What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-04 compared with 2024-08-01 · 99 added, 86 removed, 171 unchanged (52% of the section changed)

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Our growth and pursuit of scientific innovation is fueled by our world-class leading monoclonal antibody (mAb) platform that has a proven track record and is further strengthened by our artificial intelligence-led mAb optimization and engineering capabilities.

Our current clinical development pipeline consists of product candidates targeting hepatitis delta virus (HDV) and hepatitis B virus (HBV).

Our current clinical development pipeline consists of product candidates targeting hepatitis delta virus (HDV), hepatitis B virus (HBV), in addition to multiple oncology programs.

The most advanced preclinical candidate in our pipeline includes respiratory syncytial virus (RSV) and human metapneumovirus (MPV).

Additionally, Vir is evaluating a small interfering RNA (siRNA) through a collaboration with Alnylam in our hepatitis clinical trials.

We have established our own internal process development, analytical development, manufacturing, supply chain and quality capabilities and worked with contract development and manufacturing organizations (CDMOs) to develop, manufacture, test and supply our early- and late-stage product candidates.

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Significant Developments

Following is a summary of selected significant developments affecting our business that occurred since the filing of our Quarterly Report on Form 10-Q for the period ended March 31, 2024.

For additional developments or for a more comprehensive discussion of certain developments below, see our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Report on Form 10-Q for the period March 31, 2024.

Following is a summary of selected significant developments affecting our business that occurred since the filing of our Quarterly Report on Form 10-Q for the period ended June 30, 2024.

Pipeline Programs

Chronic Hepatitis Delta (CHD)

• We presented positive preliminary Phase 2 chronic hepatitis delta SOLSTICE study data at the European Association for the Study of the Liver, EASL™ Congress 2024.

◦ Tobevibart monotherapy and combination therapy with elebsiran achieved high virologic response and ALT normalization in people living with the hepatitis delta virus after 12 and 24 weeks of treatment.

◦ Complete 24-week treatment data on the approximately 60 participants is on track to be reported in the fourth quarter of 2024.

• On June 26, the U.S.

Food and Drug Administration (FDA) cleared our investigational new drug (IND) application and granted Fast Track designation for the combination of tobevibart and elebsiran for the treatment of chronic hepatitis delta infection.

• We plan to present additional data from the Phase 2 chronic hepatitis delta SOLSTICE trial, including 24-week clinical data for both study cohorts in approximately 60 patients and further data data for those patients who were on study beyond 24 weeks at the time of data cut-off at the American Association for the Study of Liver Diseases (AASLD), "The Liver Meeting", in November 2024.

◦ One cohort assesses the combination of tobevibart and elebsiran administered every four weeks, while a second cohort evaluates tobevibart monotherapy administered every two weeks.

◦ The SOLSTICE trial is evaluating the safety, tolerability and efficacy of tobevibart and elebsiran for the treatment of chronic hepatitis delta.

Chronic Hepatitis B (CHB)

• The Phase 2 MARCH Part B study is fully enrolled with 48-week end of treatment data expected in the fourth quarter of 2024.

The study is evaluating the safety, tolerability and antiviral activity of the combination of tobevibart and elebsiran with and without peginterferon alpha.

• Initial data from the Phase 2 PREVAIL platform study and its THRIVE/STRIVE sub-protocols is expected in the first half of 2025.

These studies are evaluating combinations of tobevibart, elebsiran and/or peginterferon alpha in two patient populations:

immune-active but treatment-naïve and inactive carriers.

• We plan to share end-of-treatment data from the Phase 2 MARCH Part B trial as a Late Breaking presentation at the AASLD in November 2024.

◦ The MARCH-B trial is evaluating the safety, tolerability and antiviral activity of the triplet combination of tobevibart and elebsiran plus peginterferon alfa-2a in approximately 30 participants, and approximately 50 participants treated with the doublet combination of tobevibart and elebsiran.

◦ We also plan to share further data assessing a potential functional cure in the second quarter of 2025.

