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) March 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 532,220 $ 542,224 Marketable securities — 49,194 Prepaid expenses and other current assets 22,081 25,293 Total current assets 554,301 616,711 Property and equipment, net 87 83 Operating lease right-of-use asset 1,648 — Other non-current assets 237 3,297 Total assets $ 556,273 $ 620,091 Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable $ 18,682 $ 5,783 Accrued expenses 76,537 56,277 Operating lease liability, current 315 — Total current liabilities 95,534 62,060 Early-exercise liability 3 6 Operating lease liability, non-current 1,344 — Other non-current liability — 6 Total liabilities 96,881 62,072 Commitments and contingencies (Note 8) Stockholders’ equity (deficit): Preferred stock (undesignated), $ 0.0001 par value; 10,000,000 shares authorized and no shares issued and outstanding at March 31, 2022 and December 31 2021 — — Common stock, $ 0.0001 par value; 1,000,000,000 shares authorized, 109,675,173 shares issued and outstanding at March 31, 2022; 1,000,000,000 shares authorized, 111,251,660 shares issued and 110,782,909 shares outstanding at December 31, 2021 11 11 Treasury stock, at cost; 0 shares and 468,751 shares at March 31, 2022 and December 31, 2021, respectively — — Additional paid-in capital 852,156 850,125 Accumulated other comprehensive loss — ( 8 ) Accumulated deficit ( 392,775 ) ( 292,109 ) Total stockholders’ equity (deficit) 459,392 558,019 Total liabilities, convertible preferred stock and stockholders’ equity (deficit) $ 556,273 $ 620,091 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 March 31, Three Months Ended March 31, 2022 2021 Operating expenses: Research and development (1) $ 92,035 $ 34,032 Acquired in-process research and development (2) — 1,000 Selling, general and administrative 8,704 3,677 Total operating expenses 100,739 38,709 Loss from operations ( 100,739 ) ( 38,709 ) Other income (expense): Other income (expense), net 73 9 Total other income (expense), net 73 9 Net loss ( 100,666 ) ( 38,700 ) Other comprehensive income (loss) Unrealized gain on available-for-sale securities, net of tax 8 — Comprehensive loss $ ( 100,658 ) $ ( 38,700 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 0.93 ) $ — Weighted-average common shares outstanding, basic and diluted 107,869,570 — (1) Includes related-party amounts of $ 2,000 and $ 188 for the three months ended March 31, 2022 and 2021, respectively (see Note 15). (2) Includes related-party amounts of $ 0 and $ 1,000 for the three months ended March 31, 2022 and 2021, respectively (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 (Loss) 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 ) Convertible Preferred Stock Common Stock Treasury Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Shares Amount Shares Amount Capital Income (Loss) Deficit Equity (Deficit) Balances at December 31, 2021 — $ — 110,782,909 $ 11 468,751 $ — $ 850,125 $ ( 8 ) $ ( 292,109 ) $ 558,019 Vesting of restricted common stock from early-exercised options — — — — — — 1 — — 1 Exercise of stock options — — 50,353 — — — 47 — — 47 Repurchase of unvested restricted common stock — — ( 1,158,089 ) — 1,158,089 — — — — — Retirement of treasury stock — — — — ( 1,626,840 ) — — — — — Stock-based compensation expense — — — — — — 1,983 — — 1,983 Unrealized gain on available-for-sale securities, net of tax — — — — — — — 8 — 8 Net loss — — — — — — — — ( 100,666 ) ( 100,666 ) Balances at March 31, 2022 — $ — 109,675,173 $ 11 — $ — $ 852,156 $ — $ ( 392,775 ) $ 459,392 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) Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Cash flows from operating activities: Net loss $ ( 100,666 ) $ ( 38,700 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 1,983 587 Net amortization of premiums and accretion of discounts on marketable securities 194 — Amortization of operating lease right-of-use asset 80 — Depreciation expense 4 — Changes in operating assets and liabilities: Prepaid expenses and other current assets 3,212 ( 1,178 ) Other non-current assets 3,060 — Accounts payable 12,899 3,164 Accrued expenses 20,260 12,386 Operating lease liabilities ( 69 ) — Other non-current liabilities ( 6 ) — Net cash used in operating activities ( 59,049 ) ( 23,741 ) Cash flows from investing activities: Maturities of marketable securities 49,000 — Net cash provided by investing activities 49,000 — Cash flows from financing activities: Proceeds from exercises of stock options 47 — Payments for repurchases of unvested restricted common stock ( 2 ) — Net cash provided by financing activities 45 — Net decrease in cash and cash equivalents ( 10,004 ) ( 23,741 ) Cash and cash equivalents at beginning of period 542,224 114,988 Cash and cash equivalents at end of period $ 532,220 $ 91,247 Supplemental disclosure of non-cash investing and financing activities: Operating lease right-of-use asset recognized upon adoption of ASC 842 $ 1,728 $ — Deferred offering and issuance costs included in accrued expenses $ — $ 55 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 differentiated products for the prevention and treatment of infectious diseases. The Company is developing its lead product candidate, adintrevimab, for the prevention and treatment of COVID-19, the disease caused by the virus SARS-CoV-2 and its variants. Beyond COVID-19, the Company is leveraging robust antibody discovery and development capabilities that have enabled expedited advancement of adintrevimab into clinical trials to develop therapeutic or preventative options for other infectious diseases, such as additional coronaviruses and influenza. The Company initiated clinical trials for adintrevimab in February 2021. Adintrevimab is designed to be a potent, long-acting and broadly neutralizing antibody for both the prevention and treatment of COVID-19. The Company was incorporated in the State of Delaware in June 2020. The Company operates as a virtual company and maintains 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 discovery, manufacturing, clinical and commercial success of its product candidates. In July 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. In August 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 $ 327.5 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company. 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 Company has not generated any revenue since inception. The Company’s lead product candidate could require significant additional research and development efforts, including extensive clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and compliance-reporting capabilities. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales, including government supply contracts. 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. The Company has primarily funded its operations with proceeds from sales of convertible preferred stock and proceeds from the Company’s IPO. The Company has incurred losses and negative cash flows from operations since its inception, including a net loss of $ 100.7 million for the three months ended March 31, 2022. As of March 31, 2022, the Company had an accumulated deficit of $ 392.8 million. The Company expects to continue to generate operating losses for the foreseeable future. The Company expects that its existing cash and cash equivalents 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 Company expects to seek additional funding through equity 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 obtain sufficient capital, the Company could 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 adintrevimab and other product candidates 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 Omicron variant and its sublineages and the Delta variant), the availability, administration and acceptance of vaccines, monoclonal antibodies, antiviral agents and other therapeutic modalities, vaccine mandates by employers and/or local or national governments, 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, its impact on the Company's clinical trial design and enrollment, trial sites, contract research organizations ( “ CROs ” ), contract development and manufacturing organizations ( “ CDMOs ”) , and other third parties with which the Company 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 CROs, CDMOs 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 (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying condensed consolidated financial statements include the accounts of Adagio Therapeutics, Inc. 