What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-08-04 · 130 added, 111 removed, 526 unchanged (31% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

2023 December 31,

9 unchanged sentences

Property and equipment, net 99,309 105,609

Operating right-of-use assets 74,934 82,557

Operating lease right-of-use assets 72,622 82,557

Restricted cash and cash equivalents, noncurrent 7,057 6,656

6 unchanged sentences

Accrued and other liabilities 146,111 489,090

Deferred revenue, current portion 15,681 15,517

Deferred revenue, current 15,312 15,517

Total current liabilities 165,050 511,029

7 unchanged sentences

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized as of June 30, 2023 and December 31, 2022;

no shares issued and outstanding as of June 30, 2023 and December 31, 2022

10,000,000 shares authorized as of September 30, 2023 and December 31, 2022;

no shares issued and outstanding as of September 30, 2023 and December 31, 2022

Common stock, $ 0.0001 par value;

300,000,000 shares authorized as of June 30, 2023 and December 31, 2022;

134,230,494 and 133,236,687 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

300,000,000 shares authorized as of September 30, 2023 and December 31, 2022;

134,497,886 and 133,236,687 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 1,798,823 1,709,835

Accumulated other comprehensive loss ( 1,900 ) ( 9,122 )

Retained earnings 41,562 377,237

(Accumulated deficit) retained earnings ( 121,851 ) 377,237

TOTAL STOCKHOLDERS’ EQUITY 1,675,085 2,077,963

4 unchanged sentences

( in thousands, except share and per share data )

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

1 unchanged sentence

Contract revenue 289 39,998 1,484 52,534

License revenue from a related party — 22,289 — 22,289

Grant revenue 6,737 3,125 39,501 7,704

9 unchanged sentences

Interest income 21,931 9,332 66,254 11,920

Other (expense) income, net ( 367 ) 691 ( 8,388 ) 3,421

Other income (expense), net 882 27,026 ( 7,506 ) 30,447

Total other income (expense) 20,106 22,768 37,852 ( 77,652 )

12 unchanged sentences

( in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

16 unchanged sentences

Loss Retained

Earnings Noncontrolling

Earnings (Accumulated Deficit) Noncontrolling

interest Total

Stockholders'

Balance at March 31, 2023 133,930,957 $ 13 $ 1,737,626 $ ( 3,219 ) $ 236,337 $ 44 $ 1,970,801

Balance at June 30, 2023 134,230,494 $ 13 $ 1,771,536 $ ( 2,903 ) $ 41,562 $ — $ 1,810,208

Vesting of restricted common stock 73,351 — — — — — —

Exercise of stock options 194,041 — 343 — — — 343

Issuance of common stock under employee stock purchase plan 114,903 — 2,605 — — — 2,605

Stock-based compensation — — 26,944 — — — 26,944

Other comprehensive income — — — 1,003 — — 1,003

Increase in ownership interest in a subsidiary — — ( 56 ) — — ( 44 ) ( 100 )

Net loss — — — — ( 163,413 ) — ( 163,413 )

Balance at June 30, 2023 134,230,494 $ 13 $ 1,771,536 $ ( 2,903 ) $ 41,562 $ — $ 1,810,208

Balance at September 30, 2023 134,497,886 $ 13 $ 1,798,823 $ ( 1,900 ) $ ( 121,851 ) $ — $ 1,675,085

Vir Stockholders' Equity

6 unchanged sentences

Stockholders'

Balance at March 31, 2022 132,353,441 $ 13 $ 1,625,785 $ ( 4,805 ) $ 380,021 $ — $ 2,001,014

Balance at June 30, 2022 132,597,812 $ 13 $ 1,656,024 $ ( 7,553 ) $ 303,528 $ — $ 1,952,012

Vesting of restricted common stock 53,102 — — — — — —

Exercise of stock options 376,444 — 2,044 — — — 2,044

Issuance of common stock under employee stock purchase plan 94,175 2,066 — — — 2,066

Stock-based compensation — — 24,814 — — — 24,814

Other comprehensive loss — — — ( 4,327 ) — — ( 4,327 )

Net loss — — — — ( 76,493 ) — ( 76,493 )

Balance at June 30, 2022 132,597,812 $ 13 $ 1,656,024 $ ( 7,553 ) $ 303,528 $ — $ 1,952,012

Net income — — — — 175,312 — 175,312

Balance at September 30, 2022 133,027,358 $ 13 $ 1,682,882 $ ( 11,880 ) $ 478,840 $ — $ 2,149,855

