What changed in this filing

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Item 1. Financial Statements

2024-05-03 compared with 2023-11-03 · 194 added, 267 removed, 389 unchanged (54% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

2024 December 31,

28 unchanged sentences

Preferred stock, $ 0.0001 par value;

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

10,000,000 shares authorized as of March 31, 2024 and December 31, 2023;

no shares issued and outstanding as of March 31, 2024 and December 31, 2023

Common stock, $ 0.0001 par value;

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

300,000,000 shares authorized as of March 31, 2024 and December 31, 2023;

135,843,560 and 134,781,286 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,852,839 1,828,862

Accumulated other comprehensive loss ( 2,397 ) ( 815 )

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

Accumulated deficit ( 303,100 ) ( 237,824 )

TOTAL STOCKHOLDERS’ EQUITY 1,547,356 1,590,236

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Collaboration revenue $ ( 987 ) $ 46,574

Contract revenue 52,191 138

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

Grant revenue 5,172 16,245

5 unchanged sentences

Total operating expenses 136,457 206,328

(Loss) income from operations ( 186,732 ) 194,964 ( 545,289 ) 983,570

Other income (expense):

Loss from operations ( 80,081 ) ( 143,371 )

Other income:

Change in fair value of equity investments ( 5,915 ) ( 13,103 )

Interest income 21,283 21,307

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

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

(Loss) income before benefit from (provision for) income taxes ( 166,626 ) 217,732 ( 507,437 ) 905,918

Benefit from (provision for) income taxes 3,213 ( 42,420 ) 8,293 ( 288,478 )

Net (loss) income $ ( 163,413 ) $ 175,312 $ ( 499,144 ) $ 617,440

Other expense, net ( 287 ) ( 8,021 )

Total other income 15,081 183

Loss before (provision for) benefit from income taxes ( 65,000 ) ( 143,188 )

(Provision for) benefit from income taxes ( 276 ) 2,232

Net loss ( 65,276 ) ( 140,956 )

Net loss attributable to noncontrolling interest — ( 56 )

Net (loss) income attributable to Vir $ ( 163,413 ) $ 175,312 $ ( 499,088 ) $ 617,440

Net (loss) income per share attributable to Vir, basic $ ( 1.22 ) $ 1.32 $ ( 3.73 ) $ 4.66

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

Weighted-average shares outstanding, basic 134,289,620 132,729,530 133,969,878 132,422,028

Weighted-average shares outstanding, diluted 134,289,620 134,963,317 133,969,878 134,711,777

Net loss attributable to Vir $ ( 65,276 ) $ ( 140,900 )

Net loss per share attributable to Vir, basic and diluted $ ( 0.48 ) $ ( 1.06 )

Weighted-average shares outstanding, basic and diluted 135,280,648 133,552,839

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

VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Statements of Comprehensive (Loss) Income

Condensed Consolidated Statements of Comprehensive Loss

( in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net (loss) income $ ( 163,413 ) $ 175,312 $ ( 499,144 ) $ 617,440

Other comprehensive income (loss):

Unrealized gain (loss) on investments 994 ( 4,318 ) 7,194 ( 10,754 )

Amortization of actuarial gain (loss) 9 ( 9 ) 28 ( 27 )

Other comprehensive income (loss) 1,003 ( 4,327 ) 7,222 ( 10,781 )

Comprehensive (loss) income $ ( 162,410 ) $ 170,985 $ ( 491,922 ) $ 606,659

Net loss $ ( 65,276 ) $ ( 140,956 )

Other comprehensive (loss) income:

Unrealized (loss) gain on investments ( 1,411 ) 5,894

Amortization of actuarial (loss) gain ( 171 ) 9

Total other comprehensive (loss) income ( 1,582 ) 5,903

Comprehensive loss ( 66,858 ) ( 135,053 )

Comprehensive loss attributable to noncontrolling interest — ( 56 )

Comprehensive (loss) income attributable to Vir $ ( 162,410 ) $ 170,985 $ ( 491,866 ) $ 606,659

Comprehensive loss attributable to Vir $ ( 66,858 ) $ ( 134,997 )

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

1 unchanged sentence

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except shares amounts)

(in thousands, except share amounts)

Vir Stockholders’ Equity

2 unchanged sentences

Comprehensive

Loss Retained

Earnings (Accumulated Deficit) Noncontrolling

Loss Accumulated

Deficit Noncontrolling

interest Total

Stockholders’