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 differentiated products for the prevention and treatment of infectious diseases. 2. Summary of Significant Accounting Policies As of March 31, 2022, the Company’s significant accounting policies and esti mates, which are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the U.S. Securities and Exchange Commission ( “ SEC ” ) on March 31, 2022 (as subsequently amended by Amendment No. 1 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 29, 2022, the “ 2021 Form 10-K ”) have not changed except as discussed below. Leases Effective January 1, 2022, the Company adopted ASU No. 2016-02, Leases (Topic 842) (“ASC 842”) using the required modified retrospective approach and utilizing the effective date as its date of initial application. As a result, prior periods are presented in accordance with the previous guidance in ASC 840, Leases (“ASC 840”). The Company evaluates whether an arrangement is or contains a lease at the inception date. If determined to be or contain a lease, the Company determines the classification of the lease at the commencement date, which represents the date at which the lessor makes the underlying asset available for use by the Company. When determining the expected accounting lease term, the Company includes the noncancellable lease term, together with periods covered by (i) an option to extend the lease if the Company is reasonably certain to exercise such option, (ii) an option to terminate the lease if the Company is reasonably certain not to exercise such option and (iii) an option to extend or not terminate the lease where the exercise of such option is controlled by the lessor. The Company has elected the short-term lease exemption, which allows the Company to not recognize lease liabilities and right-of-use assets arising from lease arrangements with original lease terms of twelve months or less. The Company elected the practical expedient to not separate lease and non-lease components for its leases. 6 Right-of-use assets represent the Company’s right to use an underlying asset over the lease term and lease liabilities represent the Company’s obligation to make lease payments under the arrangement. The Company measures its lease liabilities as the present value of the lease payments, discounted using an incremental borrowing rate, as interest rates implicit in lease arrangements are generally not readily determinable. The Company measures its right-of-use assets as the present value of its lease payments at the commencement date. The incremental borrowing rate represents the interest rate at which the Company could borrow an amount equal to the lease payments on a fully collateralized basis, over a similar term, in a similar economic environment. The Company recognizes rent expense for operating leases on a straight-line basis. The Company recognizes variable lease expenses as incurred. The Company remeasures right-of-use assets and lease liabilities when a lease is modified, and the modification is not accounted for as a separate contract. A modification is accounted for as a separate contract if the modification grants the Company an additional right of use not included in the original lease arrangement and the increase in lease payments is commensurate with the additional right of use. The Company assesses its right-of-use assets for impairment in a manner consistent with its assessment for long-lived assets held and used in operations. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of March 31, 2022, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2022 and 2021, the condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 and the condensed consolidated statements of convertible preferred stock and stockholders’ equity (deficit) for the three months ended March 31, 2022 and 2021 are unaudited. The accompanying unaudited condensed consolidated financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. The accompanying consolidated balance sheet as of December 31, 2021 was derived from audited financial statements, but does not include all disclosures required by GAAP. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited annual consolidated financial statements, and the notes thereto, as of and for the year ended December 31, 2021, which are included in the Company’s 2021 Form 10-K. 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 March 31, 2022 and December 31, 2021, the condensed consolidated results of operations for the three months ended March 31, 2022 and March 31, 2021, the condensed consolidated cash flows for the three months ended March 31, 2022 and March 31, 2021 and changes in stockholders’ equity (deficit) for the three months ended March 31, 2022 and March 31, 2021 have been made. The Company’s condensed consolidated results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022. 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. Prior to the IPO, significant estimates and assumptions also included 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 condensed 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 condensed 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 and Adopted 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) (“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. 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. The Company adopted the new standard and used the modified retrospective approach with January 1, 2022 as the initial date of application. The Company elected the available package of practical expedients which allowed the Company to not reassess previous accounting conclusions around whether arrangements are or contain leases, the classification of leases, and the treatment of initial direct costs. As a result of the adoption of ASC 842, the Company recorded (i) an operating lease liability, current of $ 0.3 million, (ii) an operating lease liability, non-current of $ 1.4 million and (iii) an operating lease right-of-use asset of $ 1.7 million, net of the unamortized balance of deferred rent liability as of the transition date. There was no impact from the adoption of ASC 842 to the Company’s results of operations and cash flows from operations. A summary of the impact of the adoption is as follows (in thousands): December 31, 2021 Impact of Adoption January 1, 2022 Operating lease right-of-use asset $ — $ 1,728 $ 1,728 Operating lease liability, current — 308 308 Other non-current liability 6 ( 6 ) — Operating lease liability, non-current — 1,426 1,426 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 and amendments is to provide information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date and utilize a methodology that requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. 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 limits the recognition of the amount of credit losses for available-for-sale debt securities to the amount by which the carrying value exceeds fair value. The measurement will be based on relevant information, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount and requires 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 and early adoption is permitted. In November 2019, the FASB 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. 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 Company did no t hold any available-for-sale marketable securities as of March 31, 2022. 