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

7 unchanged sentences

Loss Retained

Earnings Noncontrolling

Earnings (Accumulated Deficit) Noncontrolling

interest Total

9 unchanged sentences

Net loss — — — — ( 499,088 ) ( 56 ) ( 499,144 )

Balance at June 30, 2023 134,230,494 $ 13 $ 1,771,536 $ ( 2,903 ) $ 41,562 $ — $ 1,810,208

Balance at September 30, 2023 134,497,886 $ 13 $ 1,798,823 $ ( 1,900 ) $ ( 121,851 ) $ — $ 1,675,085

Vir Stockholders' Equity

14 unchanged sentences

Net income — — — — 617,440 — 617,440

Balance at June 30, 2022 132,597,812 $ 13 $ 1,656,024 $ ( 7,553 ) $ 303,528 $ — $ 1,952,012

Balance at September 30, 2022 133,027,358 $ 13 $ 1,682,882 $ ( 11,880 ) $ 478,840 $ — $ 2,149,855

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

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income $ ( 499,144 ) $ 617,440

Adjustments to reconcile net (loss) income to net cash (used in) provided for operating activities:

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Change in estimated constraint on profit-sharing amount ( 28,101 ) 353,526

1 unchanged sentence

Amortization of intangible assets 399 399

(Accretion of discounts) amortization of premiums on investments, net ( 12,366 ) 1,732

Accretion of discounts on investments, net ( 10,057 ) ( 1,315 )

Payment of contingent consideration in excess of acquisition date fair value — ( 93,803 )

43 unchanged sentences

Vir Biotechnology, Inc.

(“Vir” or the “Company”) is an immunology company focused on combining immunologic insights with cutting-edge technologies to treat and prevent serious infectious diseases.

Its current pipeline consists of sotrovimab (where marketing authorization has been granted, marketed under the brand name Xevudy ® ) and other product candidates targeting hepatitis B virus (“HBV”), hepatitis D virus (“HDV”), influenza A and B virus, human immunodeficiency virus (“HIV”) and coronavirus disease 2019 (“COVID-19”).

Vir has several preclinical candidates in its pipeline.

Vir has assembled technology platforms that are designed to stimulate and enhance the immune system by exploiting critical observations of natural immune processes.

In January 2023, a majority-owned subsidiary was incorporated in the State of Delaware, Encentrio Therapeutics, Inc.

(“Encentrio”).

(“Vir” or the “Company”) is an immunology company focused on combining cutting-edge technologies to treat and prevent serious infectious diseases and other serious conditions.

Vir has assembled two technology platforms that are designed to stimulate and enhance the immune system by exploiting critical observations of natural immune processes.

Its current clinical development pipeline consists of product candidates targeting hepatitis B virus (“HBV”), hepatitis delta virus (“HDV”) and human immunodeficiency virus (“HIV”).

Vir has several preclinical candidates in its pipeline including those targeting influenza A and B, coronavirus disease 2019 (“COVID-19”), respiratory syncytial virus and human metapneumovirus, (“RSV” and “MPV”, respectively), and human papillomavirus (“HPV”).

In January 2023, a majority-owned subsidiary, Encentrio Therapeutics, Inc.

(“Encentrio”), was incorporated in the State of Delaware.

The Company initially owned 80 % of Encentrio’s outstanding voting shares.

In the three months ended June 30, 2023, the Company increased its ownership of Encentrio's outstanding voting shares to 100 %.

During the three months ended June 30, 2023, the Company increased its ownership of Encentrio's outstanding voting shares to 100 %.

The primary purpose of Encentrio is to conduct research and development of oncology therapeutics.

3 unchanged sentences

The Company will pay Cowen a commission of up to 3.0 % of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide Cowen with customary indemnification and contribution rights.

As of June 30, 2023, no shares have been sold under the Sales Agreement.

As of September 30, 2023, no shares have been sold under the Sales Agreement.

The Sales Agreement will expire in November 2023.

As of June 30, 2023, the Company had $ 1.9 billion in cash, cash equivalents, and investments, which the Company believes will be sufficient to fund its operations for a period through at least twelve months from the issuance date of these unaudited condensed consolidated financial statements.

As of September 30, 2023, the Company had $ 1.7 billion in cash, cash equivalents, and investments, which the Company believes will be sufficient to fund its operations for a period through at least twelve months from the issuance date of these unaudited condensed consolidated financial statements.

Summary of Significant Accounting Policies

5 unchanged sentences

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s financial information.

The condensed consolidated results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other future annual or interim period.

The condensed consolidated results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other future annual or interim period.

Certain information and footnote disclosures typically included in the Company’s annual consolidated financial statements have been condensed or omitted.

24 unchanged sentences

The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents and investments, and issuers of the investments to the extent recorded on the unaudited condensed consolidated balance sheets.

As of June 30, 2023, the Company has no off-balance sheet concentrations of credit risk.

As of September 30, 2023, the Company has no off-balance sheet concentrations of credit risk.

The Company is exposed to credit losses primarily through receivables from customers and collaborators and through its available-for-sale debt securities.

3 unchanged sentences

The Company’s expected loss allowance methodology for the debt securities is developed by reviewing the extent of the unrealized loss, the size, term, geographical location, and industry of the issuer, the issuers’ credit ratings and any changes in those ratings, as well as reviewing current and future economic market conditions and the issuers’ current status and financial condition.

During the six months ended June 30, 2023 and 2022, there was no allowance for losses on available-for-sale debt securities attributable to credit risk.

During the nine months ended September 30, 2023 and 2022, there was no allowance for losses on available-for-sale debt securities attributable to credit risk.

Investments include available-for-sale debt securities and equity investments, which are carried at estimated fair value.

10 unchanged sentences

Otherwise, the investments in equity securities are measured at cost less impairment, adjusted for observable price changes for identical or similar investments of the same issuer unless the Company has significant influence or control over the investee.

Changes in fair value resulting from observable price changes are presented as change in fair value of equity investments, and changes in fair value resulting from foreign currency translation are included in other (expense) income, net on the unaudited condensed consolidated statements of operations.

Changes in fair value resulting from observable price changes are presented as change in fair value of equity investments, and changes in fair value resulting from foreign currency translation are included in other income (expense), net on the unaudited condensed consolidated statements of operations.

Restricted Cash and Cash Equivalents

21 unchanged sentences

The Company evaluates the promised goods or services in these agreements to determine which ones represent distinct performance obligations.

Prior to recognizing revenue, the Company makes estimates of the transaction price, including variable consideration that is subject to a constraint.

Prior to recognizing revenue, the Company estimates the transaction price, including variable consideration that is subject to a constraint.

Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

9 unchanged sentences

For performance obligations satisfied over time, the Company estimates the efforts needed to complete the performance obligation and recognizes revenue by measuring the progress towards complete satisfaction of the performance obligation using an input measure.

For arrangements that include sales-based royalties, including commercial milestone payments based on pre-specified level of sales, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

For arrangements that include sales-based royalties, including commercial milestone payments based on pre-specified levels of sales, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Achievement of these royalties and commercial milestones may solely depend upon the performance of the licensee.

17 unchanged sentences

Cash Equivalents and Available-for-Sale Securities

The following tables summarize the Company’s Level 1 and Level 2 financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as of June 30, 2023 and December 31, 2022:

June 30, 2023

The following tables summarize the Company’s Level 1 and Level 2 financial assets measured at fair value on a recurring basis within the fair value hierarchy as of September 30, 2023 and December 31, 2022:

September 30, 2023

Hierarchy Amortized

20 unchanged sentences

(1) Includes $ 19.3 million of restricted cash equivalents.

Accrued interest receivable excluded from both the fair value and amortized cost basis of the available-for-sale debt securities are presented within prepaid expenses and other current assets, and other assets in the unaudited condensed consolidated balance sheets.

Accrued interest receivable amounted to $ 1.9 million and $ 2.5 million as of June 30, 2023 and

Accrued interest receivable excluded from both the fair value and amortized cost basis of the available-for-sale debt securities are presented within prepaid expenses and other current assets in the unaudited condensed consolidated balance sheets.

Accrued interest receivable amounted to $ 2.9 million and $ 2.5 million as of September 30, 2023 and December 31,

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

December 31, 2022, respectively.

The Company did not write off any accrued interest receivable during the six months ended June 30, 2023 and 2022.

The Company recognized total net unrealized loss of $ 2.2 million and $ 8.4 million in accumulated other comprehensive loss as of June 30, 2023 and December 31, 2022, respectively.

2022, respectively.

The Company did not write off any accrued interest receivable during the nine months ended September 30, 2023 and 2022.

The Company recognized total net unrealized losses of $ 1.2 million and $ 8.4 million in accumulated other comprehensive loss as of September 30, 2023 and December 31, 2022, respectively.

The gross unrealized losses related to U.S.

government treasuries as of June 30, 2023 and December 31, 2022 were due to changes in interest rates.

As of June 30, 2023, there were no investments that have been in a continuous material unrealized loss position for longer than 12 months.

The Company determined that the gross unrealized losses on our investments as of June 30, 2023 were temporary in nature.

government treasuries as of September 30, 2023 and December 31, 2022 were due to changes in interest rates.

As of September 30, 2023, there were no investments that have been in a continuous material unrealized loss position for longer than 12 months.

The Company determined that the gross unrealized losses on our investments as of September 30, 2023 were temporary in nature.

The Company currently does not intend, and it is highly unlikely that it will be required, to sell these securities before recovery of their amortized cost basis.

As of June 30, 2023, no securities have contractual maturities of longer than 2 years.

As of June 30, 2023, the Company's equity investment consisted solely of ordinary shares of Brii Biosciences Limited (“Brii Bio Parent”).

As of September 30, 2023, no securities have contractual maturities of longer than 2 years.

As of September 30, 2023, the Company's equity investment consisted solely of ordinary shares of Brii Biosciences Limited (“Brii Bio Parent”).

The equity securities of Brii Bio Parent are listed on the Stock Exchange of Hong Kong Limited and are considered to be marketable equity securities and subsequently remeasured at fair value at each reporting date.

As of June 30, 2023, the Company remeasured the equity investment at a fair value of $ 13.5 million.

The Company recognized an unrealized loss of $ 5.1 million and $ 11.4 million, for the three months ended June 30, 2023 and 2022, respectively, and an unrealized loss of $ 18.2 million and $ 106.4 million, for the six months ended June 30, 2023 and 2022, respectively, as other income (expense) in the unaudited condensed consolidated statement of operations.

For the three and six months ended June 30, 2023 and 2022, the unrealized losses related to foreign currency translation for the respective periods were immaterial.

As of September 30, 2023, the Company remeasured the equity investment at a fair value of $ 10.8 million.

The Company recognized an unrealized loss of $ 2.7 million and $ 13.6 million, for the three months ended September 30, 2023 and 2022, respectively, and an unrealized loss of $ 20.9 million and $ 120.0 million, for the nine months ended September 30, 2023 and 2022, respectively, as other income (expense) in the unaudited condensed consolidated statement of operations.

For the three and nine months ended September 30, 2023 and 2022, the unrealized losses related to foreign currency translation for the respective periods were immaterial.

Contingent Consideration Obligations

Contingent consideration obligations include potential milestone payments in connection with the acquisitions of Humabs Biomed SA (“Humabs”).

The Company classifies the contingent consideration as Level 3 financial liabilities within the fair value hierarchy as of June 30, 2023 and December 31, 2022.

Contingent consideration obligations include potential milestone payments in connection with the acquisition of Humabs Biomed SA (“Humabs”).

The Company classifies the contingent consideration as Level 3 financial liabilities within the fair value hierarchy as of September 30, 2023 and December 31, 2022.

The estimated fair value of the contingent consideration related to the Humabs acquisition was determined by calculating the probability-weighted clinical, regulatory and commercial milestone payments based on the assessment of the likelihood and estimated timing that certain milestones would be achieved.

As of June 30, 2023, the Company calculated the estimated fair value of the remaining clinical and regulatory milestones related to VIR-3434, an investigational subcutaneously administered HBV-neutralizing monoclonal antibody, or mAb, using the following significant unobservable inputs:

As of September 30, 2023, the Company calculated the estimated fair value of the remaining clinical and regulatory milestones related to VIR-3434, an investigational subcutaneously administered HBV-neutralizing monoclonal antibody, or mAb, using the following significant unobservable inputs:

Unobservable input Range

4 unchanged sentences

(1) Unobservable inputs were weighted based on the relative fair value of the clinical and regulatory milestone payments.

For the commercial milestones, the Company used a Monte Carlo simulation because of the availability of discrete revenue forecasts.

As of June 30, 2023, the Monte Carlo simulation assumed a commercial product launch and associated discrete revenue forecasts, as well as the following significant unobservable inputs for the remaining commercial milestones related to VIR-3434:

For the commercial milestones, the Company used a Monte Carlo simulation.

As of September 30, 2023, the Monte Carlo simulation assumed a commercial product launch and associated discrete revenue forecasts, as well as the following significant unobservable inputs for the remaining commercial milestones related to VIR-3434:

Unobservable input Value

3 unchanged sentences

The discount rate captures the credit risk associated with the payment of the contingent consideration when earned and due.

As of June 30, 2023 and December 31, 2022, the estimated fair value of the contingent consideration related to the Humabs acquisition was $ 23.8 million and $ 23.4 million, respectively, with changes in the estimated fair value recorded in research and development expenses in the unaudited condensed consolidated statements of operations.

As of September 30, 2023 and December 31, 2022, the estimated fair value of the contingent consideration related to the Humabs acquisition was $ 24.3 million and $ 23.4 million, respectively, with changes in the estimated fair value recorded in research and development expenses in the unaudited condensed consolidated statements of operations.

VIR BIOTECHNOLOGY, INC.

5 unchanged sentences

Changes in fair value ( 627 )

Balance at June 30, 2023 $ 24,927

Balance at September 30, 2023 $ 24,310

Grant Agreements

Bill & Melinda Gates Foundation Grants

The Company has entered into various grant agreements with the Bill & Melinda Gates Foundation, under which it was awarded grants totaling up to $ 65.7 million to support its HIV vaccine program, tuberculosis vaccine program, HIV vaccinal antibody program and malaria vaccinal antibody program.

The Company has entered into various grant agreements with the Bill & Melinda Gates Foundation, under which it was awarded grants totaling up to $ 49.9 million to support its human cytomegalovirus ("HCMV") vaccine programs for HIV and tuberculosis as well as the Company's HIV vaccinal antibody program and malaria vaccinal antibody program.

The term of the grant agreements will expire at various dates through June 2027, unless terminated earlier by the Bill & Melinda Gates Foundation for the Company’s breach, failure to progress the funded project, in the event of the Company’s change of control, change in the Company’s tax status, or significant changes in the Company’s leadership that the Bill & Melinda Gates Foundation reasonably believes may threaten the success of the projects.

4 unchanged sentences

The premium received by the Company is deferred and recognized over the same period as the grant proportionally.

The Company recognized grant revenue of $ 4.7 million and $ 2.1 million for the three months ended June 30, 2023 and 2022, respectively, and $ 6.6 million and $ 4.6 million for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, the Company had deferred revenue of $ 15.7 million and $ 15.5 million, respectively.

As of June 30, 2023 and December 31, 2022, the Company had $ 7.6 million and $ 7.7 million, respectively, within accrued and other liabilities, which may need to be refunded to the Bill & Melinda Gates Foundation.

The Company recognized grant revenue of $ 3.8 million and $ 2.8 million for the three months ended September 30, 2023 and 2022, respectively, and $ 10.5 million and $ 7.4 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023 and December 31, 2022, the Company had deferred revenue of $ 15.3 million and $ 15.5 million, respectively.

As of September 30, 2023 and December 31, 2022, the Company had $ 9.2 million and $ 7.7 million, respectively, within accrued and other liabilities, which may need to be refunded to the Bill & Melinda Gates Foundation.

Biomedical Advanced Research and Development Authority

2 unchanged sentences

Under the BARDA Agreement, the Company may receive up to an estimated $ 1.0 billion to advance the development of a full portfolio of innovative solutions to address influenza and potentially other infectious disease threats.

The Base Period (as defined below) for the BARDA Agreement includes government funding of approximately $ 55.0 million to reimburse a portion of expenses incurred by the Company to support the development of VIR-2482, an investigational prophylactic monoclonal antibody designed with the aim to protect against seasonal and pandemic influenza, including expenses related to the Phase 2 pre-exposure prophylaxis trial of VIR-2482.

The BARDA Agreement also provides for additional BARDA funding after the exercise by BARDA of up to twelve options to further support the development of pre-exposure prophylactic antibodies

The Base Period for the BARDA Agreement includes government funding of approximately $ 55.0 million to reimburse a portion of expenses incurred by the Company to support the development of VIR-2482, an investigational prophylactic monoclonal antibody designed with the aim to protect against seasonal and pandemic influenza, including expenses related to the Phase 2 pre-exposure prophylaxis trial of VIR-2482.

The BARDA Agreement also provides for additional BARDA funding after the exercise by BARDA of up to twelve options to further support the development of pre-exposure prophylactic antibodies including and beyond

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

including and beyond VIR-2482 for the prevention of influenza illness or possibly supporting medical countermeasures for other pathogens of pandemic potential.

The BARDA Agreement has an initial term that commenced on September 30, 2022 and extends through January 2026 (“Base Period”), which may be extended by mutual written agreement of the Company and BARDA if certain conditions are met or if BARDA exercises any of its options, as described above, and is terminable by the Company and BARDA at any time under specified circumstances, including for convenience.

The Company recognized grant revenue under the BARDA Agreement of $ 11.8 million and $ 26.1 million for the three and six months ended June 30, 2023, respectively, and an other receivable in prepaid expenses and other current assets of $ 13.0 million as of June 30, 2023.

As of June 30, 2023, $ 2.5 million of potential future reimbursement remains available out of $ 55.0 million for the Base Period.

VIR-2482 for the prevention of influenza illness or possibly supporting medical countermeasures for other pathogens of pandemic potential.

In September 2023, the Company and BARDA entered into Amendment No.