• VIR-5818 is a dual-masked HER2-targeted T-cell engager in clinical development and is designed to minimize off-tumor toxicity, potentially allowing for higher doses and increased efficacy to address the significant unmet needs of patients with HER2 expressing cancers.

◦ A Phase 1 basket study of VIR-5818 as a monotherapy, and in combination with pembrolizumab, is on-going in multiple tumor types, including metastatic breast cancer and metastatic colorectal cancer.

◦ We plan to share initial clinical data for VIR-5818 in the first quarter of 2025.

• VIR-5500 is a dual-masked PSMA directed T-cell engager in clinical development and is designed to minimize off-tumor toxicity and potentially improve efficacy relative to existing approved PSMA-targeted therapies.

◦ A Phase 1 dose escalation study of VIR-5500 is ongoing to assess its safety profile and optimal doses for future development in metastatic-castration resistant prostate cancer.

◦ We plan to share initial clinical data for VIR-5500 in the first quarter of 2025.

• VIR-5525 is a dual-masked EGFR targeted T-cell engager with a cleared Investigational New Drug Application (IND) from the U.S.

◦ We plan to initiate a Phase 1 basket study of VIR-5525 in the first quarter of 2025 in patients across a number of solid tumor indications of high unmet need, which may include metastatic head and neck squamous cell carcinoma, metastatic adenocarcinoma, squamous non-small cell lung cancer, and metastatic colorectal cancer.

Preclinical Pipeline Candidates

• We continue to advance pre-clinical assets in respiratory syncytial virus in partnership with GSK, and pursue HIV cure in collaboration with the Bill & Melinda Gates Foundation.

Corporate Update

• As announced on August 1, 2024, we signed an exclusive worldwide license agreement with Sanofi for multiple potential best-in-class clinical-stage T-cell engagers and exclusive use of the protease-cleavable masking platform, acquired by Sanofi from Amunix Pharmaceuticals.

This license agreement is subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act Antitrust Improvements Act of 1976, as amended (HSR).

• We initiated a strategic restructuring to advance the development of our hepatitis programs and focus on the highest near-term value opportunities.

The organizational realignment and optimization include phasing out programs in influenza, COVID-19, and our T cell-based viral vector platform, as well as a workforce reduction of approximately 25% or approximately 140 employees.

We expect to end 2024 with approximately 435 employees, a decrease of approximately 200 from our peak headcount in the second quarter of 2023.

This includes the Sanofi employees who are expected to join us following receipt of HSR clearance.

As a result of this strategic restructuring and prioritization we anticipate:

• Approximately $50 million of annual workforce cost savings starting in 2025.

Combined with the strategic actions taken in December 2023, we lowered our cost structure by approximately $90 million since its peak in 2023, part of which will be redeployed to the newly anticipated key personnel from Sanofi.

• Cost savings of $50 million through the end of 2025 due to the phasing out of certain programs.

These savings will substantially be reinvested in the newly licensed programs from Sanofi following closing of the transaction.

• Restructuring expenses estimated at $11 million to $13 million, primarily related to employee severance cash payouts.

We expect to recognize most of these expenses in the second half of 2024.

• On May 29, 2024, we announced the appointment of Mark D.

Eisner, M.D., M.P.H.

as Executive Vice President and Chief Medical Officer, effective June 3, 2024.

Eisner brings extensive late-stage clinical development expertise and deep knowledge in the fields of immunology and infectious disease.

• On April 18, 2024, we announced that founding board members Phillip Sharp, Ph.D.

and Robert Perez would not stand for reelection.

Effective May 29, 2024, two new independent directors were elected in their place, including Norbert Bischofberger, Ph.D., who brings close to 40 years of biotech leadership experience and Ramy Farid, Ph.D., whose pioneering work applying advanced computational methods to drug discovery has enabled high-quality, novel molecules for drug development and materials applications.

• On August 1, 2024 we announced an exclusive worldwide license to use of the proprietary PRO-XTEN™ universal masking technology for oncology and infectious disease and to three clinical-stage masked TCEs with potential applications in a range of cancers.