8 The following tables summarize the gross unrealized gains and losses of the Company’s marketable securities as of December 31, 2021 (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. Treasury securities $ 49,202 $ — $ ( 8 ) $ 49,194 No available-for-sale marketable securities held as of December 31, 2021 had remaining maturities greater than twelve months. 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 March 31, 2022: Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 531,231 $ — $ — $ 531,231 $ 531,231 $ — $ — $ 531,231 Fair Value Measurements at December 31, 2021: Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 541,220 $ — $ — $ 541,220 Marketable securities: U.S. Treasury securities 49,194 — — 49,194 $ 590,414 $ — $ — $ 590,414 The money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. The Company did not hold any U.S. Treasury securities as of March 31, 2022. There were no changes to the valuation methods during the three months ended March 31, 2022 or March 31, 2021. The Company evaluates transfers between levels at the end of each reporting period. There were no transfers into or out of Level 1, Level 2 or Level 3 fair value measurements during the three months ended March 31, 2022 or March 31, 2021. 9 5. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): March 31, 2022 December 31, 2021 Prepaid external research, development and manufacturing costs $ 19,062 $ 20,582 Prepaid insurance 1,823 3,190 Prepaid compensation and other 1,196 1,521 $ 22,081 $ 25,293 6. Accrued Expenses Accrued expenses consisted of the following (in thousands): March 31, 2022 December 31, 2021 Accrued external research, development and manufacturing costs $ 72,064 $ 48,590 Accrued professional and consultant fees 2,326 2,155 Accrued employee compensation 1,817 4,945 Other 330 587 $ 76,537 $ 56,277 7. License and Collaboration Agreements Adimab Assignment Agreement In July 2020, the Company entered into an Assignment and License Agreement with Adimab (“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. 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 months ended March 31, 2022 and 2021, the Company recognized $ 0.3 million and $ 0.2 million, respectively, of research and development expense in connection with services provided by Adimab. Please refer to Note 15 for additional information. In July 2020, in consideration for the rights assigned and license conveyed under the Adimab Assignment Agreement, the Company issued 5,000,000 shares of its Series A convertible preferred stock (the “Series A Preferred Stock”), then having a fair value of $ 40.0 million, to Adimab. Concurrently, Adimab relinquished 21,250,000 shares of the Company’s common stock to the Company, then having a fair value of $ 85,000 . 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. 10 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 adintrevimab, which obligated the Company to make a $ 1.0 million milestone payment to Adimab. In April 2021, the Company achieved the second specified milestone under the agreement upon dosing of the first patient in a Phase 2 global clinical trial evaluating adintrevimab 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 adintrevimab 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 achievement of each of the first, second and third milestones became probable of achievement 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 (“NDA”) for a Product by the U.S. Food and Drug Administration (the “FDA”), which was not considered probable as of March 31, 2022. During the three months ended March 31, 2022, the Company did no t recognize any in-process research and development (“IPR&D”) expense in connection with contingent consideration payable under the Adimab Assignment Agreement. During the three months ended March 31, 2021, the Company recognized $ 1.0 million as IPR&D expense in connection with upfront consideration and contingent consideration payable under the Adimab Assignment Agreement. 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 March 31, 2022. 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 that 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 that the fair value of the repurchased common stock was $ 85,000 , based on the results of a third-party valuation, and that 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. 11 Adimab Collaboration Agreement In May 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. During the three months ended March 31, 2022, 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. During the three months ended March 31, 2022, the Company recognized $ 0.4 million of expense in connection with services provided by Adimab. Through March 31, 2022, 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 next potential milestone under the Adimab Collaboration Agreement is a $1.0 million milestone related to dosing of the first subject in a Phase 1 trial, which was not considered probable as of March 31, 2022. 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 March 31, 2022, 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. 12 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 paid 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. 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 March 31, 2022, no royalties had become due to WuXi. The Cell Line License Agreement remains in effect until it is terminated. The Company may terminate the Cell Line License Agreement at any time with notice to WuXi. 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. 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 $ 0.2 million, consisting solely of the upfront fee, was recognized as acquired IPR&D expense for the period from June 3, 2020 (inception) to December 31, 2020. 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. In August 2021, the Company paid TSRI $ 1.5 million in funding, which was 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 March 31, 2022, the Company had not exercised its Option. To the extent any TSRI Licensed Product covered by the Research Agreement is commercialized, the Company is obligated to pay TSRI royalties of a low single-digit percentage on a TSRI Licensed Product-by-Licensed Product and country-by-country basis based on a percentage of net sales, subject to reduction and floor. Royalties are payable for each product on a country-by-country basis through the later of (i) the expiration of the last valid claim of any patent covering such product in such country or (ii) 12 years from the first commercial sale of such product. The Research Agreement will expire when no further royalties are due to TSRI. The Research Agreement may be early terminated upon mutual written consent of both parties. The Company may terminate the Research Agreement at any time upon advance written notice to TSRI or upon the appointment of certain personnel deemed unacceptable. In addition, TSRI may terminate the Research Agreement if the Company fails to perform or observe any contractual term in any material respect or in the event of a material breach by the Company that remains uncured for a specified period. Following early termination, all licenses will terminate and revert to TSRI, all sublicenses granted by the Company will automatically terminate, and any then-existing sublicensees will have the right to obtain a direct license from TSRI. 13 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. During the three months ended March 31, 2022, the Company recognized $ 0.9 million of expense associated with services performed under the Research Agreement. In April 2022, the Company provided written notice to TSRI to terminate the Research Agreement. 