P00001 to the BARDA Agreement (the “Amended BARDA Agreement”), pursuant to which BARDA awarded the Company $ 50.1 million in new funding upon the exercise of an additional option.

The Company will use $ 40.0 million to support the development of VIR-7229 through a Phase 1 clinical trial and $ 10.1 million to support the discovery of new monoclonal antibody against a second pathogen of pandemic potential.

The Company may also receive up to $ 11.2 million of additional funding for the Base Period under the Amended BARDA Agreement to wind down activities related to the Phase 2 pre-exposure prophylaxis trial of VIR-2482.

The Amended BARDA Agreement will expire in July 2027 and may be extended by mutual written agreement of the Company and BARDA, if funding is available and research opportunities within scope reasonably warrant, or, if any of the options are exercised (as described above), to cover the period of such exercised option set forth in the Amended BARDA Agreement.

The Amended BARDA Agreement is terminable by the Company and BARDA at any time under specified circumstances, including for convenience.

The Company recognized grant revenue under the BARDA Agreement of $ 2.9 million and $ 29.0 million for the three and nine months ended September 30, 2023, respectively, and an other receivable in prepaid expenses and other current assets of $ 4.8 million as of September 30, 2023.

As of September 30, 2023, $ 60.9 million of potential future reimbursement remains available out of $ 116.3 million total awarded amount under the Amended BARDA Agreement.

Collaboration and License Agreements

22 unchanged sentences

Subject to an opt-out mechanism, the parties share all development costs, manufacturing costs, and costs and expenses for the commercialization of the collaboration products, with the Company bearing 72.5 % of such costs for the antibody products, except that GSK has the sole right to develop (including to seek, obtain or maintain regulatory approvals), manufacture and commercialize sotrovimab in and for mainland China, Hong Kong, Macau and Taiwan at GSK's sole cost and expense, and equal sharing of such costs for the functional genomics products.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The 2020 GSK Agreement will remain in effect with respect to each collaboration program for as long as there is a collaboration product being developed or commercialized by the lead party, or the non-opt-out party, in such program.

3 unchanged sentences

In April 2022, the FDA excluded the use of sotrovimab in all U.S.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

regions due to the continued proportion of COVID-19 cases caused by certain Omicron subvariants.

6 unchanged sentences

At each reporting period, the Company evaluates the latest available facts and circumstances to determine whether any portion of profit-sharing amounts should be constrained.

As of June 30, 2023, GSK continue to have certain potentially excess binding supply manufacturing commitments of sotrovimab and certain binding reserved manufacturing capacity not expected to be utilized, which have not yet been fully reported to the Company as allowable manufacturing expenses for the cumulative profit-sharing amounts to date.

The Company expects GSK to continue to adjust allowable manufacturing expenses for the Company’s share of the excess supply write-offs and unused binding manufacturing capacity and report to the Company as cost-sharing amounts in future periods.

In June 2023, the Company paid $ 273.6 million to GSK primarily related to excess supply write-offs and unused binding manufacturing capacity previously reserved.

In 2023, GSK reported to the Company certain allowable manufacturing expenses related to excess sotrovimab supply and binding reserved manufacturing capacity not utilized, which the Company had previously reserved as constraint on its cumulative profit-sharing amounts.

For the three and nine months ended September 30, 2023, the Company paid GSK $ 67.0 million and $ 340.5 million, respectively, relating to these manufacturing expenses.

GSK may continue to adjust allowable manufacturing expenses for the Company’s share of the excess supply write-offs and unused binding manufacturing capacity and report to the Company as cost-sharing amounts in future periods.

The Company evaluated the latest available facts and circumstances to update its evaluation of profit-sharing amounts to be constrained.

As of September 30, 2023, the Company reserved $ 0.9 million as accrued liability for its share of the remaining estimated manufacturing expenses related to excess sotrovimab supply and binding reserved manufacturing capacity not utilized.

The Company re-assesses these estimates each reporting period.

During the three and six months ended June 30, 2023 and 2022, the Company recorded profit-sharing amounts and profit-sharing amounts constrained, released as components of collaboration revenue in the unaudited condensed consolidated statements of operations, as follows:

Three Months Ended June 30, Six Months Ended June 30,

During the three and nine months ended September 30, 2023 and 2022, the Company recorded profit-sharing amounts, profit-sharing amounts constrained, and profit-sharing amounts constrained, released as components of collaboration revenue in the unaudited condensed consolidated statements of operations, as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

6 unchanged sentences

Costs associated with co-development activities performed under the 2020 GSK Agreement are included in research and development expenses on the unaudited condensed consolidated statements of operations, with any reimbursement of costs by GSK reflected as a reduction of such expenses.

Under the 2020 GSK Agreement, the Company recognized additional net research and development expenses of $ 5.3 million and $ 7.1 million during the three months ended June 30, 2023 and 2022, respectively, and $ 12.5 million and $ 13.6 million during the six months ended June 30, 2023 and 2022, respectively.

Under the 2020 GSK Agreement, the Company recognized additional net research and development expenses of $ 6.1 million and $ 10.4 million during the three months ended September 30,

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

2023 and 2022, respectively, and $ 18.6 million and $ 24.0 million during the nine months ended September 30, 2023 and 2022, respectively.

2021 Expanded GSK Collaboration

2 unchanged sentences

(2) an expansion of the parties’ current Functional Genomics Program to focus on functional genomics screens directed to targets associated with respiratory viruses (the “Expanded Functional Genomics Program”);

and (3) additional programs to develop

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

neutralizing mAbs directed to up to three non-influenza target pathogens selected by GSK (the “Selected Pathogens” and such programs, the “Additional Programs”).

and (3) additional programs to develop neutralizing mAbs directed to up to three non-influenza target pathogens selected by GSK (the “Selected Pathogens” and such programs, the “Additional Programs”).

Under the Influenza Program, the parties collaborate to research, develop and commercialize mAbs for the prevention, treatment or prophylaxis of influenza, including the Company’s influenza mAbs (with respect to VIR-2482, only if GSK exercises its option).

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Provided that the Company conducts and completes a Phase 2 clinical trial for VIR-2482, GSK has the exclusive option to obtain exclusive rights to co-develop and commercialize VIR-2482 under the Influenza Program (the “VIR-2482 Option”).

As of June 30, 2023, GSK had not exercised the VIR-2482 Option.

As of September 30, 2023, GSK had not exercised the VIR-2482 Option.

On July 20, 2023, the Company announced that the VIR-2482 Phase 2 Prevention of Illness Due to Influenza A, or PENINSULA, trial evaluating the prevention of symptomatic influenza A illness did not meet primary or secondary efficacy endpoints.

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Upon achievement of a pre-defined regulatory milestone for the first product in the Influenza Program, which may be (i) VIR-2482 (if GSK exercised the VIR-2482 Option), (ii) a next-generation mAb, or (iii) any other influenza mAb approved by the Joint Steering Committee to be included in the collaboration, arising from the Influenza Program, GSK will make a milestone payment to the Company of up to $ 200.0 million.

As of June 30, 2023, the total unrecognized transaction price of $ 51.7 million is classified as noncurrent deferred revenue on the Company's unaudited condensed consolidated balance sheets related to the remaining performance obligations, being the remaining two material rights resulting from the Selected Pathogen Rights.

As of September 30, 2023, the total unrecognized transaction price of $ 51.7 million is classified as noncurrent deferred revenue on the Company's unaudited condensed consolidated balance sheets related to the remaining performance obligations, being the remaining two material rights resulting from the Selected Pathogen Rights.

Costs associated with co-development activities performed under the 2021 GSK Agreement are included in research and development expenses in the unaudited condensed consolidated statements of operations, with any reimbursement of costs by GSK reflected as a reduction of such expenses.

Under the 2021 GSK Agreement, the Company recognized additional net research and development expenses of $ 0.9 million and $ 0.9 million during the three months ended June 30, 2023 and 2022, respectively, and $ 1.3 million and $ 1.0 million during the six months ended June 30, 2023 and 2022, respectively.

Under the 2021 GSK Agreement, the Company recognized additional net research and development expenses of $ 0.6 million and $ 0.3 million during the three months ended September 30, 2023 and 2022, respectively, and $ 1.9 million and $ 1.3 million during the nine months ended September 30, 2023 and 2022, respectively.

VIR BIOTECHNOLOGY, INC.

3 unchanged sentences

Property and equipment, net consists of the following:

September 30,

2023 December 31,

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Total property and equipment, net $ 99,309 $ 105,609

Depreciation expenses were $ 4.6 million and $ 10.1 million for the three and six months ended June 30, 2023, respectively, and $ 1.5 million and $ 2.9 million for the three and six months ended June 30, 2022, respectively.

Depreciation expenses were $ 4.5 million and $ 14.6 million for the three and nine months ended September 30, 2023, respectively, and $ 1.6 million and $ 4.4 million for the three and nine months ended September 30, 2022, respectively.

Accrued and Other Liabilities

Accrued and other liabilities consist of the following:

September 30,

2023 December 31,

(in thousands)

Net profit-sharing amount $ 78,073 $ 357,762

Research and development expenses $ 65,693 $ 48,880

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Excess funds payable under grant agreements 9,217 7,652

Net profit-sharing amount 6,964 357,762

Other professional and consulting expenses 4,336 3,987

3 unchanged sentences

Commitments and Contingencies

Manufacturing and Supply Agreements

In December 2022, the Company and a third-party contract development manufacturing organization (the “CDMO”) entered into a master service agreement, and subsequently various scopes of work with respect to the manufacturing of VIR-2482 (collectively, the “VIR-2482 Agreements”).

As of June 30, 2023, the Company has a balance of unpaid noncancellable commitments under the VIR-2482 Agreements up to approximately $ 36 million in the aggregate.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

20, 2023, the Company announced that the VIR-2482 Phase 2 Prevention of Illness Due to Influenza A, or PENINSULA, trial evaluating the prevention of symptomatic influenza A illness did not meet primary or secondary efficacy endpoints.

Legal Proceedings

3 unchanged sentences

Under such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party.

In some cases, the indemnification will continue after the termination of the agreement.

In some cases, the indemnification will continue after the termination of the

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable.

3 unchanged sentences

The Company holds a minority equity interest in Brii Biosciences Offshore Limited through Brii Bio Parent.

As of June 30, 2023, one member of the Company’s board of directors serves on Brii Bio Parent’s board of directors.

As of September 30, 2023, one member of the Company’s board of directors serves on Brii Bio Parent’s board of directors.

Stock-Based Awards

3 unchanged sentences

The fair value of stock options granted to employees was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

12 unchanged sentences

Expected Volatility — Expected volatility is determined by using a blended approach of the Company and its industry peers’ historical volatilities.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Risk-Free Interest Rate — The Company based the risk-free interest rate over the expected term of the stock options based on the constant maturity rate of U.S.

1 unchanged sentence

Expected Dividend Rate — The expected dividend is zero as the Company has not paid nor does it anticipate paying any dividends on its profit interest units in the foreseeable future.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Stock-Based Compensation Expense

1 unchanged sentence

The following table sets forth the total stock-based compensation expense for all awards granted to employees and non-employees and the ESPP in the unaudited condensed consolidated statements of operations:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

Basic net (loss) income per common share is computed by dividing the net (loss) income attributable to Vir by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents.

Diluted net income (loss) per common share is computed by dividing the net income (loss) attributable to Vir by the sum of the weighted-average number of common shares outstanding during the period plus any potential dilutive effects of common stock equivalents outstanding during the period calculated in accordance with the treasury stock method.

Diluted net (loss) income per common share is computed by dividing the net (loss) income attributable to Vir by the sum of the weighted-average number of common shares outstanding during the period plus any potential dilutive effects of common stock equivalents outstanding during the period calculated in accordance with the treasury stock method.

For periods that the Company was in a net loss position, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common securities outstanding would have been anti-dilutive.

The following is a calculation of the basic and diluted net income (loss) per share (in thousands, except share and per share data):

Three Months Ended June 30, Six Months Ended June 30,

The following is a calculation of the basic and diluted net (loss) income per share (in thousands, except share and per share data):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

8 unchanged sentences

Net (loss) income attributable to Vir per share, diluted $ ( 1.22 ) $ 1.30 $ ( 3.73 ) $ 4.58

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Total 15,731,354 10,575,325 15,102,516 11,438,772

The table below presents our (loss) income before benefit from (provision for) income taxes, benefit from (provision for) income taxes and effective tax rate for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The table below presents our (loss) income before benefit from (provision for) income taxes, benefit from (provision for) income taxes and effective tax rate for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

Accordingly, the Company's effective tax rates will vary depending on the relative proportion of foreign to United States income/loss, the utilization of net operating loss and tax credit carry forwards and carrybacks, changes in jurisdictional mix of income and expense, changes in management’s assessment of matters such as the ability to realize deferred tax assets, and changes in tax laws.

The benefit from income taxes for the three and six months ended June 30, 2023 was primarily due to a pre-tax loss and the Company's ability to carry-back the research and development credit to 2022.

Unrecognized tax benefits were $ 12.1 million and $ 10.6 million as of June 30, 2023 and December 31, 2022, respectively, and if recognized, would favorably affect the effective tax rate in future periods.

The benefit from income taxes for the three and nine months ended September 30, 2023 was primarily due to a pre-tax loss and the Company's ability to carry-back the research and development credit to 2022.

Unrecognized tax benefits were $ 12.9 million and $ 10.6 million as of September 30, 2023 and December 31, 2022, respectively, and if recognized, would favorably affect the effective tax rate in future periods.

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

What changed 10-Q

Item 1. Financial Statements