Invivyd, Inc. 10-Q

Item 1 . Financial Statements. ADAGIO THE RAPEUTICS, INC. Condensed Consolidated Balance Sheets (UNaudited) (In thousands, except share and per share amounts) September 30, 2021 December 31, 2020 Assets Current assets: Cash and cash equivalents $ 478,269 $ 114,988 Marketable securities 188,053 — Prepaid expenses and other current assets 13,833 2,394 Total current assets 680,155 117,382 Other non-current assets 6,115 — Total assets $ 686,270 $ 117,382 Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable $ 17,564 $ 8,153 Accrued expenses 35,485 4,919 Total current liabilities 53,049 13,072 Early-exercise liability 8 11 Total liabilities 53,057 13,083 Commitments and contingencies (Note 8) Convertible preferred stock (Series A, B and C) $ 0.0001 par value; 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 $ 0 and $ 169,900 at September 30, 2021 and December 31, 2020, respectively — 169,548 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; 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 5 1 Treasury stock, at cost; no shares and 22,600,000 shares at September 30, 2021 and December 31, 2020, respectively — ( 85 ) Additional paid-in capital 842,272 154 Accumulated other comprehensive income 3 — Accumulated deficit ( 209,067 ) ( 65,319 ) Total stockholders’ equity (deficit) 633,213 ( 65,249 ) Total liabilities, convertible preferred stock and stockholders’ equity (deficit) $ 686,270 $ 117,382 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 ADAGIO THER APEUTICS, INC. Condensed Consolidated Statements of Operations and Comprehensive Loss (UNaudited) (In thousands, except share and per share amounts) Three Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, Period from June 3, 2020 (Inception) to September 30, 2021 2020 2021 2020 Operating expenses: Research and development (1) $ 45,366 $ 7,251 $ 114,465 $ 7,299 Acquired in-process research and development (2) 4,000 39,915 7,500 39,915 Selling, general and administrative 11,052 842 21,853 892 Total operating expenses 60,418 48,008 143,818 48,106 Loss from operations ( 60,418 ) ( 48,008 ) ( 143,818 ) ( 48,106 ) Other income (expense): Interest income 48 — 80 — Other expense ( 5 ) — ( 10 ) — Total other income (expense), net 43 — 70 — Net loss ( 60,375 ) ( 48,008 ) ( 143,748 ) ( 48,106 ) Other comprehensive income (loss) Unrealized gain on available-for-sale securities, net of tax 3 — 3 — Comprehensive loss $ ( 60,372 ) $ ( 48,008 ) $ ( 143,745 ) $ ( 48,106 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 0.98 ) $ ( 25.98 ) $ ( 7.06 ) $ ( 7.55 ) Weighted-average common shares outstanding, basic and diluted 61,297,086 1,847,826 20,346,771 6,375,000 (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. 2 ADAGIO THE RAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED) (In thousands, except share amounts) Convertible Preferred Stock Common Stock Treasury Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Shares Amount Shares Amount Capital Income Deficit Equity (Deficit) Balances at June 3, 2020 (Inception) — $ — — $ — — $ — $ — $ — $ — $ — Issuance of common stock at inception — — 21,250,000 2 — — ( 2 ) — — — Issuance of restricted common stock upon early exercise of stock options — — 6,943,240 1 — — ( 1 ) — — — Net loss — — — — — — — — ( 98 ) ( 98 ) Balances at June 30, 2020 — — 28,193,240 3 — — ( 3 ) — ( 98 ) ( 98 ) Issuance of Series A convertible preferred stock in exchange for license and common stock 5,000,000 40,000 ( 21,250,000 ) ( 2 ) 21,250,000 ( 85 ) 2 — — ( 85 ) Issuance of Series A convertible preferred stock, net of issuance costs of $ 194 6,237,500 49,706 — — — — — — — — Stock-based compensation expense — — — — — — 7 — — 7 Net loss — — — — — — — — ( 48,008 ) ( 48,008 ) Balances at September 30, 2020 11,237,500 $ 89,706 6,943,240 $ 1 21,250,000 $ ( 85 ) $ 6 $ — $ ( 48,106 ) $ ( 48,184 ) Convertible Preferred Stock Common Stock Treasury Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Shares Amount Shares Amount Capital Income Deficit Equity (Deficit) Balances at December 31, 2020 12,647,934 $ 169,548 5,593,240 $ 1 22,600,000 $ ( 85 ) $ 154 $ — $ ( 65,319 ) $ ( 65,249 ) Stock-based compensation expense — — — — — — 587 — — 587 Net loss — — — — — — — — ( 38,700 ) ( 38,700 ) Balances at March 31, 2021 12,647,934 169,548 5,593,240 1 22,600,000 ( 85 ) 741 — ( 104,019 ) ( 103,362 ) Issuance of Series C convertible preferred stock, net of issuance costs of $ 337 4,296,550 335,163 — — — — — — — — Issuance of common stock — — 6,000 — — — 66 — — 66 Vesting of restricted common stock from early-exercised options — — — — — — 3 — — 3 Stock-based compensation expense — — — — — — 3,342 — — 3,342 Retirement of treasury stock — — — — ( 22,600,000 ) 85 ( 85 ) — — — Net loss — — — — — — — — ( 44,673 ) ( 44,673 ) Balances at June 30, 2021 16,944,484 504,711 5,599,240 1 — — 4,067 — ( 148,692 ) ( 144,624 ) Issuance of common stock upon completion of initial public offering, net of commissions, underwriting discounts and offering costs — — 20,930,000 2 — — 327,518 — — 327,520 Conversion of convertible preferred stock to common stock ( 16,944,484 ) ( 504,711 ) 84,722,420 2 — — 504,707 — — 504,709 Stock-based compensation expense — — — — — — 5,979 — — 5,979 Vesting of restricted common stock from early-exercised options — — — — — — 1 — — 1 Unrealized gain on available-for-sale securities, net of tax — — — — — — — 3 — 3 Net loss — — — — — — — — ( 60,375 ) ( 60,375 ) Balances at September 30, 2021 — $ — 111,251,660 $ 5 — $ — $ 842,272 $ 3 $ ( 209,067 ) $ 633,213 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 ADAGIO THER APEUTICS, INC. Condensed Consolidated Statements of Cash Flows (UNAUDITED) (In thousands) Nine Months Ended September 30, 2021 Period from June 3, 2020 (Inception) to September 30, 2020 Cash flows from operating activities: Net loss $ ( 143,748 ) $ ( 48,106 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 9,908 7 Non-cash acquired in-process research and development — 39,915 Net amortization of premiums and accretion of discounts on marketable securities 577 — Non-cash payments 66 — Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 11,342 ) ( 47 ) Accounts payable 8,909 5,210 Accrued expenses 30,122 1,881 Other non-current assets ( 6,016 ) ( 3 ) Net cash used in operating activities ( 111,524 ) ( 1,143 ) Cash flows from investing activities: Purchase of marketable securities ( 188,627 ) — Net cash used in investing activities ( 188,627 ) — Cash flows from financing activities: Proceeds from issuance of convertible preferred stock, net of issuance costs paid 335,163 49,706 Proceeds from issuance of common stock, net of commissions and underwriting discounts 330,905 — Proceeds from early exercises of stock options — 14 Payments of initial public offering costs ( 2,636 ) — Net cash provided by financing activities 663,432 49,720 Net increase in cash and cash equivalents 363,281 48,577 Cash and cash equivalents at beginning of period 114,988 — Cash and cash equivalents at end of period $ 478,269 $ 48,577 Supplemental disclosure of non-cash financing activities: Deferred offering and issuance costs included in accounts payable and accrued expenses $ 749 $ — Issuance of Series A convertible preferred stock in exchange for assigned rights, license and repurchased common stock $ — $ 40,000 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 ADAGIO THERAPEUTICS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. 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, including coronavirus disease 2019 (“COVID-19”) and influenza. 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 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. The Company operates as a virtual company and plans to maintain a corporate headquarters for general and administrative purposes only. In addition, the Company engages third parties, including Adimab, LLC (“Adimab”), to perform ongoing research and development and other services on its behalf. 