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

Balance at December 31, 2023 134,781,286 $ 13 $ 1,828,862 $ ( 815 ) $ ( 237,824 ) $ — $ 1,590,236

Vesting of restricted common stock 950,254 1 — — — — 1

1 unchanged sentence

Stock-based compensation — — 23,757 — — — 23,757

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

Other comprehensive loss — — — ( 1,582 ) — — ( 1,582 )

Net loss — — — — ( 65,276 ) — ( 65,276 )

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

Balance at March 31, 2024 135,843,560 $ 14 $ 1,852,839 $ ( 2,397 ) $ ( 303,100 ) $ — $ 1,547,356

Vir Stockholders’ Equity

6 unchanged sentences

Stockholders’

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

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

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

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.

VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except shares amounts)

Vir Stockholders' Equity

Common Stock Additional

Capital Accumulated

Comprehensive

Loss Retained

Earnings (Accumulated Deficit) Noncontrolling

interest Total

Stockholders'

Balance at December 31, 2022 133,236,687 $ 13 $ 1,709,835 $ ( 9,122 ) $ 377,237 $ — $ 2,077,963

1 unchanged sentence

Exercise of stock options 177,102 — 2,310 — — — 2,310

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

Stock-based compensation — — 25,481 — — — 25,481

1 unchanged sentence

Contributions from noncontrolling interest owners — — — — — 100 100

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

Net loss — — — — ( 140,900 ) ( 56 ) ( 140,956 )

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

Vir Stockholders' Equity

Common Stock Additional

Capital Accumulated

Comprehensive

Loss (Accumulated Deficit) Retained

Earnings Noncontrolling

interest Total

Stockholders'

Balance at December 31, 2021 131,161,404 $ 13 $ 1,571,535 $ ( 1,099 ) $ ( 138,600 ) $ — $ 1,431,849

Issuance of common stock in connection with a grant agreement 881,365 — 28,462 — — — 28,462

Vesting of restricted common stock 323,700 — — — — — —

Exercise of stock options 566,714 — 3,602 — — — 3,602

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

Stock-based compensation — — 77,217 — — — 77,217

Other comprehensive loss — — — ( 10,781 ) — — ( 10,781 )

Net income — — — — 617,440 — 617,440

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

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

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

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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

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

Net loss $ ( 65,276 ) $ ( 140,956 )

Adjustments to reconcile net loss to net cash used in operating activities:

Change in estimated constraint on profit-sharing amount 685 ( 31,541 )

Depreciation and amortization 4,517 5,638

Amortization of intangible assets 399 399

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

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

Amortization of premiums (accretion of discounts) on investments, net 238 ( 9,365 )

Noncash lease expense 1,447 2,173

2 unchanged sentences

Stock-based compensation 23,757 25,481

In-process research and development impairment 6,899 —

Long-lived assets impairment 7,474 —

Other ( 578 ) 301

Other non-cash items, net ( 176 ) 206

Changes in operating assets and liabilities:

6 unchanged sentences

Deferred revenue ( 50,159 ) 1,700

Net cash (used in) provided by operating activities ( 670,858 ) 1,628,127

Net cash used in operating activities ( 109,390 ) ( 125,782 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of an equipment — 22

Proceeds from sale of equipment 533 —

Purchases of property and equipment ( 1,872 ) ( 6,867 )

Purchases of investments ( 562,939 ) ( 384,513 )

Maturities of investments 1,486,677 84,836

Net cash provided by (used in) investing activities 269,440 ( 1,040,326 )

Maturities and sales of investments 592,698 489,459

Net cash provided by investing activities 28,420 98,079

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock in connection with a grant agreement — 28,462

Payment of principal on financing lease obligation ( 69 ) ( 66 )

Proceeds from exercise of stock options 221 2,310

Issuance of common stock under ESPP 2,605 2,066

Contributions from noncontrolling interest owners — 100

Increase in ownership interest in a subsidiary ( 100 ) —

Payment of contingent consideration — ( 1,197 )

Net cash provided by financing activities 152 2,344

Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents ( 395,618 ) 620,551

Net decrease in cash, cash equivalents and restricted cash and cash equivalents ( 80,818 ) ( 25,359 )

Cash, cash equivalents and restricted cash and cash equivalents at beginning of period 261,292 867,968

10 unchanged sentences

Vir Biotechnology, Inc.

(“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” or the “Company”) is an immunology company focused on powering the immune system to transform lives by treating and preventing infectious diseases and other serious conditions, including viral-associated diseases.

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

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

5 unchanged sentences

Liquidity and Capital Resources

In November 2020, the Company entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”), under which the Company may from time to time offer and sell shares of its common stock for an aggregate offering price of up to $ 300.0 million, through or to Cowen, acting as sales agent or principal.

The shares will be offered and sold under the Company’s shelf registration statement on Form S-3 and a related prospectus filed with the Securities and Exchange Commission (the “SEC”) on November 10, 2020.

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

The Sales Agreement will expire in November 2023.

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.

In November 2023, the Company entered into a sales agreement (“Sales Agreement”) with Cowen and Company, LLC, as sales agent (“TD Cowen”), pursuant to which the Company may from time to time offer and sell shares of its common stock for an aggregate offering price of up to $ 300.0 million, through or to TD Cowen, acting as sales agent or principal.

The shares will be offered and sold under the Company’s shelf registration statement on Form S-3 and a related prospectus filed with the Securities and Exchange Commission (“SEC”) on November 3, 2023.

The Company will pay TD 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 TD Cowen with customary indemnification and contribution rights.

As of March 31, 2024, no shares have been sold under the Sales Agreement.

As of March 31, 2024, the Company had $ 1.51 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 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.

The unaudited condensed consolidated results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, 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.

7 unchanged sentences

Concentration of Credit Risk, Credit Loss and Other Risks and Uncertainties

Although the Company received Emergency Use Authorization (“EUA”), temporary authorization or marketing approval for sotrovimab (under the brand name Xevudy ® ), sotrovimab is currently deauthorized in the U.S.

and has limitations in use outside of the U.S.

In addition, the Company is subject to a number of other challenges and risks similar to other biopharmaceutical companies in the early stage, including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its other product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of sotrovimab and other product candidates and protection of proprietary technology.

The Company is subject to a number of challenges and risks similar to other biopharmaceutical companies, including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of product candidates and protection of proprietary technology.

If the Company does not successfully obtain regulatory approval, commercialize or partner any of its product candidates, it will be unable to generate revenue from product sales or maintain profitability.

2 unchanged sentences

Such deposits may, at times, exceed federally insured limits.

On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver.

Prior to such events, the Company held cash deposits at SVB in excess of government insured limits.

On March 12, 2023, the U.S.

Treasury Department, the Federal Reserve and the FDIC jointly announced enabling actions that fully protect all SVB depositors’ insured and uninsured deposits, and that such depositors would have access to all of their funds starting March 13, 2023.

On March 13, 2023, the Company was able to access its deposits at the FDIC’s newly created Silicon Valley Bridge Bank, N.A., which was subsequently purchased on March 27, 2023 by First Citizens Bank & Trust Company, a subsidiary of First Citizens BancShares, Inc.

As such, no losses have been incurred by the Company on deposits that were held at SVB.

Management believes that the Company is not currently exposed to significant credit risk as the Company’s investments are held in custody at a third-party financial institution.

The Company has not experienced any losses on its deposits of cash and cash equivalents.

Management believes that the Company is not currently exposed to significant credit risk as the Company’s investments are held in custody at third-party financial institutions.

The Company’s investment policy limits investments to certain types of securities issued by the U.S.

1 unchanged sentence

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 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.

The Company’s expected loss allowance methodology for the receivables is developed using historical collection experience, current and future economic market conditions, a review of the current aging status and financial condition of the entities.

Specific allowance amounts are established to record the appropriate allowance for customers that have a higher probability of default.

Balances are written off when determined to be uncollectible.

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 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.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

As of March 31, 2024, the Company has no off-balance sheet concentrations of credit risk.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents, which consist of amounts invested primarily in money market funds and are stated at fair value.

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

Available-for-Sale Debt Securities

The Company’s valuations of marketable securities are generally derived from independent pricing services based on quoted prices in active markets for similar securities at period end.

Generally, investments with original maturities beyond three months at the date of purchase and which mature at, or less than 12 months from, the unaudited condensed consolidated balance sheet date are considered short-term investments, with all others considered to be long-term investments.

Unrealized gains and losses deemed temporary in nature are reported as a component of accumulated other comprehensive income (loss).

Generally, investments with original maturities beyond three months at the date of purchase and that mature at, or less than 12 months from, the unaudited condensed consolidated balance sheet date are considered short-term investments, with all others considered to be long-term investments.

Unrealized gains and losses deemed temporary in nature are reported as a component of accumulated other comprehensive loss.

The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the unaudited condensed consolidated statements of operations.