8. Commitments and Contingencies Operating Lease Commitments In September 2021, the Company entered into a five year noncancelable facilities lease agreement 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. In addition to base rent, monthly rental payments include the Company’s proportionate share of operating expenses. The lease terms provide for one five-year extension term with base rent calculated on the then-market rate. The components of operating lease expense were as follows (in thousands): Three Months Ended March 31, 2022 Operating lease cost $ 105 Variable lease cost 8 Total lease cost $ 113 Supplemental cash flow information related to the operating lease was as follows (in thousands) Three Months Ended March 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 100 Future minimum lease payments under the noncancelable lease as of March 31, 2022 was as follows (in thousands): Year Ending December 31, Operating Lease 2022 (excluding the three months ended March 31, 2022) $ 302 2023 411 2024 421 2025 430 2026 328 Total lease payments 1,892 Present value adjustment ( 233 ) Present value of operating lease liability $ 1,659 As of March 31, 2022, the Company’s operating lease was measured using a weighted-average incremental borrowing rate of 6 % over a weighted-average remaining lease term of 4.5 years. License Agreements The Company has entered into license agreements with Adimab, WuXi and TSRI (see Note 7). In April 2022, the Company provided written notice to TSRI to terminate the Research Agreement. 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 manufactures adintrevimab drug substance and drug product for commercial use. The Company committed to minimum noncancelable purchase obligations related to batches of a dintrevimab drug substance and certain services with respect to the product requirements for 2022, the payments for which will extend into 2023, and batches of a dintrevimab drug product and certain services with respect to the product requirements for 2022, the payments for which will extend into 2023. As of March 31, 2022, there were no material changes to future minimum payments under non-cancelable purchase obligations associated with the Commercial Manufacturing Agreement. As of March 31, 2022, the Company had paid an aggregate of $ 19.6 million under the Commercial Manufacturing Agreement. The payments of $19.6 million resulted in a current prepaid expense of $ 17.4 million, included in prepaid expenses and other current assets, and $ 2.2 million was expensed to research and development expense as incurred. 14 In April 2022, the total volume of contractually binding drug substance and drug product batches to be manufactured under the Commercial Manufacturing Agreement was reduced, resulting in a decrease of the previous commitment of minimum non-cancelable purchase obligations of $ 107.8 million and a related credit in the low eight-figures to be received in the future toward services rendered by WuXi. 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. 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, supply chain, and distribution. 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 March 31, 2022 and December 31, 2021. 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 March 31, 2022 and December 31, 2021, 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 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. 15 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 . In July 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. In August 2021, in connection with the closing of the IPO, the Company filed an amended and restated certificate of incorporation to, among other things: (i) increase the number of authorized shares of common stock from 150,000,000 shares to 1,000,000,000 shares, (ii) eliminate all references to the previously existing series of convertible preferred stock and (iii) authorize 10,000,000 shares of undesignated preferred stock that may be issued from time to time by the Company’s board of directors in one or more series. Upon issuance of each series of Preferred Stock, the Company assessed the embedded conversion and liquidation features of the securities 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 date of each series 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). 10. Common Stock The voting, d ividend 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 of 1933, as amended (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 March 31, 2022 and December 31, 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. 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, in July 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. In August 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 March 31, 2022, the Company had reserved 43,533,527 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). Treasury Stock In April and May 2021, the Company retired an aggregate of 22,600,000 shares of common stock held in treasury. Upon retirement, the shares were redesignated as authorized but unissued shares of the Company’s common stock. In November 2021, the Company repurchased 468,751 shares of unvested restricted common stock at the original purchase price upon a termination of service during the vesting period. As of December 31, 2021, the shares of common stock repurchased were recorded as treasury stock in the accompanying consolidated balance sheets and 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 insignificant. In February 2022, the Company repurchased 1,158,089 shares of unvested restricted common stock at the original purchase price upon a termination of service during the vesting period. The shares of common stock repurchased were recorded as treasury stock in the accompanying condensed consolidated balance sheets and 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 insignificant. 16 In March 2022, the Company retired an aggregate of 1,626,840 shares of common stock held in treasury. Upon retirement, the shares were redesignated as authorized but unissued shares of the Company’s common stock. Stock Split In July 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 In August 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 $ 327.5 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company. Upon the closing of the IPO, all of the shares of the Company’s convertible preferred stock then outstanding converted into 84,722,420 shares of common stock. Upon the conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock (at par value) and additional paid-in capital. 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. Prior to the IPO, 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 March 31, 2022, there were 12,102,733 shares authorized to be issued upon the exercise of outstanding stock option grants and no shares reserved for future issuance under the 2020 Plan. 17 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. On January 1, 2022, 5,539,145 shares of common stock were automatically added to the shares authorized for issuance under the 2021 Plan pursuant to the terms of the 2021 Plan. 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 March 31, 2022, there were 42,190,754 shares authorized to be issued, which includes 22,452,807 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. Prior to its IPO in August 2021, the Company had been a private company. Due to the proximity to the IPO, the Company continues to lack sufficient 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. The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock options granted : Three Months Ended March 31, Three Months Ended March 31, 2022 2021 Expected term (in years) 6.0 6.0 Expected volatility 72.3 % 73.5 % Risk-free interest rate 1.8 % 0.6 % Expected dividend yield — % — % Stock Option Activity The following table summarizes the Company’s stock option activity since December 31, 2021: Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value (in years) (in thousands) Outstanding at December 31, 2021 18,871,592 $ 10.15 9.3 $ 24,897 Granted 5,520,081 $ 6.56 Exercised ( 50,353 ) $ 0.94 Forfeited ( 4,603,373 ) $ 10.59 Outstanding at March 31, 2022 19,737,947 $ 9.07 9.2 $ 10,594 Vested and expected to vest at March 31, 2022 19,737,947 $ 9.07 9.2 $ 10,594 Options exercisable at March 31, 2022 2,394,616 $ 3.68 8.7 $ 4,209 The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2022 was $ 4.23 per share. 18 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair market value of the common stock for the options that were in the money at March 31, 2022 and December 31, 2021. The total intrinsic value of stock options exercised was $ 0.3 million for the three months ended March 31, 2022. Early Exercise of Stock Options into Restricted Stock The Company’s restricted stock activity during the three months ended March 31, 2022 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 December 31, 2021 3,082,175 Issued — Vested ( 266,858 ) Repurchased ( 1,158,089 ) Unvested restricted stock at March 31, 2022 1,657,228 Proceeds from the early exercise of stock options are recorded as an early-exercise liability on the condensed 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 March 31, 2022 and December 31, 2021 the liability related to the payments for unvested shares from early-exercised options was less than $ 0.1 million. Stock-Based Compensation Expense The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations and comprehensive loss (in thousands): Three Months Ended March 31, Three Months Ended March 31, 2022 2021 Research and development $ 3,153 $ 279 Selling, general and administrative ( 1,170 ) 308 $ 1,983 $ 587 In February 2022, Tillman U. Gerngross, Ph.D., resigned as Chief Executive Officer and President and as a member of the Company's board of directors. In accordance with his resignation, Dr. Gerngross's outstanding stock options were forfeited, resulting in a reversal of selling, general and administrative related stock-based compensation expense of approximately $ 4.6 million. As of March 31, 2022 , total unrecognized stock-based compensation expense related to unvested stock-based awards was $ 95.8 million, which is expected to be recognized over a weighted-average period of 3.2 years. 2021 Employee Stock Purchase Plan In July 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Employee Stock Purchase Plan (the ‘‘2021 ESPP’’), which became effective immediately prior to and contingent upon the execution of the underwriting agreement related to the Company’s IPO. A total of 1,342,773 shares of common stock were initially reserved for issuance under the 2021 ESPP. There were no shares issued under the 2021 ESPP as of March 31, 2022. The number of shares of common stock that may be issued under the 2021 ESPP will automatically increase on the first day of each calendar year, beginning on January 1, 2022 and continuing through January 1, 2031, by an amount equal to the lesser of (i) 1 % of the shares of common stock outstanding on the last day of the calendar month before the date of each automatic increase, (ii) 2,685,546 shares and (iii) an amount determined by the Company’s board of directors. The number of shares to be issued under the 2021 ESPP did not increase on January 1, 2022. 19 12. Income Taxes For the three months ended March 31, 2022 and 2021, 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 months ended March 31, 2022 and 2021, the Company contributed $ 0.2 million and less than $ 0.1 million, respectively, 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 March 31, Three Months Ended March 31, 2022 2021 Numerator: Net loss attributable to common stockholders $ ( 100,666 ) $ ( 38,700 ) Denominator: Weighted-average common shares outstanding, basic and diluted 107,869,570 — Net loss per share attributable to common stockholders, basic and diluted $ ( 0.93 ) $ — 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. Net loss per share data is not applicable for the three months ended March 31, 2021 as the Company had no shares of common stock outstanding for accounting purposes during that period. All of the 5,593,240 shares of common stock issued and outstanding as of March 31, 2021 were shares of unvested restricted common stock issued by the Company upon the early exercise of stock options granted in June 2020. As a result, such shares 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 the three months ended March 31, 2021. 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 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 Months Ended March 31, Three Months Ended March 31, 2022 2021 Convertible preferred stock (as converted to common stock) — 63,239,670 Stock options to purchase common stock 19,737,947 2,968,070 Unvested restricted common stock 1,657,228 5,593,240 21,395,175 71,800,980 15. Related Party Transactions Adimab participated in the Series B Preferred Stock financing and the Series C Preferred Stock financing by purchasing 44,076 and 128,064 shares of Series B Preferred Stock and Series C Preferred Stock, respectively, for an aggregate purchase price of $ 2.5 million and $ 10.0 million, respectively (see Note 9). 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). 20 During the three months ended March 31, 2022, the Company did no t recognize any IPR&D expense pursuant to the Adimab Assignment Agreement. During the three months ended March 31, 2021, the Company recognized $ 1.0 million as IPR&D expense in connection with milestones payable under the Adimab Assignment Agreement (see Note 7). During the three months ended March 31, 2022 and 2021, the Company recognized $ 0.3 million and $ 0.2 million of research and development expense, respectively, with respect to services performed by Adimab on the Company’s behalf under the Adimab Assignment Agreement (see Note 7). 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). During the three months ended March 31, 2022, the Company recognized $ 1.3 million of research and development expense related to the quarterly fee. During the three months ended March 31, 2022 , the Company recognized $ 0.4 million of research and development expense with respect to services performed by Adimab on the Company’s behalf under the Adimab Collaboration Agreement. As of March 31, 2022 and December 31, 2021, $ 2.0 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 March 31, 2022 and December 31, 2021, 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 Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on March 31, 2022 (as subsequently amended by Amendment No. 1 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 29, 2022, the “2021 Form 10-K”). 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 subsidiary. 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 differentiated products for the prevention and treatment of infectious disease. We are developing our lead product candidate, adintrevimab, 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 are leveraging our team’s collective expertise and capabilities to deliver adintrevimab to patients and to discover novel solutions to infectious diseases through internal research and collaborations. Adintrevimab is designed to be a potent, long-acting and broadly neutralizing antibody for both the prevention and treatment of COVID-19. We believe several key attributes combine to potentially differentiate adintrevimab, including breadth, potency, durability of protection, convenient intramuscular, or IM, administration, and potential for broad application across multiple indications, depending on the SARS-CoV-2 variant. Data from our Phase 1 healthy volunteer study ADG20-1-001 confirmed the extended half-life of adintrevimab, which we believe may allow for durable protection against COVID-19, depending on the variant. In February 2022, we expanded the Phase 1 study to evaluate safety and pharmacokinetics at higher doses. As of March 27, 2022, there were no study drug related adverse events, serious adverse events, injection-site reactions or hypersensitivity reactions reported across all dose levels evaluated. We are assessing adintrevimab in two separate Phase 2/3 clinical trials: our EVADE trial to evaluate adintrevimab for the