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 were $ 3.4 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). The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. 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 $ 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 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, 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. The terms of any financing may adversely affect the holdings or rights of the Company’s stockholders. If the Company is unable to continue to obtain sufficient capital, the Company will be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all. 5 Impact of the COVID-19 Coronavirus 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 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 has fallen. 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 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 The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Adagio Therapeutics Security Corporation. All intercompany accounts and transactions have been eliminated in consolidation. The Company views its operations and manages its business in one operating segment, which is the business of discovering, developing and commercializing antibody-based solutions for infectious diseases. 2. 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 6 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. GAAP. 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 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 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. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ materially from those estimates or assumptions. The Company is monitoring the potential impact of the COVID-19 pandemic on its business and consolidated financial statements. The Company is not aware of any specific event or circumstance that would require any update to its estimates or judgments reflected in these consolidated financial statements or a revision of the carrying value of its assets or liabilities as of the issuance date of these condensed consolidated financial statements. These estimates may change as new events occur and additional information is obtained. Recently Issued Accounting Pronouncements The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected not to “opt out” of the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for nonpublic companies. 7 In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02” or “ASC 842”), as subsequently amended. ASC 842 sets forth the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASC 842 replaces the existing guidance in ASC No. 840, Leases (“ASC 840”). ASC 842 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method for finance leases or on a straight-line basis over the term of the lease for operating leases. In addition, a lessee is also required to record (i) a right-of-use asset and a lease liability on its balance sheets for all leases with a term of greater than 12 months regardless of their classification and (ii) lease expense on its statement of operations for operating leases and amortization and interest expense on its statement of operations for financing leases. Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases under ASC 840. ASC 842 also requires lessees and lessors to disclose key information about their leasing transactions. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842) , which added an optional transition method that allows companies to adopt the standard as of the beginning of the year of adoption as opposed to the earliest comparative period presented. In November 2019, the FASB issued guidance delaying the effective date for all entities, except for public entities. For public entities, ASU 2016-02 was effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. In June 2020, the FASB issued ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities (“ASU 2020-05”), which delayed the adoption date of ASU 2016-02 for nonpublic entities. For nonpublic entities, ASU 2016-02 is effective for annual periods beginning after December 15, 2021, including interim periods within annual periods beginning after December 15, 2022. Early adoption is permitted, including in an interim period. Entities are required to adopt ASC 842 using a modified retrospective transition method. 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. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively, “Topic 326”). The main objective of this update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this update replace the incurred loss impairment methodology in current guidance with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Under ASU 2016-13, expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities are required to be recorded through an allowance for credit losses. The update also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which the carrying value exceeds fair value. The measurement of expected credit losses will be based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 also establishes additional disclosure requirements related to credit risks. For public entities that qualify as a filer with the Securities and Exchange Commission, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. In November 2019, the FASB issued ASU No. 2019-10, which deferred the effective date for nonpublic entities to annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2016-13 is applied by means of a cumulative-effect adjustment to the opening retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating the potential impact that the adoption of this standard may have on its consolidated financial statements and related disclosures. 8 In August 2018, the FASB issued ASU No. 2018-15, Intangibles–Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). The amendments in ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the update requires entities in a hosting arrangement that is a service contract to follow the guidance in ASC 350-40, Internal-Use Software (“ASC 350-40”) to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Costs to develop or obtain internal-use software that cannot be capitalized under ASC 350-40, such as training costs and certain data conversion costs, also cannot be capitalized for a hosting arrangement that is a service contract. Therefore, an entity in a hosting arrangement that is a service contract determines which project stage an implementation activity relates to. Costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed as the activities are performed. ASU 2018-15 also requires entities to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. ASU 2018-15 was effective for public entities for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. For nonpublic entities, ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption is permitted, including adoption in any interim period. ASU 2018-15 is applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. 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. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The update also clarifies and simplifies other aspects of the accounting for income taxes. For public entities, ASU 2019-12 is required to be adopted for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. For nonpublic entities, ASU 2019-12 is effective for annual periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued or made available for issuance. An entity that elects to early adopt the update in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the update in the same period. The Company is currently evaluating the potential impact that the adoption of this standard may have on its consolidated financial statements and related disclosures. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 was issued to reduce the complexity associated with accounting for certain financial instruments with characteristics of liabilities and equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock and improves the disclosures for convertible instruments and related earnings per share guidance. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related earnings per share guidance. For public entities that qualify as a filer with the Securities and Exchange Commission, excluding entities eligible to be smaller reporting companies, ASU 2020-06 is effective for fiscal annual periods beginning after December 15, 2021, including interim periods within those fiscal years. For nonpublic entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. ASU 2020-06 must be adopted as of the beginning of its annual fiscal year. ASU 2020-06 may be adopted through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the potential impact that the adoption of this standard may have on its consolidated financial statements and related disclosures. 3. 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 Fair Value September 30, 2021 U.S. treasury securities $ 188,050 $ 3 $ — $ 188,053 Total $ 188,050 $ 3 $ — $ 188,053 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. 9 4. Fair Value Measurements Fair Value Measurements Certain assets of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company’s cash equivalents are carried at fair value, determined according to the fair value hierarchy described above. The carrying values of the Company’s accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities. The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands): Fair Value Measurements at September 30, 2021: Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market fund $ 477,440 $ — $ — $ 477,440 Marketable securities: U.S. treasury securities 188,053 — — 188,053 $ 665,493 $ — $ — $ 665,493 Fair Value Measurements at December 31, 2020: Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market fund $ 39,006 $ — $ — $ 39,006 $ 39,006 $ — $ — $ 39,006 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. 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 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. 10 5. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): September 30, 2021 December 31, 2020 Prepaid external research, development and manufacturing costs $ 7,489 $ 2,253 Prepaid insurance 4,558 41 Prepaid compensation and related expenses 525 78 Interest receivable 682 — Other 579 22 $ 13,833 $ 2,394 6. Accrued Expenses Accrued expenses consisted of the following (in thousands): September 30, 2021 December 31, 2020 Accrued external research, development and manufacturing costs $ 30,011 $ 3,853 Accrued professional and consultant fees 2,239 237 Accrued employee compensation 2,575 794 Other 660 35 $ 35,485 $ 4,919 7. License and Collaboration Agreements 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”). In addition, Adimab granted to the Company a non-exclusive, worldwide, royalty-bearing, sublicensable license to certain of its platform patents and technology for the development, manufacture and commercialization of the CoV Antibodies and pharmaceutical products containing or comprising one or more CoV Antibodies (each, a “Product”) for all indications and uses, with the exception of certain diagnostic uses and use as a research reagent (the “Field”). The Company is entitled to sublicense the assigned rights and licensed intellectual property solely with respect to any CoV Antibody or Product, subject to specified conditions of the agreement. The Company is obligated to use commercially reasonable efforts to achieve specified development and regulatory milestones for Products in certain major markets and to commercialize a product in any country in which the Company obtains marketing approval. Pursuant to the terms of the Adimab Assignment Agreement, the parties will establish one or more work plans that set forth the activities to be performed under the agreement (each, a “Work Plan”), and each party is responsible for performing the obligations to which it is assigned under such Work Plans. Upon execution of the Adimab Assignment Agreement, the Company and Adimab agreed on an initial work plan that outlined the services that will be performed commencing at inception of the arrangement. The Company is obligated to pay Adimab quarterly for its services performed under each Work Plan at a specified full-time equivalent rate. Otherwise, the Company is solely responsible for the development, manufacture and commercialization of the CoV Antibodies and associated Products at its own cost and expense. The Company is solely responsible for preparing and submitting all investigational new drug applications, new drug applications, biologics license applications and other regulatory filings for the CoV Antibodies and Products in the Field, and for obtaining and maintaining all marketing approvals for Products in the Field, at its sole expense. Additionally, the Company has the sole right to prosecute, maintain, enforce and defend patents covering the CoV Antibodies and Products, all at its own expense. 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, 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. The maximum aggregate amount of milestone payments payable under the agreement for any and all Products is $ 24.6 million; 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 global clinical trial evaluating ADG20, which obligated the Company to make a $ 1.0 million milestone payment to Adimab. In 11 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 “ NDA ” ) 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. Royalties are due on a Product-by-Product and country-by-country basis beginning upon the first commercial sale of each Product and ending on the later of (i) 12 years after the first commercial sale of such Product in such country and (ii) expiration of the last valid claim of a patent covering such Product in such country (“Royalty Term”). 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, 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. The Company may terminate the agreement at any time for any or no reason upon advance written notice to Adimab. Either party may terminate the agreement in the event of a material breach by the other party that is not cured within specified periods, except that after the initiation of the first clinical trial of a Product, Adimab may only terminate the agreement for an uncured material breach by the Company for its due diligence obligation or a payment obligation. 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 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. Therefore, the aggregate acquisition cost of $ 39.9 million was recognized as acquired IPR&D expense in July 2020. The $39.9 million of costs to acquire the IPR&D assets was determined as a result of the Company’s allocation of the $ 40.0 million aggregate fair value of the 5,000,000 shares of the Series A Preferred Stock that the Company issued to Adimab on the acquisition date in exchange for (i) the IPR&D assets acquired from Adimab and (ii) 21,250,000 shares of the Company’s common stock that it repurchased from Adimab on that same date. The Company allocated the $40.0 million fair value of the 5,000,000 shares of Series A Preferred Stock to the IPR&D assets and to the repurchased common stock based on their relative fair values on the acquisition date. As of that date and before allocation, the Company determined the fair value of the repurchased common stock was $ 85,000 , based on the results of a third-party valuation, and the fair value of the IPR&D assets was $40.0 million. The Company determined the fair value of the 5,000,000 shares of Series A Preferred Stock based on the $ 8.00 price per share paid for the stock by new investors in the Company’s Series A Preferred Stock financing, which closed on the same date as the date on which the Company acquired the CoV Antibodies and Adimab CoV Assets under the Adimab Assignment Agreement. 