The agreement became effective on September 9, 2024.

◦ Certain former employees of Sanofi joined us following the closing of the agreement.

• On August 1, 2024 we announced the phase-out of clinical programs in influenza, COVID-19, and its T-cell based viral vector platform.

The Company is seeking partners to advance these clinical programs through further development.

Additionally, the Company announced a workforce reduction of approximately 25%, or approximately 140 employees.

• On September 10, 2024, we announced the appointment of Jason O’Byrne as Executive Vice President and Chief Financial Officer, effective October 2, 2024.

O’Byrne is an accomplished executive with more than 20 years of experience in finance and operations and brings leadership in capital allocation and formation, corporate strategy and operational excellence.

Our Collaboration, License and Grant Agreements

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Components of Operating Results

To date, sotrovimab has been granted emergency authorization, temporary authorization or marketing approval (under the brand name Xevudy®), and has been supplied in more than 30 countries.

Other than sotrovimab, we have not obtained regulatory approval for our product candidates, and we do not expect to generate any significant revenue from the sale of our other product candidates until we complete clinical development, submit regulatory filings and receive approvals from the applicable regulatory bodies for such product candidates, if ever.

Although we have previously recognized revenue from our profit-share related to sotrovimab under our definitive collaboration agreement with GSK executed in June 2020, or the 2020 GSK Agreement, we may continue to incur net operating losses for at least the next several years as the extent of future revenue from the sale of sotrovimab remains uncertain.

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region in the future, and we do not expect meaningful collaboration revenue in the future from the sale of sotrovimab for the treatment of COVID-19 even if it were reauthorized by the FDA.

In addition, we have not obtained regulatory approval for any other product candidates, and we do not expect to generate any significant revenue from the sale of our other product candidates until we complete clinical development, submit regulatory filings and receive approvals from the applicable regulatory bodies for such product candidates, if ever.

Collaboration revenue

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• other allocated expenses, including expenses for rent and facilities maintenance, and depreciation and amortization.

We expect our research and development expenses to increase substantially in absolute dollars over time as we advance our product candidates into and through preclinical studies and clinical trials and pursue regulatory approval of our product candidates.

We expect our research and development expenses to increase substantially in absolute dollars over time as we advance our product candidates into and through preclinical and clinical studies and pursue regulatory approval of our product candidates.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming.

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the safety and efficacy of our product candidates, early clinical data, investment in our clinical programs, the ability of collaborators to successfully develop our licensed product candidates, competition, manufacturing capability and commercial viability.

In addition, under our license agreement with Sanofi, we may incur additional clinical, and regulatory milestone payments based on the development progress of certain oncology programs.

We may also be required to pay commercial milestone payments and royalties in the event of a successful product launch and our receipt of commercial revenues.

Therefore, we are unable to predict the timing or the final cost to complete our clinical programs or validation of our manufacturing and supply processes and delays may occur due to numerous factors.

Factors that could cause or contribute to delays or additional costs include, but are not limited to, those discussed in the “Risk Factors” section of the Quarterly Report.

As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate significant revenue from the commercialization and sale of any of our product candidates.

Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations.

We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments, our ongoing assessments as to each product candidate’s commercial potential and the impact of public health epidemics, such as the COVID-19 pandemic.

We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical and clinical studies, regulatory developments, our ongoing assessments as to each product candidate’s commercial potential and the impact of public health epidemics, such as the COVID-19 pandemic.

In addition, our existing collaborators have significant discretion in determining the efforts and resources that they will apply to our collaborations and may not pursue further development and commercialization of products resulting from our collaboration arrangements or may elect to not to continue or renew research and development programs, which would delay the development and may increase the cost of developing our product candidates and may result in a need for additional capital or a suitable replacement collaborator.

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• per patient trial costs;

• the number of trials required for approval;

• the number of sites included in the trials;

• enrollment and retention of patients in trials in countries disrupted by geopolitical events, including civil or political unrest;

• the number of studies required for approval;

• the number of sites included in the studies;

• enrollment and retention of patients in studies in countries disrupted by geopolitical events, including civil or political unrest;

• the length of time required to enroll eligible patients;

• the number of patients that participate in the trials;

• the number of patients that participate in the studies;

• the number of doses that patients receive;

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• potential additional safety monitoring requested by regulatory agencies;

• the duration of patient participation in the trials and follow-up;

• the duration of patient participation in the studies and follow-up;

• the cost and timing of manufacturing our product candidates;

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Personnel-related expenses consist of salaries, benefits and stock-based compensation.

We expect our selling, general and administrative expenses to increase in absolute dollars over time as we continue to support our research and development activities, and commercialization activities for any of our product candidates, if approved, and to grow our business.

In the long-term as we advance our research and development programs toward potential commercialization, we expect our selling, general, and administrative expenses to increase in absolute dollars to support commercialization activities and related expansion in research and development activities.

Restructuring, long-lived asset impairment and related charges

Restructuring, long-lives asset impairment and related charges consist primarily of charges incurred in connection with our cost saving initiatives implemented during the second half of 2023, including severance and other employee-related expenses and long-lived assets impairment charges and disposal losses.

Restructuring, long-lives asset impairment and related charges consist primarily of charges incurred in connection with our cost saving initiatives implemented during the second half of 2024 and 2023, respectively, including severance and other employee-related expenses and long-lived assets impairment charges and disposal losses.

Change in Fair Value of Equity Investments

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Interest income consists of interest earned on our cash, cash equivalents and investments.

Other Expense, Net

Other expense, net consists of gains and losses from foreign currency transactions and the remeasurement of our contingent consideration obligation.

Benefit from Income Taxes

Benefit from income taxes consists primarily of income taxes on our domestic and foreign operations.

Other (Expense) Income, Net

Other (expense) income, net consists of gains and losses from foreign currency transactions and the remeasurement of our contingent consideration obligation.

(Provision for) Benefit from Income Taxes

(Provision for) benefit from income taxes consists primarily of income taxes on our domestic and foreign operations.

Net Loss Attributable to Noncontrolling Interest

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Results of Operations

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

The following table summarizes our results of operations for the periods presented (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 Change 2024 2023 Change

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Interest income 17,527 21,931 (4,404) 57,656 66,254 (8,598)

Other expense, net (535) (367) (168) (822) (8,388) 7,566

Other (expense) income, net (893) 882 (1,775) (1,715) (7,506) 5,791

Total other income 17,764 20,106 (2,342) 51,585 37,852 13,733

Loss before benefit from income taxes (139,890) (197,623) 57,733 (204,890) (340,811) 135,921

Benefit from income taxes 1,512 2,848 (1,336) 1,236 5,080 (3,844)

Loss before (provision for) benefit from income taxes (213,540) (166,626) (46,914) (418,430) (507,437) 89,007

(Provision for) benefit from income taxes (177) 3,213 (3,390) 1,059 8,293 (7,234)

Net loss (213,717) (163,413) (50,304) (417,371) (499,144) 81,773

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Net loss attributable to Vir $ (213,717) $ (163,413) $ (50,304) $ (417,371) $ (499,088) $ 81,717

The increase in collaboration revenue for the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to lower loss from the sales of sotrovimab and lower profit-sharing amount constrained under the 2020 GSK Agreement.

The decrease in collaboration revenue for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to lower revenues from the release of profit-sharing amount previously constrained.

The decrease in contract revenue for the three months ended June 30, 2024 compared to the same period in 2023 was not material.

The increase in contract revenue for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to $51.7 million of deferred revenue recognized during the first quarter of 2024 as GSK’s rights to select up to two additional non-influenza target pathogens under the 2021 GSK Agreement expired on March 25, 2024.

The decrease in grant revenue for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to lower revenue recognized in accordance with our agreement with BARDA.

The lower negative collaboration revenue for the three months ended September 30, 2024 compared to the same period in 2023 was primarily due to reduced loss from the sales of sotrovimab.