3 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 income (expense), 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 expense, net on the unaudited condensed consolidated statements of operations.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Restricted Cash and Cash Equivalents

5 unchanged sentences

To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(i) identify the contract with a customer;

(ii) identify the performance obligations in the contract;

8 unchanged sentences

In order to record collaboration revenue, the Company utilizes certain information from its collaboration partner, including actual net product sales and costs incurred for sales activities, and makes key judgments based on business updates related to commercial and clinical activities such as expected commercial demand, commercial supply plan, manufacturing commitments, risks related to expired or obsolete inventories, and risks related to potential product returns or contract terminations.

The Company uses these estimates to determine whether payments due to it under its collaboration arrangements, such as profit-share payments, should be recognized as revenue in the period that they become due or whether any portion of the payments due should be constrained from revenue recognition because it is not probable that recognizing such amounts would not result in a material reversal of revenues in future reporting periods.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The Company uses these estimates to determine whether payments due to it under its collaboration arrangements, such as profit-share payments, should be recognized as revenue in the period that they become due or whether any portion of the payments due should be constrained from revenue recognition because it is not probable that recognizing such amounts will not result in a significant reversal of cumulative revenues recognized in future reporting periods.

The Company has entered into a number of license and collaboration agreements that fall within the scope of ASC 606.

4 unchanged sentences

These agreements may include the following types of consideration:

non-refundable upfront payments, reimbursement for research services, research, development or regulatory milestone payments, profit-sharing arrangements, and royalty and commercial sales milestone payments.

non-refundable upfront payments, reimbursement for research and development services, research, development or regulatory milestone payments, profit-sharing arrangements, and royalty and commercial sales milestone payments.

If there are multiple distinct performance obligations, the Company allocates the transaction price to each distinct performance obligation based on their estimated standalone selling prices (“SSP”).

3 unchanged sentences

The Company also considers whether to use a different estimation approach or a combination of approaches to estimate the SSP for each distinct performance obligation.

Developing certain assumptions (e.g., treatable patient population, expected market share, probability of success and product profitability, discount rate based on weighted-average cost of capital) to estimate the SSP of a distinct performance obligation requires significant judgment.

Developing certain assumptions (e.g., treatable patient population, expected market share, probability of success and product profitability, and discount rate based on weighted-average cost of capital) to estimate the SSP of a distinct performance obligation requires significant judgment.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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.

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The changes in fair values of contingent consideration related to the achievement of various milestones are recorded within research and development expenses or selling, general and administrative expenses based on the nature of the relevant underlying activities.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

New Accounting Pronouncement Not Yet Adopted

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign).

ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes.

The guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted.

The Company is currently evaluating the impact the adoption of ASU 2023-09 may have on its consolidated financial statements and related disclosures.

Fair Value Measurements

6 unchanged sentences

The carrying amounts of the Company’s financial instruments, including accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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 within the fair value hierarchy as of September 30, 2023 and December 31, 2022:

September 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 March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024

Hierarchy Amortized

Losses Aggregate

(in thousands)

Money market funds (1)

2 unchanged sentences

government agency bonds and discount notes Level 2 97,634 57 ( 75 ) 97,616

Yankee bonds Level 2 10,967 — ( 12 ) 10,955

Asset-backed securities Level 2 15,849 4 ( 2 ) 15,851

Corporate bonds Level 2 236,306 74 ( 273 ) 236,107

Equity securities Level 1 N/A N/A N/A 3,927

5 unchanged sentences

Losses Aggregate

(in thousands)

Money market funds (1)

1 unchanged sentence

government treasuries Level 2 1,162,124 1,017 ( 80 ) 1,163,061

government agency bonds and discount notes Level 2 181,189 27 ( 50 ) 181,166

Equity securities Level 1 N/A N/A N/A 9,853

3 unchanged sentences

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

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.

Accrued interest receivable amounted to $ 5.7 million and $ 4.0 million as of March 31, 2024 and December 31, 2023, respectively.

The Company did not write off any accrued interest receivable during the three months ended March 31, 2024 and 2023.

The Company recognized total net unrealized losses of $ 0.5 million and total net unrealized gains of $ 0.9 million in accumulated other comprehensive loss as of March 31, 2024 and December 31, 2023, respectively.

The gross unrealized losses related to U.S.

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.

government treasuries, U.S.

government agency bonds and discount notes, and securities issued by institutions with investment-grade credit ratings as of March 31, 2024 and December 31, 2023 were due to changes in interest rates.

The Company determined that the gross unrealized losses on the investments as of March 31, 2024 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 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 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.

As of March 31, 2024, no securities have contractual maturities of longer than two years .

As of March 31, 2024, 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 The Stock Exchange of Hong Kong Limited and are considered to be marketable equity securities and measured at fair value at each reporting date.

As of March 31, 2024, the Company remeasured the equity investment at a fair value of $ 3.9 million.

The Company recognized an unrealized loss of $ 5.9 million and $ 13.1 million, for the three months ended March 31, 2024 and 2023, respectively, as other income in the unaudited condensed consolidated statement of operations.

For the three months ended March 31, 2024 and 2023, the unrealized losses related to foreign currency translation for the respective periods were not material.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Contingent Consideration Obligations

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 Company classifies the contingent consideration as Level 3 financial liabilities within the fair value hierarchy as of March 31, 2024 and December 31, 2023.

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 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:

As of March 31, 2024, the Company calculated the estimated fair value of the remaining clinical and regulatory milestones related to tobevibart (formally as VIR-3434), an investigational subcutaneously administered HBV-neutralizing monoclonal antibody, or mAb, using the following significant unobservable inputs:

Unobservable input Range

5 unchanged sentences

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:

As of March 31, 2024, 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 tobevibart:

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 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.

Notes to Unaudited Condensed Consolidated Financial Statements

As of March 31, 2024 and December 31, 2023, the estimated fair value of the contingent consideration related to the Humabs acquisition was $ 27.6 million and $ 26.0 million, respectively, with changes in the estimated fair value recorded in research and development expenses in the unaudited condensed consolidated statements of operations.

The estimated fair value of the contingent consideration related to the Humabs acquisition involves significant estimates and assumptions that give rise to measurement uncertainty.

3 unchanged sentences

Changes in fair value 1,649

Balance at September 30, 2023 $ 24,310

Balance at March 31, 2024 $ 27,610

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 $ 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.

Concurrently with the execution of the grant agreement for the vaccinal antibody program, the Company entered into a stock purchase agreement with the Bill & Melinda Gates Foundation, under which the Bill & Melinda Gates Foundation purchased 881,365 shares of the Company’s common stock on January 13, 2022, at a price per share of $ 45.38 , for an aggregate purchase price of approximately $ 40.0 million.

The fair market value of the common stock issued to the Bill & Melinda Gates Foundation was $ 28.5 million, based on the closing stock price of $ 37.65 per share on the closing date and taking into account a discount for the lack of marketability due to the restrictions in place on the underlying shares, resulting in a $ 11.3 million premium received by the Company.

The Company accounted for the common stock issued to the Bill & Melinda Gates Foundation based on its fair market value on the closing date and determined that the premium paid by the Bill & Melinda Gates Foundation should be included in the deferred revenue from the vaccinal antibody grant.

The Company has entered into various grant agreements with the Bill & Melinda Gates Foundation (“BMGF”), under which it was awarded grants totaling up to $ 49.9 million to support its HIV vaccine program, tuberculosis vaccine program, 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 BMGF 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 BMGF reasonably believes may threaten the success of the projects.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Concurrently with the execution of the grant agreement for the vaccinal antibody program, the Company entered into a stock purchase agreement with the BMGF, under which the BMGF purchased 881,365 shares of the Company’s common stock on January 13, 2022, at a price per share of $ 45.38 , for an aggregate purchase price of approximately $ 40.0 million.

The fair market value of the common stock issued to the BMGF was $ 28.5 million, based on the closing stock price of $ 37.65 per share on the closing date and taking into account a discount for the lack of marketability due to the restrictions in place on the underlying shares, resulting in a $ 11.3 million premium received by the Company.

The Company accounted for the common stock issued to the BMGF based on its fair market value on the closing date and determined that the premium paid by the BMGF should be included in the deferred revenue from the vaccinal antibody grant.

Payments received in advance that are related to future research activities along with the aforementioned premium received are deferred and recognized as revenue when the donor-imposed conditions are met, which is as the research and development activities are performed.

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

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.

The Company recognized grant revenue of $ 1.9 million and $ 1.9 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024 and December 31, 2023, the Company had deferred revenue of $ 14.6 million and $ 13.1 million, respectively.

As of March 31, 2024 and December 31, 2023, the Company had $ 7.6 million and $ 9.2 million, respectively, within accrued and other liabilities, which may need to be refunded to the BMGF.

Biomedical Advanced Research and Development Authority

In September 2022, the Company entered into an other transaction for advanced research agreement (the “BARDA Agreement”) with the Biomedical Advanced Research and Development Authority (“BARDA”), part of the U.S.

In September 2022, the Company entered into a multi-year agreement (the “BARDA Agreement”) under Other Transaction Authority with the Biomedical Advanced Research and Development Authority (“BARDA”), part of the U.S.

Department of Health and Human Services’ Administration for Strategic Preparedness and Response.

1 unchanged sentence

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.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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

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

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

4 unchanged sentences

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.

The Company recognized grant revenue related to BARDA of $ 3.3 million and $ 14.3 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024 and December 31, 2023, the Company had receivables from BARDA of $ 4.1 million and $ 7.6 million, respectively, as part of prepaid expenses and other current assets.

As of March 31, 2024, $ 53.3 million of potential future reimbursement remains available under the Amended BARDA Agreement.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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.

8 unchanged sentences

Manufacturing costs include inventory revaluation adjustments, lower of cost or market inventory adjustments, inventory write-downs and write-offs, and binding purchase commitments with a third-party manufacturer among other manufacturing costs.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

In periods when allowable expenses exceed amounts recognized for net product sales of sotrovimab, negative revenue would be reported in our consolidated statements of operations.

2 unchanged sentences

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.

For the year ended December 31, 2023, the Company paid GSK $ 341.4 million 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.

As of March 31, 2024, the Company’s share of the remaining estimated manufacturing expenses related to excess sotrovimab supply and binding reserved manufacturing capacity not utilized is $ 0.7 million.

The Company re-assesses these estimates each reporting period.

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:

During the three months ended March 31, 2024 and 2023, the Company recorded profit-sharing amount, profit-sharing amount constrained, and profit-sharing amount previously constrained, released as components of collaboration revenue in the unaudited condensed consolidated statements of operations, as follows (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands)

Collaboration revenue, net

Profit-sharing amount $ ( 287 ) $ 7,236

3 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 $ 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.

Under the 2020 GSK Agreement, the Company recognized additional net research and development expenses of $ 2.8 million and $ 7.3 million during the three months ended March 31, 2024 and 2023, respectively.

2021 Expanded GSK Collaboration

In 2021, the Company and GSK entered into a collaboration agreement (the “2021 GSK Agreement”) under which the parties agreed to expand the 2020 GSK Agreement to collaborate on three separate programs:

(1) a program to research, develop and commercialize monoclonal antibodies (“mAbs”) for the prevention, treatment or prophylaxis of the influenza virus (the “Influenza Program”), excluding VIR-2482 unless GSK exercises its option as described below;

(1) a program to research, develop and commercialize certain mAbs for the prevention, treatment or prophylaxis of the influenza virus (the “Influenza Program”), excluding VIR-2482 unless GSK exercises its exclusive option to co-develop and commercialize after the Company completes a Phase 2 clinical trial (“VIR-2482 Option”);

(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 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).

The Company conducts the development and clinical manufacturing activities for VIR-2482 up to the completion of a Phase 2 clinical trial.

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 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.

GSK is the lead party for development, clinical and commercial manufacturing and commercialization activities for products under the Influenza Program (other than VIR-2482 unless and until GSK exercises the VIR-2482 Option, if applicable).

and (3) additional programs to develop neutralizing mAbs directed to up to three non-influenza target pathogens if selected by GSK prior to March 25, 2024 (the “Selected Pathogens” and such programs, the “Additional Programs”).

On February 21, 2024, the Company and GSK entered into a letter agreement (the “Letter Agreement”) pursuant to which the Company and GSK agreed to terminate the Influenza Program and GSK’s VIR-2482 Option from the 2021 GSK Agreement and to wind down and terminate the cost-sharing arrangements and all ongoing activities in relation to the Influenza Program.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The parties mutually agree upon the allocation of responsibility for the development of products under the Expanded Functional Genomics Program, and for the development and early-stage manufacturing of products under the Additional Programs if and when GSK decides which Selected Pathogens to pursue.

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For each collaboration program, the Company granted or will grant GSK certain license rights related to the development, manufacturing and commercialization of products arising from the program.

GSK selected respiratory syncytial virus (“RSV”) as its first pathogen under the Additional Programs.

The parties share 50 % of all development costs in accordance with the budget for each of the collaboration programs (other than for VIR-2482, unless GSK exercises the VIR-2482 Option).

GSK selected RSV as its first pathogen under the Additional Programs in 2022.

During the three months ended March 31, 2024, the Company recognized contract revenue of $ 51.7 million as GSK’s rights to select the remaining two additional non-influenza target pathogens expired on March 25, 2024.

The Company had no other remaining performance obligations under the 2021 GSK Agreement.

The parties share 50 % of all development costs in accordance with the budget for each of the collaboration programs.

The parties also share 50 % of all profits and losses arising from any collaboration product.

If GSK exercises the VIR-2482 Option, GSK will pay the Company an option exercise fee of $ 300.0 million unless certain agreed product criteria for VIR-2482 are not met, in which case the parties will negotiate an alternative option exercise fee.

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 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 $ 0.6 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.

Notes to Unaudited Condensed Consolidated Financial Statements

Under the 2021 GSK Agreement, the additional net research and development expenses were not material during the three months ended March 31, 2024 and 2023.

Balance Sheet Components

Property and Equipment, net

Property and equipment, net consists of the following:

September 30,

Property and equipment, net consists of the following (in thousands):

2024 December 31,

(in thousands)

Laboratory equipment $ 43,955 $ 43,728

6 unchanged sentences

Total property and equipment, net $ 92,477 $ 96,018

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.

Depreciation expenses were $ 4.4 million and $ 5.5 million for the three months ended March 31, 2024 and 2023, respectively.

Accrued and Other Liabilities

Accrued and other liabilities consist of the following:

September 30,

Accrued and other liabilities consist of the following (in thousands):

2024 December 31,

(in thousands)

Research and development expenses $ 27,314 $ 33,129

Payroll and related expenses 17,508 41,322

Accrued income taxes 15,415 15,228

Operating lease liabilities, current 11,913 12,867

Excess funds payable under grant agreements 7,603 9,202

Net profit-sharing amount 6,964 357,762

Other professional and consulting expenses 3,492 3,418

Other accrued expenses 3,711 12,711

Accrued royalties 1,112 816

Net profit-sharing amount 287 —

Accrued income taxes 146 149

Other accrued expenses 2,885 3,317

Total accrued and other liabilities $ 72,260 $ 104,220

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Restructuring, Impairment and Other Costs

In December 2023, the Company initiated strategic steps to reduce operating expenses and focus its capital allocation on programs with the highest potential for patient impact and value creation (“Restructuring Plan”).

As part of the steps, the R&D facilities in St.

Louis, Missouri and Portland, Oregon will be closed in 2024.

In addition, approximately 75 net positions, or 12 % of the workforce, will be eliminated, which includes reductions from the Company’s discontinuation of its innate immunity small molecule group that was initiated in the third quarter of 2023.

The Company expects all actions related to the Restructuring Plan to be substantially completed in the third quarter of 2024.

During the year ended December 31, 2023, the Company incurred severance and other employee-related expenses of $ 5.9 million, of which $ 4.0 million was included in research and development expense and $ 1.9 million was included in selling, general and administrative expense.

As of December 31, 2023, the Company recorded $ 4.5 million as accrued and other liabilities related to restructuring costs.

In addition to severance and other employee-related expenses, the Company also recorded one-time non-cash impairment charges and disposal losses on ROU assets, leasehold improvements, and equipment of $ 7.7 million for the year ended December 31, 2023, primarily related to the consolidation of facilities and disposal of equipment used in the small molecule platform that was discontinued.

Of the $ 7.7 million, $ 5.6 million was included in research and development expense, and $ 2.1 million was included in selling, general and administrative expense.

The following table is a summary of restructuring related severance and other employee-related expenses incurred during the three months ended March 31, 2024 and a roll forward of accrued restructuring costs from December 31, 2023 to March 31, 2024 (in thousands).

Severance and other employee-related expenses

Accrued restructuring charges at December 31, 2023 $ 4,454

Restructuring charges, net

Research and development

Selling, general and administrative

Total restructuring charges, net ( 48 )

Cash payment ( 2,592 )

Accrued restructuring charges at March 31, 2024 $ 1,814

Reconciliation of accrued restructuring charges to the condensed consolidated balance sheets

Accrued and other liabilities $ 1,814

For the three months ended March 31, 2024, the Company did not incur material contract termination costs, other associated exit costs, impairment charges, or long-lived assets disposal losses related to restructuring activities.

As of March 31, 2024, the Company continues to expect to incur additional restructuring charges of approximately $ 25 million to $ 35 million, primarily related to facility closures in the future.

Commitments and Contingencies

Manufacturing and Supply Agreements

In the first quarter of 2024, the Company and a third-party contract development manufacturing organization entered into various scopes of work with respect to the manufacturing of tobevibart (the “Tobevibart Agreements”).

As of March 31, 2024, the Company had a balance of unpaid commitments of approximately $ 20 million under the Tobevibart Agreements.

Legal Proceedings

The Company may from time to time be party to claims and legal proceedings that arise in the normal course of its business and that may or may not have, individually or in the aggregate, a material adverse effect on its results of operations, financial condition or liquidity.

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Indemnification

1 unchanged sentence

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

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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

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

1 unchanged sentence

To date, no demands have been made upon the Company to provide indemnification under these agreements, and thus, there are no indemnification claims that the Company is aware of that could have a material effect on the unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of operations, or unaudited condensed consolidated statements of cash flows.

Related Party Transaction

Related Party Transactions

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

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

As of March 31, 2024, one member of the Company’s board of directors serves on Brii Bio Parent’s board of directors.

Stock-Based Awards

The Company has maintained a stock incentive plan for the issuance of incentive stock options (“ISO”), non-qualified stock options (“NSO”), stock appreciation rights (“SARs”), restricted stock, other stock awards and performance cash awards, to employees, non-employee directors, and consultants.

The Company also has an employee stock purchase plan (“ESPP”) for its employees or employees of any of the Company’s designated affiliates.

The Company has maintained a stock incentive plan for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, other stock awards and performance cash awards, to employees, non-employee directors, and consultants.

The Company also has an employee stock purchase plan (“ESPP”) for its employees.

Stock Options Granted to Employees

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Expected term of options (in years) 6.1

1 unchanged sentence

100.7 % - 101.2 %

99.6 % - 101.5 %

103.8 % - 111.2 %

Risk-free interest rate 4.3 %

3.4 % - 4.1 %

3.4 % - 4.4 %

1.6 % - 3.6 %

Expected dividend yield — —

1 unchanged sentence

• Expected Term — The expected term represents the period that the stock options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).

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

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

• 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.

5 unchanged sentences

Stock-based compensation is recognized on a straight-line basis over the requisite service period, which is generally the vesting period.

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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands)

Research and development $ 13,606 $ 13,353

1 unchanged sentence

Total stock-based compensation $ 23,757 $ 25,481

Net (Loss) Income Per Share

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 (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.

Net Loss Per Share

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

Diluted net loss per common share is computed by dividing the net 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.

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 (loss) income per share (in thousands, except share and per share data):

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net (loss) income attributable to Vir $ ( 163,413 ) $ 175,312 $ ( 499,088 ) $ 617,440

Weighted-average shares outstanding, basic 134,289,620 132,729,530 133,969,878 132,422,028

Weighted-average effect of dilutive securities:

Options to purchase common stock — 2,144,302 — 2,227,493

Restricted shares subject to future vesting — 75,759 — 55,080

Shares to purchase under Employee Stock Purchase Plan — 13,726 — 7,176

Weighted-average shares outstanding, diluted 134,289,620 134,963,317 133,969,878 134,711,777

Net (loss) income attributable to Vir per share, basic $ ( 1.22 ) $ 1.32 $ ( 3.73 ) $ 4.66

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

Net loss attributable to Vir $ ( 65,276 ) $ ( 140,900 )

Weighted-average shares outstanding, basic and diluted 135,280,648 133,552,839

Net loss attributable to Vir per share, basic and diluted $ ( 0.48 ) $ ( 1.06 )

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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Options issued and outstanding 12,018,822 9,135,760

1 unchanged sentence

Total 16,540,696 12,167,833

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):

The table below presents our loss before (provision for) benefit from income taxes, (provision for) benefit from income taxes and effective tax rate for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(Loss) income before benefit from (provision for) income taxes $ ( 166,626 ) $ 217,732 $ ( 507,437 ) $ 905,918

Benefit from (provision for) income taxes $ 3,213 $ ( 42,420 ) $ 8,293 $ ( 288,478 )

Loss before (provision for) benefit from income taxes $ ( 65,000 ) $ ( 143,188 )

(Provision for) benefit from income taxes $ ( 276 ) $ 2,232

Effective tax rate ( 0.4 %) 1.6 %

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The Company is subject to income taxes in the United States and foreign jurisdictions.

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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 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.

The provision for income taxes for the three months ended March 31, 2024 was not material.

The benefit from income taxes for the three months ended March 31, 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 $ 13.9 million and $ 13.6 million as of March 31, 2024 and December 31, 2023, 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