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 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. 12 Adimab Collaboration Agreement On May 21, 2021, the Company entered into a Collaboration Agreement with Adimab (the “Adimab Collaboration Agreement”) for the discovery and optimization of proprietary antibodies as potential therapeutic product candidates. Under the agreement, the Company and Adimab will collaborate on research programs for a specified number of targets selected by the Company within a specified time period. Under the Adimab Collaboration Agreement, Adimab granted the Company a worldwide, non-exclusive license to certain of its platform patents and technology and antibody patents to perform the Company’s responsibilities during the ongoing research period and for a specified evaluation period thereafter (the “Evaluation Term”). In addition, the Company granted Adimab a license to certain of the Company’s patents and intellectual property solely to perform Adimab’s responsibilities under the research plans. Under the agreement, the Company has an exclusive option, on a program-by-program basis, to obtain licenses and assignments to commercialize selected products containing or comprising antibodies directed against the applicable target, which option may be exercised upon the payment of a specified option fee for each program. Upon exercise of an option by the Company, Adimab will assign to the Company all right, title and interest in the antibodies of the optioned research program and will grant the Company a worldwide, royalty-free, fully paid-up, non-exclusive, sublicensable license under the Adimab platform technology for the development, manufacture and commercialization of the antibodies for which the Company has exercised its options and products containing or comprising those antibodies. 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 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; a discovery delivery fee of $ 0.2 million; and an optimization completion fee of $ 0.2 million. 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. The Company is also obligated to pay Adimab royalties of a mid single-digit percentage based on net sales of any product under the agreement, subject to reductions for third-party licenses. The royalty term will expire for each product on a country-by-country basis upon the later of (i) 12 years after the first commercial sale of such product in such country and (ii) the expiration of the last valid claim of any patent claiming composition of matter or method of making or using any antibody identified or optimized under the Adimab Collaboration Agreement in such country. In addition, the Company is obligated to pay Adimab for Adimab’s performance of certain validation work with respect to certain antigens acquired from a third party. 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. 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. The Company may terminate the Adimab Collaboration Agreement at any time upon advance written notice to Adimab. In addition, subject to certain conditions, either party may terminate the Adimab Collaboration Agreement in the event of a material breach by the other party that is not cured within specified periods. 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 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. 13 WuXi Cell Line License Agreement In December 2020, the Company entered into a Cell Line License Agreement with WuXi Biologics (Hong Kong) Limited (“WuXi”) (the “Cell Line License Agreement”), under which WuXi granted to the Company a non-exclusive, non-transferable, worldwide, royalty-bearing, sublicensable license to certain of its intellectual property, including certain patent rights associated with a proprietary cell line developed by WuXi for the exploitation of certain recombinant antibodies developed using such proprietary cell line (each, a “Licensed Product”). Each Licensed Product generated under the arrangement will be produced from a transformed or transfected version of the proprietary cell line derived by WuXi (each of such transformed or transfected cell lines, a “Licensed Cell Line”). 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 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. However, if the Company uses WuXi to manufacture all of its commercial supplies, no royalties would be owed by the Company to WuXi for net sales of Licensed Products. The Company has an option to buy out its royalty obligations on a Licensed Cell Line-by-Licensed Cell Line basis by making a one-time payment of $ 15.0 million to WuXi. 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 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 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. Either party may terminate the Cell Line License Agreement in the event of a material breach by the other party that is not cured within a specified period after notice. Upon termination of the Cell Line License Agreement, the license conveyed by WuXi to the Company will continue in full force and effect with respect to all Licensed Products manufactured using the Licensed Cell Line already generated under the arrangement, provided that the Company continues to pay its royalty obligations, if any. 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 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 14 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. 8. 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, WuXi and TSRI (see Note 7). Manufacturing Agreements 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 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. Either party may terminate the agreement upon the breach or default by the other party, other than a non-payment breach, that is not cured within 90 days after notice. Both parties are also entitled to terminate the Commercial Manufacturing Agreement if the other party becomes insolvent or is the subject of a petition in bankruptcy or of any other related proceeding or event. Either party may terminate either the Commercial Manufacturing Agreement in its entirety, or an individual order, (i) to the extent the other party suffers a force majeure event that is continuing for a predefined period of time and (ii) if the other party fails to make a payment when due under the arrangement and such non-payment is not cured within 30 days after notice. 15 Other Contracts 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. Under such agreements, the Company is contractually obligated to make certain payments to vendors upon early termination, primarily to reimburse them for their unrecoverable outlays incurred prior to cancellation as well as any amounts owed by the Company prior to early termination. 