prevention of COVID-19 and our STAMP trial to evaluate adintrevimab for the treatment of COVID-19. Our EVADE clinical trial is a global Phase 2/3 clinical trial evaluating adintrevimab as a prevention for COVID-19 in both the post-exposure and pre-exposure settings. Our STAMP trial is our global Phase 2/3 clinical trial evaluating adintrevimab as a treatment for COVID-19. Due to the emergence and global spread of the Omicron variant, against which adintrevimab has reduced in vitro neutralization potency compared to prior variants, enrollment in both EVADE and STAMP was paused on January 11, 2022, and preliminary safety and efficacy data were evaluated in pre-and post-Omicron populations (EVADE) and non-Omicron/Omicron populations (STAMP). In the primary analysis population, patients infected with or exposed to a non-Omicron variant, or the pre-Omicron group, adintrevimab met the primary objectives across all three indications, demonstrating statistically significant and clinically meaningful efficacy. In pre-exposure and post-exposure prophylaxis, adintrevimab was associated with 71% and 75% relative risk reductions compared to placebo, respectively, in the prevention of reverse transcription-polymerase chain reaction, or RT-PCR, confirmed symptomatic COVID-19. In an exploratory analysis of patients exposed to the Omicron variant, or the post-Omicron group, in pre-exposure prophylaxis, adintrevimab was associated with a clinically meaningful reduction in the risk of developing RT-PCR confirmed symptomatic COVID-19 compared with placebo. In treatment, adintrevimab was associated with a 66% relative risk reduction compared to placebo in the incidence COVID-19 related hospitalization or all cause death through Day 29 in the pre-Omicron group. In patients treated within three days of symptom onset, adintrevimab was associated with a reduced risk of COVID-19 hospitalization or death from any cause through Day 29 by 74% compared to placebo. A preliminary analysis of available safety data in each trial revealed a safety profile similar to that of placebo for adintrevimab. 22 The Omicron BA.2 variant, which has shown reduced in vitro susceptibility to monoclonal antibodies, has recently emerged as the current predominant variant of SARS-CoV-2 in the United States. Adintrevimab, which has demonstrated broadly neutralizing activity in vitro against SARS-CoV-2 variants of concern including Alpha, Beta, Delta, Delta Plus, Gamma and Omicron BA.1, has markedly reduced neutralization activity in vitro against the Omicron BA.2 variant. Based on feedback from the FDA regarding adintrevimab’s lack of neutralizing activity against the BA.2 variant, we are pausing the submission of an Emergency Use Authorization, or EUA, request. We intend to continue engaging with the FDA and monitor the evolution of SARS-CoV-2 and the in vitro activity of adintrevimab against predominant variants in the United States to determine the optimal timing for the planned EUA request. In addition we continue engaging with other health authorities outside of the United States on potential authorization pathways for adintrevimab. We are committed to advancing adintrevimab as a potential future therapeutic option in anticipation of the emergence of new variants. We are on-track to have more than one million doses of adintrevimab secured in 2022, in preparation of its potential utility as a prophylaxis and treatment option for COVID-19 in the future. We are also evaluating additional broadly neutralizing antibodies targeting the receptor binding domain, or RBD, as well as other subdomains within the spike protein for COVID-19. In addition, we plan to leverage our robust antibody discovery and development capabilities and our partnerships that together have enabled our expedited advancement of adintrevimab into clinical trials to develop therapeutic or preventative options for other infectious diseases, such as additional coronaviruses and influenza. We continue to evaluate product candidates for infectious diseases with high unmet medical need through in-licensing opportunities that may leverage our team’s expertise and capabilities. SARS-CoV-2 has given rise to a global pandemic that swept rapidly throughout the world in 2020. Of significant current concern is the continued emergence of a number of SARS-CoV-2 variants with increased transmissibility, pathogenicity, and/or the ability to evade neutralizing antibodies. In addition to the emergence of these variants, there are multiple factors that we believe contribute to the likelihood of COVID-19 becoming an endemic threat, including: (1) viral transmission before symptom onset; (2) uneven global rollout of vaccinations; (3) ongoing vaccine hesitancy; (4) limited duration of immunity conferred by both natural infection and vaccination; (5) limited vaccine efficacy against certain SARS-CoV-2 variants; (6) uncertain impact of vaccines on transmission; and (7) variable implementation of virus mitigation behaviors, such as wearing masks and social distancing. We also believe that future pandemics similar to the COVID-19 pandemic are likely because, in many parts of the world, humans live in close proximity to animal species harboring coronaviruses that are capable of infecting humans. Our vision is to discover, develop and commercialize differentiated products for the prevention and treatment of infectious diseases. To enable this vision, our current discovery efforts are focused on unique antibody-based product candidates that we optimize to improve breadth, potency, half-life, where applicable, and developability. Key elements that we believe differentiate our approach include: (1) recognition of the importance of and identification of broadly neutralizing antibodies; (2) industry-leading B cell mining, protein engineering and developability screening capabilities through our internal expertise and collaborations; and (3) reducing risk of clinical resistance. 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. In May 2021, we entered into a funded discovery agreement with Adimab focused on discovery efforts for new antibodies that may be effective against other coronaviruses and influenza, both of which have the potential to cause pandemics. In the event that Adimab discovers an antibody that is expected to meet certain product profiles developed by us, we will have the exclusive option to require Adimab to assign us its rights in any such antibody and to grant us certain licenses. In addition, we engage other third parties to perform ongoing research and development and other services on our behalf. 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 and executing arrangements with third parties for the manufacture of our product candidates and raising capital. We rely heavily on partnerships, external consultants and contract research organizations, or CROs, to conduct our discovery, 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 net proceeds of $464.7 million from sales of our preferred stock, and most recently, with net 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 $327.5 million, after deducting underwriting discounts and commissions and offering expenses payable by us. To date, we have not generated any revenue from any sources, including product sales or government supply contracts. 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. 23 Since our inception, we have incurred significant losses, including a net loss of $100.7 million for the three months ended March 31, 2022. As of March 31, 2022, we had an accumulated deficit of $392.8 million. We expect to continue to incur significant expenses and recognize 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. Our expenses could increase substantially in connection with our ongoing activities, as we: • continue to conduct our ongoing clinical trials of a dintrevimab , 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 discovery technologies; • validate our commercial-scale current good manufacturing practices, or cGMP, manufacturing process ; • manufacture material under cGMP at our contracted manufacturing facilities for clinical trials and potential EUA, regulatory approval and commercial sales ; • 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 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, including expenses related to corporate governance matters and stockholder proposals for our 2022 annual meeting of stockholders . 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 any of our product candidates for the 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. 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 and emergence of adintrevimab susceptible SARS-CoV-2 variants of concern, or VOCs , 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. 24 Based on our current operating plan, we believe that our existing cash and cash equivalents of $532.2 million as of March 31, 2022, will be sufficient to fund our operating expenses and capital expenditure requirements into the second half of 2024. 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 adintrevimab and other product candidates for the prevention and treatment of COVID-19. The severity of the COVID-19 pandemic and the continued emergence of VOCs (such as the widespread Omicron variant and its sublineages and the Delta variant), the availability, administration and acceptance of vaccines, monoclonal antibodies, antiviral agents and other therapeutic modalities, vaccine mandates by employers and/or local or national governments, 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, or CROs, contract development and manufacturing organizations, or CDMOs, and other third parties with which we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. To date, we have experienced some delays and disruptions in our development activities as a result of the COVID-19 pandemic. Some of our CROs, CDMOs and other service providers also continue to be impacted. We will continue to monitor developments as we address 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; • 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 collaborators, consultants, contractors and CROs, that conduct the discovery, 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 25 • 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 a dintrevimab . 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. Our research and development expenses could increase substantially in the near term as we advance a dintrevimab through clinical development on a global basis, pursue regulatory approval of a dintrevimab , 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 FDA 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 adintrevimab 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; • 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. 26 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 declaration by the U.S. Department of Health and Human Services of a federal public health emergency, or a Public Health Emergency, we will not be able to receive an EUA. The declaration of a Public Health Emergency was most recently renewed in April 2022 and may or may not be renewed again. 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 it is deemed probable that we will 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. Our selling, general and administrative expenses could increase 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 could 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 continue to 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 March 31, 2022, we have operated as a virtual company and maintain a corporate headquarters for general and administrative purposes only . Therefore, we do not incur material operating expenses for the rent, maintenance and insurance of facilities or for depreciation of fixed assets. Other Income (Expense), Net Other income (expense), net consists of interest income earned from our cash, cash equivalents and marketable securities and the net amortization or accretion of premiums and discounts related to our marketable securities. We expect our interest income to vary each reporting period depending on our average bank deposits, money market funds and investment balances during the period and market interest rates. Income Taxes Since our inception, we have not recorded any income tax expense or realized benefits for the net losses we have incurred or for the research and development tax credits generated in each period as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss, or NOL, carryforwards and tax credit carryforwards will not be realized. 27 Results of Operations Comparison of the three months ended March 31, 2022 and 2021 The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021: Three Months Ended March 31, Three Months Ended March 31, (in thousands) 2022 2021 Change Operating expenses: Research and development $ 92,035 $ 34,032 $ 58,003 Acquired in-process research and development — 1,000 (1,000 ) Selling, general and administrative 8,704 3,677 5,027 Total operating expenses 100,739 38,709 62,030 Loss from operations (100,739 ) (38,709 ) (62,030 ) Other income (expense): Other income (expense), net 73 9 64 Total other income (expense), net 73 9 64 Net loss $ (100,666 ) $ (38,700 ) $ (61,966 ) The following discussion presents the components of our expenses for the periods presented: Research and Development Expenses Three Months Ended March 31, Three Months Ended March 31, (in thousands) 2022 2021 Change Direct, external research and development expenses by program: Adintrevimab $ 77,583 $ 30,652 $ 46,931 Unallocated research and development expenses: Personnel-related costs 9,512 2,260 7,252 External discovery-related and other costs 4,940 1,120 3,820 Total research and development expenses $ 92,035 $ 34,032 $ 58,003 Research and development expenses were $92.0 million for the three months ended March 31, 2022, compared to $34.0 million for the three months ended March 31, 2021. The $58.0 million increase in research and development expenses was primarily due to the following: • The increase in direct costs related to our adintrevimab program of $46.9 million was primarily due to overall increases in our contract manufacturing and contract research expenses of $33.6 million related to the production of materials for use in our clinical trials and nonclinical studies for the adintrevimab program, as well as supply for use under a potential EUA for adintrevimab, procured from WuXi, our sole-source supplier of drug substance and drug product, and clinical trial expenses of $13.7 million related to ongoing activities for our clinical trials for the adintrevimab program, partially offset by lower costs due to a pause in trial enrollment during the three months ended March 31, 2022. These overall increases were offset by a decrease in other external research and development costs of $0.4 million. • Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were $6.3 million and stock-based compensation expense was $3.2 million for the three months ended March 31, 2022, compared to personnel-related costs of $2.0 million and stock-based compensation expense of $0.3 million for the three months ended March 31, 2021. The increase in personnel-related costs of $7.2 million was primarily due to the hiring of additional individuals to support the development of our product candidates, including an increase in stock-based compensation expense of $2.9 million. • The increase in external discovery-related and other costs of $3.8 million was primarily due to the $1.3 million quarterly fee under the Adimab Collaboration Agreement, which was entered into during the second quarter of 2021, $0.9 million related to services performed under the Research Collaboration and License Agreement with TSRI, $0.6 million with respect to services performed by Adimab on our behalf under the Adimab Assignment Agreement and the Adimab Collaboration Agreement, and $1.0 million in other external costs, including consulting services, insurance costs and software expenditures. Acquired In-Process Research and Development Expenses There was no IPR&D expense recognized during the three months ended March 31, 2022. 28 Acquired IPR&D expenses of $1.0 million for the three months ended March 31, 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 February 2021 upon the dosing of the first patient in a Phase 1 clinical trial evaluating adintrevimab. 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 the milestone achievement became probable. Selling, General and Administrative Expenses Three Months Ended March 31, Three Months Ended March 31, (in thousands) 2022 2021 Change Personnel-related costs $ 1,643 $ 1,494 $ 149 Professional and consultant fees 6,661 1,969 4,692 Other 400 214 186 Total selling, general and administrative expenses $ 8,704 $ 3,677 $ 5,027 Selling, general and administrative expenses were $8.7 million for the three months ended March 31, 2022, compared to $3.7 million for the three months ended March 31, 2021. The $5.0 million increase in selling, general and administrative expenses was primarily due to the following: • Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were $2.8 million and stock-based compensation expense was a credit of $1.2 million for the three months ended March 31, 2022, compared to personnel-related costs of $1.2 million and stock-based compensation expense of $0.3 million for the three months ended March 31, 2021. The increase in personnel-related costs of $0.1 million was primarily due to the hiring of additional individuals to support our operations as we began operating as a public company, partially offset by the reversal of stock-based compensation expense related to the forfeiture of stock options in conjunction with the resignation of our former Chief Executive Office and President. • The increase in professional services and consultant fees of $4.7 million was primarily attributable to costs incurred as we began operating as a public company, including director and officer insurance premiums, and other fees. • Other costs remained relatively consistent between periods. Other Income (Expense), Net Other income (expense), net was less than $0.1 million for the three months ended March 31, 2022, consisting primarily of interest earned on invested cash balances. There was no other income (expense), net recognized during the three months ended March 31, 2021. 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 or government supply contracts, and have incurred significant operating losses and negative cash flows from operations. We expect to incur substantial expenses and operating losses for the foreseeable future as we advance the clinical development of our product candidates. To date, we have financed our operations with net proceeds of $464.7 million from sales of our preferred stock, and most recently, with net proceeds from our IPO in August 2021, in 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 $327.5 million, after deducting underwriting discounts and commissions and offering expenses payable by us. As of March 31, 2022, we had cash and cash equivalents of $532.2 million. Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Three Months Ended March 31, Three Months Ended March 31, (in thousands) 2022 2021 Net cash used in operating activities $ (59,049 ) $ (23,741 ) Net cash provided by investing activities 49,000 — Net cash provided by financing activities 45 — Net decrease in cash and cash equivalents $ (10,004 ) $ (23,741 ) 29 Operating Activities During the three months ended March 31, 2022, operating activities used $59.0 million of cash, primarily due to our net loss of $100.7 million, partially offset by non-cash charges of $2.3 million. Net cash provided by changes in our operating assets and liabilities consisted of a $20.3 million increase in accrued expenses and a $12.9 million increase in accounts payable, partially offset by a $3.2 million decrease in prepaid expenses and other current assets and a $3.1 million decrease in other non-current assets. The increases in accounts payable and accrued expenses were primarily due to increased external costs associated with our research and development activities, including clinical trials and clinical and commercial manufacturing . During the three months ended March 31, 2021, operating activities used $23.7 million of cash, primarily resulting from our net loss of $38.7 million, partially offset by non-cash charges of $0.6 million and net cash provided by changes in our operating assets and liabilities of $14.4 million. Net cash provided by changes in our operating assets and liabilities for the three months ended March 31, 2021 consisted primarily of a $12.4 million increase in accrued expenses and a $3.2 million increase in accounts payable, both partially offset by a $1.2 million increase in prepaid expenses and other current assets. The increases in accounts payable, accrued expenses and prepaid expenses were primarily due to increased external costs associated with our research and development activities, including clinical trials and manufacturing. In all periods presented, other changes in prepaid expenses and other current assets, accounts payable, accrued expenses and other liabilities not described above were generally due to growth in our business, the advancement of our research programs, and the timing of vendor invoicing and payments. Investing Activities Net cash provided by investing activities during the three months ended March 31, 2022 consisted of $49.0 million in maturities of marketable securities. We had no cash used in or provided by investing activities for the three months ended March 31, 2021. Financing Activities Net cash provided by financing activities during the three months ended March 31, 2022 primarily consisted of less than $0.1 million from exercises of stock options. We had no cash used in or provided by financing activities for the three months ended March 31, 2021. Funding Requirements Our expenses could increase 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, including any associated manufacturing activities, and potential commercialization efforts . 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 adintrevimab and our other product candidates; • the scope, progress, results and costs of discovery, non-clinical studies, preclinical development, laboratory testing and clinical trials for adintrevimab 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; • the scope, progress, results and costs of manufacturing and validation activities associated with adintrevimab and with the development and manufacturing of 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 clinical and commercial supply of our potential future 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; 30 • 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 May 13, 2022, we believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2024. 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, your ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences and anti-dilution protections that adversely affect your rights as a common stockholder. 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. Contractual Obligations and Commitments During the three months ended March 31, 2022, there were no material changes to our contractual obligations from those described in the 2021 Form 10-K. 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 and estimates 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 2021 Form 10-K. 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 and estimates from those described in the 2021 Form 10-K, except as disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. 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. 31 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 Item 3 . Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item .