What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 331 added, 201 removed, 855 unchanged (38% of the section changed)

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10,000,000 shares

authorized and no shares issued and outstanding at March 31, 2023

authorized and no shares issued and outstanding at June 30, 2023

and December 31, 2022

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1,000,000,000 shares authorized,

109,316,226 shares issued and outstanding at March 31, 2023;

109,570,333 shares issued and outstanding at June 30, 2023;

109,044,046 shares issued and outstanding at December 31, 2022

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(In thousands, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses:

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Weighted-average common shares outstanding, basic and diluted

(1) Includes related-party amounts of $ 2,960 and $ 2,000 for the three months ended March 31, 2023 and 2022, respectively (see Note 15).

(2) Includes related-party amounts of $ 375 and $ 0 for the three months ended March 31, 2023 and 2022, respectively (see Note 15).

(1) Includes related-party amounts of $ 2,258 and $ 5,218 for the three and six months ended June 30, 2023 , respectively, and $ 2,285 and $ 4,285 for the three and six months ended June 30, 2022 , respectively (see Note 15).

(2) Includes related-party amounts of $ 0 and $ 375 for the three and six months ended June 30, 2023 , respectively, and includes no related-party amounts for both the three and six months ended June 30, 2022 (see Note 15).

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

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Balances at March 31, 2022

Exercise of stock options

Repurchase of unvested restricted common stock

Stock-based compensation expense

Balances at June 30, 2022

Treasury Stock

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Balances at March 31, 2023

Vesting of restricted common stock from early-exercised options

Exercise of stock options

Repurchase of unvested restricted common stock

Retirement of treasury stock

Stock-based compensation expense

Issuance of common stock under the employee stock purchase plan

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

Balances at June 30, 2023

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

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(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

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Cash flows from investing activities:

Purchases of marketable securities

Maturities of marketable securities

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Operating lease right-of-use asset recognized upon adoption of ASC 842

Operating lease right-of-use asset recognized under ASC 842

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

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The Company is generating a robust pipeline of product candidates which could be used in prevention or treatment of serious viral diseases, starting with COVID-19 and expanding into influenza and other high-need indications.

In March 2023, the Company announced dosing of the first participants in a Phase 1 clinical trial of VYD222, a monoclonal antibody (“mAb”) candidate for prevention of COVID-19.

In May 2023, the Company completed the dosing of all participants in the Phase 1 clinical trial.

The Phase 1 randomized, blinded, placebo-controlled, dose-ranging trial, which is being conducted in Australia, will evaluate the safety, pharmacokinetics, tolerability, and serum virus neutralizing activity of VYD222 in healthy adult volunteers.

The dose-ranging trial will evaluate three different doses, each administered as a single IV push.

All doses are designed to provide durability in the face of viral evolution and flexibility at the time of regulatory submission.

Additionally, in April 2023, the Company announced that the U.S.

Food and Drug Administration (“FDA”) cleared its Investigational New Drug (“IND”) application for VYD222.

In June and July 2023, the Company announced positive initial data from an ongoing Phase 1 clinical trial of VYD222, a monoclonal antibody (“mAb”) candidate in development for the prevention of symptomatic COVID-19 in vulnerable populations, such as immunocompromised people.

In May 2023, the Company completed the dosing of all participants in the Phase 1 clinical trial of VYD222.

Initial Phase 1 data announced in June and July 2023 showed that a single administration of VYD222 was generally well-tolerated at all three dose levels tested with no serious adverse events having been reported.

Serum samples from all dose levels tested in the Phase 1 clinical trial showed robust neutralization activity against Omicron XBB.1.5 at Day 7.

In June 2023, the Company also announced that it had reached general alignment with the U.S.

Food and Drug Administration (the “FDA”) on a pathway to potential emergency use authorization (“EUA”) for VYD222 and anticipated follow-on mAb candidates designed to prevent symptomatic COVID-19.

The Company plans to leverage this pathway in the U.S., and in August 2023, the Company announced its plans to initiate a pivotal clinical trial of VYD222, referred to as the CANOPY trial, using a surrogate endpoint to generate the clinical data needed to enable a potential EUA submission for the prevention of symptomatic COVID-19.

VYD222 is the Company’s second mAb candidate to enter clinical testing.

VYD222 has demonstrated in vitro neutralizing activity against prior and current SARS-CoV-2 variants of concern (“VoCs”), including Omicron sublineages up to and through XBB.1.5.

VYD222 was designed for broad activity and has demonstrated in vitro neutralizing activity against prior and current SARS-CoV-2 variants of concern (“VoCs”), including Omicron sublineages up to and through XBB.1.5.

VYD222 was engineered from adintrevimab, the Company’s investigational mAb that has a robust safety data package and demonstrated clinically meaningful results in global Phase 2/3 clinical trials for both the prevention and treatment of COVID-19.

Beyond VYD222, the Company plans to leverage its expanded laboratory capabilities and integrated discovery platform to produce additional candidates designed to optimize their ability to stay ahead of the evolving SARS-CoV-2 virus.

Beyond VYD222, the Company plans to leverage its expanded laboratory capabilities and integrated discovery platform to produce additional candidates optimized to stay ahead of the evolving SARS-CoV-2 virus.

In addition, the Company continues to engage with regulatory agencies with the goal of streamlining the development of novel antibodies to protect immunocompromised and other high-risk populations against the evolving SARS-CoV-2 virus.

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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 initial public offering (“IPO”).

The Company has incurred losses and negative cash flows from operations since its inception, including a net loss of $ 35.3 million for the three months ended March 31, 2023.

As of March 31, 2023, the Company had an accumulated deficit of $ 568.7 million.

The Company has primarily funded its operations with proceeds from sales of convertible preferred stock and proceeds from the Company’s initial public offering

(“IPO”).

The Company has incurred losses and negative cash flows from operations since its inception, including a net loss of $ 85.5 million for the six months ended June 30, 2023.

As of June 30, 2023, the Company had an accumulated deficit of $ 619.0 million.

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

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Impact of COVID-19 on the Company's Operations

The full impact of the COVID-19 pandemic and the disease continues to evolve and change as of the date of this Quarterly Report on Form 10-Q, and such impact will directly affect the potential commercial prospects of VYD222 and other product candidates for the prevention and treatment of COVID-19.

The severity of the COVID-19 pandemic, the evolution of the disease and the continued emergence of VoCs, and the availability, administration and acceptance of vaccines, mAbs, antiviral agents and other therapeutic modalities 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 authorized or approved.

Similarly, it is not possible to determine the scale and rate of economic recovery from the pandemic, supply chain disruptions, and labor availability and costs, or the impact of other indirect factors that may be attributable to the pandemic.

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 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, clinical 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.

COVID-19 continues to present public health and economic challenges around the world.

The full impact of the COVID-19 pandemic remains uncertain, and such impact may directly or indirectly affect the potential commercial prospects of VYD222 and other product candidates for the prevention and treatment of COVID-19.

The evolution of the disease and the continued emergence of VoCs, and the availability, administration and acceptance of vaccines, mAbs, antiviral agents, and other therapeutic modalities may affect the design and enrollment of the Company’s clinical trials, the potential regulatory authorization or approval of the Company’s product candidates, the availability of funding and partnership opportunities, and the commercialization of the Company’s product candidates, if authorized or approved.

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

It is not possible to determine the scale and rate of economic recovery from the COVID-19 pandemic, supply chain disruptions, and labor availability and costs, or the impact of other indirect factors that may be attributable to the pandemic.

The ultimate extent to which COVID-19 directly or indirectly impacts the Company’s business, financial condition, operations, and product development timelines and plans remains uncertain and will depend on future developments, including the duration and spread of outbreaks and the continued emergence of VoCs, actions taken to prevent or treat COVID-19, and its economic impact on local, regional, national and international markets.

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.

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.

Some of the Company’s clinical research organizations (“CROs”), contract development and manufacturing organizations (“CDMOs”) and other service providers have also been impacted.

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

Additionally, if the financial markets and/or the overall economy are impacted for an extended period as a result of the COVID-19 pandemic or otherwise, the Company’s results and operations may be materially adversely affected and may affect the Company’s ability to raise capital.

Basis of Presentation

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Summary of Significant Accounting Policies

As of March 31, 2023, the Company’s significant accounting policies and estimates, which are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the U.S.

As of June 30, 2023, the Company’s significant accounting policies and estimates, which are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 23, 2023 (the “2022 Form 10-K”) have not changed, except as discussed below.

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ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets.

In April 2019, the FASB issued clarification to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, or ASU 2016-13.