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 From time to time, the Company may become involved in legal proceedings or other litigation relating to claims arising in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and estimated exposure amount. Legal fees and other costs associated with such proceedings are expensed as incurred. As of September 30, 2021 and December 31, 2020, the Company was not a party to any material legal proceedings. Indemnification Agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to its vendors, lessors, contract research organizations, contract manufacturing organizations, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and its executive officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments that the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims. 9. Convertible Preferred Stock The Company has issued Series A convertible preferred stock (the “Series A Preferred Stock”), Series B convertible preferred stock (the “Series B Preferred Stock”), and Series C Preferred Stock (the “Series C Preferred Stock”), all of which are collectively referred to as the “Preferred Stock.” In July 2020, the Company issued and sold 6,237,500 shares of Series A Preferred Stock, at a price of $ 8.00 per share, for gross proceeds of $ 49.9 million and incurred $ 0.2 million of issuance costs. Concurrently, the Company issued 5,000,000 shares of Series A Preferred Stock, then having a fair value of $ 40.0 million, to Adimab as consideration payable pursuant to the Adimab Assignment Agreement (see Note 7). In October and November 2020, the Company issued and sold 1,410,434 shares of Series B Preferred Stock, at a price of $ 56.72 per share, for gross proceeds of $ 80.0 million and incurred $ 0.2 million of issuance costs. Adimab, a related party, participated in the Series B Preferred Stock financing by purchasing 44,076 shares of Series B Preferred Stock for an aggregate purchase price of $ 2.5 million. The issuance of the Series B Preferred Stock resulted in changes to certain terms of the Series A Preferred Stock. The Company concluded that such changes were not significant and resulted in a modification, rather than an extinguishment, of the Series A Preferred Stock. The changes to the terms of the Series A Preferred Stock did not result in incremental value to the stockholders. Therefore, there was no impact to the accounting for the Series A Preferred Stock. In April 2021, the Company issued and sold 4,296,550 shares of its Series C Preferred Stock, at a price of $ 78.08578 per share, for aggregate gross proceeds of $ 335.5 million and incurred $ 0.3 million of issuance costs. Adimab, a related party, participated in the Series C Preferred Stock financing by purchasing 128,064 shares of Series C Preferred Stock for an aggregate purchase price of $ 10.0 million. 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. 16 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. 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 Shares Authorized Shares Issued and Outstanding Carrying Value Liquidation Preference Common Stock Issuable Upon Conversion Series A Preferred Stock 11,237,500 11,237,500 $ 89,706 $ 89,900 56,187,500 Series B Preferred Stock 1,410,434 1,410,434 79,842 80,000 7,052,170 12,647,934 12,647,934 $ 169,548 $ 169,900 63,239,670 10. Common Stock 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 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 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 In April and May 2021, the Company retired an aggregate of 22,600,000 shares of its common stock held in treasury. Upon retirement, the shares were redesignated as authorized but unissued shares of the Company’s common stock. Stock Split 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. 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 17 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. 11. Stock-Based Compensation 2020 Equity Incentive Plan The Company’s 2020 Equity Incentive Plan (the “2020 Plan”) provides for the Company to grant incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units and other stock-based awards to employees, members of the board of directors and consultants. The 2020 Plan is administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. The board of directors may also delegate to one or more officers of the Company the power to grant awards to employees and certain officers of the Company. 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 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. The Company’s board of directors determined the fair value of the Company’s common stock, taking into consideration its most recently available valuation of common stock performed by third parties as well as additional factors which may have changed since the date of the most recent contemporaneous valuation through the date of grant. Stock options granted under the 2020 Plan expire after ten years and typically vest over a four-year period with the first 25 % vesting upon the first anniversary of a specified vesting commencement date and the remainder vesting in 36 equal monthly installments over the succeeding three years , contingent on the recipient’s continued employment or service. 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 The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. 18 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: Three Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, Period from June 3, 2020 (Inception) to September 30, 2021 2020 2021 2020 Fair value of common stock $ 14.05 $ 1.00 $ 10.12 $ 0.31 Expected term (in years) 6.1 6.0 6.0 6.1 Expected volatility 73.2 % 73.3 % 73.3 % 72.3 % Risk-free interest rate 1.0 % 0.4 % 1.0 % 0.4 % Expected dividend yield — % — % — % — % Stock Option Activity The following table summarizes the Company’s stock option activity since December 31, 2020: Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value (in years) (in thousands) Outstanding at December 31, 2020 2,968,070 $ 0.78 9.8 $ 11,362 Granted 14,725,078 $ 10.12 Forfeited ( 232,187 ) $ 2.68 Outstanding at September 30, 2021 17,460,961 $ 8.63 9.5 $ 586,814 Vested and expected to vest at September 30, 2021 17,460,961 $ 8.63 9.5 $ 586,814 Options exercisable at September 30, 2021 1,025,630 $ 2.32 8.7 $ 40,943 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 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. The Company has the right to repurchase any unvested shares of restricted common stock, at the original purchase price, upon any voluntary or involuntary termination of the service relationship during the vesting period. A summary of the Company’s unvested common stock from option early exercises that is subject to repurchase by the Company is as follows: Number of Shares Unvested restricted stock at June 3, 2020 (inception) — Issued 6,943,240 Vested — Repurchased ( 1,350,000 ) Unvested restricted stock at December 31, 2020 5,593,240 Issued — Vested ( 1,734,101 ) Repurchased — Unvested restricted stock at September 30, 2021 3,859,139 Proceeds from the early exercise of stock options are recorded as an early-exercise liability on the consolidated balance sheets. The liability for unvested common stock subject to repurchase is then reclassified to common stock and additional paid-in capital as the Company’s repurchase right lapses. 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 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. 19 Stock-Based Compensation Expense The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations and comprehensive loss (in thousands): Three Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, Period from June 3, 2020 (Inception) to September 30, 2021 2020 2021 2020 Research and development $ 2,151 $ 5 $ 3,582 $ 5 Selling, general and administrative 3,828 2 6,326 2 $ 5,979 $ 7 $ 9,908 $ 7 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. 12. Income Taxes 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. 13. Defined Contribution Plan The Company maintains a 401(k) Plan (the “401(k) Plan”) for the benefit of eligible employees. The 401(k) Plan is a defined contribution plan under Section 401(k) of the Internal Revenue Code of 1986 that covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Pursuant to the terms of the 401(k) Plan, the Company is required to make non-elective contributions of 3 % of eligible participants’ compensation. 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. 14. 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): Three Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, Period from June 3, 2020 (Inception) to September 30, 2021 2020 2021 2020 Numerator: Net loss attributable to common stockholders $ ( 60,375 ) $ ( 48,008 ) $ ( 143,748 ) $ ( 48,106 ) Denominator: Weighted-average common shares outstanding, basic and diluted 61,297,086 1,847,826 20,346,771 6,375,000 Net loss per share attributable to common stockholders, basic and diluted $ ( 0.98 ) $ ( 25.98 ) $ ( 7.06 ) $ ( 7.55 ) Shares of unvested restricted common stock are not considered outstanding for accounting purposes until vested and were excluded from the calculations of basic net loss per share attributable to common stockholders for all periods presented. The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. 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 20 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 Ended September 30, Period from June 3, 2020 (Inception) to September 30, 2021 2020 Convertible preferred stock (as converted to common stock) — 56,187,500 Stock options to purchase common stock 17,460,961 2,968,070 Unvested restricted common stock 3,859,139 6,943,240 21,320,100 66,098,810 15. 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 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. 21 Item 2 . 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 SEC, on August 6, 2021 (the “Prospectus”). Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to Adagio Therapeutics, Inc. together with its consolidated subsidiaries. Forward-Looking Statements The information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements and information within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements, including, without limitation, the risks set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q and in our other filings with the SEC. These forward-looking statements are applicable only as of the date on which they are made and we do not assume any obligation to update any forward-looking statements. Overview 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, 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 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 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. 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. In July 2020, we entered into an assignment and license agreement, or the Adimab Assignment Agreement, with Adimab, pursuant to which we acquired certain rights to Adimab’s antibodies relating to COVID-19 and severe acute respiratory syndrome, or SARS, as well as related provisional patent applications, know-how and data generated with respect to the associated antibodies. In addition, Adimab granted to us a non-exclusive, worldwide license to certain of Adimab’s platform patents and technology for use in research and development. In connection with the rights and license acquired, we issued 5,000,000 shares of our Series A preferred stock to Adimab. 22 Since our inception, we have devoted substantially all of our resources to organizing and staffing, building an intellectual property portfolio, business planning, conducting research and development, establishing arrangements with third parties for the manufacture of our product candidates and raising capital. We rely heavily on external consultants and contract research organizations, or CROs, to conduct our non-clinical, preclinical and clinical activities. Additionally, we are currently dependent on WuXi Biologics (Hong Kong) Limited, or WuXi, a contract development and manufacturing organization, or CDMO, for the manufacture of our product candidates for clinical and commercial use. 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 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. 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. In addition, our losses from operations may fluctuate significantly from period to period depending on the timing of our clinical trials and our expenditures on other research and development activities, including any associated manufacturing activities, and potential commercialization efforts. 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 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;  seek regulatory approval for any product candidates that successfully complete clinical trials;  pursue marketing approvals or EUA and reimbursement for our product candidates;  acquire or in-license other product candidates, intellectual property and/or technologies;  develop, establish and validate our commercial-scale current good manufacturing practices, or cGMP, manufacturing process;  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;  comply with regulatory requirements established by the applicable regulatory authorities;  establish a sales, marketing and distribution infrastructure and scale up manufacturing capabilities to commercialize any product candidates for which we may obtain regulatory approval or EUA;  hire and retain additional personnel, including research, clinical, development, manufacturing, quality control, quality assurance, regulatory and scientific personnel;  add operational, financial, corporate development, management information systems and administrative personnel, including personnel to support our product development and planned future commercialization efforts; and  incur additional legal, accounting and other expenses in operating as a public company. We do not anticipate generating revenue from product sales, including government supply contracts, unless and until we successfully complete clinical development and obtain marketing approvals or EUA for one or more of our product candidates. 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 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. 23 As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, government or private-party grants, debt financings, collaborations with other companies and strategic alliances. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. We may never obtain regulatory approval for any of our product candidates. Even if we are able to generate product sales, we may not become profitable. 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, 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.” 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 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 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 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 has fallen. 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 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. 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. If the financial markets and/or the overall economy are impacted for an extended period, our results and operations may be materially adversely affected and may affect our ability to raise capital. Components of Our Results of Operations Revenue To date, we have not generated any revenue from product sales, including government supply contracts, or any other sources. If our development efforts for our product candidates are successful and result in regulatory approval or collaboration or license agreements with third parties, we may generate revenue in the future from product sales or payments from collaboration or license agreements that we may enter into with third parties, or any combination thereof. Research and Development Expenses The nature of our business and primary focus of our activities generate a significant amount of research and development costs. Research and development expenses represent costs incurred by us for:  the non-clinical and preclinical development of our product candidates, including our discovery efforts; 24  the procurement of our product candidates from third-party manufacturers; and  the global clinical development of our product candidates. Such costs consist of:  personnel-related expenses, including salaries, bonuses, benefits and other compensation-related costs, including stock-based compensation expense, for employees engaged in research and development functions;  expenses incurred under agreements with third parties, such as consultants, contractors and CROs, that conduct the non-clinical and preclinical studies and clinical trials of our product candidates and research programs;  costs of procuring manufactured product candidates for use in non-clinical studies, preclinical studies and clinical trials from third-party CDMOs;  costs of outside consultants and advisors, including their fees and stock-based compensation;  payments made under third-party licensing agreements; and  other expenses incurred as a result of research and development activities. We expense research and development costs as incurred. Non-refundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered or the services rendered. Our primary focus since inception has been the development of ADG20. Our research and development costs consist primarily of external costs, such as fees paid to CDMOs, CROs and consultants in connection with our non-clinical studies, preclinical studies and clinical trials. To date, external research and development costs for any individual product candidate have been tracked commencing upon product candidate nomination. We do not allocate employee-related costs, costs associated with our discovery efforts and other internal or indirect costs to specific research and development programs or product candidates because these resources are used and these costs are deployed across multiple programs under development and, as such, are not separately classified. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher and more variable development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in the near term as we advance ADG20 through clinical development on a global basis, pursue regulatory approval of ADG20, continue to discover and develop additional product candidates and incur expenses associated with hiring additional personnel to support our research and development efforts, including the associated manufacturing activities. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of our product candidates. This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of:  the timing and progress of preclinical and clinical development activities;  the number and scope of preclinical and clinical programs we decide to pursue;  filing acceptable investigational new drug applications with the U.S. Food and Drug Administration or comparable foreign applications that allow commencement of our planned clinical trials or future clinical trials for our product candidates;  sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials, manufacture the product candidates and complete associated regulatory activities;  our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and successfully develop, obtain regulatory approval or EUA for our product candidates;  successful enrollment and timely completion of clinical trials, including our ability to generate positive data from any such clinical trials;  the costs associated with the development of any additional development programs and product candidates we identify in-house or acquire through collaborations;  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; 25  our ability to obtain and maintain patent, trademark and trade secret protection and regulatory exclusivity for our product candidates, if and when approved, and otherwise protecting our rights in our intellectual property portfolio;  receipt of timely marketing approvals from applicable regulatory authorities;  our ability to maintain compliance with regulatory requirements, including good clinical practices, current good laboratory practices and cGMPs, and to comply effectively with other rules, regulations and procedures applicable to the development and sale of pharmaceutical products;  potential significant and changing government regulation, regulatory guidance and requirements and evolving treatment guidelines; and  the impact of any business interruptions to our operations or those of third parties with which we work, particularly in light of the current COVID-19 pandemic. A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. 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 “ PHE ” ), 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 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 payments to Adimab under the terms of the agreement by which we acquired the IPR&D assets. Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of salaries, bonuses, benefits, third-party fees and other related costs, including stock-based compensation, for our personnel and external contractors involved in our executive, finance, legal, business development and other administrative functions as well as our commercial function. Selling, general and administrative expenses also include costs incurred for outside services associated with such functions, including legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax and administrative consulting services; insurance costs; market research costs; and other selling, general and administrative expenses. These costs relate to the operation of the business, unrelated to the research and development function, or any individual program. We anticipate that our selling, general and administrative expenses will increase significantly in the future as our business expands and we increase our headcount to support the expected growth in our research and development activities and the potential commercialization of our product candidates. In particular, we expect to incur additional commercialization expenses prior to any regulatory approval or EUA of our product candidates as we continue to expand our commercial function to support potential future product launches. We also anticipate that we will incur increased expenses associated with operating as a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services, director and officer insurance premiums, and investor and public relations costs. 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 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, 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 . 26 Income Taxes 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 September 30, 2021 and 2020 The following table summarizes our results of operations for the three months ended September 30, 2021 and 2020: Three Months Ended September 30, Three Months Ended September 30, (in thousands) 2021 2020 Change Operating expenses: Research and development $ 45,366 $ 7,251 $ 38,115 Acquired in-process research and development 4,000 39,915 (35,915 ) Selling, general and administrative 11,052 842 10,210 Total operating expenses 60,418 48,008 12,410 Loss from operations (60,418 ) (48,008 ) (12,410 ) Other income (expense): Interest income 48 — 48 Other expense (5 ) — (5 ) Total other income (expense), net 43 — 43 Net loss and comprehensive loss $ (60,375 ) $ (48,008 ) $ (12,367 ) The following discussion presents the components of our expenses for the periods presented: Research and Development Expenses Three Months Ended September 30, Three Months Ended September 30, (in thousands) 2021 2020 Change Direct, external research and development expenses by program: ADG20 $ 31,878 $ 6,294 $ 25,584 ADG10 4,440 — 4,440 Unallocated research and development expenses: Personnel-related costs 6,857 489 6,368 External discovery-related and other costs 2,191 468 1,723 Total research and development expenses $ 45,366 $ 7,251 $ 38,115 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 $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. 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 27 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. Selling, General and Administrative Expenses Three Months Ended September 30, Three Months Ended September 30, (in thousands) 2021 2020 Change Personnel-related costs $ 6,432 $ 204 $ 6,228 Professional and consultant fees 4,108 558 3,550 Other 512 80 432 Total selling, general and administrative expenses $ 11,052 $ 842 $ 10,210 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, 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 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: Nine Months Ended September 30, Period from June 3, 2020 (Inception) to September 30, (in thousands) 2021 2020 Change Operating expenses: Research and development $ 114,465 $ 7,299 $ 107,166 Acquired in-process research and development 7,500 39,915 (32,415 ) Selling, general and administrative 21,853 892 20,961 Total operating expenses 143,818 48,106 95,712 Loss from operations (143,818 ) (48,106 ) (95,712 ) Other income (expense): Interest income 80 — 80 Other expense (10 ) — (10 ) Total other income (expense), net 70 — 70 Net loss and comprehensive loss $ (143,748 ) $ (48,106 ) $ (95,642 ) Research and Development Expenses Nine Months Ended September 30, Period from June 3, 2020 (Inception) to September 30, (in thousands) 2021 2020 Change Direct, external research and development expenses by program: ADG20 $ 90,561 6,294 $ 84,267 ADG10 4,440 — 4,440 Unallocated research and development expenses: Personnel-related costs 14,457 537 13,920 External discovery-related and other costs 5,007 468 4,539 Total research and development expenses $ 114,465 $ 7,299 $ 107,166 28 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 $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. Selling, General and Administrative Expenses Nine Months Ended September 30, Period from June 3, 2020 (Inception) to September 30, (in thousands) 2021 2020 Change Personnel-related costs $ 11,980 $ 252 $ 11,728 Professional and consultant fees 9,026 560 8,466 Other 847 80 767 Total selling, general and administrative expenses $ 21,853 $ 892 $ 20,961 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, 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 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 Sources of Liquidity Since our inception in June 2020, we have not generated any revenue from any sources, including from product sales, and have incurred significant operating losses and negative cash flows from operations. 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 $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. 29 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. Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Nine Months Ended September 30, Period from June 3, 2020 (Inception) to September 30, (in thousands) 2021 2020 Net cash used in operating activities $ (111,524 ) $ (1,143 ) Net cash used in investing activities (188,627 ) — Net cash provided by financing activities 663,432 49,720 Net increase in cash and cash equivalents $ 363,281 $ 48,577 Operating Activities 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 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. 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. Investing Activities 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 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 We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the non-clinical and preclinical studies and the current and future clinical trials of our product candidates. Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including:  the rate of progress in the development of AGD20 and our other product candidates;  the scope, progress, results and costs of non-clinical studies, preclinical development, laboratory testing and clinical trials for ADG20 and future product candidates and associated development programs;  the extent to which we develop, in-license or acquire other product candidates and technologies in our pipeline; 30  the scope, progress, results and costs as well as timing of process development and manufacturing scale-up and validation activities associated with ADG20 and our future product candidates and other programs as we advance them through preclinical and clinical development;  the number and development requirements of product candidates that we may pursue;  the costs, timing and outcome of regulatory review of our product candidates;  our headcount growth and associated costs as we expand our research and development capabilities and establish a commercial infrastructure;  the timing and costs of securing sufficient capacity for commercial supply of our product candidates, or the raw material components thereof;  the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval or EUA;  the costs necessary to obtain regulatory approvals, if any, for products in the United States and other jurisdictions, and the costs of post-marketing studies that could be required by regulatory authorities in jurisdictions where approval is obtained;  the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;  the continuation of our existing licensing and collaboration arrangements and entry into new collaborations and licensing arrangements, if at all;  the need and ability to hire additional research, clinical, development, scientific and manufacturing personnel;  the costs we incur in maintaining business operations;  the need to implement additional internal systems and infrastructure;  the effect of competing technological, product and market developments;  the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;  the costs of operating as a public company; and  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 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. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, government or private-party grants, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences and anti-dilution protections that adversely affect as a common stockholders’ rights. Additional debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring debt, making acquisitions or capital expenditures or declaring dividends, which could adversely constrain our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute your ownership interest. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or through other sources, when needed, we may be required to delay, limit, reduce or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates to third parties that we would otherwise prefer to develop and market ourselves. 31 Contractual Obligations and Commitments There have been no material changes to our contractual obligations from those described in the Prospectus. 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 Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Prospectus. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. There have been no significant changes to our critical accounting policies from those described in the Prospectus. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission. 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 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 September 30, 2021. See Item 4, Controls and Procedures. If we are unable to remediate this material weakness, or if we identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business. Emerging Growth Company Status The Jumpstart Our Business Startups Act of 2012 permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. 32