The decrease in collaboration revenue for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to lower revenues from the release of profit-sharing amount previously constrained.

The increase in contract revenue for the three months ended September 30, 2024 compared to the same period in 2023 was not material.

The increase in contract revenue for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to $51.7 million of deferred revenue recognized during the first quarter of 2024 when GSK’s rights to select up to two additional non-influenza target pathogens under the 2021 GSK Agreement expired on March 25, 2024.

The decrease in grant revenue for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to lower revenue recognized in accordance with our agreement with BARDA and to a lesser extent, lower revenue recognized from the Bill and Melinda Gates Foundation.

Cost of Revenue

The increase in cost of revenue for the three months ended June 30, 2024 compared to the same period in 2023 was not material.

The decrease in cost of revenue for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to lower third-party royalties owed based on the sales of sotrovimab under the 2020 GSK Agreement.

The increase in cost of revenue for the three months ended September 30, 2024 compared to the same period in 2023 was not material.

The decrease in cost of revenue for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to lower third-party royalties owed based on the sales of sotrovimab under the 2020 GSK Agreement.

Research and Development Expenses

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 Change 2024 2023 Change

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Total research and development expenses $ 195,178 $ 145,028 $ 50,150 $ 400,416 $ 470,754 $ (70,338)

The decrease in research and development expenses for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to lower clinical costs and contract manufacturing costs associated with the wind down of the Company’s Phase 2 PENINSULA trial evaluating VIR-2482, lower contract manufacturing costs associated with tobevibart and elebsiran used in the Company's CHD and CHB clinical trials, and lower personnel costs associated with the reduction in the headcount resulting from the cost saving initiatives implemented during the second half of 2023.

The increase in research and development expenses for the three months ended September 30, 2024 compared to the same period in 2023 was primarily due to the expensing of the in-process research and development obtained as part of our license agreement with Sanofi, partially offset by lower clinical costs and contract manufacturing costs associated with the wind down of the Company’s Phase 2 PENINSULA trial evaluating VIR-2482, lower contract manufacturing costs associated with tobevibart and elebsiran used in the Company's CHD and CHB clinical trials, and lower personnel costs associated with the reduction in the headcount resulting from the cost saving initiatives implemented during the second half of 2023.

The decrease in research and development expenses for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to lower clinical costs and contract manufacturing costs associated with the wind down of the Company’s Phase 2 PENINSULA trial evaluating VIR-2482, lower contract manufacturing costs associated with tobevibart and elebsiran used in the Company's CHD and CHB clinical trials, and lower personnel costs associated with the reduction in the headcount resulting from the cost saving initiatives implemented during the second half of 2023 partially offset by a portion of the upfront payment made to Sanofi being allocated to in-process research and development.

Selling, General and Administrative Expenses

The decrease in selling, general and administrative expenses for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to cost saving initiatives implemented during the second half of 2023.

The decrease in selling, general and administrative expenses for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to cost saving initiatives implemented during the second half of 2023.

Restructuring, long-lived assets impairment and related charges

The increase in restructuring, long-lived assets impairment and related charges for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to right-of-use asset and leasehold improvement impairment charges related to closing our St.

Louis, Missouri facility, which was previously announced on December 13, 2023.

The increase in restructuring, long-lived assets impairment and related charges for the three months ended September 30, 2024 compared to the same period in 2023 was primarily due to severance charges incurred related to our strategic restructuring announcement in August 2024 and, to a lesser extent, the right-of-use asset impairment charges related to closing our Portland, Oregon facility, which was previously announced on December 13, 2023.

The increase in restructuring, long-lived assets impairment and related charges for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to the right-of-use asset and leasehold improvement impairment charges related to closing our St.

Louis, Missouri facility, which was previously announced on December 13, 2023, and severance charges incurred related to our strategic restructuring announcement in August 2024.

Change in Fair Value of Equity Investments

Our investment consisted solely of shares of Brii Bio Parent, which is a marketable equity investment and remeasured to fair value at each reporting period.

For the three and six months ended June 30, 2024, we recognized an unrealized gain of $0.4 million and an unrealized loss $5.5 million due to the change in fair value, respectively, compared to an unrealized loss of $5.1 million and $18.2 million for the same periods in 2023, respectively.

We recognized an unrealized gain of $1.1 million for the three months ended September 30, 2024, and an unrealized loss of $4.4 million for the nine months ended September 30, 2024, due to the change in fair value.

For the same periods in 2023, we recognized unrealized losses of $2.7 million and $20.9 million, respectively.

Interest Income

The decrease in interest income for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to lower balances of cash, cash equivalents, and investments.

Other Expense, Net

The increase in other expense, net for the three months ended June 30, 2024 compared to the same period in 2023 was not material.

The decrease in other expense, net for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to a decrease in foreign exchange measurement loss related to the accrued liability recognized in connection with the profit-sharing amount constrained under the 2020 GSK Agreement.

Benefit from Income Taxes

The benefit for income taxes for the three and six months ended June 30, 2024 was primarily due to favorable adjustments in estimated tax payable.

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.

The decrease in interest income for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to lower balances of cash, cash equivalents, and investments.

Other (Expense) Income, Net

The change in other (expense) income, net for the three months ended September 30, 2024 compared to the same period in 2023 was not material.

The decrease in other (expense) income, net for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to a decrease in foreign exchange measurement loss related to the accrued liability recognized in connection with the profit-sharing amount constrained under the 2020 GSK Agreement.

(Provision for) Benefit from Income Taxes

The provision for income taxes for the three months ended September 30, 2024 was not material.

The benefit from income taxes for the nine months ended September 30, 2024 was primarily due to a favorable adjustment to estimated tax payable.

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.

Liquidity, Capital Resources and Capital Requirements

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To date, we have financed our operations primarily through sales of our common stock from our initial public offering and subsequent follow-on offering, sales of our convertible preferred securities, and payments received under our grant and collaboration agreements.

As of June 30, 2024, we had $1.43 billion in cash, cash equivalents, and investments.

As of June 30, 2024, we had accumulated deficit of $441.5 million.

As of September 30, 2024, we had $1.19 billion in cash, cash equivalents, and investments.

As of September 30, 2024, we had accumulated deficit of $655.2 million.

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

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We 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 June 30, 2024, no shares have been sold under the Sales Agreement.

As of September 30, 2024, no shares have been sold under the Sales Agreement.

Funding Requirements and Conditions

Our primary use of our capital resources is to fund our operating expenses, which consist primarily of expenditures related to identifying, acquiring, developing, manufacturing and in-licensing our technology platforms and product candidates, and conducting preclinical studies and clinical trials, and to a lesser extent, selling, general and administrative expenditures.

Our primary use of our capital resources is to fund our operating expenses, which consist primarily of expenditures related to identifying, acquiring, developing, manufacturing and in-licensing our technology platforms and product candidates, and conducting preclinical and clinical studies, and to a lesser extent, selling, general and administrative expenditures.

We have not obtained regulatory approval for any product candidates other than sotrovimab, and we do not expect to generate significant revenue from the sale of our other product candidates until we complete clinical development, submit regulatory filings and receive approvals from the applicable regulatory bodies for such product candidates, if ever.

We may continue to incur net losses for the foreseeable future.

Based upon our current operating plan, we believe that our existing cash, cash equivalents and investments as of June 30, 2024 as noted above will enable us to fund our operations for at least the next 12 months from the filing date of this Quarterly Report on Form 10-Q.

Based upon our current operating plan, we believe that our existing cash, cash equivalents and investments as of September 30, 2024 as noted above will enable us to fund our operations for at least the next 12 months from the filing date of this Quarterly Report on Form 10-Q.

However, our operating plan may change as a result of many factors currently unknown to us, and we may need to raise additional capital to complete the development and commercialization of our product candidates and fund certain of our existing manufacturing and other commitments.

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We have various operating lease arrangements for office and laboratory spaces located in California, Oregon, Missouri and Switzerland with contractual lease periods expiring between 2025 and 2035.

As of June 30, 2024, we expect to make total lease payments of $143.5 million through 2034.

As of September 30, 2024, we expect to make total lease payments of $140.7 million through 2035.

To date, we have entered into collaboration, license and acquisition agreements where the payment obligations are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones, and we are required to make royalty payments in connection with the sale of products developed under those agreements.

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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 June 30, 2024, the Company had a balance of unaccrued unpaid commitments of approximately $19 million under the Tobevibart Agreements.

As of September 30, 2024, the Company had a balance of unaccrued unpaid commitments of approximately $15 million under the Tobevibart Agreements.

In the third 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 elebsiran (the “Elebsiran Agreements”).

As of September 30, 2024, the Company had unaccrued unpaid commitments of approximately $7 million under the Elebsiran Agreements.

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements.

The following table summarizes our cash flows for the periods indicated (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash (used in) provided by:

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Cash used in operating activities is derived by adjusting our net loss for non-cash items and changes in operating assets and liabilities.

Cash used in operating activities during the six months ended June 30, 2024 decreased compared to the same period in 2023 primarily due to lower payments to GSK related to profit-sharing amount constrained under the 2020 GSK Agreement, and lower clinical development and contract manufacturing activities related to the wind down of the Phase 2 PENINSULA trial evaluating VIR-2482, partially offset by lower receipts for grant and collaboration revenues.

Cash used in operating activities during the nine months ended September 30, 2024 decreased compared to the same period in 2023 primarily due to lower payments to GSK related to profit-sharing amount constrained under the 2020 GSK Agreement, and lower clinical development and contract manufacturing activities related to the wind down of the Phase 2 PENINSULA trial evaluating VIR-2482, partially offset by the payment made under our license agreement with Sanofi.

Investing Activities

Cash provided by investing activities during the six months ended June 30, 2024 decreased compared to the same period in 2023 primarily due to higher cash used in investment purchases, net of investment maturities and sales.

Cash provided by investing activities during the nine months ended September 30, 2024 increased compared to the same period in 2023 primarily due to higher cash provided by maturities and sales of investment, net of investment purchases.

Financing Activities

Cash provided by financing activities during the six months ended June 30, 2024 decreased compared to the same period in 2023 primarily due to lower proceeds from the exercises of stock options.

Cash provided by financing activities during the nine months ended September 30, 2024 decreased compared to the same period in 2023 primarily due to lower proceeds from the exercises of stock options.

Critical Accounting Policies and Estimates

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Actual results may differ from these estimates.

There have been no significant changes in our critical accounting policies during the six months ended June 30, 2024, as compared with those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 26, 2024.

There have been no significant changes in our critical accounting policies during the nine months ended September 30, 2024, as compared with those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 26, 2024 other than disclosed below.

Asset Acquisitions

We make certain judgments to determine whether acquisitions and other similar transactions should be accounted for as acquisitions of assets or business combinations using the guidance in Accounting Standard Codification, or ASC, Topic 805, Business Combinations by first applying a screen test to assess if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets.

If the screen test is met, the transaction is accounted for as an asset acquisition.

If the screen test is not met, further assessment is required to determine whether we have acquired inputs and a substantive processes that together significantly contribute to the ability to create outputs, which would meet the definition of a business.

If determined to be an asset acquisition, we account the transaction using the cost accumulation and allocation method.

Under this method, the cost of the acquisition, including direct acquisition-related costs, is allocated to the assets acquired or liabilities assumed on a relative fair value basis.

Goodwill is not recognized in an asset acquisition, and any difference between consideration transferred and the fair value of the net assets acquired is allocated to the identifiable assets acquired based on their relative fair values.

Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the consideration is paid or becomes payable (unless the contingent consideration payments are subject to guidance in ASC 480, Distinguishing Liabilities from Equity, or ASC 815, Derivatives and Hedging).

Upon recognition of the contingent consideration payments, the amount is included in the cost of the acquired asset or group of assets.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis