ 4.0 million milestone payment to Adimab.

The Company recognized each expense when it became probable upon achievement of the first, second and third milestones in February, April and August 2021, respectively.

The next potential milestone under the Adimab Assignment Agreement is a $ 4.0 million milestone related to the acceptance of the filing of the first New Drug Application (or “

) for a Product by the FDA.

During the three and nine months ended September 30, 2021, the Company recognized $ 4.0 million and $ 7.5 million, respectively, as in-process research and development (“IPR&D”) expense in connection with contingent consideration payable under the Adimab Assignment Agreement.

For both the three months ended September 30, 2020 and for the period from June 3, 2020 (inception) to September 30, 2020, the Company recognized $ 39.9 million as IPR&D expense in connection with the upfront consideration payable under the Adimab Assignment Agreement to acquire rights to Adimab’s antibodies relating to COVID-19 and SARS and related intellectual property and a license to certain of Adimab’s platform patents and technology for use in the research and development of our product candidates.

The Company is obligated to pay Adimab royalties of a mid single-digit percentage based on net sales of any Products, once commercialized.

The royalty rate is subject to reductions specified under the agreement.

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In addition, the Company is obligated to pay Adimab royalties of a specified percentage in the range of 45 % to 55 % of any compulsory sublicense consideration received by the Company in lieu of certain royalty payments.

Except for the first milestone payment of $ 1.0 million and second milestone payment of $ 2.5 million, which were paid by the Company to Adimab in March and May 2021, respectively, no other milestone, royalty or other contingent payments had become due to Adimab through June 30, 2021.

Except for the first milestone payment of $ 1.0 million, the second milestone payment of $ 2.5 million, and the third milestone payment of $ 4.0 million, which were paid by the Company to Adimab in March, May and September 2021, respectively, no other milestone, royalty or other contingent payments had become due to Adimab through September 30, 2021.

Unless earlier terminated, the Adimab Assignment Agreement remains in effect until the expiration of the last-to-expire Royalty Term for any and all Products.

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Upon any termination of the agreement prior to its expiration, all licenses and rights granted pursuant to the arrangement will automatically terminate and revert to the granting party and all other rights and obligations of the parties will terminate.

The Company concluded that the Adimab Assignment Agreement represented an asset acquisition of IPR&D assets with no alternative future use.

The Company concluded the Adimab Assignment Agreement represented an asset acquisition of IPR&D assets with no alternative future use.

The arrangement did not qualify as a business combination because substantially all of the fair value of the assets acquired was concentrated in a single asset.

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Amounts paid with respect to services performed by Adimab on the Company’s behalf under the Adimab Assignment Agreement are recognized as research and development expense as such amounts are incurred.

For the three and six months ended June 30, 2021, the Company recognized $ 0.2 million and $ 0.4 million, respectively, of expense in connection with services provided by Adimab.

For the period from June 3, 2020 (inception) to June 30, 2020, the Company did no t recognize any expense in connection with services provided to Adimab.

For the three and nine months ended September 30, 2021, the Company recognized $ 0.5 million and $ 0.9 million, respectively, of expense in connection with services provided by Adimab.

For the three months ended September 30, 2020 and for the period from June 3, 2020 (inception) to September 30, 2020, the Company recognized $ 0.3 million of expense in connection with services provided to Adimab.

Please refer to Note 15 for additional information.

Adimab Collaboration Agreement

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The Company is obligated to use commercially reasonable efforts to develop, seek marketing approval for, and commercialize one product that contains an antibody discovered in each research program.

The Company is obligated to pay Adimab a quarterly fee of $ 1.3 million, which obligation may be cancelled at the Company’s option at any time.

The Company is obligated to pay Adimab a quarterly fee of $ 1.3 million, which may be cancelled at the Company’s option at any time.

For so long as the Company is paying such quarterly fee (or earlier if (i) the Company experiences a change of control after the third anniversary of the Adimab Collaboration Agreement or (ii) Adimab owns less than a specified percentage of the Company’s equity), Adimab and its affiliates will not assist or direct certain third parties to discover or optimize antibodies that are intended to bind to coronaviruses or influenza viruses.

The Company may also elect to decrease the scope of Adimab’s exclusivity obligations and obtain a corresponding decrease in the quarterly fee.

For both the three and nine months ended September 30, 2021, the Company recognized $ 1.3 million of research and development expense related to the quarterly fee.

For each agreed upon research program that is commenced, the Company is obligated to pay Adimab quarterly for its services performed during a given research program at a specified full-time equivalent rate;

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For each option exercised by the Company to commercialize a specific research program, the Company is obligated to pay Adimab an exercise fee of $ 1.0 million.

Amounts paid with respect to services performed by Adimab on the Company’s behalf in each of the research programs under the Adimab Collaboration Agreement are recognized as research and development expense as such amounts are incurred and services are rendered.

For both the three and nine months ended September 30, 2021, the Company recognized less than $ 0.1 million and $ 0.1 million of expense, respectively, in connection with services provided by Adimab.

Through September 30, 2021, the Company has no t paid a drug delivery fee or optimization completion fee to Adimab and the Company has not exercised its option with respect to any program.

The Company is obligated to pay Adimab up to $ 18.0 million upon the achievement of specified development and regulatory milestones for each product under the agreement that achieves such milestones.

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In consideration for this work, the Company is obligated to pay Adimab royalties of a low single-digit percentage based on net sales of products that contain such antigens for the same royalty term as antibody-based products, but the Company is not obligated to make any milestone payments for such antigen products.

For the three and six months ended June 30, 2021 and for the period from June 3, 2020 (inception) to June 30, 2020, the Company did not incur significant costs under the Adimab Collaboration Agreement.

Through September 30, 2021, the Company has not paid any royalties to Adimab under the Adimab Collaboration Agreement.

The Adimab Collaboration Agreement will expire (i) if the Company does not exercise any option, upon the conclusion of the last Evaluation Term for the research programs, or (ii) if the Company exercises an option, on the expiration of the last royalty term for a product in a particular country, unless the agreement is earlier terminated.

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The Company concluded that the Adimab Collaboration Agreement represented an asset acquisition of IPR&D with no alternative future use.

Therefore, payments made by the Company to Adimab for services performed and milestones achieved will be recognized as acquired IPR&D expense in the related period in which the services are performed or the related milestone is considered probable of achievement.

Therefore, payments made by the Company to Adimab for milestones achieved will be recognized as acquired IPR&D expense in the related period in which the services are performed or the related milestone is considered probable of achievement.

Amounts paid with respect to services performed by Adimab on the Company’s behalf under the Adimab Collaboration Agreement are recognized as research and development expense as such amounts are incurred and services are rendered .

Please refer to Note 15 for additional information.

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The Company was obligated to pay an upfront fee of $ 0.2 million to WuXi upon completion of cell bank generation for the first Licensed Cell Line created under the arrangement.

Such amount became due in December 2020, was an accrued expense as of December 31, 2020 and remained accrued as of June 30, 2021 .

Such amount became due in December 2020, was an accrued expense as of December 31, 2020 and was included in accounts payable as of September 30, 2021 .

The Company is also obligated to pay royalties in the range of 0.3 % to 0.5 % to WuXi based on net sales of any Licensed Products manufactured by the Company or a third party on its behalf.

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Royalties are due on a Licensed Product-by-Licensed Product basis commencing on the date of the first commercial sale of the applicable product and continue for so long as the Company commercializes Licensed Products or until the Company exercises its option to buy out the royalty obligations.

Through June 30, 2021 , no royalties had become due to WuXi.

Through September 30, 2021 , no royalties had become due to WuXi.

The Cell Line License Agreement remains in effect until it is terminated.

The Company may terminate the Cell Line License Agreement at any time with notice to WuXi.

The Company may terminate the Cell Line License Agreement at any time with advance written notice to WuXi.

WuXi may terminate the Cell Line License Agreement in the event the Company fails to make a payment when due under the arrangement and such non-payment is not cured within a specified period after notice.

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The Company concluded that the Cell Line License Agreement represented an asset acquisition of IPR&D with no alternative future use.

Therefore, the aggregate acquisition cost of $ 0.2 million, consisting solely of the upfront fee, was recognized as acquired IPR&D expense for the period from June 3, 2020 (inception) to December 31, 2020.

Therefore, the aggregate acquisition cost of $ 0.2 million, consisting solely of the upfront fee, was recognized as acquired IPR&D expense during the period from June 3, 2020 (inception) to December 31, 2020.

Research Collaboration and License Agreement with The Scripps Research Institute

In August 2021, the Company entered into a Research Collaboration and License Agreement (the “Research Agreement”) with The Scripps Research Institute (“TSRI”).

Under the terms of the Research Agreement, TSRI will perform research activities (the “Research Program”) to identify vaccine candidates for the prevention, diagnosis or treatment of influenza or beta coronaviruses (the “Specified Field”).

Unless otherwise mutually agreed by the parties, the Research Program will be completed by August 2023.

Activities initiated under the Research Agreement for targets or indications pursued under the arrangement will be conducted in accordance with a research plan to be agreed upon by the parties (each, a “Research Plan”).

Each of the parties is responsible for performing the tasks to which it is assigned under the Research Plans.

The Company is obligated to provide the research funding necessary to carry out the Research Program pursuant to the budget outlined in each Research Plan.

As of September 30, 2021, the Company paid TSRI $ 1.5 million in funding, which is credited against research funding payable by the Company under the Research Agreement.

Additionally, the Company is obligated to make specified payments to TSRI to the extent that TSRI complies with certain exclusivity covenants.

Pursuant to the terms of the Research Agreement, the Company was granted an exclusive option (the "Option") to acquire an exclusive, worldwide, sublicensable license under TSRI’s rights in certain patent rights and know-how for the exploitation of any vaccine product containing, comprised of, or derived from, any vaccine candidate identified or developed under the Research Program (each, a “TSRI Licensed Product”) in the Specified Field.

Any licenses granted under the arrangement are subject to certain exceptions, conditions and reserved rights.

The Company’s option is exercisable for a predefined period of time as outlined in the arrangement.

Upon exercise of the Option, the Company is required to reimburse certain patent costs previously incurred by TSRI and bear all future related patent costs.

Following the exercise of the Option, the Company has the sole right and responsibility for the further development and potential commercialization of the associated Licensed Product, at its sole cost and expense.

As of September 30, 2021, the Company had not exercised its Option.

To the extent any TSRI Licensed Product covered by the Research Agreement is commercialized, the Company is obligated to pay TSRI royalties of a low single-digit percentage on a TSRI Licensed Product-by-Licensed Product and country-by-country basis based on a percentage of net sales, subject to reduction and floor.

Royalties are payable for each product on a country-by-country basis through the later of (i) the expiration of the last valid claim of any patent covering such product in such country or (ii) 12 years from the first commercial sale of such product.

The Research Agreement will expire when no further royalties are due to TSRI.

The Research Agreement may be early terminated upon mutual written consent of both parties.

The Company may terminate the Research Agreement at any time upon advance written notice to TSRI or upon the appointment of certain personnel deemed unacceptable.

In addition, TSRI

may terminate the Research Agreement if the Company fails to perform or observe any contractual term in any material respect or in the event of a material breach by the Company that remains uncured for a specified period.

Following early termination, all licenses will terminate and revert to TSRI, all sublicenses granted by the Company will automatically terminate, and any then-existing sublicensees will have the right to obtain a direct license from TSRI.

Amounts incurred for services performed by TSRI under each of the research plans are expensed to research and development expense as the services are rendered.

For the three and nine months ended September 30, 2021, the Company recorded $ 0.4 million and $ 1.5 million, respectively, of expense associated with services performed under the Research Agreement.

Commitments and Contingencies

Operating Lease Commitments

On September 14, 2021, the Company entered into a five year lease agreement (the “lease”) for approximately 9,600 square feet of office space in Waltham, Massachusetts.

The monthly rental payments under the lease, which include base rent charges of $ 0.4 million per year, are subject to periodic rent increases through September 2026.

The Company recognizes rent expense on a straight-line basis over the lease term and records deferred rent for rent expense incurred but not yet paid.

The Company's rent expense for the three months ended September 30, 2021 was less than $ 0.1 million.

License Agreements

The Company has entered into license agreements with Adimab and WuXi (see Note 6).

The Company has entered into license agreements with Adimab, WuXi and TSRI (see Note 7).

Manufacturing Agreements

In December 2020, the Company entered into a Commercial Manufacturing Services Agreement with WuXi (the “Commercial Manufacturing Agreement”).

The Commercial Manufacturing Agreement outlines the terms and conditions under which WuXi will manufacture ADG20 drug substance for commercial use.

In December 2020, the Company entered into a Commercial Manufacturing Services Agreement with WuXi, which was amended and restated in August 2021 (as amended and restated, the “Commercial Manufacturing Agreement”).

The Commercial Manufacturing Agreement outlines the terms and conditions under which WuXi will manufacture ADG20 drug substance and drug product for commercial use.

The Company committed to minimum non-cancelable purchase obligations related to batches of ADG20 drug substance and certain services with respect to the product requirements for 2021 and 2022, the payments for which will extend into 2023, and batches of ADG20 drug product and certain services with respect to the product requirements for 2022, the payments for which will extend into 2023.

There has been no material change to future minimum payments under non-cancelable purchase obligations associated with the Commercial Manufacturing Agreement.

As of June 30, 2021, Company had neither made any payments under the Commercial Manufacturing Agreement nor made any incremental purchases under the Commercial Manufacturing Agreement.

As of September 30, 2021 , the Company paid $ 9.4 million under the Commercial Manufacturing Agreement.

The $9.4 million payment resulted in a short-term prepaid expense of $ 3.6 million, included in "Prepaid expenses and other current assets", and a long-term prepaid expense of $ 5.8 million, included in "Other non-current assets", on the condensed consolidated balance sheet.

Unless earlier terminated, the Commercial Manufacturing Agreement remains in effect for an initial period of five years and thereafter automatically renews for further successive periods of five years each.

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Other Contracts

The Company has agreements with third parties that it enters into in the ordinary course of business for various products and services, including those related to research, preclinical and clinical operations, manufacturing and support.

These contracts do not contain any minimum purchase commitments.

The Company enters into agreements with third parties during the ordinary course of business for various products and services, including those related to research, pre clinical and clinical operations, manufacturing and support.

These contracts do not contain any material minimum purchase commitments.

Certain of these agreements provide for termination rights subject to the payment of termination fees and/or wind-down costs.

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The actual amounts the Company could pay in the future to the vendors under such agreements may differ from the purchase order amounts due to cancellation provisions.

The termination fees were not probable of payment as of September 30, 2021 and December 31, 2020.

Legal Proceedings

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Legal fees and other costs associated with such proceedings are expensed as incurred.

As of June 30, 2021 and December 31, 2020, the Company was not a party to any material legal proceedings.

As of September 30, 2021 and December 31, 2020, the Company was not a party to any material legal proceedings.

Indemnification Agreements

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The terms of the Series C Preferred Stock are substantially the same as the terms of the Series A Preferred Stock and Series B Preferred Stock, except that the Original Issue Price per share and the Conversion Price per share of the Series C Preferred Stock is $ 78.08578 .

On July 30, 2021, the Company filed an amended and restated certificate of incorporation, which increased the Company’s authority to issue (i) 150,000,000 shares of common stock and (ii) 16,944,484 shares of Preferred Stock.

On August 10, 2021, in connection with the closing of the IPO, the Company filed an amended and restated certificate of incorporation to, among other things:

(i) increase the number of authorized shares of common stock from 150,000,000 shares to 1,000,000,000 shares, (ii) eliminate all references to the previously existing series of convertible preferred stock, and (iii) authorize 10,000,000 shares of undesignated preferred stock that may be issued from time to time by the Company’s board of directors in one or more series.

Upon issuance of each class of Preferred Stock, the Company assessed the embedded conversion and liquidation features of the shares and determined that such features did not require the Company to separately account for these features.

The Company also concluded that no beneficial conversion feature existed on the issuance dates of each class of Preferred Stock.

At the balance sheet dates, Preferred Stock consisted of the following (in thousands, except share amounts):

June 30, 2021

Shares Issued

Issuable Upon

Series A Preferred Stock

Series B Preferred Stock

Series C Preferred Stock

Upon the closing of the Company’s IPO in August 2021, all shares of the Company’s convertible preferred stock then outstanding converted into 84,722,420 shares of common stock (see Note 10).

As of December 31, 2020, Preferred Stock consisted of the following (in thousands, except share amounts):

December 31, 2020

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Series B Preferred Stock

Upon the closing of the Company’s IPO in August 2021, all shares of the Company’s convertible preferred stock then outstanding converted into 84,722,420 shares of common stock (see Note 15).

The voting, dividend and liquidation rights of the holders of shares of the Company’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth above and described in the Company’s final prospectus for the IPO filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on August 6, 2021.

The voting, dividend and liquidation rights of the holders of shares of the Company’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth above and described in the Company’s final prospectus related to the IPO filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on August 6, 2021.

In June 2020, the Company issued and sold 21,250,000 shares of its common stock to Adimab upon formation of the Company for $ 0.00002 per share.

In July 2020, such shares of common stock were repurchased by the Company from Adimab contemporaneous with the execution of the Adimab Assignment Agreement, pursuant to which the Company acquired certain intellectual property rights in exchange for the issuance of 5,000,000 shares of its Series A Preferred Stock.

As of June 30, 2021 the 21,250,000 shares of common stock repurchased from Adimab were retired and redesignated as authorized but unissued shares of the Company’s common stock.

As of December 31, 2020 , the 21,250,000 shares of common stock repurchased from Adimab were recorded as treasury stock in the accompanying consolidated balance sheets and consolidated statements of convertible preferred stock and stockholders’

deficit as such shares were not retired.

As of September 30, 2021 the 21,250,000 shares of common stock repurchased from Adimab were retired and redesignated as authorized but unissued shares of the Company’s common stock.

As of December 31, 2020 , the 21,250,000 shares of common stock repurchased from Adimab were recorded as treasury stock in the accompanying condensed consolidated balance sheets and condensed consolidated statements of convertible preferred stock and stockholders’

equity (deficit) as such shares were not retired.

The fair value of the repurchased common stock was $ 0.004 per share, or $ 85,000 in the aggregate, as determined based on a third-party valuation (see Note 7).

In April 2021, the Company increased the number of shares of common stock authorized for issuance from 19,000,000 to 23,251,555 shares and increased the number of shares of preferred stock authorized for issuance from 12,647,934 to 16,944,484 shares, of which 4,296,550 shares were designated as Series C Preferred Stock.

As of June 30, 2021 and December 31, 2020 , the Company had reserved 108,383,970 and 80,466,735 shares of common stock, respectively, for the potential conversion of shares of Preferred Stock into common stock, the exercise of outstanding stock options and the issuance of awards available for grant under the Company’s 2020 Equity Incentive Plan (see Note 10).

As described in Note 9 above, on July 30, 2021, the Company filed an amended and restated certificate of incorporation, which increased the Company’s authority to issue 150,000,000 shares of common stock.

On August 10, 2021, in connection with the closing of the IPO, the Company filed an amended and restated certificate of incorporation to, among other things, increase the number of authorized shares of common stock from 150,000,000 shares to 1,000,000,000 shares.

As of September 30, 2021 , the Company had reserved 36,417,895 shares of common stock for the exercise of outstanding stock options and the issuance of awards available for grant under the Company’s 2020 Equity Incentive Plan, 2021 Equity Incentive Plan and 2021 Employee Stock Purchase Plan (see Note 11).

As of December 31, 2020 , the Company had reserved 80,466,735 shares of common stock for the potential conversion of shares of Preferred Stock into common stock, the exercise of outstanding stock options and the issuance of awards available for grant under the Company’s 2020 Equity Incentive Plan (see Note 11).

Treasury Stock

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Upon retirement, the shares were redesignated as authorized but unissued shares of the Company’s common stock.

Initial Public Offering

On August 10, 2021, the Company completed its IPO, pursuant to which it issued and sold 20,930,000 shares of its common stock, including 2,730,000 shares of its common stock pursuant to the full exercise of the underwriters’

option to purchase additional shares.

The aggregate net proceeds received by the Company from the IPO were approximately $ 330.9 million, after deducting underwriting discounts and commissions, but before deducting offering expenses payable by the Company, which were $ 3.4 million.

Upon the closing of the IPO, all of the shares of the Company’s convertible preferred stock then outstanding converted into 84,722,420 shares of common

Upon the conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock (at par value) and additional paid-in capital.

Stock-Based Compensation

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The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or its committee or any such officer if so delegated.

The total number of shares of common stock that may be issued under the 2020 Plan was 29,254,790 as of June 30, 2021 and 22,820,305 as of December 31, 2020.

As of June 30, 2021 and December 31, 2020 , 8,729,920 shares and 14,258,995 shares, respectively, remained available for future issuance under the 2020 Plan.

In July 2021, the Company’s board of directors adopted and the stockholders approved the 2021 Equity Incentive Plan, and no further awards will be issued under the 2020 Plan (see Note 15).

The exercise price for stock options granted may not be less than the fair market value of the Company’s common stock on the date of grant, as determined by the board of directors, or at least 110 % of the fair market value of the Company’s common stock on the date of grant in the case of an incentive stock option granted to an employee who owns stock representing more than 10 % of the voting power of all classes of stock as determined by the board of directors as of the date of grant.

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Certain awards of stock options permit the holders to exercise the option in whole or in part prior to the full vesting of the option in exchange for unvested shares of restricted common stock with respect to any unvested portion of the option so exercised.

As of September 30, 2021 , there were no shares authorized to be issued and no shares reserved for future issuance under the 2020 Plan.

As of December 31, 2020 , there were 22,820,305 shares authorized to be issued and 14,258,995 shares reserved for future issuance under the 2020 Plan.

2021 Equity Incentive Plan

In July 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Equity Incentive Plan (the “2021 Plan”), which became effective immediately prior to and contingent upon the execution of the underwriting agreement related to the Company’s IPO.

The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards.

The number of shares reserved for issuance under the 2021 Plan was equal to 35,075,122 , which is the sum of 11,413,572 new shares;

plus the number of shares (not to exceed 23,661,550 shares), which represents (i) the number of shares that remained available for issuance under the 2020 Plan, at the time the 2021 Plan became effective, and (ii) any shares subject to outstanding stock options or other stock awards that were granted under the 2020 Plan that are forfeited, terminate, expire or are otherwise not issued.

In addition, the number of shares of the Company’s common stock reserved for issuance under the 2021 Plan will automatically increase on the first day of each calendar year, beginning on January 1, 2022 and continuing through January 1, 2031, in an amount equal to 5 % of the shares of common stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the board of directors.

The shares of common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, repurchased or are otherwise terminated by the Company under the 2021 Plan will be added back to the shares of common stock available for issuance under the 2021 Plan.

As of September 30, 2021, there were 35,075,122 shares authorized to be issued and 17,614,161 shares reserved for future issuance under the 2021 Plan.

Stock Option Valuation

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The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the fair value of stock options granted:

September 30,

(Inception) to

September 30,

Fair value of common stock

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Outstanding at December 31, 2020

Outstanding at June 30, 2021

Vested and expected to vest at June 30, 2021

Options exercisable at June 30, 2021

The weighted-average grant date fair value of stock options granted during the three and six months ended June 30, 2021 was $ 6.75 and $ 5.96 , respectively, per option.

The weighted-average grant date fair value for the period from June 3, 2020 to June 30, 2020 was less than $ 0.01 per option.

Outstanding at September 30, 2021

Vested and expected to vest at September 30, 2021

Options exercisable at September 30, 2021

The weighted-average grant date fair value of stock options granted during the three and nine months ended September 30, 2021 was $ 9.03 and $ 6.51 , respectively, per option.

The weighted-average grant date fair value for the three months ended September 30, 2020 and the period from June 3, 2020 (inception) to September 30, 2020 was $ 0.68 and $ 0.21 , respectively, per option.

Early Exercise of Stock Options into Restricted Stock

The Company’s restricted stock activity during the six months ended June 30, 2021 is solely due to shares of restricted common stock issued pursuant to the permitted early exercise of stock options.

The Company’s restricted stock activity during the nine months ended September 30, 2021 is solely due to shares of restricted common stock issued pursuant to the permitted early exercise of stock options.

Shares of common stock issued upon exercise of unvested stock options are restricted and continue to vest in accordance with the original vesting schedule applicable to the associated stock option award.

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Unvested restricted stock at December 31, 2020

Unvested restricted stock at June 30, 2021

Unvested restricted stock at September 30, 2021

Proceeds from the early exercise of stock options are recorded as an early-exercise liability on the consolidated balance sheets.

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Shares issued pursuant to the early exercise of stock options are not considered to be outstanding for accounting purposes until the shares vest.

As of June 30, 2021 and December 31, 2020 the liability related to the payments for unvested shares from early-exercised options was less than $ 0.1 million.

As of September 30, 2021 and December 31, 2020 the liability related to the payments for unvested shares from early-exercised options was less than $ 0.1 million.

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations and comprehensive loss (in thousands):

The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations and comprehensive loss (in thousands):

September 30,

(Inception) to

September 30,

Research and development

Selling, general and administrative

As of June 30, 2021 , total unrecognized stock-based compensation expense related to unvested stock-based awards was $ 69.6 million, which is expected to be recognized over a weighted-average period of 3.8 years.

For the three and six months ended June 30, 2021 , and for the period from June 3, 2020 (inception) to June 30, 2020, the Company recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits generated in each period, due to its uncertainty of realizing a benefit from those items.

As of September 30, 2021 , total unrecognized stock-based compensation expense related to unvested stock-based awards was $ 86.7 million, which is expected to be recognized over a weighted-average period of 3.6 years.

For the three and nine months ended September 30, 2021 , the three months ended September 30, 2020, and the period from June 3, 2020 (inception) to September 30, 2020, the Company recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits generated in each period, due to its uncertainty of realizing a benefit from those items.

All of the Company’s operating losses since inception have been generated in the United States.

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compensation.

For the three and six months ended June 30, 2021 , the Company contributed $ 0.1 million and $ 0.2 million, respectively, to the 401(k) Plan.

The Company did no t make any contributions for the period from June 3, 2020 (inception) to June 30, 2020.

For the three and nine months ended September 30, 2021 , the Company contributed $ 0.2 million and $ 0.4 million, respectively, to the 401(k) Plan.

For the three months ended September 30, 2020 and for the period from June 3, 2020 (inception) to September 30, 2020, the Company contributed an insignificant amount to the 401(k) Plan.

Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):

September 30,

(Inception) to

September 30,

Net loss attributable to common stockholders

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Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated, because including them would have had an anti-dilutive effect:

Three and Six Months

The Company excluded the following potential

common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated, because including them would have had an anti-dilutive effect:

Three and Nine Months

September 30,

(Inception) to

September 30,

Convertible preferred stock (as converted to common stock)

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Related Party Transactions

Adimab Assignment Agreement

Under the Adimab Assignment Agreement, Adimab, a principal stockholder of the Company, received upfront consideration in the form of Series A Preferred Stock, is entitled to receive milestone and royalty payments upon specified conditions, and receives payments from the Company for providing ongoing services under the agreement (see Note 7).

Adimab participated in the Series B and C Preferred Stock financings by purchasing 44,076 and 128,064 shares of Series B and C Preferred Stock, respectively, for an aggregate purchase price of $ 2.5 million and $ 10 million, respectively (see Note 9).

During the three and nine months ended September 30, 2021, the Company recognized $ 4.0 million and $ 7.5 million, respectively, as IPR&D expense in connection with milestones payable under the Adimab Assignment Agreement.

For the three months ended September 30, 2020 and for the period from June 3, 2020 (inception) to September 30, 2020 the Company recognized $ 39.9 million as IPR&D expense in connection with the upfront consideration payable under the Adimab Assignment Agreement (see Note 7).

During the three and nine months ended September 30, 2021 , the Company recognized $ 0.5 million and $ 0.9 million of research and development expense, respectively, with respect to services performed by Adimab on the Company’s behalf under the Adimab Assignment Agreement.

During the three months ended September 30, 2020, and for the period from June 3, 2020 (inception) to September 30, 2020, the Company recognized $ 0.3 million of research and development expense with respect to services performed by Adimab on the Company’s behalf under the Adimab Assignment Agreement.

Adimab Collaboration Agreement

Under the Adimab Collaboration Agreement, the Company is obligated to pay Adimab for certain fees, milestone and royalty payments (see Note 7).

For the three and six months ended June 30, 2021 , the Company recognized $ 0.2 million and $ 0.4 million, respectively with respect to services performed by Adimab on the Company’s behalf under the Adimab Assignment Agreement.

For the period from June 3, 2020 (inception) to June 30, 2021, the Company did not recognize any costs with respect to services performed by Adimab on the Company’s behalf under the Adimab Assignment Agreement.

During the three and six months ended June 30, 2021, the Company recognized $ 2.5 million and $ 3.5 million, respectively, as IPR&D expense in connection with contingent consideration payable under the Adimab Assignment Agreement.

For the period from June 3, 2020 (inception) to June 30, 2020 the Company did no t recognize any IPR&D expense under the Adimab Assignment Agreement.

As of June 30, 2021 and December 31, 2020, $ 0.2 million and $ 0.6 million, respectively, was due to Adimab by the Company.

As of June 30, 2021 and December 31, 2020, no amounts were due from Adimab to the Company.

Subsequent Events

2021 Equity Incentive Plan

On July 27, 2021, the Company’s board of directors adopted, and on July 29, 2021 its stockholders approved, the 2021 Equity Incentive Plan (the “2021 Plan”), which became effective immediately prior to and contingent upon the execution of the underwriting agreement related to the Company’s IPO.

The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards.

The number of shares reserved for issuance under the 2021 Plan is initially equal to 35,075,122 , which is the sum of 11,413,572 new shares;

2021 Employee Stock Purchase Plan

On July 27, 2021, the Company’s board of directors adopted, and on July 29, 2021 its stockholders approved, the 2021 Employee Stock Purchase Plan (the ‘‘2021 ESPP’’), which became effective immediately prior to and contingent upon the execution of the underwriting agreement related to the Company’s IPO.

A total of 1,342,773 shares of common stock were initially reserved for issuance under this plan.

The number of shares of common stock that may be issued under the 2021 ESPP will automatically increase on the first day of each calendar year, beginning on January 1, 2022 and continuing through January 1, 2031, by an amount equal to the lesser of (i) 1 % of the shares of common stock outstanding on the last day of the calendar month before the date of each automatic increase, (ii) 2,685,546 shares and (iii) an amount determined by the Company’s board of directors.

Initial Public Offering

option to purchase additional shares.

The aggregate net proceeds received by the Company from the IPO were approximately $ 330.9 million, after deducting underwriting discounts and commissions, but before deducting estimated offering expenses payable by the Company, which are estimated to be $ 3.8 million.

Upon the closing of the IPO, all of the shares of the Company’s convertible preferred stock then outstanding converted into 84,722,420 shares of common stock.

Upon the conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock (at par value) and additional paid-in capital.

Increase in Authorized Number of Shares of Common Stock and Changes in Authorized Preferred Stock

On August 10, 2021, in connection with the closing of the IPO, the Company filed a restated certificate of incorporation, which amended and restated the Company’s certificate of incorporation to, among other things:

(i) increase the number of authorized shares of common stock from 19,000,000 shares to 1,000,000,000 shares, (ii) eliminate all references to the previously existing series of convertible preferred stock, and (iii) authorize 10,000,000 shares of undesignated preferred stock that may be issued from time to time by the Company’s board of directors in one or more series.

Research Collaboration and License Agreement with The Scripps Research Institute

In August 2021, the Company entered into a Research Collaboration and License Agreement (the “Research Agreement”) with The Scripps Research Institute (“TSRI”).

Unless otherwise mutually agreed by the parties, the Research Program will be completed by August 2023.

The Company is obligated to provide the research funding necessary to carry out the Research Program pursuant to the budget outlined in each Research Plan.

As of June 30, 2021, the Company paid TSRI $ 1.5 million in pre-paid funding, which will be credited against any research funding payable by the Company under the Research Agreement.

Additionally, the Company is obligated to make specified payments to TSRI to the extent that TSRI complies with certain exclusivity covenants.

Pursuant to the terms of the Research Agreement, the Company was granted an exclusive option (the Option) to acquire an exclusive, worldwide, sublicensable license under TSRI’s rights in certain patent rights and know-how for the exploitation of any vaccine product containing, comprised of, or derived from, any vaccine candidate identified or developed under the Research Program (each, a “TSRI Licensed Product”) in the Specified Field.

Any licenses granted under the arrangement are subject to certain exceptions, conditions and reserved rights.

The Company’s option is exercisable for a predefined period of time as outlined in the arrangement.

Upon exercise of the Option, the Company is required to reimburse certain patent costs previously incurred by TSRI and bear all future related patent costs.

To the extent any Licensed Product covered by the Research Agreement is commercialized, the Company is obligated to pay TSRI royalties of a low single-digit percentage on a Licensed Product-by-Licensed Product and country-by-country basis based on a percentage of net sales, subject to reduction and floor.

The Research Agreement will expire (i) when no further royalties are due to TSRI or (ii) twelve years from the first commercial sale of the Licensed Product, whichever is longer.

The Company may terminate the Research Agreement at any time upon advance written notice to TSRI.

In addition, TSRI may terminate the Research Agreement in the event of a material breach.

Following expiration or termination, all licenses will terminate and revert to TSRI, all sublicenses granted by the Company will automatically terminate, and any then-existing sublicensees will have the right to obtain a direct license from TSRI.

Milestone Achievements under the Adimab Assignment Agreement

In August 2021, the Company dosed the first patient in a Phase 3 global clinical trial evaluating ADG20 for the prevention of COVID-19, which resulted in a milestone payment of $ 4.0 million being due by the Company under the Adimab Assignment Agreement.

The $ 4.0 million milestone will be expensed in the third quarter of 2021.

For the three and nine months ended September 30, 2021, the Company recognized $ 1.3 million of research and development expense related to the quarterly fee.

For the three and nine months ended September 30, 2021 , the Company recognized less than $ 0.1 million and $ 0.1 million, respectively, of research and development expense with respect to services performed by Adimab on the Company’s behalf under the Adimab Collaboration Agreement.

As of September 30, 2021 and December 31, 2020, $ 0.6 million and $ 0.6 million, respectively, was due to Adimab under both the Adimab Assignment Agreement and the Adimab Collaboration Agreement by the Company.

As of September 30, 2021 and December 31, 2020, no amounts were due from Adimab under the Adimab Assignment Agreement or the Adimab Collaboration Agreement to the Company.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our final prospectus for our initial public offering filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, or the Securities Act, with the Securities and Exchange Commission, or SEC, on August 6, 2021 (the “Prospectus”).

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,”

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Adagio Therapeutics, Inc.

is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of antibody-based solutions for infectious diseases with pandemic potential.

We are developing our lead product candidate, ADG20, for the treatment and prevention of coronavirus disease 2019, or COVID-19, the disease caused by the virus SARS-CoV-2 and its variants.

is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of antibody-based solutions for infectious diseases with pandemic potential, including COVID-19 and influenza.

We are developing our lead product candidate, ADG20, for the prevention and treatment of coronavirus disease 2019, or COVID-19, the disease caused by the virus SARS-CoV-2 and its variants.

COVID-19 has caused the current global pandemic that remains a significant global health crisis and has resulted in millions of deaths and lasting health problems in many survivors.

We believe that COVID-19 will become an endemic disease requiring a variety of effective, safe and convenient treatment and prevention options for years to come.

We believe that COVID-19 will become an endemic disease requiring a variety of effective, safe and convenient prevention and treatment options for years to come.

We aim to address COVID-19 and future potential viral outbreaks by building a portfolio of antibodies with broadly neutralizing activity against multiple members of the coronavirus family or additional viruses with pandemic potential.

Our portfolio of antibodies was discovered by Adimab, LLC, or Adimab, an industry leader in translating target hypotheses into therapeutically relevant antibodies with their proprietary platform, which has resulted in more than 400 antibody discovery programs.

ADG20 is designed to be a potent, long-acting and broadly neutralizing antibody for both the treatment and prevention of COVID-19 as either a single or combination agent.

Unlike other antibody-based therapies specifically targeting SARS-CoV-2, ADG20 has demonstrated an ability in non-clinical studies to neutralize SARS-CoV-2, including variants of concern, as well as a broad range of SARS-like viruses with neutralization potency at IC 50 (half maximal inhibitory concentrations) of approximately 0.01 mcg/mL or less in live-virus cellular assays.

ADG20 is designed to be a potent, long-acting and broadly neutralizing antibody for both the prevention and treatment of COVID-19 as either a single or combination agent.

We believe several attributes differentiate ADG20.

Unlike other antibody-based therapies specifically targeting SARS-CoV-2, ADG20 has demonstrated an ability in non-clinical studies to neutralize a diverse panel of circulating SARS-CoV-2 variants, including the newly emerged Lambda, Mu and Delta plus variants, as well as a broad range of SARS-like viruses with neutralization potency at IC 50 (half maximal inhibitory concentrations) of approximately 0.01 mcg/mL or less in live-virus cellular assays.

We believe this demonstrated in vitro neutralization activity will translate into a low-clinical dose which, in turn, may translate into the ability to conveniently deliver ADG20 as a single intramuscular, or IM, injection.

We believe these and other attributes of ADG20 differentiate it from other antibodies that are either available under Emergency Use Authorization, or EUA, or in development to address COVID-19.

We have completed enrollment in our first-in-human Phase 1 clinical trial of ADG20.

Interim data demonstrated that ADG20 was well tolerated and displayed a pharmacokinetic profile consistent with an extended half-life monoclonal antibody, or mAb.

Serum virus neutralizing antibody titers measured the day following administration of ADG20 were similar to or exceeded peak serum neutralizing antibody titers generated after two doses of mRNA or adenovirus-based COVID-19 vaccines.

Based on these data, we are conducting two separate Phase 2/3 clinical trials:

our STAMP trial to evaluate ADG20 for the treatment of COVID-19 and our EVADE trial to evaluate ADG20 for the prevention of COVID-19.

Additionally, our portfolio includes multiple broadly neutralizing antibodies, including ADG10, for potential use with ADG20 as a combination therapy for the treatment and prevention of COVID-19 and future coronavirus outbreaks.

Data from a six-month evaluation timepoint in our Phase 1 healthy volunteer study ADG20-1-001 confirmed the extended half-life of ADG20, which approached 100 days based on data from the 300 mg IM dose cohort and we believe may allow for protection of up to twelve months.

As of September 4, 2021, there were no study drug related adverse events, serious adverse events, injection-site reactions or hypersensitivity reactions reported through a minimum of three months follow-up across all cohorts .

In addition, in an exploratory analysis, 50% serum virus neutralizing antibody titers against an authentic SARS-CoV-2 D614G variant measured six months after a single 300 mg IM dose of ADG20 were similar to observed peak titers with the RNA-1273 vaccine series and exceeded those achieved with the AZD1222 vaccine series.

We are conducting two separate Phase 2/3 clinical trials:

our EVADE trial to evaluate ADG20 for the prevention of COVID-19 and our STAMP trial to evaluate ADG20 for the treatment of COVID-19.

Additionally, our portfolio includes multiple broadly neutralizing antibodies, including ADG10, for potential use with ADG20 as a combination therapy for the prevention and treatment of COVID-19 and future coronavirus outbreaks.

We were formed in June 2020.

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We expect to continue to rely on third parties for clinical trials and the manufacture and testing of our product candidates.

Since our inception, we have financed our operations with proceeds from sales of our preferred stock, and most recently, with proceeds from our completed initial public offering, or IPO.

Through June 30, 2021, we had received net proceeds of $464.7 million from the sales of our preferred stock.

Since our inception, we have financed our operations with approximately $464.7 million of net proceeds from sales of our preferred stock, and most recently, with proceeds from our initial public offering, or IPO.

In August 2021, we completed our IPO pursuant to which we issued and sold 20,930,000 shares of our common stock, including 2,730,000 shares of common stock pursuant to the full exercise of the underwriters’

option to purchase additional shares.

We received aggregate net proceeds from our IPO of approximately $330.9 million, after deducting underwriting discounts and commissions, but before deducting offering expenses payable by the Company, which were $3.4 million.

To date, we have not generated any revenue from any sources, including product sales.

In February 2021, we advanced ADG20 into a Phase 1 clinical trial.

In April and August 2021, we advanced ADG20 into two Phase 2/3 clinical trials.

We have not yet commenced significant development activities with respect to other product candidates.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved.

option to purchase additional shares.

We received aggregate net proceeds from our IPO of approximately $330.9 million, after deducting underwriting discounts and commissions, but before deducting estimated offering expenses payable by the Company, which are estimated to be $3.8 million.

Since our inception, we have incurred significant losses, including net losses of $65.3 million for the period from June 3, 2020 (inception) to December 31, 2020 and of $83.4 million for six months ended June 30, 2021.

As of June 30, 2021, we had an accumulated deficit of $148.7 million.

Since our inception, we have incurred significant losses, including net losses of $65.3 million for the period from June 3, 2020 (inception) to December 31, 2020 and of $143.7 million for the nine months ended September 30, 2021.

As of September 30, 2021, we had an accumulated deficit of $209.1 million.

We expect to continue to incur significant expenses and recognize substantial losses in the foreseeable future as we expand and progress our research and development activities as well as the associated manufacturing activities and commercialization efforts.

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We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:

continue to conduct our ongoing clinical trials of ADG20, including advancement into late-stage global clinical trials, as well as initiate and complete additional clinical trials of future product candidates or current product candidates in new indications or patient populations;

continue to conduct our ongoing clinical trials of ADG20, including advancement through late-stage global clinical trials, as well as initiate and complete additional clinical trials of future product candidates or current product candidates in new indications or patient populations;

continue to advance the preclinical development of our other product candidates and our preclinical and discovery programs;

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develop, establish and validate our commercial-scale current good manufacturing practices, or cGMP, manufacturing process;

manufacture material under cGMP, for clinical trials and potential EUA and commercial sales at our contracted manufacturing facilities;

manufacture material under cGMP, for potential EUA and commercial sales at our contracted manufacturing facilities;

maintain, expand, enforce, defend and protect our intellectual property portfolio;

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We are currently establishing our commercial infrastructure to support the anticipated marketing and distribution of our product candidates.

Subject to receiving marketing approval or EUA, we expect to enter into arrangements with third parties for the sale, marketing and distribution of our product candidates.

Subject to receiving marketing approval or EUA for prevention and/or treatment of COVID-19, we expect to enter into arrangements with third parties for the sale, marketing and distribution of our product candidates.

Accordingly, if we obtain marketing approval or EUA for any of our product candidates, we will incur significant additional commercialization expenses related to product manufacturing, marketing, sales and distribution.

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

We believe that our existing cash and cash equivalents, including the net proceeds from our IPO received in August 2021, will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

See “—Liquidity and Capital Resources.”

See “Liquidity and Capital Resources.”

Impact of COVID-19 on Our Operations

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic.

The evolving and constantly changing impact of the pandemic will directly affect the potential commercial prospects of ADG20 for the treatment and prevention of COVID-19.

The severity of the COVID-19 pandemic and the continued emergence of variants of concern (such as the widespread Delta variant), the availability, administration and acceptance of vaccines, monoclonal antibodies and other treatment modalities and the potential development of “herd immunity”

The evolving and constantly changing impact of the pandemic will directly affect the potential commercial prospects of ADG20 for the prevention and treatment of COVID-19.

by the global population will affect the design and enrollment of our clinical trials, the potential regulatory authorization or approval of our product candidates and the commercialization of our product candidates, if approved.

In addition, our business and operations may be more broadly adversely affected by the COVID-19 pandemic.

The global COVID-19 pandemic continues to evolve rapidly, and we will continue to monitor it closely.

The ultimate extent of the impact of the COVID-19 pandemic on our business, financial condition, operations and product development timelines and plans remains highly uncertain and will depend on future developments, including the duration and spread of the outbreak and its impact on our clinical trial design and enrollment, trial sites, CROs, CDMOs and other third parties with which we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

The ultimate extent of the impact of the COVID-19 pandemic on our business, financial condition, operations and product development timelines and plans remains highly uncertain and will depend on future developments, including the duration and spread of outbreaks and the continued emergence of variants, its impact on our clinical trial design and enrollment, trial sites, contract research organizations, contract manufacturing organizations and other third parties with which we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

To date, we have experienced some delays and disruptions in our development activities as a result of the COVID-19 pandemic.

In the future, we anticipate there could be additional or even significant disruptions, delays or uncertainties in our development activities as a result of the COVID-19 pandemic as the outbreak progresses and some of our CROs, CDMOs and other service providers continue to be impacted.

We will continue to monitor developments as we address the disruptions, delays and uncertainties relating to the COVID-19 pandemic.

Some of our contract research organizations, contract manufacturing organizations and other service providers also continue to be impacted.

We will continue to monitor developments as it addresses the disruptions, delays and uncertainties relating to the COVID-19 pandemic.

These developments and the impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain and cannot be predicted.

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the costs associated with the development of any additional development programs and product candidates we identify in-house or acquire through collaborations;

the prevalence and severity of adverse events experienced with ADG20 or any other product candidates;

the prevalence, nature and severity of adverse events experienced with ADG20 or any other product candidates;

the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder;

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We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others.

In addition, we may never succeed in obtaining regulatory approval or EUA for any of our product candidates.

We may never succeed in obtaining regulatory approval or EUA for any of our product candidates.

In addition, in the absence of a Public Health Emergency (or “

), we may not be able to receive an EUA.

The national PHE declaration is currently in effect through January 2022 and may or may not be renewed.

Acquired In-Process Research and Development Expenses

Acquired in-process research and development, or IPR&D, expenses consist primarily of the upfront costs we incurred in July 2020, as well as any costs of contingent milestone payments and royalties we incurred in subsequent periods, to acquire rights to Adimab’s antibodies relating to COVID-19 and SARS and related intellectual property and a license to certain of Adimab’s platform patents and technology, or the IPR&D assets, for use in the research and development of our product candidates.

Acquired in-process research and development, or IPR&D, expenses consist primarily of the upfront costs we incurred in July 2020, as well as any costs of contingent milestone payments we incurred in subsequent periods, to acquire rights to Adimab’s antibodies relating to COVID-19 and SARS and related intellectual property and a license to certain of Adimab’s platform patents and technology, or the IPR&D assets, for use in the research and development of our product candidates.

We expensed the cost of the IPR&D assets because they had no alternative future use as of the acquisition date.

We will recognize additional acquired IPR&D expenses in the future if and when we become obligated to make contingent milestone and royalty payments to Adimab under the terms of the agreement by which we acquired the IPR&D assets.

We will recognize additional acquired IPR&D expenses in the future if and when we become obligated to make contingent milestone payments to Adimab under the terms of the agreement by which we acquired the IPR&D assets.

Selling, General and Administrative Expenses

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We also expect to incur additional intellectual property-related expenses as we file additional patent applications to protect innovations arising from our research and development activities.

Through June 30, 2021, we have operated as a virtual company.

Through September 30, 2021, we have operated as a virtual company.

Therefore, we do not incur material operating expenses for the rent, maintenance and insurance of facilities or for depreciation of fixed assets.

Interest Income

Interest income consists of interest earned from our cash and cash equivalents.

We expect our interest income will increase slightly as we invest the cash received from our sales of Series C preferred stock in April 2021 and the net proceeds from our IPO.

For the three and six months ended June 30, 2021, and for the period from June 3, 2020 (inception) to June 30, 2020, the Company recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits generated in each period, due to its uncertainty of realizing a benefit from those items.

Interest income consists of interest earned from our cash, cash equivalents and marketable securities.

We expect our interest income to modestly increase as we continue to invest the cash received from our sales of Series C preferred stock in April 2021 and the net proceeds from our IPO in August 2021 .

For the three and nine months ended September 30, 2021, the three months ended September 30, 2020, and for the period from June 3, 2020 (inception) to September 30, 2020, the Company recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits generated in each period, due to its uncertainty of realizing a benefit from those items.

Results of Operations

Comparison of the three months ended June 30, 2021 to the period from June 3, 2020 (inception) to June 30, 2020

The following table summarizes our results of operations for the three months ended June 30, 2021 and for the period from June 3, 2020 (inception) to June 30, 2020:

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Comparison of the three months ended September 30, 2021 and 2020

The following table summarizes our results of operations for the three months ended September 30, 2021 and 2020:

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Research and Development Expenses

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Total research and development expenses

Research and development expenses were $35.1 million for the three months ended June 30, 2021, compared to less than $0.1 million for the period from June 3, 2020 (inception) to June 30, 2020.

The increase of $28.0 million in direct costs related to our ADG20 program was primarily due to overall increases in our clinical study costs and manufacturing expenses, for which there were no costs incurred during the period from June 3, 2020 (inception) to June 30, 2020.

Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs, were $4.1 million and stock-based compensation expense was $1.2 million for the three months ended June 30, 2021, compared to personnel-related costs of less than $0.1 million for the period from June 3, 2020 (inception) to June 30, 2020.

The overall increase in personnel-related costs is attributable to the hiring of individuals to support the development of ADG20.

The increase in external discovery related costs and other of $1.7 million was primarily driven by $1.2 million in professional services and consulting costs and $0.5 million of other research and development related costs.

Research and development expenses were $45.4 million for the three months ended September 30, 2021, compared to $7.3 million for the three months ended September 30, 2020.

The increase of $25.6 million in direct costs related to our ADG20 program was primarily due to overall increases in our clinical study costs and manufacturing expenses.

The increase of $4.4 million in direct costs related to our ADG10 program was driven by manufacturing expenses, for which there were no costs incurred during the three months ended September 30, 2020.

Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were $4.7 million and stock-based compensation expense was $2.2 million for the three months ended September 30, 2021, compared to personnel-related costs of $0.5 million and stock-based compensation expense of less than $0.1 million for the three months ended September 30, 2020.

The overall increase in personnel-related costs is attributable to the hiring of individuals to support the development of our product candidates.

The increase in external discovery related costs and other of $1.7 million was primarily driven by the $1.3 million quarterly fee under the Adimab Collaboration Agreement, $0.5 million in professional services and consulting costs, offset by $0.1 million of other research and development related costs.

Acquired In-Process Research and Development Expenses

Acquired IPR&D expenses of $2.5 million for three months ended June 30, 2021 consisted of the cost we incurred in the period under the Adimab Assignment Agreement for a milestone payment that became due to Adimab in April 2021 upon the dosing of the first patient in a Phase 2 clinical trial evaluating ADG20.

Acquired IPR&D expenses of $4.0 million for three months ended September 30, 2021 consisted of the cost we incurred in the period under the Adimab Assignment Agreement for a milestone payment that became due to Adimab in August 2021 upon the dosing of the first patient in a Phase 3 global clinical trial evaluating ADG20 for the prevention of COVID-19.

The amount of this contingent payment was recognized as an IPR&D expense based on the nature of the associated assets acquired from Adimab on the date of the milestone achievement.

to COVID-19 and SARS and related intellectual property and a license to certain of Adimab’s platform patents and technology for use in the research and development of our product candidates.

We expensed the cost of the IPR&D assets because they had no alternative future use as of the acquisition date.

The Company did not incur any IPR&D expense for the period from June 3, 2020 (inception) to June 30, 2020.

Selling, General and Administrative Expenses

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Total selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended June 30, 2021 were $7.1 million, compared to $0.1 million for the period from June 3, 2020 (inception) to June 30, 2020.

Selling, general and administrative expenses for the three months ended September 30, 2021 were $11.1 million, compared to $0.8 million for the three months ended September 30, 2020.

Personnel-related costs increased by $6.2 million due to increased hiring to support general and administrative functions.

Personnel-related costs included salaries and wages and stock-based compensation expense of $1.9 million and $2.2 million, respectively, for the three months ended June 30, 2021, compared to $0 for the period from June 3, 2020 (inception) to June 30, 2020.

The increase of $2.9 million in professional services and consultant fees and $0.1 million of other expenses is attributable to costs incurred as we prepared to become a public company.

Other income was less than $0.1 million for the three months ended June 30, 2021 and $0 for the period from June 3, 2020 (inception) to June 30, 2020, consisting primarily of interest earned on invested cash balances.

Comparison of the six months ended June 30, 2021 to the period from June 3, 2020 (inception) to June 30, 2020

The following table summarizes our results of operations for the six months ended June 30, 2021 and for the period from June 3, 2020 (inception) to June 30, 2020:

Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were $2.6 million and stock-based compensation expense was $3.8 million for the three months ended September 30, 2021, compared to personnel-related costs of $0.2 million and stock-based compensation expense of less than $0.1 million for the three months ended September 30, 2020.

The increase of $3.6 million in professional services and consultant fees and the increase of $0.4 million in other expenses was attributable to costs incurred as we began operating as a public company, including insurance premiums and other fees.

Other income was less than $0.1 million for the three months ended September 30, 2021 and $0 for the three months ended September 30, 2020, consisting primarily of interest earned on invested cash balances.

Comparison of the nine months ended September 30, 2021 to the period from June 3, 2020 (inception) to September 30, 2020

The following table summarizes our results of operations for the nine months ended September 30, 2021 and for the period from June 3, 2020 (inception) to September 30, 2020:

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Research and Development Expenses

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Total research and development expenses

Research and development expenses were $69.2 million for the six months ended June 30, 2021, compared to less than $0.1 million for the period from June 3, 2020 (inception) to June 30, 2020.

The increase of $58.7 million in direct costs related to our ADG20 program was primarily due to overall increases in our clinical study costs and manufacturing expenses, for which there were no costs incurred for the period from June 3, 2020 (inception) to June 30, 2020.

Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs, were $6.2 million and stock-based compensation expense was $1.4 million for the six months ended June 30, 2021, compared to personnel-related costs of less than $0.1 million for the period from June 3, 2020 (inception) to June 30, 2020.

The overall increase in personnel-related costs is attributable to the hiring of more individuals to support the development of ADG20.

The increase in external discovery-related and other costs and other of $2.9 million was primarily driven by $2.1 million in professional services and consulting services and $0.8 million of other research and development related costs.

Research and development expenses were $114.5 million for the nine months ended September 30, 2021, compared to $7.3 million for the period from June 3, 2020 (inception) to September 30, 2020.

The increase of $84.3 million in direct costs related to our ADG20 program was primarily due to overall increases in our clinical study costs and manufacturing expenses.

The increase of $4.4 million in direct costs related to our ADG10 program was primarily due to manufacturing expenses, for which there were no costs incurred for the period from June 3, 2020 (inception) to September 30, 2020.

Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs, were $10.9 million and stock-based compensation expense was $3.6 million for the nine months ended September 30, 2021, compared to personnel-related costs of $0.5 million and stock-based compensation expense of less than $0.1 million for the period from June 3, 2020 (inception) to September 30, 2020.

The overall increase in personnel-related costs is attributable to the hiring of more individuals to support the development of ADG20 and ADG10.

The increase in external discovery-related and other costs and other of $4.5 million was primarily driven by $1.3 million quarterly fee under the Adimab Collaboration Agreement, $1.5 million related to the TSRI Research Agreement and an increase in professional services and consultant fees.

Acquired In-Process Research and Development Expenses

Acquired IPR&D expenses of $3.5 million for the six months ended June 30, 2021 consisted of the costs we incurred in the period under the Adimab Assignment Agreement for a $1.0 million milestone payment that became due to Adimab in February 2021 upon the dosing of the first patient in a Phase 1 clinical trial evaluating ADG20 and a $2.5 million milestone payment that became due to Adimab in April 2021 upon the dosing of the first patient in the first Phase 3 clinical trial of a product licensed under the agreement.

Acquired IPR&D expenses of $7.5 million for the nine months ended September 30, 2021 consisted of the costs we incurred in the period under the Adimab Assignment Agreement for a $1.0 million milestone payment that became due to Adimab in February 2021 upon the dosing of the first patient in a Phase 1 global clinical trial evaluating ADG20, a $2.5 million milestone payment that became due to Adimab in April 2021 upon the dosing of the first patient in the first Phase 2 global clinical trial of a product licensed under the agreement, and a $4.0 million milestone payment that became due to Adimab in August 2021 upon dosing of the first patient in a Phase 3 global clinical trial evaluating ADG20 for the prevention of COVID-19.

The amounts of these contingent payments were recognized as an IPR&D expense based on the nature of the associated assets acquired from Adimab on the date of the milestone achievement.

Acquired IPR&D expense of $39.9 million for the three months ended September 30, 2020 consisted of the costs we incurred in the period under the Adimab Assignment Agreement to acquire rights to Adimab’s antibodies relating to COVID-19 and SARS and related intellectual property and a license to certain of Adimab’s platform patents and technology for use in the research and development of our product candidates.

We expensed the cost of the IPR&D assets because they had no alternative future use as of the acquisition date.

The Company did not incur any IPR&D expense for the period from June 3, 2020 (inception) to June 30, 2020.

Selling, General and Administrative Expenses

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Total selling, general and administrative expenses

Selling, general and administrative expenses for the six months ended June 30, 2021 were $10.7 million, compared to $0.1 million for the period from June 3, 2020 (inception) to June 30, 2020.

Selling, general and administrative expenses for the nine months ended September 30, 2021 were $21.9 million, compared to $0.9 million for the period from June 3, 2020 (inception) to September 30, 2020.

Personnel-related costs increased by $11.7 million due to increased hiring to support general and administrative functions.

Personnel-related costs included salaries and wages and stock-based compensation expense of $3.0 million and $2.5 million, respectively, for the six months ended June 30, 2021, compared to $0 for the period from June 3, 2020 (inception) to June 30, 2020.

The increase of $4.9 million in professional services and consultant fees and $0.2 million in other expenses is attributable to costs incurred as we prepared to operate as a public company.

Other income was less than $0.1 million for the six months ended June 30, 2021 and $0 for the period from June 3, 2020 (inception) to June 30, 2020, consisting of primarily of interest earned on invested cash balances.

Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs, were $5.7 million and stock-based compensation expense was $6.3 million for the nine months ended September 30, 2021, compared to personnel-related costs of $0.2 million and stock-based compensation expense of less than $0.1 million for the period from June 3, 2020 (inception) to September 30, 2020.

The increase of $8.5 million in professional services and consultant fees and the increase of $0.8 million in other expenses is attributable to costs incurred as we began operating as a public company, including insurance premiums and other fees.

Other income was less than $0.1 million for the nine months ended September 30, 2021 and $0 for the period from June 3, 2020 (inception) to September 30, 2020, consisting of primarily of interest earned on invested cash balances.

Liquidity and Capital Resources

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We expect to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our product candidates.

To date, we have funded our operations with proceeds from sales of our preferred stock, and most recently, with proceeds from our IPO completed in August 2021.

Through June 30, 2021, we had received net proceeds of $464.7 million from sales of our preferred stock.

As of June 30, 2021, we had cash and cash equivalents of $392.5 million.

To date, we have funded our operations with $467.7 million of net proceeds from sales of our preferred stock, and most recently, with $330.9 million of net proceeds from our IPO completed in August 2021.

As of September 30, 2021, we had cash, cash equivalents and marketable securities of $666.3 million.

option to purchase additional shares.

The following table summarizes our sources and uses of cash for each of the periods presented:

September 30,

(Inception) to

September 30,

(in thousands)

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

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Operating Activities

During the six months ended June 30, 2021, operating activities used $57.3 million of cash, primarily due to our net loss of $83.4 million, partially offset by non-cash stock-based compensation expense of $3.9 million and net cash provided by changes in our operating assets and liabilities of $22.1 million.

Net cash provided by changes in our operating assets and liabilities consisted of a $2.2 million increase in accounts payable and a $21.1 million increase in accrued expenses, both partially offset by a $1.2 million increase in prepaid expenses and other current assets.

During the nine months ended September 30, 2021, operating activities used $111.5 million of cash, primarily due to our net loss of $143.7 million, partially offset by non-cash stock-based compensation expense of $9.9 million and net cash provided by changes in our operating assets and liabilities of $21.7 million.

Net cash provided by changes in our operating assets and liabilities consisted of a $8.9 million increase in accounts payable and a $30.1 million increase in accrued expenses, partially offset by a $11.3 million increase in prepaid expenses and other current assets and a $6.0 million increase in other non-current assets.

The increases in accounts payable and accrued expenses were primarily due to amounts owed to vendors in connection with our research and development activities, including increased external costs associated with clinical trials and manufacturing, as well as increases in accrued employee bonuses.

The increase in prepaid expenses and other current assets was primarily due to prepayments for external research and development activities.

We had no cash used in or provided by operating activities for the period from June 3, 2020 (inception) to June 30, 2020.

The increase in prepaid expenses and other current assets and other non-current assets was primarily due to prepayments for external research and development activities and prepayments for insurance premiums.

During the period from June 3, 2020 (inception) to September 30, 2020, operating activities used $1.1 million of cash, primarily due to our net loss of $48.1 million, offset by non-cash acquired IPR&D of $39.9 million and net cash provided by changes in our operating assets and liabilities of $7.0 million.

Net cash provided by changes in our operating assets and liabilities consisted of a $5.2 million increase in accounts payable and a $1.9 million increase in accrued expenses.

Investing Activities

We had no cash used in or provided by investing activities for six months ended June 30, 2021 or for the period from June 3, 2020 (inception) to June 30, 2020.

Net cash used in investing activities during the nine months ended September 30, 2021 consisted of $188.6 million in investment purchases.

We had no cash used in or provided by investing activities for the period from June 3, 2020 (inception) to September 30, 2020.

Financing Activities

During the six months ended June 30, 2021 net cash provided by financing activities was $335.3 million, which is primarily related to net proceeds from the issuance of our Series C preferred stock in April 2021.

We had no cash used in or provided by financing activities for the period from June 3, 2020 (inception) to June 30, 2020.

Net cash provided by financing activities during the nine months ended September 30, 2021 consisted of $328.3 million from sales of our common stock and $335.2 million of net proceeds from the issuance of our Series C Preferred Stock in April 2021.

Net cash provided by financing activities from June 3, 2020 (inception) to September 30, 2020 consists of $49.7 million from the issuance of our Series A preferred stock in July 2020.

Funding Requirements

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the progression of the COVID-19 pandemic and emergence of potential outbreaks of other coronaviruses, including the impact of any business interruptions to our operations or to those of our contract manufacturers, suppliers or other vendors resulting from the COVID-19 pandemic or other similar public health crises.

As of September 20, 2021, we believe that our existing cash, cash equivalents and short-term investments, including the net proceeds from our IPO, will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

As of November 15, 2021, we believe that our existing cash, cash equivalents and marketable securities, including the net proceeds from our IPO, will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

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There have been no material changes to our contractual obligations from those described in the Prospectus.

For additional information, see Note 7 to our consolidated financial statements appearing in this Quarterly Report on Form 10-Q.

For additional information, see Note 8 to our condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Significant Judgments and Estimates

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Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations and cash flows is disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations and cash flows is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Internal Control over Financial Reporting

We identified a material weakness in our internal control over financial reporting that existed as of June 30, 2021.

We identified a material weakness in our internal control over financial reporting that existed as of September 30, 2021.

See Item 4, Controls and Procedures.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements