What changed in this filing

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Item 1A. Risk Factors

2020-11-10 compared with 2020-08-11 · 134 added, 79 removed, 1222 unchanged (15% of the section changed)

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You should consider all of the risk factors described when evaluating our business.

Summary of Risk Factors

Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common stock.

These risks include, among others, the following:

We have incurred significant net losses since inception and anticipate that we will continue to incur substantial net losses for the foreseeable future and may never achieve or maintain profitability.

Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

We require substantial additional funding to finance our operations.

If we are unable to raise capital when needed, we could be forced to delay, reduce or terminate certain of our development programs or other operations.

Our future success is substantially dependent on the successful clinical development, regulatory approval and commercialization of our product candidates in a timely manner.

If we are not able to obtain required regulatory approvals, we will not be able to commercialize our product candidates and our ability to generate product revenue will be adversely affected.

We are a party to strategic collaboration and license agreements pursuant to which we are obligated to make substantial payments upon achievement of milestone events and, in certain cases, have relinquished important rights over the development and commercialization of certain current and future product candidates.

We also intend to explore additional strategic collaborations, which may never materialize or may require that we relinquish rights to and control over the development and commercialization of our product candidates.

Success in preclinical studies or earlier clinical trials may not be indicative of results in future clinical trials and we cannot assure you that any ongoing, planned or future clinical trials will lead to results sufficient for the necessary regulatory approvals.

Clinical product development involves a lengthy and expensive process.

We may incur additional costs and encounter substantial delays or difficulties in our clinical trials.

Our business could be materially adversely affected by the effects of health pandemics or epidemics, including the current COVID-19 pandemic and future outbreaks of the disease.

We intend to rely on third parties to produce clinical and commercial supplies of our product candidates.

If we are unable to obtain and maintain patent protection for our product candidates and technology, or if the scope of the patent protection obtained is not sufficiently broad or robust, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our product candidates and technology may be adversely affected.

We are highly dependent on our key personnel, and if we are not able to retain these members of our management team or recruit and retain additional management, clinical and scientific personnel, our business will be harmed.

Risks Related to Our Financial Position and Capital Needs

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Since inception in April 2016, we have incurred significant net losses and have never generated any revenue from product sales.

Our net loss was $108.4 million and $62.6 million for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020, we had an accumulated deficit of $476.9 million.

Our net loss was $193.0 million and $110.9 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, we had an accumulated deficit of $561.5 million.

We expect to continue to incur significant expenses and increasing net losses for the foreseeable future.

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If we are unable to raise capital when needed, we could be forced to delay, reduce or terminate certain of our development programs or other operations.

As of June 30, 2020, excluding restricted cash, we had cash, cash equivalents and short-term investments of $552.4 million.

Based upon our current operating plan, we believe that our existing cash, cash equivalents and short-term investments as of June 30, 2020 and the proceeds from our subsequent sale of common stock in connection with our follow-on offering in July 2020 will fund our current operating plans through at least the next 12 months from the issuance date of our condensed consolidated financial statements for the period ended June 30, 2020.

As of September 30, 2020, excluding restricted cash, we had cash, cash equivalents and short-term investments of $826.6 million.

Based upon our current operating plan, we believe that our existing cash, cash equivalents and short-term investments as of September 30, 2020 will fund our current operating plans through at least the next 12 months from the issuance date of our condensed consolidated financial statements for the period ended September 30, 2020.

However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned.

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If we are unable to raise additional capital when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise develop and market ourselves.

Our pursuit of a potential therapy for COVID-19, the disease caused by the virus SARS-CoV-2, is at an early stage, and we are committing substantial financial resources and personnel and making substantial capital commitments with third parties in furtherance thereof and we may be unable to secure sufficient capital or manufacturing capacity to develop and commercialize a therapy that successfully treats the virus in a timely manner, if at all.

In response to the recent outbreak of COVID-19, the disease caused by the virus SARS-CoV-2, we are pursuing various potential therapies to address the disease, including through mAbs using our antibody platform (in collaboration with several partners), such as VIR-7831 and VIR-7832, and siRNA using our siRNA platform (in collaboration with Alnylam), such as VIR-2703.

Our testing and development of these potential therapies is in early stages, and we may be unable to produce a therapy that successfully treats the virus in a timely manner, if at all.

For example, we have not yet initiated any clinical trials for VIR-7831, VIR-7832 or VIR-2703, although we plan to commence a Phase 2/3 clinical trial in August 2020 for VIR-7831, for which we anticipate initial clinical data to be available before the end of the year, commence a Phase 2 clinical trial later this year for VIR-7832 and continue pre-clinical studies for VIR-2703.

For example, we initiated a Phase 3 clinical trial in October 2020 for VIR-7831, for which we anticipate that interim data may be available as early as January 2021.

We have not yet initiated any clinical trials for VIR-7832 or VIR-2703, although we plan to commence a Phase 1b/2a clinical trial in the first quarter of 2021 for VIR-7832 and continue pre-clinical studies for VIR-2703 led by Alnylam Pharmaceuticals, Inc., or Alnylam .

We are also committing substantial financial resources, both internally and externally, and personnel to the development of a potential therapy for COVID-19, which may cause delays in or otherwise negatively impact our other development programs, despite uncertainties surrounding the longevity and extent of COVID-19 as a global health concern.

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We were obligated to pay directly to WuXi, prior to our assignment of such agreement, a total of approximately $130.0 million for such capacity reservation, if all batches are manufactured, inclusive of estimated raw material costs, with between 70% and 80% of the batch production fees owed to WuXi Biologics on a take-or-pay basis regardless of whether we utilize such manufacturing slots.

In July 2020, we assigned each of the Samsung Letter Agreement and the WuXi Biologics Letter Agreement to GlaxoSmithKline Trading Services Limited , or GSKTSL , and GSKTSL entered into a Master Services Agreement with Samsung , or the Samsung MSA, and a non-exclusive Master Services Agreement for Commercial Manufacture of Drug Substance with WuXi Biologics , or the WuXi Biologics MSA, thereby superseding each of the Samsung Letter Agreement and the WuXi Biologics Letter Agreement , and pursuant to which , among other things, Samsung and WuXi Biologics will perform development and manufacturing services for clinical and commercial supply of antibody products under our SARS-CoV-2 antibody program under each of the Samsung MSA and WuXi Biologics MSA.

the WuXi Biologics Letter Agreement , and pursuant to which , among other things, Samsung and WuXi Biologics will perform development and manufacturing services for clinical and commercial supply of antibody products under our SARS-CoV-2 antibody program under each of the Samsung MSA and WuXi Biologics MSA.

In accordance with the terms of the definitive c ollaboration a greement with Glaxo Wellcome UK Limited and Beecham S.A.

(collectively referred to as GSK ) , we will continue to be responsible for 72.5% of the costs under each of the Samsung MSA and WuXi Biologics MSA , and GSK will bear 27.5% of such costs, subject to certain conditions and exceptions.

In May 2020, we entered into a clinical development and manufacturing agreement with Biogen Inc., or Biogen, pursuant to which we could be required to pay approximately $100.0 million to Biogen as an “access fee” based on our current working assumptions of manufacturing yield per batch if we successfully manufacture all batches of SARS-CoV-2 antibody drug substance under the Samsung MSA , in addition to other payments to Biogen pursuant to statements of work under the Biogen agreement.

In May 2020, we entered into a clinical development and manufacturing agreement with Biogen Inc., or Biogen, pursuant to which we could be required to pay approximately $100.0 million to Biogen as an “access fee” based on our current working assumptions of manufacturing titer and yield per batch if we successfully manufacture all batches of SARS-CoV-2 antibody drug substance under the Samsung MSA , in addition to other payments to Biogen pursuant to statements of work under the Biogen agreement.

Our current estimated aggregate commitments to GSK under the Samsung MSA and WuXi Biologics MSA for drug substance, drug product and raw material are approximately $482 .0 million , excluding the approximate “access fee” payable to Biogen.

While we believe securing such manufacturing capacity and technological expertise is crucial to the potential success of our SARS-CoV-2 antibody development programs, such capital commitments, in the aggregate, currently exceed our available cash and cash equivalents and short-term investments.

While we believe securing such manufacturing capacity and technological expertise is crucial to the potential success of our SARS-CoV-2 antibody development programs, such capital commitments plus any future commitments, in the aggregate, may, in the future, exceed our available cash and cash equivalents and short-term investments.

We may also need to enter into additional manufacturing arrangements in the future in order to create an effective supply chain for our COVID-19 product candidates that will adequately support demand.

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In addition, another party may be successful in producing a more efficacious therapy for SARS-CoV-2 or in producing a therapy in a more timely manner, which may also lead to the diversion of funding away from us and toward other companies or lead to decreased demand for our potential therapies.

There are efforts by several public and private entities to develop a therapy for COVID-19, including Johnson & Johnson, AstraZeneca plc, Sanofi S.A., Pfizer Inc.

and Moderna, Inc., some of which are further along in the clinical development process than we are.

There are efforts by several public and private entities to develop a therapy for COVID-19, including AstraZeneca plc, Eli Lilly, Johnson & Johnson, Moderna, Inc., Pfizer Inc., Regeneron Pharmaceuticals, Inc., and Sanofi S.A., some of which are further along in the clinical development process than we are.

These other entities may be more successful at developing, manufacturing or commercializing a therapy for COVID-19.

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government funding, and broader manufacturing infrastructure.

In addition, several organizations have already secured significant commitments from goverments to purchase COVID-19 vaccines.

There are no assurances that we will secure U.S.

government funding or a broad enough manufacturing infrastructure, which may adversely impact our ability to commercialize a therapy for COVID-19.

In addition, several organizations have already secured significant commitments from governments to purchase COVID-19 vaccines.

The success or failure of other entities, or perceived success or failure, may adversely impact our ability to obtain any future funding for our development and manufacturing efforts or to ultimately commercialize a therapy for COVID-19, if approved.

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We may face unforeseen challenges in our product development strategy, and we can provide no assurances that our product candidates will be successful in clinical trials or will ultimately receive regulatory approval.

We have only recently initiated clinical trials for three product candidates.

We have only recently initiated clinical trials for four product candidate s .

We have not obtained regulatory approval for any product candidate, and it is possible that any product candidates we may seek to develop in the future will not obtain regulatory approval.

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Monotherapy with each of these agents may provide a functional cure in some patients, while combination therapy may be necessary for others.

We recently initiated a Phase 2 clinical trial to combine VIR-2218 with pegylated interferon-alpha and we are planning trials that combine VIR-2218 with VIR-3434.

We initiated a Phase 2 clinical trial to combine VIR-2218 with pegylated interferon-alpha and we are planning trials that combine VIR-2218 with VIR-3434.

We are also evaluating additional combinations with other immunotherapy agents and direct acting antiviral agents.

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we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;

disruptions caused by man-made or natural disaster s or public health pandemics or epidemics or other business interruption s, including the current COVID-19 pandemic and future outbreaks of the disease , which already caused us to delay initiation of the Phase 2 trial for VIR-2482 and Phase 1 trial for VIR-1111, and could cause other or additional disruptions .

Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenue from future product sales or other sources.

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Furthermore, our product candidates are based on certain innovative technology platforms, which makes it even more difficult to predict the time and cost of product candidate development and obtaining regulatory approval, particularly for our small interfering ribonucleic acid, or siRNA, and cytomegalovirus, or CMV, vector technologies.

Relatively few siRNA product candidates have ever been tested in humans and to date, we are only aware of two siRNAs, ONPATTRO ( patisiran ) in 2018 and Givlaari ( givosiran ) in 2019 (both developed by Alnylam Pharmaceuticals, Inc., or Alnylam), that have received regulatory approval.

In addition, the compounds we are developing may not demonstrate in patients the chemical and pharmacological properties ascribed to them in preclinical studies, and they may interact with human biological systems in unforeseen, ineffective or harmful ways.

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Identifying and qualifying patients to participate in our clinical trials is critical to our success.

We are developing VIR-2218 and VIR-3434 for the treatment of HBV, VIR-2482 for the prevention of influenza A, VIR-1111 for the prevention of human immunodeficiency virus, or HIV, VIR-2020 for the prevention of tuberculosis, or TB, and VIR-7831, VIR-7832 and VIR-2703 for the treatment of COVID-19.

We are developing VIR-7831, VIR-7832 and VIR-2703 for the treatment of COVID-19, VIR-2218 and VIR-3434 for the treatment of HBV, VIR-2482 for the prevention of influenza A, VIR-1111 for the prevention of human immunodeficiency virus, or HIV, and VIR-2020 for the prevention of tuberculosis, or TB.

In particular, clinical trials for prophylaxes tend to require enrollment of a larger number of subjects than clinical trials for treatments.

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Often, it is not possible to determine whether or not the product candidate being studied caused these conditions.

Regulatory authorities may draw different conclusions or require additional testing to confirm these determinations, if they occur.

Regulatory authorities may draw different conclusions and may require us to pause our clinical trials or require additional testing to confirm these determinations, if they occur.

In addition, it is possible that as we test our product candidates in larger, longer and more extensive clinical trials, or as use of these product candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, discomforts and other adverse events that were not observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by subjects or patients.

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In partial consideration for the options granted by us to Brii Bio, Brii Bio Parent and Brii Bio granted us, with respect to up to four of Brii Bio Parent’s or Brii Bio’s programs, an exclusive option to be granted exclusive rights to develop and commercialize compounds and products arising from such Brii Bio programs in the United States for the Field of Use.

In June 2020 , Brii Bi o exercised its option to obtain exclusive rights to develop and commercialize compounds and products arising fro m VIR-2218 in the China Territory pursuant to the Brii Agreement .

In June 2020 , Brii Bi o exercised its option to obtain exclusive rights to develop and commercialize compounds and products arising from VIR-2218 in the China Territory pursuant to the Brii Agreement .

We cannot be certain that, following the exercise of an option by Brii Bio or by us, we will achieve any benefits from our collaboration with Brii Bio.

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These advantages could render our product candidates obsolete or non-competitive before we can recover the costs of such product candidates’ development and commercialization.

For example, there are efforts by several public and private entities to develop a therapy for COVID-19, including Johnson & Johnson, AstraZeneca plc, Sanofi S.A., Pfizer Inc.

and Moderna, Inc., some of which are further along in the clinical development process than we are.

For example, there are efforts by several public and private entities to develop a therapy for COVID-19, including AstraZeneca plc, Eli Lilly, Johnson & Johnson, Moderna, Inc., Pfizer Inc., Regeneron Pharmaceuticals, Inc., and Sanofi S.A.

, some of which are further along in the clinical development process than we are.

These other entities may be more successful at developing, manufacturing or commercializing a therapy for COVID-19.

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Namely, the Trump administration has taken several executive actions, including the issuance of a number of executive orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review and approval of marketing applications.

It is difficult to predict how these executive actions, including the executive orders, will be implemented and the extent to which they will affect the FDA’s ability to exercise its regulatory authority.

If these executive actions impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business, financial condition, results of operations and prospects may be negatively impacted.

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Our product candidates targeting SARS-CoV-2, the virus that causes COVID-19, are in the early testing and development stages.

VIR-7831, a SARS-CoV-2-neutralizing mAb, is planned to initiate a Phase 2/3 clinical trial in August 2020, VIR-7832, also a SARS-CoV-2-neutralizing mAb, is planned to initiate a Phase 2 clinical trial later this year, and VIR-2703, a SARS-CoV-2-targeting siRNA, is planned to continue pre-clinical studies.

VIR-7831, a SARS-CoV-2-neutralizing mAb, is currently in a Phase 3 clinical trial, VIR-7832, also a SARS-CoV-2-neutralizing mAb, is planned to initiate a Phase 1b/2a clinical trial and discussions with regulatory bodies are ongoing, and VIR-2703, a SARS-CoV-2-targeting siRNA, is planned to continue pre-clinical studies led by Alnylam.

The speed at which companies and institutions are acting to create and test many therapeutics and vaccines for COVID-19 is unusual, and evolving or changing plans or priorities within the FDA, including changes based on new knowledge of COVID-19 and how the disease affects the human body, may significantly affect the regulatory timelines for our COVID-19 product candidates.

Results from our continued development and planned clinical trials may raise new questions and require us to redesign proposed clinical trials, including revising proposed endpoints or adding new clinical trial sites or cohorts of subjects.

Discussions with the FDA regarding the design of the anticipated Phase 2/3 clinical trial for VIR-7831 are ongoing and important aspects of the trial design have yet to be determined, including the number of patients to be enrolled in the trial, the specific endpoints of the trial and the methods for obtaining and testing samples in the trial and discussions with the FDA regarding the anticipated Phase 2 clinical trial for VIR-7832 are in the initial stages.

As part of these ongoing discussions, the FDA may require us to conduct additional pre-clinical studies and/or clinical trials than we originally anticipated, which could result in significant delay in our development program for these product candidates.

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federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, which also imposes certain obligations, including mandatory contractual terms, with respect to safeguarding the privacy and security of individually identifiable health information of covered entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers as well as their business associates, independent contractors of a covered entity that perform certain services involving the use or disclosure of individually identifiable health information on their behalf;

the Federal Food Drug or Cosmetic Act, or FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices;

Physician Payments Sunshine Act and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the government information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members, which will be expanded beginning in 2022, to require applicable manufacturers to report such information regarding its relationships with physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and certified nurse midwives during the previous year;

analogous U.S.

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For example, The Tax Cuts and Jobs Act of 2017, or Tax Act, includes a provision that repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year, which is commonly referred to as the “individual mandate.” Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the Affordable Care Act’s mandated medical device tax and “Cadillac” tax on high-cost employer-sponsored health coverage and, effective January 1, 2021, also eliminates the health insurer tax.

Further, the Bipartisan Budget Act of 2018, or the BBA, among other things, amended the ACA, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” In December 2018, the CMS, published a final rule permitting further collections and payments to and from certain ACA-qualified health plans and health insurance issuers under the ACA adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment.

Further, the Bipartisan Budget Act of 2018, or the BBA, among other things, amended the ACA, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” In December 2018, the CMS, published a final rule permitting further collections and payments to and from certain ACA-qualified health plans and health insurance issuers under the ACA risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment.

On April 27, 2020, the United States Supreme Court reversed a Federal Circuit decision that previously upheld Congress' denial of $12 billion in "risk corridor" funding.

On December 14, 2018, a U.S.

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Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act are invalid as well.

On March 2, 2020, the United States Supreme Court granted the petitions for writs of certiorari to review this case, and has allotted one hour for oral arguments, which are expected to occur in the fall.

On March 2, 2020, the United States Supreme Court granted the petitions for writs of certiorari to review this case.

It is unclear how such litigation and other efforts to repeal and replace the ACA will impact the ACA.

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In addition, the Trump administration previously released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contained proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers.

The Department of Health and Human Services, or HHS, has solicited feedback on some of these measures and has implemented others under its existing authority.

For example, in May 2019, CMS issued a final rule to allow

Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020.

The Department of Health and Human Services, or HHS, has solicited feedback on some of

these measures and has implemented others under its existing authority.

For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020.

This final rule codified a CMS policy change that was effective January 1, 2019.

On July 24, 2020, the Trump administration announced four executive orders related to prescription drug pricing that attempt to implement several of the administration’s proposals, including a policy that would tie certain Medicare Part B drug prices to international drug prices , the details of which were released on September 13, 2020 and expanded the policy to cover certain Part D drugs ;

one that directs HHS to finalize the Canadian drug importation proposed rule previously issued by HHS and makes other changes allowing for personal importation of drugs from Canada;

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and one that reduces costs of insulin and epipens to patients of federally qualified health centers.

The FDA also recently released a final rule, effective November 30, 2020, implementing a portion of the importation executive order providing guidance for states to build and submit importation plans for drugs from Canada .

While some of these measures may require additional authorization to become effective, the U.S.

Congress and the Trump administration have indicated that they will continue to seek new legislative and/or administrative measures to control drug and biological product costs.

In addition, it is uncertain how the results of the 2020 U.S.

elections will impact these measures.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, designed to encourage importation from other countries and bulk purchasing.

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If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition, results of operations and prospects could be materially harmed.

In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

In addition, responding to any action will likely result in a materially significant diversion of management’s attention and

resources and significant defense costs and other professional fees.

Enforcement actions and sanctions could further harm our business, financial condition, results of operations and prospects.

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We are dependent on third parties to manufacture the clinical supplies of our current and any future product candidates.

We have established relationships with multiple contract development and manufacturing organizations, or CDMOs, that have produced material to support our preclinical, Phase 1 and Phase 2 clinical trials.

We have not yet manufactured our product candidates on a commercial scale, and we do not yet have sufficient information to reliably estimate the cost of the commercial manufacturing of our product candidates.

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We also intend to rely on third-party manufacturers to supply us with sufficient quantities of our product candidates to be used, if approved, for commercialization.

We do not yet have a commercial supply agreement for commercial quantities of our product candidates.

If we are not able to meet market demand for any approved product or if we are not able to produce supply at low enough costs, it would negatively impact our ability to generate revenue, harm our reputation, and could have an adverse effect on our business, financial condition, results of operations and prospects.

In addition, we currently rely on foreign CDMOs, including a CDMO in China, and will likely continue to rely on foreign CDMOs in the future.

Foreign CDMOs may be subject to trade restrictions and other foreign regulatory requirements which could increase the cost or reduce the supply of material available to us, or delay the procurement of such material.

There is, however, no assurance that our third-party manufacturers will meet our working assumptions of manufacturing titer and yield per batch of our product candidates.

Any reduction in anticipated manufacturing titer and yield delay may adversely impact our ability to meet market demand for any approved product.

Furthermore, if we are not able to produce supply at low enough costs, it would negatively impact our ability to generate revenue, harm our reputation, and could have an adverse effect on our business, financial condition, results of operations and prospects.

In addition, we currently rely on foreign CDMOs, including a CDMO in China which we rely on for the clinical development, manufacturing, and commercialization of our proprietary antibodies developed for SARS-CoV-2, and will likely continue to rely on foreign CDMOs in the future.

Foreign CDMOs may be subject to trade restrictions and other foreign regulatory requirements which could increase the cost or reduce the supply of material available to us, delay the procurement of such material or have an adverse effect on our ability to secure significant commitments from governments to purchase our potential therapies .

Additionally, the biopharmaceutical industry in particular in China is strictly regulated by the Chinese government.

Changes to Chinese regulations or government policies affecting biopharmaceutical companies are unpredictable and may have a material adverse effect on our partnerships in China which could have an adverse effect on our business, financial condition, results of operations and prospects.

Evolving changes in China’s economic, political, and social conditions could also negatively impact our ability to manufacture our product candidates for our planned clinical trials, which could adversely affect our financial condition and cause us to delay our clinical development programs.

Evolving changes in China’s economic, political, and social conditions and the uncertainty around China’s relationship with other governments, such as the United States and the United Kingdom could also negatively impact our ability to manufacture our product candidates for our planned clinical trials or have an adverse effect on our ability to secure government funding , which could adversely affect our financial condition and cause us to delay our clinical development programs.

Further, our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including:

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A finding of infringement could prevent us from manufacturing and commercializing our current or any future product candidates or force us to cease some or all of our business operations, which could harm our business.

Even if we are successful in defending against such claims, litigation can be expensive and time-consuming and would divert management’s attention from our core business.

Even if we are successful in defending against such claims, litigation can be expensive and time-consuming and would

divert management’s attention from our core business.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

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We may in the future be required to make these payments, which could adversely affect our financial condition.

For example, as a result of the achievement of a certain development milestone achieved in June 2020, we paid an aggregate of $10.0 million to Humabs securityholders.

For example, as a result of the achievement of certain development milestones achieved in June and October 2020, we paid an aggregate of $20.0 million to Humabs securityholders.

Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results.

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We expect to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.

As of June 30, 2020, we had 253 full-time employees.

As of September 30, 2020, we had 297 full-time employees.

As the clinical development of our product candidates progresses, we also expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of research, development, regulatory affairs and, if any of our product candidates receives marketing approval, sales, marketing and distribution.

In addition, we also expect to hire additional personnel in order to operate as a public company.

To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel.

In addition, we must effectively integrate, develop and motivate a growing number of new employees, and maintain the beneficial aspects of our corporate culture.

We continue to closely monitor the COVID-19 situation and will evolve our expansion plans as needed.

As a result of the global pandemic, the majority of our workforce has been working from home since March 2020.

Despite this, we must continue to effectively integrate, develop and motivate a growing number of new employees, and maintain the beneficial aspects of our corporate culture.

We have implemented plans to reopen our offices to allow employees to return when appropriate.

Although these plans are based on a phased approach consistent with local government requirements, and focused on employee safety, and contemplate returning to remote work should new restrictions be implemented, there is uncertainty regarding recent phased reopening, which may be rolled back, and restrictions re-implemented.

We are also working to provide our employees with the support they need to ensure continuity of business operations.

The expansion of our operations may lead to significant costs and may divert our management and business development resources.

We may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel.

We may not be able to effectively manage the expansion of our operations, recruit and train additional qualified personnel, or succeed at effectively integrating employees that have joined during the global pandemic.

Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

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Our business could be materially adversely affected by the effects of health pandemics or epidemics, including the current outbreak of COVID-19 pandemic and future outbreaks of the disease, which was declared by the World Health Organization as a global pandemic, and is resulting in travel and other restrictions to reduce the spread of the disease, including a California executive order, a San Francisco Bay Area and several other state and local orders across the country, which, among other things, direct individuals to shelter at their places of residence, direct businesses and governmental agencies to cease non-essential operations at physical locations, prohibit certain non-essential gatherings, and order cessation of non-essential travel.

The San Francisco Bay Area shelter-in-place order took effect in March 2020, has been amended, and has no current expiration date.

Similarly, the March 2020 California executive order will continue for an indefinite period of time.

The San Francisco Bay Area shelter-in-place order took effect in March 2020, has been amended to gradually allow for the phased reopening of certain activities, but the broader shelter-in-place mandates continue to remain in effect with no current expiration date.

Similarly, the broader effects of the March 2020 California executive order will continue for an indefinite period of time.

As a result, a large part of our workforce in the United States has been working remotely since March 2020 and plans to fully reopen our offices have not yet been initiated.

In addition, our Humabs BioMed S.A.

subsidiary headquartered in Bellinzona, Switzerland has employees who reside in Italy and who are affected by the national quarantine imposed by the Italian government to slow the spread of COVID-19.

As a result of these recent developments, we have implemented work-from-home policies for most of our employees.

Although we have recently implemented plans to reopen our offices to allow employees to return when appropriate, there is uncertainty regarding recent phased reopenings, which may be rolled back and restrictions reimplemented.

subsidiary headquartered in Bellinzona, Switzerland who has employees who reside in both Switzerland and Italy is affected by restrictions and national quarantined regulations imposed by both the Swiss and Italian governments.

As a result of these developments, in the early part of the year, most of our employees in Bellinzona, Switzerland were working remotely.

In the summer, some of these restrictions were relaxed, and we were able to implement our plans to slowly reopen our offices to allow employees to return.

Although our reopening plans have been consistent with local governments requirements and their phased approach to reopening, there is uncertainty regarding recent phased reopenings, which may be rolled back and restrictions reimplemented.

The effects of the state executive order, a local shelter-in-place order, government-imposed quarantines and our work-from-home policies, including the evolving nature of such policies, may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

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In particular, some of our CDMOs that we use to supply our early stage product candidates are located in China, where the COVID-19 outbreak was first reported and where there have been government-imposed quarantines.

While many of these materials may be obtained by more than one supplier, including suppliers outside of China, port closures and other restrictions resulting from the coronavirus outbreak in the region may disrupt our supply chain or limit our ability to obtain sufficient materials for our product candidates .

While many of these materials may be obtained by more than one supplier, including suppliers outside of China, port closures and other restrictions resulting from the coronavirus outbreak in the region or other regions may disrupt our supply chain or limit our ability to obtain sufficient materials for our product candidates.

In addition, our clinical trials have been affected by the ongoing COVID-19 pandemic.

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Similarly, our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, has been delayed or disrupted, which has adversely impacted our clinical trial operations.

As previously disclosed, clinical trials for our VIR-1111 and VIR-2482 product candidates were delayed due to the COVID-19 pandemic.

For example, the initiation of the Phase 1 trial for VIR-1111 and Phase 2 trial for VIR-2482, which were delayed due to the impact of COVID-19, are now expected in the fourth quarter of 2020 and fourth quarter of 2021, respectively.

Further delays to our trials may occur.

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We have in the past experienced security breaches of our information technology systems.

The techniques used to sabotage or to obtain unauthorized access to information systems, and networks in which cyber threat actors store data or through which they transmit data change frequently and we may be unable to implement adequate preventative measures.

Any significant system failure, accident or security breach could have a material adverse effect on our business, financial condition and results of operations.

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Furthermore, federal, state and international laws and regulations, such as the GDPR, can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties and significant legal liability, if our information technology security efforts fail.

We receive, process, store and use personal information and other data, which subjects us to governmental regulation and other legal obligations, liability and risks related to privacy, security, and data protection, and our actual or perceived failure to comply with such obligations could harm our reputation, subject us to significant fines and liability, and otherwise adversely affect our business.

We receive, process, store and use personal information and other data about our clinical trial participants, employees, partners and others.

We must comply with numerous foreign and domestic laws and regulations regarding privacy and the storing, sharing, use, processing, disclosure, security, and protection of personal information and other data, such as information that we collect about patients and healthcare providers in connection with clinical trials in the United States and abroad.

We (and our service providers) receive, process, store and use personal information and other data, which subjects us to governmental regulation and other legal obligations, liability and risks related to privacy, security, and data protection, and our (and our service providers’) actual or perceived failure to comply with such obligations could harm our reputation, subject us to significant fines and liability, and otherwise adversely affect our business.

We, and our service providers, receive, process, store and use personal information and other data about our clinical trial participants, employees, partners and others.

We, and our service providers, must comply with numerous foreign and domestic laws and regulations regarding privacy and the storing, sharing, use, processing, disclosure, security, and protection of personal information and other data, such as information that we collect about patients and healthcare providers in connection with clinical trials in the United States and abroad.

We strive to comply with all applicable requirements and obligations;

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With substantial uncertainty over the interpretation and application of these laws, regulations and other obligations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses in our efforts to do so.

In addition, various states, such as California and Massachusetts, have implemented similar privacy and data protection laws and regulations that impose restrictive requirements regulating the use and disclosure of health information and other personally identifiable information.

These laws and regulations are not necessarily preempted by HIPAA, particularly if a state affords greater protection to individuals than HIPAA.

Where state laws are more protective, we have to comply with the stricter provisions.

In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to individuals who believe their personal information has been misused.

For example, California enacted legislation that became effective on January 1, 2020, the California Consumer Privacy Act, or CCPA, that, among other things, requires covered companies to provide new disclosures to California residents, affords California residents new abilities to opt-out of certain disclosures of personal information, and allows for a new cause of action for data breaches.

The CCPA was amended several times throughout 2018, 2019, and 2020, and it is unclear whether further modifications will be made to this legislation or how it will be interpreted.

Although there are limited exemptions for clinical trial data under the CCPA, the CCPA and other similar laws could impact our business activities depending on how it is interpreted and exemplifies the vulnerability of our business to the evolving regulatory environment related to personal data.

The CCPA exemplifies the vulnerability of our business to the evolving regulatory environment related to personal information.

In addition, the California Privacy Rights Act of 2020, or CPRA, was approved by California voters during the November 2020 ballot initiative in California.

The CPRA will amend the CCPA by creating additional privacy rights for California consumers and additional obligations on businesses, which could subject us to additional compliance costs as well as potential fines, individual claims and commercial liabilities.

It is expected that the CPRA would take effect on January 1, 2023.

The GDPR, CCPA and many other laws and regulations relating to privacy and data protection are still being tested in courts, and they are subject to new and differing interpretations by courts and regulatory officials.

Additionally, the interplay of federal and state laws may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for us and data we receive, use and share, potentially exposing us to additional expense, adverse publicity and liability.

We are working to comply with the GDPR, CCPA and other privacy and data protection laws and regulations that apply to us, and we anticipate needing to devote significant additional resources to complying with these laws and regulations.

The global data protection landscape is rapidly evolving, and we expect that there will continue to be new and proposed laws, regulations and industry standards concerning privacy, data protection and information security, and we cannot yet determine the impact that such future laws, regulations and standards may have on our business.

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The GDPR also provides for more robust regulatory enforcement and greater penalties for noncompliance than previous data protection laws, including fines of up to €20 million or 4% of global annual revenue of any noncompliant company for the preceding financial year, whichever is higher.

Further, the United Kingdom’s decision to leave the European Union, often referred to as Brexit, has created uncertainty with regard to the regulation of data protection in the United Kingdom, including with respect to whether laws or regulations will apply to us consistent with the GDPR in the future and how data transfers to and from the United Kingdom will be regulated.

European data protection laws, including the GDPR, generally restrict the transfer of personal data from Europe, including the EEA, United Kingdom and Switzerland, to the United States and most other countries unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data.

European data protection laws, including the GDPR, generally restrict the transfer of personal data from Europe, including the EEA , U nited K ingdom and Switzerland, to the United States and most other countries unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data .

One of the primary safeguards allowing U.S.

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Department of Commerce.

However, the Court of Justice of the European Union recently invalidated the EU-U.S.

Privacy Shield framework.

The same decision also raised questions about whether one of the primary alternatives to the EU-U.S.

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Privacy Shield and t he Standard Contractual Clauses .

Authorities in the U nited K ingdom and Switzerland, whose data protection laws are similar to those of the European Union, may similarly invalidate use of the EU-U.S.

Privacy Shield and Swiss-U.S.

Privacy Shield, respectively, as mechanisms for lawful personal data transfers from those countries to the United States.

However, the Court of Justice of the European Union recently invalidated the EU-U.S.

Privacy Shield.

The same decision also raised questions about whether one of the primary alternatives to the EU-U.S.

Privacy Shield, namely, the European Commission’s Standard Contractual Clauses, can lawfully be used for personal information transfers from the EU to the United States or most other countries.

At present, there are few, if any, viable alternatives to the EU-U.S.

Privacy Shield and the Standard Contractual Clauses.

Following the Court of Justice of the European Union’s decision, the Swiss Federal Data Protection and Information Commissioner , or the FDPIC , announced that the Swiss-U .

Privacy Shield does not provide adequate safeguards for the purposes of personal data transfers from Switzerland to the United States .

While the FDPIC does not have authority to invalidate the Swiss-U .

Privacy Shield regime, the FDPIC’s announcement casts doubt on the viability of the Swiss-U .

Privacy Shield as a future compliance mechanism for Swiss-US data transfers.

Authorities in the U nited K ingdom , whose data protection laws are similar to those of the European Union, may similarly invalidate use of the EU-U.S.

Privacy Shield as a mechanism for lawful personal information transfers from those countries to the United States.

As such, if we are unable to implement a valid solution for personal data transfers from Europe, including, for example, obtaining individuals’ explicit consent to transfer their personal data from Europe to the United States or other countries, we will face increased exposure to regulatory actions, substantial fines and injunctions against processing personal data from Europe.

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The type of challenges we face in Europe will likely also arise in other jurisdictions that adopt laws similar in construction to the GDPR or regulatory frameworks of equivalent complexity .

Further, various states, such as California and Massachusetts, have implemented similar privacy and data protection laws and regulations that impose restrictive requirements regulating the use and disclosure of health information and other personally identifiable information.

These laws and regulations are not necessarily preempted by HIPAA, particularly if a state affords greater protection to individuals than HIPAA.

Where state laws are more protective, we have to comply with the stricter provisions.

In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to individuals who believe their personal information has been misused.

For example, California recently enacted legislation that became effective on January 1, 2020, the California Consumer Privacy Act, or CCPA, that, among other things, requires covered companies to provide new disclosures to California residents, affords California residents new abilities to opt-out of certain disclosures of personal information, and allows for a new cause of action for data breaches.

The CCPA was amended several times throughout 2018 and 2019, and it is unclear whether further modifications will be made to this legislation or how it will be interpreted.

While the United Kingdom Data Protection Act of 2018, which “implements” and complements the GDPR achieved Royal Assent on May 23, 2018 and is now effective in the United Kingdom, it is still unclear whether the transfer of data from the EU to the United Kingdom will in future remain lawful under GDPR.

During the period of “transition” (i.e., until December 31, 2020), EU law will continue to apply in the United Kingdom, including the GDPR, and transfers of data from the EU to the United Kingdom are permitted without the need for any “adequacy mechanism.

Unless the EU Commission makes an “adequacy finding” in respect of the United Kingdom before January 1, 2021, from that date the United Kingdom will be a “third country” under the GDPR and transfers of data from the EU to the United Kingdom will require an “adequacy mechanism”, such as the Standard Contractual Clauses.

Additionally, other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our services and operating our business.

It is possible that the GDPR, CCPA or other laws and regulations relating to privacy and data protection may be interpreted and applied in a manner that is inconsistent from jurisdiction to jurisdiction or inconsistent with our current policies and practices and compliance with such laws and regulations could require us to change our business practices and compliance procedures in a manner adverse to our business.

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operations, the taxation of foreign earnings , and the deductibility of expenses under the Tax Act or future tax reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges in the current or future taxable years , and could increase our future U.S.

The foregoing items, as well as any other future changes in tax laws, could have a material adverse effect on our business, cash flow, financial condition , or results of operations.

The foregoing items, as well as any other future changes in tax laws, including as a result of the 2020 U.S.

elections, could have a material adverse effect on our business, cash flow, financial condition , or results of operations.

In addition, it is uncertain if and to what extent various states will conform to the Tax Act or any newly enacted federal tax legislation.

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The stock market in general and the market for biopharmaceutical and pharmaceutical companies in particular, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

The ongoing COVID-19 pandemic, for example, has negatively affected the stock market and investor sentiment and has resulted in significant volatility.

The ongoing COVID-19 pandemic, for example, has negatively affected some sectors of the stock market and investor sentiment and has resulted in significant volatility.

As a result of this volatility, you may not be able to sell your common stock at or above the price you paid for your shares.

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For example, on September 30, 2018, then California Governor Jerry Brown signed into law Senator Bill 826, which generally requires public companies with principal executive offices in California to have a minimum number of females on the company’s board of directors.

E ach public company with principal executive offices in California i s required to have at least one female on its board of directors , and b y December 31, 2021, will be required to have at least two females on its board of directors if the company has at least five directors, and at least three females on its board of directors if the company has at least six directors.

The new law does not provide a transition period for newly listed companies.

Each public company with principal executive offices in California is required to have at least one female on its board of directors, and by December 31, 2021, will be required to have at least two females on its board of directors if the company has at least five directors, and at least three females on its board of directors if the company has at least six directors.

We are currently compliant with the requirements, but there are no assurances that we will be compliant in the future.

If we fail to comply with this new law, we could be fined by the California Secretary of State, with a $100,000 fine for the first violation and a $300,000 for each subsequent violation, and our reputation may be adversely affected.

Additionally, on September 30, 2020, California Governor Gavin Newsom signed into law

Assembly Bill 979 which generally requires public companies with principal executive offices in California to include specified numbers of directors from “underrepresented communities.” By December 31, 2021, each public company with principal executive offices in California is required to have at least one director from an underrepresented community.

By December 31, 2022, a public company with more than four but fewer than nine directors will be required to have a minimum of two directors from underrepresented communities, and a public company with nine or more directors will need to have a minimum of three directors from underrepresented communities.

If we fail to comply with either Senator Bi ll 826 or Assembly Bill 979 , we could be fined by the California Secretary of State, with a $100,000 fine for the first violation and a $300,000 for each subsequent violation, and our reputation may be adversely affected.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

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federal courts have exclusive jurisdiction.

Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.

Furthermore, Section 22 of the Securities Act of 1933, as amended, or the Securities Act, creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.

Accordingly, both state and federal courts have jurisdiction to entertain such claims.

To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation further provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, or the Securities Act, unless we consent in writing to the selection of an alternative forum.

To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation further provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, unless we consent in writing to the selection of an alternative forum.

While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions.

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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 1A. Risk Factors