Financial Instruments, or ASU 2016-13.

The guidance is effective for fiscal years beginning after December 15, 2022.

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Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of March 31, 2023, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022, the condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022 and the condensed consolidated statements of stockholders’

equity (deficit) for the three months ended March 31, 2023 and 2022 are unaudited.

The accompanying unaudited condensed consolidated financial statements as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 have been prepared by the Company pursuant to the rules and regulations of the SEC for interim financial statements.

The accompanying condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2023 and 2022, the condensed consolidated statements of cash flows for the six months ended June 30, 2023 and 2022 and the condensed consolidated statements of stockholders’

equity (deficit) for the three and six months ended June 30, 2023 and 2022 are unaudited.

The accompanying unaudited condensed consolidated financial statements as of June 30, 2023, and for the three and six months ended June 30, 2023 and 2022, have been prepared by the Company pursuant to the rules and regulations of the SEC for interim financial statements.

The accompanying condensed consolidated balance sheet as of December 31, 2022 was derived from audited financial statements, but does not include all disclosures required by U.S.

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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, 2022, which are included in the Company’s 2022 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, 2023 and December 31, 2022, the condensed consolidated results of operations for the three months ended March 31, 2023 and 2022, the condensed consolidated cash flows for the three months ended March 31, 2023 and 2022 and changes in stockholders’

equity (deficit) for the three months ended March 31, 2023 and 2022 have been made.

The Company’s condensed consolidated results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2023 .

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 June 30, 2023 and December 31, 2022, the condensed consolidated results of operations for the three and six months ended June 30, 2023 and 2022, the condensed consolidated cash flows for the six months ended June 30, 2023 and 2022 and changes in stockholders’

equity (deficit) for the six months ended June 30, 2023 and 2022 have been made.

The Company’s condensed consolidated results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2023 .

Use of Estimates

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This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies.

There have been no new accounting pronouncements or changes to accounting pronouncements that could be expected to materially impact the Company’s unaudited condensed consolidated financial statements during the three months ended March 31, 2023, as compared to the recent accounting pronouncements described in Note 2 of the Company’s condensed consolidated financial statements included in its 2022 Form 10-K.

There have been no new accounting pronouncements or changes to accounting pronouncements that could be expected to materially impact the Company’s unaudited condensed consolidated financial statements during the six months ended June 30, 2023 , as compared to the recent accounting pronouncements described in Note 2 of the Company’s condensed consolidated financial statements included in its 2022 Form 10-K.

Marketable Securities

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

The following tables summarize the gross unrealized gains, unrealized losses and credit losses of the Company’s marketable securities as of March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023

The following tables summarize the gross unrealized gains, unrealized losses and credit losses of the Company’s marketable securities as of June 30, 2023 and December 31, 2022 (in thousands):

June 30, 2023

Amortized Cost

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Total financial assets

The Company did not record any charges for credit-related impairments for its available-for-sale securities during the three months ended March 31, 2023.

No available-for-sale marketable securities held as of March 31, 2023 or December 31, 2022 had remaining maturities greater than twelve months.

The Company did not record any charges for credit-related impairments for its available-for-sale securities during the three and six months ended June 30, 2023.

No available-for-sale marketable securities held as of June 30, 2023 or December 31, 2022 had remaining maturities greater than twelve months.

Fair Value Measurements

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Fair Value Measurements at

March 31, 2023:

June 30, 2023:

Cash equivalents:

Money market funds

Federal agency securities

Marketable securities:

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Treasury securities were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy.

The Company’s marketable securities also consisted of federal agency securities, which were valued based on Level 2 inputs.

In determining the fair value of its federal agency securities, the Company relied on quoted prices for similar securities in active markets

or other inputs that are observable or can be corroborated by observable market data.

The Company’s cash equivalents and marketable securities also consisted of federal agency securities, which were valued based on Level 2 inputs.

In determining the fair value of its federal agency securities, the Company relied on quoted prices for similar securities in active markets or other inputs that are observable or can be corroborated by observable market data.

Since federal agency securities typically do not trade as U.S.

government agency securities and no exchange exists to price such investments, they are recognized as Level 2 assets.

There were no changes to the valuation methods during the three months ended March 31, 2023 or 2022.

There were no changes to the valuation methods during the three and six months ended June 30, 2023 or 2022.

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, 2023 or 2022.

There were no transfers into or out of Level 1, Level 2 or Level 3 fair value measurements during the three and six months ended June 30, 2023 or 2022.

Prepaid Expenses and Other Current Assets

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

During the three months ended March 31, 2023 , the Company did no t recognize any research and development expense with respect to services performed by Adimab on the Company's behalf under the Adimab Assignment Agreement.

During the three months ended March 31, 2022, the Company recognized $ 0.3 million of research and development expense with respect to services performed by Adimab on the Company’s behalf under the Adimab Assignment Agreement.

During the three and six months ended June 30, 2023 , the Company did no t recognize any research and development expense with respect to services performed by Adimab on the Company's behalf under the Adimab Assignment Agreement.

During the three and six months ended June 30, 2022 , the Company recognized $ 0.2 million and $ 0.5 million, respectively, of research and development expense with respect to services performed by Adimab on the Company’s behalf under the Adimab Assignment Agreement.

Please refer to Note 15 for additional information.

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 , of which $ 7.5 million had been paid as of March 31, 2023;

The maximum aggregate amount of milestone payments payable under the agreement for any and all Products is $ 24.6 million , of which $ 7.9 million had been paid as of June 30, 2023;

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

In March 2023, the Company achieved the first specified milestone for the second product candidate under the Adimab Assignment Agreement upon dosing of the first subject in a Phase 1 clinical trial evaluating VYD222, which obligated the Company to make a $ 0.4 million milestone payment to Adimab and was recognized as acquired in-process research and development (“IPR&D”) expense during the three months ended March 31, 2023.

During the three months ended March 31, 2022, the Company did not recognize any IPR&D expense with respect to contingent consideration payable under the Adimab Assignment Agreement.

During the three and six months ended June 30, 2023, the Company recognized $ 0 and $ 0.4 million, respectively, of in-process research and development (“IPR&D”) expense with respect to contingent consideration payable under the Adimab Assignment Agreement.

During the three and six months ended June 30, 2022, the Company did not recognize any IPR&D expense in connection with contingent consideration payable under the Adimab Assignment Agreement.

The next potential milestone under the Adimab Assignment Agreement is a low single-digit million-dollar milestone related to dosing of the first subject in a pivotal trial evaluating VYD222, which was not considered probable under U.S.

GAAP and therefore, no expense was recognized as of March 31, 2023.

GAAP and therefore, no expense was recognized as of June 30, 2023.

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

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

Except for milestone payments of $ 7.5 million incurred through December 31, 2022 and a $ 0.4 million milestone payment incurred during the three months ended March 31, 2023, no other milestone, royalty or other contingent payments had become due to Adimab through March 31, 2023.

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

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

During both the three months ended March 31, 2023 and 2022, the Company recognized $ 1.3 million of research and development expense related to the quarterly fee.

During the three and six months ended June 30, 2023 , the Company recognized $ 1.3 million and $ 2.6 million, respectively, of research and development expense related to the quarterly fee.

During the three and six months ended June 30, 2022 , the Company recognized $ 1.3 million and $ 2.6 million, respectively, of research and development expense related to the quarterly fee.

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

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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, 2023 and 2022, the Company recognized $ 0.2 million and $ 0.4 million, respectively, of research and development expense with respect to services performed by Adimab on the Company's behalf under the Adimab Collaboration Agreement.

During both the three months ended March 31, 2023 and 2022, the Company did no t recognize any IPR&D expense related to drug delivery fees, optimization completion fees or option exercise fees.

During the three and six months ended June 30, 2023 , the Company recognized $ 0.2 million and $ 0.4 million, respectively, of research and development expense with respect to services performed by Adimab on the Company's behalf under the Adimab Collaboration Agreement.

During the three and six months ended June 30, 2022, the Company recognized $ 0.6 million and $ 1.0 million, respectively, of research and development expense with respect to services performed by Adimab on the Company’s behalf under the Adimab Collaboration Agreement.

During both the three and six months ended June 30, 2023 and 2022, the Company did no t recognize any IPR&D expense related to drug delivery fees, optimization completion fees or option exercise fees.

During the three and six months ended June 30, 2023, the Company did not recognize any research and development expense related to a drug discovery fee.

During the three and six months ended June 30, 2022, the Company recognized $ 0.2 million of research and development expense related to a drug delivery fee.

Please refer to Note 15 for additional information.

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The next potential milestone under the Adimab Collaboration Agreement is a low single-digit million-dollar milestone related to dosing of the first subject in a Phase 1 trial, which was not considered probable under U.S.

GAAP and therefore, no expense was recognized as of March 31, 2023.

GAAP and therefore, no expense was recognized as of June 30, 2023.

The Company is also obligated to pay Adimab royalties of a mid-single-digit percentage based on net sales of any product under the Adimab Collaboration Agreement, subject to reductions for third-party licenses.

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

Through March 31, 2023, the Company had not paid any royalties to Adimab under the Adimab Collaboration Agreement.

Through June 30, 2023, the Company had not paid any royalties to Adimab under the Adimab Collaboration Agreement.

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

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The next potential milestone under the Adimab Platform Transfer Agreement is a mid-six-digit dollar milestone related to the start of IND-enabling toxicology studies, which was not considered probable under U.S.

GAAP and therefore, no expense was recognized as of March 31, 2023.

GAAP and therefore, no expense was recognized as of June 30, 2023.

In addition, the Company is obligated to pay Adimab royalties of a low single-digit percentage based on net sales of products containing an antibody discovered, engineered or optimized using Adimab’s platform technology, once commercialized.

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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 a program antibody patent for covering the program antibody contained in such product in such country.

Through March 31, 2023, the Company had not paid any royalties to Adimab under the Adimab Platform Transfer Agreement.

Through June 30, 2023, the Company had not paid any royalties to Adimab under the Adimab Platform Transfer Agreement.

The Company may terminate the Adimab Platform Transfer Agreement at any time upon advance written notice to Adimab.

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In December 2020, the Company recognized an upfront fee of $ 0.2 million upon completion of cell bank generation for the first Licensed Cell Line created under the Cell Line License Agreement.

In February 2023, the Company recognized license fees of $ 0.4 million upon completion of cell bank generation for the additional Licensed Cell Lines created under the Cell Line License Agreement.

In February 2023 and June 2023, the Company recognized license fees of $ 0.4 million and $ 0.2 million, respectively, upon completion of cell bank generation for the additional Licensed Cell Lines created under the Cell Line License Agreement.

The Company is also obligated to pay royalties in the range of less than 1.0 % to WuXi Biologics based on net sales of any Licensed Products manufactured by the Company or a third party on its behalf.

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

Through March 31, 2023 , no royalties had become due to WuXi Biologics.

Through June 30, 2023 , no royalties had become due to WuXi Biologics.

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

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The Cell Line License Agreement 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 $ 0.4 million of license fees was recognized as IPR&D expense during the three months ended March 31, 2023.

Therefore, the $ 0.2 million and $ 0.6 million of license fees was recognized as IPR&D expense during the three and six months ended June 30, 2023, respectively.

Research Collaboration and License Agreement with The Scripps Research Institute

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Amounts incurred for services performed by TSRI under the Research Agreement were expensed to research and development expense as the services were rendered.

During the three months ended March 31, 2023, the Company did no t recognize any research and development expense with respect to services performed under the Research Agreement as it was terminated during 2022.

During the three months ended March 31, 2022, the Company recognized $ 0.9 million of research and development expense with respect to services performed under the Research Agreement.

During the three and six months ended June 30, 2023 , the Company did no t recognize any research and development expense with respect to services performed under the Research Agreement as it was terminated during 2022.

During the three and six months ended June 30, 2022 , the Company recognized $ 0.8 million and $ 1.7 million, respectively, of research and development expense with respect to services performed under the Research Agreement.

Population Health Partners, L.P

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On the PHP Effective Date, the Company and PHP entered into the first work order under the PHP MSA (the “PHP Work Order”), pursuant to which PHP agreed to advise and counsel the Company regarding clinical development and regulatory matters with respect to the Company’s product candidates.

The PHP Work Order is effective for six months from the Effective Date and may be extended by written agreement of the Company and PHP.

The PHP Work Order was effective for six months from the PHP Effective Date and terminated in accordance with its terms in May 2023.

The PHP MSA contains customary confidentiality provisions and representations and warranties of the parties, as well as mutual non-solicitation of certain employees during the term of the PHP MSA and for a period of one year thereafter.

As compensation for the services and deliverables under the PHP Work Order, the Company shall pay PHP a cash fee of $ 0.5 million per month during the term of the PHP Work Order for an aggregate fee of $ 3.0 million (the “Aggregate Fee”).

In the event that (i) the Company terminates the PHP Work Order for any reason other than material breach by PHP or (ii) PHP terminates the PHP Work Order due to material breach by the Company, in each case, pursuant to the terms of the PHP MSA, the Company would be required to pay PHP the balance of the Aggregate Fee as of the date the PHP Work Order is terminated.

The cash fee is subject to change if the parties extend the term of the PHP Work Order in accordance with the terms thereof.

During the three months ended March 31, 2023 , the Company recognized $ 1.5 million of research and development expense related to the cash compensation paid to PHP.

As compensation for the services and deliverables under the PHP Work Order, the Company paid PHP a cash fee of $ 0.5 million per month during the term of the PHP Work Order for an aggregate fee of $ 3.0 million (the “Aggregate Fee”).

During the three and six months ended June 30, 2023, the Company recognized $ 0.8 million and $ 2.3 million, respectively, of research and development expense related to the cash compensation paid to PHP.

Please refer to Note 15 for additional information.

In addition to the cash compensation, on the PHP Effective Date, the Company issued a warrant to purchase shares of the Company’s common stock to PHP (the “PHP Warrant”).

The exercise price of the PHP Warrant is $ 3.48 per share of the Company’s common stock, which is equal to the Nasdaq official closing price (as defined in the PHP Warrant) of a share of the Company’s common stock on the trading day immediately prior to the PHP Effective Date.

The exercise price of the PHP Warrant is $ 3.48 per share of the Company’s

common stock, which is equal to the Nasdaq official closing price (as defined in the PHP Warrant) of a share of the Company’s common stock on the trading day immediately prior to the PHP Effective Date.

The PHP Warrant is exercisable for up to an aggregate of 6,824,712 shares of the Company’s common stock, and vests in three separate tranches as follows:

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For the Three Months

Ended March 31,

Ended June 30,

For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

For The Six Months

Ended June 30,

Operating lease cost

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Operating cash flows related to operating leases

Future minimum lease payments under the noncancelable leases as of March 31, 2023 was as follows (in thousands):

Future minimum lease payments under the noncancelable leases as of June 30, 2023 was as follows (in thousands):

Year Ending December 31,

Operating Lease

2023 (excluding the three months ended March 31, 2023)

2023 (excluding the six months ended June 30, 2023)

Total lease payments

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Present value of operating lease liability

As of March 31, 2023, the Company’s operating leases were measured using a weighted-average incremental borrowing rate of 6.0 % over a weighted-average remaining lease term of 2.3 years.

As of June 30, 2023 , the Company’s operating leases were measured using a weighted-average incremental borrowing rate of 6.0 % over a weighted-average remaining lease term of 2.2 years.

As of June 30, 2022 , the Company’s operating lease was measured using a weighted-average incremental borrowing rate of 6.0 % over a weighted average remaining lease term of 3.2 years.

The total operating liabilities are presented on the Company’s condensed consolidated balance sheet based on maturity dates.

$1.6 million of the total operating liabilities are classified under “operating lease liabilities, current”

$ 1.6 million of the total operating liabilities are classified under “

operating lease liabilities, current”

for the portion due within twelve months, and $ 1.3 million is classified under “operating lease liabilities, non-current”.

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Concurrently with the PHP MSA, the Company entered into the PHP Work Order, pursuant to which PHP agreed to advise and counsel the Company regarding clinical development and regulatory matters with respect to its product candidates.

The PHP Work Order is effective for six months from November 2022 and may be extended by written agreement of the Company and PHP.

As compensation for the services and deliverables under the PHP Work Order, the Company is obligated to pay PHP a cash fee of $ 0.5 million per month during the term of the PHP Work Order for an Aggregate Fee of $ 3.0 million.

The cash fee is subject to change if the parties extend the term of the PHP Work Order in accordance with the terms thereof.

The PHP Work Order was effective for six months from November 2022 and terminated in accordance with its terms in May 2023.

As compensation for the services and deliverables under the PHP Work Order, the Company paid PHP a cash fee of $ 0.5 million per month during the term of the PHP Work Order for an Aggregate Fee of $ 3.0 million.

Clinical and Manufacturing Agreements

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In November 2022, WuXi Biologics reassigned the remaining contractually binding adintrevimab drug substance batches under the Commercial Manufacturing Agreement to contractually binding NVD200 drug substance batches under its Clinical Master Services Agreement.

During the three months ended March 31, 2023, WuXi Biologics reassigned the remaining contractually binding NVD200 drug substance batches to VYD222 drug substance batches.

During the three months ended March 31, 2023, the remaining amount of the low eight-figure credit was applied to WuXi Biologics services as a reduction of research and development expenses and a reduction of accounts payable.

As of March 31, 2023, the total remaining cost of contractually binding VYD222 drug substance batches to be manufactured under the Clinical Master Services Agreement was $ 15.1 million, which is expected to be incurred and paid in 2023.

In March 2023, WuXi Biologics reassigned the remaining contractually binding NVD200 drug substance batches to VYD222 drug substance batches.

In March 2023, the remaining amount of the low eight-figure credit was applied to WuXi Biologics services as a reduction of research and development expenses and a reduction of accounts payable.

As of June 30, 2023, the total remaining cost of contractually binding VYD222 drug substance batches to be manufactured under the Clinical Master Services Agreement was less than $ 0.1 million, which is expected to be incurred and paid in 2023.

As of June 30, 2023, $ 8.9 million related to the contractually binding VYD222 drug substance batches was included in accounts payable and accrued expenses, which is expected to be paid in the second half of 2023.

In June 2023, the Company committed to a noncancelable purchase obligation related to the procurement of resin for future use in VYD222 drug substance batches under the Commercial Manufacturing Agreement.

The total costs of contractually binding resin to be incurred by the Company is $ 10.4 million.

In July 2023, the Company committed to a noncancelable purchase obligation related to the procurement of materials to be used in VYD222 drug substance and drug product batches under the Commercial Manufacturing Agreement.

The total costs of contractually binding materials to be incurred by the Company is $ 4.3 million.

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

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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.

Until regulatory approval and future economic benefit is probable, the Company will continue to expense costs related to batches manufactured under the Commercial Manufacturing Agreement.

Other Contracts

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These contracts do not contain any material minimum purchase commitments.

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

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, 2023 and December 31, 2022.

The termination fees were not probable of payment as of June 30, 2023 and December 31, 2022.

Legal Proceedings

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fees, expert fees, and other costs.

The court appointed lead plaintiffs for the action on June 28, 2023, and has set an August 23, 2023 deadline for lead plaintiffs to file an amended complaint.

The Company believes that is has strong defenses and it intends to vigorously defend against this action.

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Additionally, the Company received a request from the SEC, dated March 22, 2023, for documents and information concerning, among other matters, the Company’s testing and analysis of the efficacy of ADG20 against Omicron and other COVID-19 variants, its public statements regarding the potential use of ADG20 against the Omicron variant, and related communications with investors and the media.

The Company intends to cooperate fully with this fact-finding inquiry.

By letter dated August 9, 2023, the SEC notified the Company that the SEC had concluded its investigation and does not intend to recommend any action against the Company.

Indemnification Agreements

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Shares Reserved for Future Issuance

As of March 31, 2023 , the Company had reserved 43,892,474 shares of common stock for the exercise of outstanding stock options and the issuance of awards available for grant under the Company’s 2020 Equity Incentive Plan, 2021 Equity Incentive Plan and 2021 Employee Stock Purchase Plan (see Note 11).

As of June 30, 2023 , the Company had reserved 43,638,367 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).

Shelf Registration Statement

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

In May 2023, the Company repurchased 46,600 shares of unvested restricted common stock at the original purchase price upon a termination of service of an employee during the vesting period.

The shares of common stock repurchased were recorded as treasury stock.

The fair value of the repurchased common stock was insignificant.

In June 2023, the Company retired the 46,600 shares of treasury stock.

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

Stock-Based Compensation

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

As of March 31, 2023, there were 9,097,011 shares authorized to be issued upon the exercise of outstanding stock option grants and no shares reserved for future issuance under the 2020 Plan.

As of June 30, 2023, there were 6,742,631 shares authorized to be issued upon the exercise of outstanding stock option grants and no shares reserved for future issuance under the 2020 Plan.

2021 Equity Incentive Plan

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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, 2023 , there was an aggregate of 42,719,001 shares authorized to be issued under the 2020 Plan and the 2021 Plan, which includes 9,097,011 and 14,786,771 shares authorized to be issued upon the exercise of outstanding stock option grants from the 2020 Plan and 2021 Plan, respectively, and 0 and 18,835,219 shares reserved for future issuance under the 2020 Plan and 2021 Plan, respectively.

As of June 30, 2023 , there was an aggregate of 42,510,161 shares authorized to be issued under the 2020 Plan and the 2021 Plan, which includes 6,742,631 and 15,078,617 shares authorized to be issued upon the exercise of outstanding stock option grants from the 2020 Plan and 2021 Plan, respectively, and 0 and 20,688,913 shares reserved for future issuance under the 2020 Plan and 2021 Plan, respectively.

Stock Option Valuation

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Three Months Ended

Six Months Ended

Expected term (in years)

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Outstanding at December 31, 2022

Outstanding at March 31, 2023

Vested and expected to vest at March 31, 2023

Options exercisable at March 31, 2023

The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2023 and 2022 was $ 1.34 and $ 4.23 , respectively, per share.

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 had exercise prices lower than the estimated fair value of the Company's common stock at March 31, 2023 and 2022.

The total intrinsic value of stock options exercised was $ 0.3 million for both the three months ended March 31, 2023 and 2022.

Outstanding at June 30, 2023

Vested and expected to vest at June 30, 2023

Options exercisable at June 30, 2023

The weighted-average grant date fair value of stock options granted during the three and six months ended June 30, 2023 was $ 0.86 and $ 1.18 , respectively, per share.

The weighted-average grant date fair value of stock options granted during the three and six months ended June 30, 2022 was $ 2.07 and $ 3.88 , respectively, per share.

The total intrinsic value of stock options exercised was $ 0.1 million and $ 0.4 million for the three and six months ended June 30, 2023 , respectively.

The total intrinsic value of stock options exercised was $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2022, respectively.

Early Exercise of Stock Options into Restricted Stock

The Company’s restricted stock activity during the three months ended March 31, 2023 was solely due to shares of restricted common stock issued pursuant to the permitted early exercise of stock options as permitted under the 2020 Plan prior to amendments to the 2020 Plan.

The Company’s restricted stock activity during the six months ended June 30, 2023 was solely due to shares of restricted common stock issued pursuant to the permitted early exercise of stock options as permitted under the 2020 Plan prior to amendments to the 2020 Plan.

The 2021 Plan does not permit early exercise of stock options.

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Unvested restricted stock at December 31, 2022

Unvested restricted stock at March 31, 2023

Unvested restricted stock at June 30, 2023

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

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

As of both March 31, 2023 and December 31, 2022 , the liability related to the payments for unvested shares from early-exercised options was less than $ 0.1 million.

As of both June 30, 2023 and December 31, 2022 , the liability related to the payments for unvested shares from early-exercised options was less than $ 0.1 million.

Stock-Based Compensation Expense

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Three Months Ended

Six Months Ended

Research and development

Selling, general and administrative

As of March 31, 2023 , total unrecognized stock-based compensation expense related to unvested stock-based awards was $ 53.8 million, which is expected to be recognized over a weighted-average period of 2.7 years.

As of June 30, 2023 , total unrecognized stock-based compensation expense related to unvested stock-based awards was $ 42.7 million, which is expected to be recognized over a weighted-average period of 2.6 years.

2021 Employee Stock Purchase Plan

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A total of 1,342,773 shares of common stock were initially reserved for issuance under the 2021 ESPP.

There were 169,300 shares issued under the 2021 ESPP as of March 31, 2023 .

There were 214,567 shares issued under the 2021 ESPP as of June 30, 2023 .

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.

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The first offering under the 2021 ESPP was June 6, 2022.

As of March 31, 2023 , 1,173,473 shares remained available for issuance under the 2021 ESPP.

During the three months ended March 31, 2023, the Company recognized less than $ 0.1 million in related stock-based compensation expense.

As of June 30, 2023 , 1,128,206 shares remained available for issuance under the 2021 ESPP.

During the three and six months ended June 30, 2023, the Company recognized less than $ 0.1 million in related stock-based compensation expense.

Warrant Expense

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The aggregate grant date fair value of the PHP Warrant was $ 17.4 million, which was recognized as warrant expense on the grant date in November 2022.

There were no warrants issued during the three months ended March 31, 2023.

As of March 31, 2023, there were 6,824,712 warrants outstanding at a weighted average exercise price of $ 3.48 , with a weighted-average remaining contractual term of 9.64 years.

For the three months ended March 31, 2023 and 2022, 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.

There were no warrants issued during the three and six months ended June 30, 2023.

As of June 30, 2023 , there were 6,824,712 warrants outstanding at a weighted average exercise price of $ 3.48 , with a weighted-average remaining contractual term of 9.39 years.

For the three and six months ended June 30, 2023 and 2022, 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.

Substantially all of the Company’s operating losses since inception have been generated in the U.S.

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compensation.

For both the three months ended March 31, 2023 and 2022, the Company contributed $ 0.2 million to the 401(k) Plan.

For both the three and six months ended June 30, 2023 , the Company contributed $ 0.1 million and $ 0.3 million, respectively, to the 401(k) Plan.

For the three and six months ended June 30, 2022 , the Company contributed $ 0.2 million and $ 0.4 million, respectively, to the 401(k) Plan.

Net Loss per Share

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Three Months Ended

Six Months Ended June 30,

Net loss attributable to common stockholders

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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:

For the Three Months

Ended March 31,

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:

For the Six Months

Ended June 30,

Stock options to purchase common stock

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Related Party Transactions

As of March 31, 2023 and December 31, 2022 , an aggregate of $ 0.6 million and $ 0.3 million, respectively, was due to Adimab under the Adimab Assignment Agreement, the Adimab Collaboration Agreement and the Adimab Platform Transfer Agreement by the Company.

As of March 31, 2023 and December 31, 2022 , no amounts were due from Adimab under the Adimab under the Adimab Assignment Agreement, the Adimab Collaboration Agreement or the Adimab Platform Transfer Agreement to the Company.

As of June 30, 2023 and December 31, 2022 , an aggregate of $ 0.2 million and $ 0.3 million, respectively, was due to Adimab under the Adimab Assignment Agreement, the Adimab Collaboration Agreement, the Adimab Platform Transfer Agreement and the Adimab DNA Sequencing Services Agreement (as defined below) by the Company.

As of June 30, 2023 and December 31, 2022 , no amounts were due to the Company from Adimab under the Adimab Assignment Agreement, the Adimab Collaboration Agreement, the Adimab Platform Transfer Agreement or the Adimab DNA Sequencing Services Agreement.

Adimab Assignment Agreement

Under the Adimab Assignment Agreement, Adimab, a principal stockholder of the Company, 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).

During the three months ended March 31, 2023, the Company recognized $ 0.4 million as IPR&D expense with respect to a milestone payable under the Adimab Assignment Agreement.

During the three months ended March 31, 2022, the Company did no t recognize any IPR&D expense with respect to contingent consideration payable under the Adimab Assignment Agreement.

During the three and six months ended June 30, 2023, the Company recognized $ 0 and $ 0.4 million, respectively, as IPR&D expense with respect to a milestone payable under the Adimab Assignment Agreement.

During the three and six months ended June 30, 2023 , the Company did no t recognize any IPR&D expense with respect to contingent consideration payable under the Adimab Assignment Agreement.

During the three and six months ended June 30, 2022, the Company recognized $ 0.2 million and $ 0.5 million, respectively, of research and development expense with respect to services performed by Adimab on the Company’s behalf under the Adimab Assignment Agreement.

Adimab Collaboration Agreement

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

During both the three months ended March 31, 2023 and 2022, the Company recognized $ 1.3 million of research and development expense related to the quarterly fee.

During the three months ended March 31, 2023 and 2022, the Company recognized $ 0.2 million and $ 0.4 million, respectively, of research and development expense with respect to services performed by Adimab on the Company’s behalf under the Adimab Collaboration Agreement.

During both the three and six months ended June 30, 2023 and 2022, the Company recognized $ 1.3 million and $ 2.6 million, respectively, of research and development expense related to the quarterly fee.

During the three and six months ended June 30, 2023 , the Company recognized $ 0.2 million and $ 0.4 million, respectively, of research and development expense with respect to services performed by Adimab on the Company’s behalf under the Adimab Collaboration Agreement.

Adimab Platform Transfer Agreement

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

During the three months ended March 31, 2023 , the Company did no t recognize any expense in connection with the Adimab Platform Transfer Agreement.

The Adimab Platform Transfer Agreement was not effective during the three months ended March 31, 2022.

During the three and six months ended June 30, 2023 , the Company did no t recognize any expense in connection with the Adimab Platform Transfer Agreement.

The Adimab Platform Transfer Agreement was not effective during the three and six months ended June 30, 2022.

Adimab DNA Sequencing Services Agreement

On May 9, 2023, the Company entered into a Services Agreement with Adimab for Adimab to perform DNA sequencing on yeast samples provided by the Company, and the delivery of the resulting data and information to the Company (the “Adimab DNA Sequencing Services Agreement”).

In exchange for the services performed, the Company will pay Adimab a fee for each yeast-derived DNA template sample present in the well within the sequencer plate.

During the three and six months ended June 30, 2023, the Company recognized less than $ 0.1 million of research and development expense with respect to services performed by Adimab on the Company’s behalf under the Adimab DNA Sequencing Services Agreement.

Mithril Group

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The Company made such reimbursement payment to Mithril II LP in the amount of $ 1.4 million, which the Company recognized as a selling, general and administrative expense.

As of March 31, 2023 , no amounts were due to any member of the Mithril Group by the Company, and no amounts were due from any member of the Mithril Group to the Company.

As of June 30, 2023 , no amounts were due to any member of the Mithril Group by the Company, and no amounts were due from any member of the Mithril Group to the Company.

Population Health Partners, L.P.

Under the PHP MSA and PHP Work Order, the Company is obligated to pay cash compensation for services and deliverables (see Note 8).

Under the PHP MSA and PHP Work Order, the Company was obligated to pay cash compensation for services and deliverables (see Note 8).

Clive Meanwell, M.D.

and Tamsin Berry, members of the Company’s board of directors, are Managing Partner and Partner of PHP, respectively.

During the three months ended March 31, 2023 , the Company recognized $ 1.5 million of research and development expense with respect to services performed by PHP in connection with the PHP Work Order.

The agreements with PHP were not effective during the three months ended March 31, 2022.

As of March 31, 2023 , $ 0.8 million was due to PHP by the Company, and no amounts were due from PHP to the Company.

During the three and six months ended June 30, 2023 , the Company recognized $ 0.8 million and $ 2.3 million, respectively, of research and development expense with respect to services performed by PHP in connection with the PHP Work Order, which terminated in accordance with its terms in May 2023.

The agreements with PHP were not effective during the three and six months ended June 30, 2022.

As of June 30, 2023 , no amounts were due to PHP by the Company, and no amounts were due from PHP to the Company.

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

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These forward-looking statements include, without limitation, statements about the following:

the timing, progress and results of our preclinical studies and clinical trials of our product candidates, including statements regarding the timing of our planned regulatory submissions, initiation and completion of studies or trials and related preparatory work and the period during which the results of the trials will become available, as well as anticipated data readouts, for our VYD222 program and other research and development programs;

the anticipated timing, design, progress and results of preclinical studies and clinical trials of our product candidates, including statements regarding initiation or completion of studies or trials and related preparatory work, the period during which results of any studies or trials will become available, and potential regulatory submissions, with respect to our VYD222 program and other research and development programs;

the design of VYD222 for broad neutralization activity against SARS-CoV-2 variants and the potential for neutralization activity against Omicron sublineages following XBB1.5 and future SARS-CoV-2 variants;

our ability to rapidly and perpetually deliver antibody-based therapies that protect vulnerable people from the devastating consequences of circulating viral threats, beginning with SARS-CoV-2, and to generate a robust pipeline of product candidates which could be used in prevention or treatment of serious viral diseases, starting with COVID-19 and expanding into influenza and other high-need indications;

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our belief that the adintrevimab clinical data package has the potential to support accelerated development of VYD222;

our ability to produce additional candidates that will be designed to optimize their ability to stay ahead of the evolving SARS-CoV-2 virus;

our intention to leverage evolving COVID-19 regulatory paradigms, which may rely on surrogate endpoints, to expedite drug development and maximize efficiency to deliver much-needed products for immunocompromised individuals and other vulnerable populations, and our belief that a ‘serial monotherapy’

the possibility for VYD222 and anticipated follow-on monoclonal antibody (“mAb”) candidates to follow a potential development pathway for mAbs using immunobridging via serum neutralizing titers and previously generated clinical trial data from a prototype antibody, and our plans to leverage this immunobridging pathway in the U.S.

to accelerate the clinical development of VYD222 and anticipated follow-on mAb candidates, with adintrevimab or future proprietary mAbs serving as the prototype;

our ability to produce additional candidates optimized to stay ahead of the evolving SARS-CoV-2 virus;

our belief that a ‘serial monotherapy’

approach would ensure that novel mAbs would be available if and when an authorized mAb loses activity against predominant circulating variants;

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our estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for or ability to obtain additional funding before we can expect to generate any revenue from product sales, if any of our product candidates are authorized or approved;

our belief that we have sufficient cash resources to fund our operating expenses and capital expenditure requirements into the second half of 2024;

our belief that we have sufficient cash resources to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2024;

our competitive position and the development of and projections relating to our competitors or our industry;

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We are generating a robust pipeline of product candidates which could be used in prevention or treatment of serious viral diseases, starting with COVID-19 and expanding into influenza and other high-need indications.

