What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-09 · 158 added, 75 removed, 253 unchanged (48% of the section changed)

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Food and Drug Administration (“FDA”) in March 2024;

• our expectation that PEMGARDA will be our first monoclonal antibody (“mAb”) in a planned series of innovative mAb candidates designed to keep pace with SARS-CoV-2 viral evolution, and our plans to leverage our INVYMAB platform approach to periodically introduce new or engineered mAb candidates as the SARS-CoV-2 virus evolves over time, including our expectation that VYD2311, a mAb optimized for neutralization potency against recent SARS-CoV-2 lineages such as BA.2.86 and JN.1, will be the next pipeline program to advance into clinical development;

• our expectation that PEMGARDA will be our first monoclonal antibody (“mAb”) in a planned series of innovative mAb candidates designed to keep pace with SARS-CoV-2 viral evolution, and our plans to leverage our INVYMAB platform approach to periodically introduce new or engineered mAb candidates as the SARS-CoV-2 virus evolves over time, including our expectation that VYD2311, a mAb optimized for neutralization potency against prominent SARS-CoV-2 variants, will be the next pipeline program to advance into clinical development;

• 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;

• our commitment to delivering protection from serious viral infectious diseases, beginning with SARS-CoV-2, and our aim to develop a continuous repertoire of SARS-CoV-2 neutralizing mAbs to keep pace with viral evolution;

• our plans regarding submission of any applications for regulatory authorization or approval of our product candidates, including our intention to submit an EUA application to the FDA for pemivibart for the treatment of mild to moderate symptomatic COVID-19 in certain immunocompromised people utilizing a rapid immunobridging pathway, and our expectations regarding potential scope and timing thereof;

• our expectations related to general alignment with the FDA on an expedient, repeatable immunobridging pathway to future potential EUAs for serial, novel mAbs for the prevention and treatment of symptomatic COVID-19;

• our plans regarding submission of any applications for regulatory authorization or approval of our product candidates, including our July 2024 submission of a request to the FDA to amend the EUA for PEMGARDA for the treatment of mild-to-moderate symptomatic COVID-19 in certain immunocompromised patients utilizing a rapid immunobridging pathway, and our expectations regarding potential scope and timing thereof;

• our expectations regarding our ability to obtain and maintain regulatory authorizations or approvals for, our product candidates;

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• our manufacturing capabilities and strategy;

• our ability to successfully commercialize our product candidates, if authorized or approved;

• our ability to successfully commercialize our product candidates, if authorized or approved, including our distribution capabilities and strategy;

• our ability to leverage technology and our INVYMAB platform approach to identify and develop future product candidates;

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The foregoing list of forward-looking statements is not exhaustive.

You should refer to the “Risk Factors” section of the 2023 Form 10-K for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements.

You should refer to the “Risk Factors” sections of the 2023 Form 10-K and this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements.

Other sections of this Quarterly Report on Form 10-Q may include additional factors that could harm our business and financial performance.

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Our proprietary INVYMAB platform approach combines state-of-the-art viral surveillance and predictive modeling with advanced antibody engineering.

INVYMAB is designed to facilitate the rapid, serial generation of new monoclonal antibodies (“mAbs”) to address evolving viral threats.

INVYMAB is designed to facilitate the rapid, serial generation of new monoclonal antibodies (“mAbs”) to keep pace with evolving viral threats.

On March 22, 2024, we received emergency use authorization (“EUA”) from the U.S.

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Recipients should not be currently infected with or have had a known recent exposure to an individual infected with SARS-CoV-2.

In May 2024, we announced our intention to submit an EUA application to the FDA for pemivibart for the treatment of mild to moderate symptomatic COVID-19 in certain immunocompromised people utilizing a rapid immunobridging pathway, which was aligned in principle with the FDA and would leverage a similar approach as we used to achieve our current EUA for PEMGARDA for pre-exposure prophylaxis of COVID-19 in certain immunocompromised people.

The immunobridging pathway for COVID-19 treatment is enabled by data from our previous Phase 2/3 clinical trial (STAMP) of adintrevimab, the prototype mAb, for the treatment of COVID-19 and data from our ongoing CANOPY Phase 3 clinical trial of VYD222 (pemivibart) for pre-exposure prophylaxis of COVID-19.

The potential COVID-19 treatment EUA request would focus on the critical treatment needs of people in the U.S.

In July 2024, we submitted a request to the FDA to amend the EUA for PEMGARDA, for the treatment of mild-to-moderate symptomatic COVID-19 in certain immunocompromised patients.

The submission utilizes a rapid immunobridging pathway previously aligned in principle with the FDA.

The EUA amendment request is based on positive immunobridging analyses of pemivibart versus comparator mAbs and data from our ongoing CANOPY Phase 3 clinical trial in participants with moderate-to-severe immune compromise.

The COVID-19 treatment EUA request focuses on the critical treatment needs of people in the U.S.

who have moderate-to-severe immune compromise and for whom alternative COVID-19 treatment options are not clinically appropriate or accessible.

Subsequent to the anticipated submission of an EUA request, we plan to initiate a compact clinical trial focused on confirmatory safety, pharmacokinetics, and clinical virology.

PEMGARDA is our first mAb in a planned series of innovative mAb candidates designed to keep pace with SARS-CoV-2 viral evolution.

As the SARS-CoV-2 virus evolves over time, we anticipate leveraging our INVYMAB platform approach to periodically introduce new or engineered mAb candidates, an approach that would be analogous to the periodic updates made to influenza and COVID-19 vaccines.

In January 2024, we nominated VYD2311, a mAb optimized for neutralization potency against recent SARS-CoV-2 lineages such as BA.2.86 and JN.1, as a drug candidate, and we expect it will be the next pipeline program to advance into clinical development.

In January 2024, we nominated VYD2311, a mAb optimized for neutralization potency against prominent SARS-CoV-2 variants, as a drug candidate, and we expect it will be the next pipeline program to advance into clinical development.

In May 2024, we announced general alignment with the FDA on an expedient, repeatable immunobridging pathway to future potential EUAs for serial, novel mAbs for the prevention and treatment of symptomatic COVID-19.

This pathway provides us with the opportunity to rapidly, efficiently, and durably deliver high value medicines that prevent and treat symptomatic COVID-19 in vulnerable populations.

In addition to developing candidates for COVID-19, we expect to apply our INVYMAB platform approach to produce lead molecules for other viral diseases, such as influenza.

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In addition, we expect to continue to rely on third parties for clinical trials and the manufacture and testing of our product candidates, as well as to perform ongoing research and development and other services on our behalf.

Since our inception, we have financed our operations primarily with net proceeds of $464.7 million from sales of our preferred stock and with net proceeds of $327.5 million from our initial public offering (“IPO”).

Through March 31, 2024, we had not generated any revenue from any sources, including product sales.

Since our inception, we have financed our operations primarily with net proceeds of $464.7 million from sales of our preferred stock, with net proceeds of $327.5 million from our initial public offering (“IPO”), and with net proceeds of $39.3 million from sales of our common stock under the Sales Agreement (as defined below).

After receiving EUA in March 2024, we have also funded our operations from sales of PEMGARDA.

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

We will begin reporting PEMGARDA net product revenue with our second quarter 2024 financial results.

Since our inception, we have incurred significant losses, including a net loss of $43.5 million for the three months ended March 31, 2024.

As of March 31, 2024, we had an accumulated deficit of $775.6 million.

Since our inception, we have incurred significant losses, including a net loss of $90.7 million for the six months ended June 30, 2024.

As of June 30, 2024, we had an accumulated deficit of $822.8 million.

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

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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 current operating plans and excluding any contribution from revenues or external financing, we will not have sufficient cash and cash equivalents to fund our operating expenses and capital requirements beyond one year from the issuance date of the interim condensed consolidated financial statements in this Quarterly Report on Form 10-Q, and therefore, we have concluded that there is substantial doubt about our ability to continue as a going concern.

Based on current operating plans and excluding any contribution from future revenues or external financing, we will not have sufficient cash and cash equivalents to fund our operating expenses and capital requirements beyond one year from the issuance date of the interim condensed consolidated financial statements in this Quarterly Report on Form 10-Q, and therefore, we have concluded that there is substantial doubt about our ability to continue as a going concern.

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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Components of Our Results of Operations

Through March 31, 2024, we had not generated any revenue from product sales or any other sources.

We expect to generate revenue from sales of PEMGARDA, which received EUA from the FDA in March 2024.

If our development efforts for other product candidates are also successful and result in regulatory authorization or approval or collaboration or license agreements with third parties, we may also generate revenue in the future from other product sales or payments from collaboration or license agreements that we may enter into with third parties, or any combination thereof.

Product Revenue, Net

In March 2024, we received EUA from the FDA for PEMGARDA.

Product revenue, net consists of product revenue earned on the sales of PEMGARDA in the United States.

Cost of Product Revenue

Cost of product revenue includes PEMGARDA manufacturing costs, labor and overhead costs, and stability study costs.

PEMGARDA manufacturing costs include manufacturing materials, third-party manufacturing costs, packaging costs and shipping costs.

Research and Development Expenses

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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, 2024, we have operated as a hybrid company with employees working at our corporate headquarters and remotely.

Through June 30, 2024, 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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We continue to monitor the manner in which countries will enact legislation to implement the Pillar Two framework proposed by the Organisation for Economic Co-operation and Development, which proposes a 15% global corporate minimum tax.

As of March 31, 2024, various countries have enacted aspects of Pillar Two while committing to enact additional aspects in future years.

As of June 30, 2024, various countries have enacted aspects of Pillar Two while committing to enact additional aspects in future years.

While we do not expect these rules to have a material impact on our effective tax rate, we continue to monitor these initiatives on a global basis.

Results of Operations

Comparison of the three months ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Comparison of the three months ended June 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

(in thousands)

Operating expenses:

Product revenue, net

Total revenue

Operating costs and expenses:

Cost of product revenue

Research and development

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Selling, general and administrative

Total operating expenses

Total operating costs and expenses

Loss from operations

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

Product Revenue, Net

Product revenue, net was $2.3 million for the three months ended June 30, 2024.

There was no product revenue, net for the three months ended June 30, 2023.

The $2.3 million increase is the result of product sales in the second quarter of 2024 following the launch of PEMGARDA.

Cost of Product Revenue

Cost of product revenue was $0.1 million for the three months ended June 30, 2024.

There was no cost of product revenue for the three months ended June 30, 2023.

The $0.1 million is the result of PEMGARDA product sales following launch and certain period costs.

We began capitalizing our inventory costs in March 2024, in connection with EUA from the FDA and based upon our expectation that these costs would be recoverable through commercialization of PEMGARDA.

Prior to the capitalization of our inventory costs, such costs were recorded as research and development expenses in the period incurred.

Had our pre-EUA manufacturing costs been capitalized, our reported margins would have been approximately 80%.

Research and Development Expenses

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands)

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(2) In March 2024, we announced the nomination of VYD2311 as a novel mAb therapeutic option for COVID-19.

Research and development expenses were $31.2 million for the three months ended March 31, 2024, compared to $27.2 million for the three months ended March 31, 2023.

The $4.0 million increase in research and development expenses was primarily due to the following:

• The increase in direct costs related to our VYD222 program was primarily due to a $6.9 million increase in contract manufacturing costs for commercial manufacturing and a $3.1 million increase in contract research costs for our CANOPY clinical trial.

These increases were offset by a decrease of $0.2 million in other external and nonclinical expenses.

• The increase in direct costs related to our VYD2311 program was due to the nomination of our VYD2311 product candidate in the first quarter of 2024.

The costs were primarily related to contract manufacturing costs.

• The decrease in direct costs related to our adintrevimab program of $2.4 million was due to a decrease in contract manufacturing costs and contract research costs after the nomination of our VYD222 product candidate in the first quarter of 2023.

• The decrease in personnel-related costs of $0.6 million was primarily due to a decrease in stock-based compensation expense.

• The decrease in external discovery-related and other costs of $4.8 million was primarily due to a $3.2 million decrease in contract manufacturing costs related to our pipeline candidates and a $1.6 million decrease in other external costs.

Research and development expenses were $30.3 million for the three months ended June 30, 2024, compared to $43.6 million for the three months ended June 30, 2023.

The $13.3 million decrease in research and development expenses was primarily due to the following:

• the decrease in direct costs related to our VYD222 program of $29.1 million in contract costs for commercial manufacturing and $0.2 million in nonclinical expenses, partially offset by increases of $2.1 million in contract research costs for our CANOPY clinical trial and $0.3 million in other external expenses;

• the increase in direct costs related to our VYD2311 program due to the nomination of our VYD2311 product candidate in the first quarter of 2024, consisting of contract manufacturing costs;

• the decrease in direct costs related to our adintrevimab program of $0.4 million following the nomination of our VYD222 product candidate in the first quarter of 2023;

• the decrease in personnel-related costs of $2.7 million due to the capitalization of certain inventory costs which were recorded as research and development costs prior to the EUA of PEMGARDA;

• the decrease in external discovery-related and other costs due to a $0.9 million decrease in other nonclinical expenses, partially offset by a $0.3 million increase in contract research costs related to our pipeline candidates and other external costs.

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

There was no IPR&D expense recognized during the three months ended March 31, 2024.

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 Assignment and 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 June 30, 2024.

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.

Selling, General and Administrative Expenses

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands)

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Total selling, general and administrative expenses

Selling, general and administrative expenses were $14.9 million for the three months ended March 31, 2024, compared to $11.0 million for the three months ended March 31, 2023.

Selling, general and administrative expenses were $21.1 million for the three months ended June 30, 2024, compared to $10.1 million for the three months ended June 30, 2023.

The $11.0 million increase in selling, general and administrative expenses was primarily due to the following:

• The increase in personnel-related costs of $1.1 million was primarily due to an increase in headcount-related costs, including an increase in stock-based compensation expense.

• The increase in professional and consultant fees of $2.9 million was primarily due to an increase in commercialization costs.

• Other costs remained relatively consistent between periods.

Other income was $2.6 million for the three months ended March 31, 2024, consisting primarily of interest earned on our invested cash balances.

Other income was $3.8 million for the three months ended March 31, 2023, consisting 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.

• the increase in personnel-related costs of $6.9 million was primarily due to an increase in headcount-related costs, including an increase in stock-based compensation expense of $4.5 million.

The increase in stock-based compensation expense was primarily due to stock-based compensation expense recognized associated with the accelerated vesting of a portion of the outstanding stock options granted to our former Chief Executive Officer, in accordance with the terms of his employment agreement;

• the increase in professional and consultant fees and other costs of $3.3 million and $0.7 million, respectively, was primarily related to the commercialization of PEMGARDA.

Other income was $2.0 million for the three months ended June 30, 2024, consisting primarily of interest earned on our invested cash balances.

Other income was $3.6 million for the three months ended June 30, 2023, consisting 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.

Comparison of the six months ended June 30, 2024 and 2023

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

(in thousands)

Product revenue, net

Total revenue

Operating costs and expenses:

Cost of product revenue

Research and development

Acquired in-process research and development

Selling, general and administrative

Total operating costs and 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:

Product Revenue, Net

Product revenue, net was $2.3 million for the six months ended June 30, 2024.

There was no product revenue, net for the six months ended June 30, 2023.

The $2.3 million increase is the result of product sales in the second quarter of 2024 following the launch of PEMGARDA.

Cost of Product Revenue

Cost of product revenue was $0.1 million for the six months ended June 30, 2024.

There was no cost of product revenue for the six months ended June 30, 2023.

The $0.1 million is the result of PEMGARDA product sales following launch and certain period costs.

Prior to the capitalization of our inventory costs, such costs were recorded as research and development expenses in the period incurred.

Had our pre-EUA manufacturing costs been capitalized, our reported margins would have been approximately 80%.

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

(1) In March 2023, we announced the nomination of VYD222 as a novel mAb therapeutic option for COVID-19.

(2) In March 2024, we announced the nomination of VYD2311 as a novel mAb therapeutic option for COVID-19.

Research and development expenses were $61.5 million for the six months ended June 30, 2024, compared to $70.8 million for the six months ended June 30, 2023.

The $9.3 million decrease in research and development expenses was primarily due to the following:

• the decrease in direct costs related to our VYD222 program of $22.2 million in contract costs for commercial manufacturing and $0.3 million in nonclinical expenses, partially offset by increases of $5.2 million in contract research costs for our CANOPY clinical trial and $0.2 million in other external expenses;

• the increase in direct costs related to our VYD2311 program due to the nomination of our VYD2311 product candidate in the first quarter of 2024, consisting of contract manufacturing costs;

• the decrease in direct costs related to our adintrevimab program of $2.8 million following the nomination of our VYD222 product candidate in the first quarter of 2023;

• the decrease in personnel-related costs of $3.2 million due to the capitalization of certain inventory costs which were recorded as research and development costs prior to the EUA of PEMGARDA;

• the decrease in external discovery-related and other costs due to a $3.2 million decrease in contract manufacturing costs related to our pipeline candidates, a $1.8 million decrease in other nonclinical expenses and a $0.4 million decrease in other external costs.

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

There was no IPR&D expense recognized during the six months ended June 30, 2024.

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 Assignment and License Agreement and $0.6 million in license fees due to WuXi Biologics under the Cell Line License Agreement.

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 $36.0 million for the six months ended June 30, 2024, compared to $21.2 million for the six months ended June 30, 2023.

The $14.8 million increase in selling, general and administrative expenses was primarily due to the following:

• the increase in personnel-related costs of $8.0 million was primarily due to an increase in headcount-related costs, including an increase in stock-based compensation expense of $5.1 million.

• the increase in professional and consultant fees and other costs of $6.2 million and $0.6 million, respectively, was primarily related to the commercialization of PEMGARDA.

Other income was $4.6 million for the six months ended June 30, 2024, consisting primarily of interest earned on our invested cash balances.

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.

Liquidity and Capital Resources

Sources of Liquidity

Through March 31, 2024, we had not generated any revenue from any sources, including from product sales, and have incurred significant operating losses and negative cash flows from operations.

Through June 30, 2024, we have incurred significant operating losses and negative cash flows from operations.

Although we received an EUA from the FDA for PEMGARDA in March 2024, we may continue to incur significant expenses and potential operating losses for the foreseeable future as we commercialize PEMGARDA and advance the development of our other product candidates.

To date, we have financed our operations primarily 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.

To date, we have financed our operations primarily with net proceeds of $464.7 million from sales of our preferred stock, with aggregate net proceeds from our IPO in August 2021 of $327.5 million, and with net proceeds of $39.3 million from sales of our common stock under the Sales Agreement (as defined below).

After receiving EUA in March 2024, we have also funded our operations from sales of PEMGARDA.

In December 2023, we entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”), pursuant to which we may, at our option, offer and sell shares of our common stock, with a sales value of up to $75.0 million, from time to time, through Cantor, acting as sales agent, in transactions deemed to be “at the market offerings”, as defined in Rule 415 under the Securities Act of 1933, as amended.

Cantor is entitled to a commission of 3% of the gross proceeds from any sales of such shares.

In February 2024, we sold 9,000,000 shares of our common stock under the Sales Agreement at an average price of $4.50 per share for $39.3 million in net proceeds.

As of March 31, 2024, $34.5 million remained available for sale under the Sales Agreement.

As of March 31, 2024, we had cash and cash equivalents of $189.4 million.

In February 2024, we sold 9,000,000 shares of our common stock under the Sales Agreement

at an average price of $4.50 per share for $39.3 million in net proceeds.

As of June 30, 2024, $34.5 million remained available for sale under the Sales Agreement.

As of June 30, 2024, we had cash and cash equivalents of $147.9 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, 2024, operating activities used $50.2 million of cash, primarily due to our net loss of $43.5 million and changes in our operating assets and liabilities of $12.6 million, partially offset by non-cash charges of $5.9 million.

The changes in our operating assets and liabilities primarily consisted of a $7.0 million decrease in accrued expenses, a $6.8 million decrease in accounts payable, a $1.7 million increase in other non-current assets, a $0.7 million decrease in other non-current liabilities, a $0.4 million decrease in operating lease liabilities and a $0.1 million increase in inventory, partially offset by a $4.0 million decrease in prepaid expenses and other current assets.

The decrease 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 the utilization of WuXi Biologics manufacturing prepayments and deposits.

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 and changes in our operating assets and liabilities of $9.2 million, partially offset by non-cash charges of $3.3 million.

The changes in our operating assets and liabilities primarily consisted of a $6.9 million decrease in accrued expenses, a $6.3 million increase in prepaid expenses and other current assets, and a $0.4 million decrease in operating lease liabilities, partially offset by a $4.4 million increase in accounts payable.

The decrease in accrued expenses and the increase in accounts payable were 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 six months ended June 30, 2024, operating activities used $91.8 million of cash, primarily due to our net loss of $90.7 million and changes in our operating assets and liabilities of $16.0 million, partially offset by non-cash charges of $14.9 million.

The changes in our operating assets and liabilities primarily consisted of a $15.8 million decrease in accrued expenses, a $2.9 million increase in accounts receivables, a $2.6 million increase in inventory, a $1.6 million increase in other non-current assets, a $0.8 million decrease in operating lease liabilities, a $0.8 million decrease in other non-current liabilities and a $0.6 million decrease in accounts payable, partially offset by a $7.4 million decrease in prepaid expenses and other current assets, and a $1.7 million increase in deferred revenue.

The decrease in 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 the utilization of WuXi Biologics manufacturing prepayments.

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 and changes in our operating assets and liabilities of $0.4 million.

The changes in our operating assets and liabilities primarily consisted of a $5.3 million increase in accrued expenses and a $2.6 million increase in accounts payable, partially offset by a $6.6 million decrease in prepaid expenses and other current assets, a $0.8 million decrease in operating lease liabilities and a $0.1 million increase in other non-current assets.

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.

Investing Activities

Net cash used in investing activities during the three months ended March 31, 2024 consisted of $0.1 million in purchases of property and equipment.

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 used in investing activities during the six months ended June 30, 2024 consisted of $0.1 million in purchases of property and equipment.

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 marketable securities and $0.6 million in purchases of property and equipment.

Financing Activities

Net cash provided by financing activities during the three months ended March 31, 2024 consisted of $39.3 million from the issuance of common stock under the Sales Agreement and $0.1 million from the issuance of common stock under the employee stock purchase plan, offset by $0.3 million in payments for offering costs related to the Sales Agreement.

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 the issuance of common stock under the employee stock purchase plan.

Net cash provided by financing activities during the six months ended June 30, 2024 consisted of $39.3 million from the issuance of common stock under the Sales Agreement, $0.2 million from exercises of stock options, $0.2 million from the issuance of common stock under the employee stock purchase plan, offset by $0.4 million in payments for offering costs related to the Sales Agreement.

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 the issuance of common stock under the employee stock purchase plan.

Funding Requirements

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In accordance with Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we are required to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern from the issuance date of our consolidated financial statements.

Based on current operating plans and excluding any contribution from revenues or external financing, we will not have sufficient cash and cash equivalents to fund our operating expenses and capital requirements beyond one year from the issuance of these consolidated financial statements, and therefore, we have concluded that there is substantial doubt about our ability to continue as a going concern.

Based on current operating plans and excluding any contribution from future revenues or external financing, we will not have sufficient cash and cash equivalents to fund our operating expenses and capital requirements beyond one year from the issuance of these consolidated financial statements, and therefore, we have concluded that there is substantial doubt about our ability to continue as a going concern.

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

Through March 31, 2024, we committed to noncancelable purchase obligations related to commercial drug substance and drug product manufacturing under the Commercial Manufacturing Services Agreement with WuXi Biologics, which was entered into in December 2020, amended and restated in August 2021 and further amended and restated in September 2023 (as amended and restated, the “Commercial Manufacturing Agreement”).

As of March 31, 2024, the total remaining contractually binding commercial drug substance and drug product purchase obligations due to WuXi Biologics was $69.3 million, which is expected to be paid in 2024 and 2025.

As of March 31, 2024, $18.4 million related to the contractually binding commercial drug substance and drug product batches was included in accounts payable and accrued expenses, which is expected to be paid in 2024.

Through March 31, 2024, the Company committed to noncancelable purchase obligations of $24.7 million related to the procurement of materials to be used in future drug substance and drug product manufacturing under the Commercial Manufacturing Agreement, which is expected to be paid in 2024.

Through June 30, 2024, we committed to noncancelable purchase obligations related to commercial drug substance and drug product manufacturing under the Commercial Manufacturing Services Agreement with WuXi Biologics, which was entered into in December 2020, amended and restated in August 2021 and further amended and restated in September 2023 (as amended and restated, the “Commercial Manufacturing Agreement”).

As of June 30, 2024, the total remaining contractually binding commercial drug substance and drug product purchase obligations due to WuXi Biologics was $52.6 million, which is expected to be paid in 2024 and 2025.

As of June 30, 2024, $15.6 million related to the contractually binding commercial drug substance and drug product batches was included in accounts payable and accrued expenses, which is expected to be paid in 2024.

Through June 30, 2024, we committed to noncancelable purchase obligations of $24.7 million related to the procurement of materials to be used in future drug substance and drug product manufacturing under the Commercial Manufacturing Agreement, which is expected to be paid in 2024.

As of June 30, 2024, $6.0 million related to the procurement of materials to be used in future drug substance and drug product manufacturing was included in accounts payable and accrued expenses, which is expected to be paid in 2024.

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 months ended March 31, 2024, there were no material changes to our contractual obligations from those described in the 2023 Form 10-K.

Other than the above noted transactions, during the three and six months ended June 30, 2024, there were no material changes to our contractual obligations from those described in the 2023 Form 10-K.

Critical Accounting Policies and Significant Judgments and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States.

The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the

reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures.

The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures.

Our critical accounting policies and estimates are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in the 2023 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 2. Management’s Discussion and Analysis