In March 2023, we announced dosing of the first participants in a Phase 1 clinical trial of VYD222, a monoclonal antibody (“mAb”) candidate for prevention of COVID-19.

In June and July 2023, we announced positive initial data from an ongoing Phase 1 clinical trial of VYD222, a mAb candidate in development for the prevention of symptomatic COVID-19 in vulnerable populations, such as immunocompromised people.

The Phase 1 randomized, blinded, placebo-controlled, dose-ranging trial, which is being conducted in Australia, is evaluating the safety, pharmacokinetics, tolerability, and serum virus neutralizing activity of VYD222 in healthy adult volunteers.

The Phase 1 dose-ranging trial is evaluating three different doses of VYD222, each administered as a single intravenous (“IV”) push.

In May 2023, we completed the dosing of all participants in the Phase 1 clinical trial.

The dose-ranging trial will evaluate three different doses, each administered as a single IV push.

All doses are designed to provide durability in the face of viral evolution and flexibility at the time of regulatory submission.

We anticipate initial data readouts from this Phase 1 clinical trial in the second quarter of 2023, which will include early insights into sVNA, and additional clinical readouts from the VYD222 program anticipated in 2023.

In April 2023, we announced that the U.S.

Food and Drug Administration (the “FDA”) cleared our Investigational New Drug (“IND”) application for VYD222.

Serum samples from all dose levels tested showed robust neutralization activity against Omicron XBB.1.5 at Day 7.

Analysis of the serum neutralizing activity from samples collected at different timepoints across all dose cohorts is ongoing, as is detailed pharmacokinetic analysis and modeling.

In June 2023, we also announced that we reached general alignment with the U.S.

We plan to leverage this pathway in the U.S., which includes the use of serum neutralizing titers as a correlate of protection (surrogate of clinical efficacy) in an immunobridging approach to a pivotal clinical trial of VYD222.

Based on FDA feedback, the use of a correlate of protection in an immunobridging approach to a pivotal EUA-directed clinical trial may be a reasonable approach for a new mAb candidate when clinical trial data from a “prototype”

mAb is available, provided that the new mAb candidate:

(1) is similar to the prototype mAb such that it leverages a consistent manufacturing platform and has limited structural and functional differences, and (2) has supportive nonclinical data, such as favorable in vitro neutralization data against currently circulating SARS-CoV-2 variants.

We plan to leverage this immunobridging pathway in the U.S.

to accelerate the clinical development of VYD222 and anticipated follow-on mAb candidates, with adintrevimab or future proprietary mAbs serving as the prototype.

In August 2023, we announced our plans to initiate a pivotal clinical trial of VYD222, referred to as the CANOPY trial, using a surrogate endpoint to generate the clinical data needed to enable a potential EUA submission for the prevention of symptomatic COVID-19.

We plan to enroll approximately 750 participants in the CANOPY trial across two cohorts in parallel.

For Cohort A, which is expected to enroll approximately 300 participants who are significantly immunocompromised, we plan to use serum neutralizing titers

against relevant SARS-CoV-2 variants at Day 28 as the primary efficacy endpoint.

The primary efficacy analysis will use an immunobridging approach comparing data obtained in the CANOPY trial for VYD222 to certain historical data from our previous Phase 2/3 clinical trial of adintrevimab for the prevention of symptomatic COVID-19 (EVADE), in which serum neutralizing titers correlated with observed clinical efficacy.

All Cohort A participants will receive VYD222 administered via IV infusion.

For Cohort B, which is expected to enroll approximately 450 participants at risk of exposure to SARS-CoV-2, the primary endpoint will be safety and tolerability.

Secondary and exploratory endpoints will include serum neutralizing titers and clinical efficacy.

Cohort B participants will be randomized 2:1 to receive VYD222 or placebo administered via IV infusion.

We plan to initiate the CANOPY trial with a 4500 mg dose of VYD222.

We expect to have initial primary endpoint data from the CANOPY trial by approximately the end of 2023.

VYD222 is our second mAb candidate to enter clinical testing.

VYD222 has demonstrated in vitro neutralizing activity against prior and current SARS-CoV-2 variants of concern (“VoCs”), including Omicron sublineages up to and through XBB.1.5.

VYD222 was engineered from adintrevimab, our investigational mAb that has a robust safety data package and demonstrated clinically meaningful results in global Phase 2/3 clinical trials for both the prevention and treatment of COVID-19.

We believe that the adintrevimab clinical data package has the potential to support accelerated development of VYD222.

We aim to leverage evolving COVID-19 regulatory paradigms, which may rely on surrogate endpoints, to expedite drug development, and maximize efficiency to deliver a much-needed mAb therapeutic option for COVID-19 for immunocompromised individuals and other vulnerable populations.

Our ongoing Phase 1 clinical trial has the goal of providing information to allow for rapid advancement into Phase 3 pivotal trials that could support regulatory filings globally.

Beyond VYD222, we plan to leverage our expanded laboratory capabilities and integrated discovery platform to produce additional candidates designed to optimize their ability to stay ahead of the evolving SARS-CoV-2 virus.

Beyond VYD222, we plan to leverage our expanded laboratory capabilities and integrated discovery platform to produce additional candidates optimized to stay ahead of the evolving SARS-CoV-2 virus.

We have multiple anti-SARS-CoV-2 mAb candidates in the discovery/preclinical stage and recently nominated an additional candidate for further preclinical characterization.

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COVID-19 persists and continues to impact patients, notably those who are immune compromised, and combating this disease will require a variety of effective and safe prevention and treatment options for years to come.

By leveraging our capabilities, which we have developed through our experience with adintrevimab and nearly three years in the COVID-19 space, we aim to develop

a continuous repertoire of SARS-CoV-2 neutralizing mAbs to keep pace with viral evolution.

By leveraging our capabilities, which we have developed through our experience with adintrevimab and over three years in the COVID-19 space, we aim to develop a continuous repertoire of SARS-CoV-2 neutralizing mAbs to keep pace with viral evolution.

We believe this ‘serial monotherapy’

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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 authorized or approved.

Since our inception, we have incurred significant losses, including a net loss of $35.3 million for the three months ended March 31, 2023.

As of March 31, 2023, we had an accumulated deficit of $568.7 million.

Since our inception, we have incurred significant losses, including a net loss of $85.5 million for the six months ended June 30, 2023.

As of June 30, 2023, we had an accumulated deficit of $619.0 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:

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seek regulatory authorization or approval for any product candidates that successfully complete clinical trials;

pursue marketing approvals or emergency use authorizations (“EUA”) and reimbursement for our product candidates;

pursue marketing approvals or EUAs and reimbursement for our product candidates;

acquire or in-license other product candidates, intellectual property and/or technologies;

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incur additional legal, accounting and other expenses in operating as a public company.

We do not anticipate generating revenue from product sales, including government supply contracts, unless and until we successfully complete clinical development and obtain marketing approvals or EUA for one or more of our product candidates.

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 explore a range of commercial go-to-market approaches, including building our own commercial organization, outsourcing to contract sales and marketing organizations, and/or partnering with other biopharmaceutical companies with established sales, marketing, and market access capabilities.

We would expect to explore a range of commercial go-to-market approaches, including building our own commercial organization, outsourcing to contract sales and marketing organizations, and/or partnering with other biopharmaceutical companies with established sales, marketing, and market access capabilities, in anticipation of potential EUA or marketing approval for any of our product candidates for the prevention and/or treatment of COVID-19.

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

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

Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities of $333.4 million as of March 31, 2023, will be sufficient to fund our operating expenses and capital expenditure requirements into the second half of 2024.

Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities of $298.4 million as of June 30, 2023, will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter 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.

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Impact of COVID-19 on Our Operations

The severity of the COVID-19 pandemic, the evolution of the disease and the continued emergence of VoCs, and the availability, administration and acceptance of vaccines, mAbs, antiviral agents and other therapeutic modalities 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 authorized or approved.

The ultimate extent of the impact of the COVID-19 pandemic on our business, financial condition, operations and product development timelines and plans remains 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, CROs, CDMOs, and other third parties with which we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

COVID-19 continues to present public health and economic challenges around the world.

The evolution of the disease and the continued emergence of VoCs, and the availability, administration and acceptance of vaccines, mAbs, antiviral agents, and other therapeutic modalities may affect the design and enrollment of our clinical trials, the potential regulatory authorization or approval of our product candidates, the availability of funding and partnership opportunities, and the commercialization of our product candidates, if authorized or approved.

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

The ultimate extent to which COVID-19 directly or indirectly impacts our business, financial condition, operations, and product development timelines and plans remains uncertain and will depend on future developments, including the duration and spread of outbreaks and the continued emergence of VoCs, actions taken to prevent or treat COVID-19, and its economic impact on local, regional, national and international markets.

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.

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.

Some of our CROs, CDMOs and other service providers have also been impacted.

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

Additionally, if the financial markets and/or the overall economy are impacted for an extended period as a result of the COVID-19 pandemic or otherwise, our results and operations may be materially adversely affected and may affect our ability to raise capital.

Components of Our Results of Operations

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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 VYD222 through clinical development, pursue EUA or regulatory approval of our product candidates, 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.

Our research and development expenses could increase substantially in the near

term as we advance VYD222 through clinical development, pursue EUA or regulatory approval of our product candidates, 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.

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potential significant and changing government regulation, regulatory guidance and requirements and evolving treatment guidelines;

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.

the impact of any business interruptions to our operations or those of third parties with which we work, including as a result of the COVID-19 pandemic.

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate.

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Secretary of the Department of Health and Human Services (“HHS”), the FDA has the authority to issue an EUA.

While the Biden Administration announced that it would allow the COVID-19 public health emergency declared by HHS under the Public Health Service Act to expire on May 11, 2023, this does not impact the FDA’s ability to authorize COVID-19 drugs and biological products for emergency use.

While the COVID-19 public health emergency declared by HHS under the Public Health Service Act expired on May 11, 2023, this does not impact the FDA’s ability to authorize COVID-19 drugs and biological products for emergency use.

The FDA may continue to issue new EUAs going forward when criteria for issuance are met.

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Acquired In-Process Research and Development Expenses

Acquired in-process research and development (“IPR&D”) expenses consist primarily of costs of contingent milestone payments incurred 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 (the “IPR&D assets”) for use in the research and development of our product candidates.

certain of Adimab’s platform patents and technology (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.

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In June 2022, and subsequently amended in September 2022, we entered into a lease agreement for dedicated laboratory and office space in Newton, Massachusetts for research and development purposes.

Through March 31, 2023, we have operated as a hybrid company with employees working at our corporate headquarters and remotely.

Through June 30, 2023, we have operated as a hybrid company with employees working at our corporate headquarters and remotely.

We have not incurred material operating expenses for the rent, maintenance and insurance of facilities, or for the depreciation of fixed assets.

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Results of Operations

Comparison of the three months ended March 31, 2023 and 2022

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022:

Comparison of the three months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022:

Three Months Ended

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Total research and development expenses

Research and development expenses were $27.2 million for the three months ended March 31, 2023, compared to $92.0 million for the three months ended March 31, 2022.

The $64.8 million decrease in research and development expenses was primarily due to the following:

The decrease in direct costs related to our adintrevimab program of $75.0 million was primarily due to a decrease in our contract manufacturing and contract research expenses for such program.

Contract manufacturing expenses decreased by $53.1 million, primarily due to production of materials for use in our clinical trials and non-clinical studies for the adintrevimab program, as well as supply for use under a potential EUA for adintrevimab during the three months ended March 31, 2022.

Contract research expenses decreased by $19.7 million, primarily due to lower costs related to a pause in enrollment and closing of clinical trials evaluating adintrevimab in January 2022 and November 2022, respectively.

Research and development expenses were $43.6 million for the three months ended June 30, 2023, compared to $37.1 million for the three months ended June 30, 2022.

The $6.5 million increase in research and development expenses was primarily due to the following:

The decrease in direct costs related to our adintrevimab program of $22.6 million was primarily due to a $7.3 million and a $13.0 million decrease in our contract manufacturing and contract research expenses, respectively, driven by expenses incurred for our adintrevimab clinical trials and manufacturing during the three months ended June 30, 2022, for which there was no comparable spend during the three months ended June 30, 2023.

In addition, other external and non-clinical expenses related to our adintrevimab program decreased by $2.3 million.

The increase in direct costs related to our VYD222 program was due to the nomination of our VYD222 product candidate in 2023 to proceed to IND-enabling activities.

The costs were primarily related to contract manufacturing expenses for the manufacture of materials for use in our clinical trials and non-clinical studies.

Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were $5.0 million and stock-based compensation expense was $2.3 million for the three months ended March 31, 2023, compared to personnel-related costs of $6.3 million and stock-based compensation expense of $3.2 million for the three months ended March 31, 2022.

The costs were primarily related to contract manufacturing expenses for VYD222 commercial manufacturing.

Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were $4.9 million and stock-based compensation expense was $1.6 million for the three months ended June 30, 2023, compared to personnel-related costs of $5.8 million and stock-based compensation expense of $3.4 million for the three months ended June 30, 2022.

The decrease in personnel-related costs of $2.7 million was primarily due to a reduction in headcount, including a decrease in stock-based compensation expense of $1.8 million.

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Acquired In-Process Research and Development (“IPR&D”) Expenses

IPR&D expenses of $0.8 million for the three months ended March 31, 2023 consisted of a $0.4 million milestone payment that became due to Adimab in March 2023 upon dosing of the first subject in a Phase 1 clinical trial evaluating VYD222 under the Adimab License Agreement and $0.4 million in license fees due to WuXi Biologics under the Cell Line License Agreement.

There was no IPR&D expense recognized during the three months ended March 31, 2022.

IPR&D expenses of $0.2 million for the three months ended June 30, 2023 consisted entirely of license fees due to WuXi Biologics under the Cell Line License Agreement.

There was no IPR&D expense recognized during the three months ended June 30, 2022.

Selling, General and Administrative Expenses

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Total selling, general and administrative expenses

Selling, general and administrative expenses were $11.0 million for the three months ended March 31, 2023, compared to $8.7 million for the three months ended March 31, 2022.

The $2.3 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 $3.1 million and stock-based compensation expense was $3.1 million for the three months ended March 31, 2023, compared to personnel-related costs of $2.8 million and a stock-based compensation credit of $1.2 million for the three months ended March 31, 2022.

The increase in personnel-related costs of $4.6 million was primarily due to the non-recurring reversal of stock-based compensation expense related to the forfeiture of stock options in conjunction with the resignation of our former Chief Executive Officer and President during the three months ended March 31, 2022.

The decrease in professional and consultant fees of $2.6 million was primarily due to a decrease in professional and consulting service costs of $1.5 million, a decrease in director and officer insurance premiums of $0.6 million and a decrease in commercial costs of $0.5 million.

Selling, general and administrative expenses were $10.1 million for the three months ended June 30, 2023, compared to $14.6 million for the three months ended June 30, 2022.

The $4.5 million decrease 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 $2.4 million and stock-based compensation expense was $3.1 million for the three months ended June 30, 2023, compared to personnel-related costs of $2.8 million and stock-based compensation expense of $3.0 million for the three months ended June 30,

The decrease in personnel-related costs of $0.3 million was primarily due to a reduction in headcount for the three months ended June 30, 2023.

The decrease in professional and consultant fees of $3.9 million was primarily due to a $3.1 million decrease in legal fees incurred for the three months ended June 30, 2022, for which there was no comparable spend for the three months ended June 30, 2023, a decrease in director and officer insurance premiums of $0.5 million and a decrease in commercial costs of $0.3 million.

Other costs remained relatively consistent between periods.

Other income was $3.8 million for the three months ended March 31, 2023, consisting primarily of $1.1 million of interest earned on our invested cash balances and $2.7 million of net accretion of discounts related to our marketable securities.

Other income was less than $0.1 million for the three months ended March 31, 2022, consisting primarily of interest earned on invested cash balances.

Other income was $3.6 million for the three months ended June 30, 2023, consisting primarily of $1.6 million of interest earned on our invested cash balances and $2.0 million of net accretion of discounts related to our marketable securities.

Other income was $0.8 million for the three months ended June 30, 2022, consisting primarily of interest earned on invested cash balances.

Comparison of the six months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

(in thousands)

Operating expenses:

Research and development

Acquired in-process research and development

Selling, general and administrative

Total operating expenses

Loss from operations

Other income (expense):

Other income (expense), net

Total other income (expense), net

The following discussion presents the components of our expenses for the periods presented:

Research and Development Expenses

Six Months Ended June 30,

(in thousands)

Direct, external research and development expenses by program:

Unallocated research and development expenses:

Personnel-related costs

External discovery-related and other costs

Total research and development expenses

Research and development expenses were $70.8 million for the six months ended June 30, 2023, compared to $129.2 million for the six months ended June 30, 2022.

The $58.4 million decrease in research and development expenses was primarily due to the following:

The decrease in direct costs related to our adintrevimab program of $97.6 million was primarily due to a $60.5 million and a $32.7 million decrease in our contract manufacturing and contract research expenses, respectively, driven by expenses incurred for our adintrevimab clinical trials and manufacturing during the six months ended June 30, 2022, for which there was no comparable spend during the six months ended June 30, 2023.

In addition, other external and non-clinical expenses related to our adintrevimab program decreased by $4.4 million.

The increase in direct costs related to our VYD222 program was due to the nomination of our VYD222 product candidate in 2023 to proceed to IND-enabling activities.

The costs were primarily related to contract manufacturing expenses for VYD222 commercial manufacturing.

Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were $9.9 million and stock-based compensation expense was $3.9 million for the six months ended June 30, 2023, compared to personnel-related costs of $12.2 million and stock-based compensation expense of $6.5 million for the six months ended June 30, 2022.

The decrease in personnel-related costs of $4.9 million was primarily due to a reduction in headcount, including a decrease in stock-based compensation expense of $2.6 million.

The increase in external discovery-related and other costs of $3.8 million was primarily due to an increase in contract manufacturing expenses related to our pipeline candidates of $3.7 million and an increase in other external costs of $1.8 million, partially offset by a decrease in non-clinical and clinical trial costs of $1.7 million.

Acquired In-Process Research and Development (“IPR&D”) Expenses

IPR&D expenses of $1.0 million for the six months ended June 30, 2023 consisted of a $0.4 million milestone payment that became due to Adimab in March 2023 upon dosing of the first subject in a Phase 1 clinical trial evaluating VYD222 under the Adimab License Agreement and $0.6 million in license fees due to WuXi Biologics under the Cell Line License Agreement.

There was no IPR&D expense recognized during the six months ended June 30, 2022.

Selling, General and Administrative Expenses

Six Months Ended June 30,

(in thousands)

Personnel-related costs

Professional and consultant fees

Total selling, general and administrative expenses

Selling, general and administrative expenses were $21.2 million for the six months ended June 30, 2023, compared to $23.3 million for the six months ended June 30, 2022.

The $2.1 million decrease 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 $5.6 million and stock-based compensation expense was $6.2 million for the six months ended June 30, 2023, compared to personnel-related costs of $5.6 million and a stock-based compensation credit of $1.8 million for the six months ended June 30, 2022.

The increase in personnel-related costs of $4.3 million was primarily due to the reversal of stock-based compensation expense related to the forfeiture of stock options in conjunction with the resignation of our former Chief Executive Officer and President during the six months ended June 30, 2022.

The decrease in professional and consultant fees of $6.4 million was primarily due to a $4.6 million decrease in legal fees incurred for the six months ended June 30, 2022, a decrease in director and officer insurance premiums of $1.0 million and a decrease in commercial costs of $0.8 million.

Other costs remained relatively consistent between periods.

Other income was $7.4 million for the six months ended June 30, 2023, consisting primarily of $2.7 million of interest earned on our invested cash balances and $4.7 million of net accretion of discounts related to our marketable securities.

Other income was $0.8 million for the six months ended June 30, 2022, consisting primarily of interest earned on invested cash balances.

Liquidity and Capital Resources

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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

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 with aggregate net proceeds from our IPO in August 2021 of $327.5 million.

As of March 31, 2023, we had cash, cash equivalents and marketable securities of $333.4 million.

As of June 30, 2023, we had cash, cash equivalents and marketable securities of $298.4 million.

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

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Operating Activities

During the three months ended March 31, 2023, operating activities used $41.2 million of cash, primarily due to our net loss of $35.3 million, partially offset by non-cash charges of $3.4 million.

Net cash used in changes in our operating assets and liabilities consisted of a $6.3 million increase in prepaid expenses and other current assets and a $4.4 million increase in accounts payable, partially offset by a $6.9 million decrease in accrued expenses.

During the six months ended June 30, 2023, operating activities used $78.6 million of cash, primarily due to our net loss of $85.5 million, partially offset by non-cash charges of $6.5 million.

Net cash used in changes in our operating assets and liabilities consisted of a $6.6 million decrease in prepaid expenses and other current assets, partially offset by a $2.6 million increase in accounts payable, and a $5.3 million increase in accrued expenses.

The increase in accounts payable and accrued expenses was primarily due to the timing of vendor invoicing and payments.

The decrease in prepaid expenses and other current assets was primarily due to up-front payments related to our Phase 1 clinical trial for VYD222 and up-front payments to WuXi Biologics for manufacturing costs.

During the six months ended June 30, 2022, operating activities used $116.4 million of cash, primarily due to our net loss of $151.7 million, partially offset by non-cash charges of $8.8 million.

Net cash provided by changes in our operating assets and liabilities consisted of a $8.4 million increase in accounts payable, partially offset by a $18.8 million decrease in prepaid expenses and other current assets, a $3.7 million decrease in accrued expenses, and a $3.0 million decrease in other non-current assets.

The increase in accounts payable and decrease in accrued expenses was primarily due to the timing of vendor invoicing and payments.

The increase in prepaid expenses and other current assets was primarily due to up-front payments related to our Phase 1 clinical trial for VYD222 and up-front payments to WuXi Biologics for manufacturing costs.

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.

The decrease in prepaid expenses and other current assets and the decrease in other non-current assets was primarily due to our utilization of WuXi Biologics manufacturing deposits.

Investing Activities

Net cash provided by investing activities during the three months ended March 31, 2023 consisted of $75.6 million in maturities of marketable securities, offset by $0.6 million in purchases of property and equipment.

Net cash provided by investing activities during the three months ended March 31, 2022 consisted of $49.0 million in maturities of marketable securities.

Net cash provided by investing activities during the six months ended June 30, 2023 consisted of $199.4 million in maturities of marketable securities, offset by $91.2 million in purchases of investments and $0.6 million in purchases of property and equipment.

Net cash provided by investing activities during the six months ended June 30, 2022 primarily consisted of $49.0 million in maturities of marketable securities.

Financing Activities

Net cash provided by financing activities during the three months ended March 31, 2023 consisted of $0.4 million from exercises of stock options and $0.1 million from issuance of common stock under the employee stock purchase plan.

Net cash provided by financing activities during the three months ended March 31, 2022 consisted of less than $0.1 million from exercises of stock options.

Net cash provided by financing activities during the six months ended June 30, 2023 consisted of $0.7 million from exercises of stock options and $0.1 million from issuance of common stock under the employee stock purchase plan.

Net cash provided by financing activities during the six months ended June 30, 2022 primarily consisted of $0.1 million from exercises of stock options.

Funding Requirements

Our expenses could increase in connection with our ongoing activities, particularly as we advance the non-clinical and preclinical studies and the 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:

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

We believe that our cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2024.

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

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Contractual Obligations and Commitments

During the three months ended March 31, 2023, there were no material changes to our contractual obligations from those described in the 2022 Form 10-K.

In June 2023, we committed to a noncancelable purchase obligation related to the procurement of resin for future use in VYD222 drug substance batches under the Amended and Restated Commercial Manufacturing Services Agreement with WuXi Biologics (the “Commercial Manufacturing Agreement”).

The total costs of contractually binding resin to be incurred by us is $10.4 million.

In July 2023, we committed to a noncancelable purchase obligation related to the procurement of materials to be used in VYD222 drug substance and drug product batches under the Commercial Manufacturing Agreement.

The total costs of contractually binding materials to be incurred by us is $4.3 million.

For additional information, see Note 9 to our condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q.

Other than the above noted transactions, during the three and six months ended June 30, 2023, there were no material changes to our contractual obligations from those described in the 2022 Form 10-K.

Critical Accounting Policies and Significant Judgments and Estimates

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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”

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 2022 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.

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 2022 Form 10-K.

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

What changed 10-Q

Item 1. Financial Statements