What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-26 · 369 added, 270 removed, 756 unchanged (46% of the section changed)

33 unchanged sentences

Description of the Matter The Company accrued $29.2 million of research and development expenses as of December 31, 2024, a portion of which relates to expense accruals for clinical trials.

As described in Note 2 to the consolidated financial statements, the Company determines accruals for clinical trials based on a number of factors, including the Company’s knowledge of the research and development programs, the status of the programs and activities, invoicing to date, and the provisions in the contracts.

As described in Note 2 and Note 7 to the consolidated financial statements, the Company determines accruals for clinical trials based on a number of factors, including the Company’s knowledge of the research and development programs, the status of the programs and activities, invoicing to date, and the provisions in the contracts.

Auditing management’s accounting for expense accruals for clinical trials is especially challenging because the evaluation is dependent on a high volume of data exchanged between third-party service providers, internal clinical personnel, and the Company’s finance team.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s process for accounting for expense accruals for clinical trials, including management’s controls over the completeness and accuracy of data used in determining these costs, as well as management’s process for estimating work completed under the service agreements.

To test expense accruals for clinical trials, our audit procedures included, amongst others, i) inspecting terms and conditions for selected clinical research organization (CRO) contracts ii) meeting with internal clinical personnel to understand the status of clinical activities for selected trials iii) testing management’s determination of work performed by CROs by inspecting the terms and timelines of significant projects iv) obtaining external confirmations from selected CROs and v) inspecting selected invoices received after the balance sheet date to determine whether services performed prior to the balance sheet date have been properly accrued for as of December 31, 2023.

To test expense accruals for clinical trials, our audit procedures included, amongst others, i) inspecting terms and conditions for selected clinical research organization (CRO) contracts, ii) meeting with internal clinical personnel to understand the status of clinical activities for selected trials, iii) testing management’s determination of work performed by CROs by inspecting the terms and timelines of significant projects, iv) obtaining external confirmations from selected CROs, and v) inspecting selected invoices received and payments processed after the balance sheet date to determine whether services performed prior to the balance sheet date have been properly accrued for as of December 31, 2024.

/s/ Ernst & Young LLP

25 unchanged sentences

Deferred revenue, current 12,648 64,853

Contingent consideration obligation, current 16,060 —

Total current liabilities 119,662 175,407

Deferred revenue, noncurrent 1,526 53,207

Operating lease liabilities, noncurrent 90,139 111,673

Contingent consideration, noncurrent 25,960 24,937

Contingent consideration obligation, noncurrent 24,050 25,960

Other long-term liabilities 14,577 15,784

10 unchanged sentences

Accumulated other comprehensive loss ( 1,717 ) ( 815 )

(Accumulated deficit) retained earnings ( 237,824 ) 377,237

Accumulated deficit ( 759,784 ) ( 237,824 )

TOTAL STOCKHOLDERS’ EQUITY 1,150,385 1,590,236

15 unchanged sentences

Selling, general and administrative 119,031 174,441 161,762

Restructuring, long-lived assets impairment and related charges 34,995 13,559 —

Total operating expenses 661,370 770,485 782,729

9 unchanged sentences

Net loss attributable to noncontrolling interest — ( 56 ) —

Net (loss) income attributable to Vir $ ( 615,061 ) $ 515,837 $ 528,584

Net (loss) income per share attributable to Vir, basic $ ( 4.59 ) $ 3.89 $ 4.07

Net (loss) income per share attributable to Vir, diluted $ ( 4.59 ) $ 3.83 $ 3.96

Net (loss) income attributable to VirBio $ ( 521,960 ) $ ( 615,061 ) $ 515,837

Net (loss) income per share attributable to VirBio, basic $ ( 3.83 ) $ ( 4.59 ) $ 3.89

Net (loss) income per share attributable to VirBio, diluted $ ( 3.83 ) $ ( 4.59 ) $ 3.83

Weighted-average shares outstanding, basic 136,246,865 134,130,924 132,606,767

7 unchanged sentences

Net (loss) income $ ( 521,960 ) $ ( 615,117 ) $ 515,837

Other comprehensive income (loss):

Other comprehensive (loss) income:

Unrealized gain (loss) on investments 503 9,310 ( 7,524 )

Actuarial (loss) gain ( 1,003 ) ( 499 ) 1,136

Total other comprehensive income (loss) 8,307 ( 8,023 ) 179

Pension actuarial loss ( 1,405 ) ( 1,003 ) ( 499 )

Total other comprehensive (loss) income ( 902 ) 8,307 ( 8,023 )

Comprehensive (loss) income ( 522,862 ) ( 606,810 ) 507,814

Comprehensive loss attributable to noncontrolling interest — ( 56 ) —

Comprehensive (loss) income attributable to Vir $ ( 606,754 ) $ 507,814 $ 528,763

Comprehensive (loss) income attributable to VirBio $ ( 522,862 ) $ ( 606,754 ) $ 507,814

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

2 unchanged sentences

(in thousands, except share data)

Vir Stockholders' Equity

VirBio Stockholders’ Equity

Common Stock Additional

5 unchanged sentences

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 collaboration agreement 1,924,927 — 85,213 — — — 85,213

Issuance of common stock to settle a contingent consideration 42,737 — 1,860 — — — 1,860

Vesting of restricted common stock 89,261 — — — — — —

Exercise of stock options 1,622,718 — 13,077 — — — 13,077

Issuance of common stock under employee stock purchase plan 65,021 — 2,300 — — — 2,300

Stock-based compensation — — 83,784 — — — 83,784

Other comprehensive income — — — 179 — — 179

Net income — — — — 528,584 — 528,584

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

15 unchanged sentences

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

Vesting of restricted common stock 1,368,362 1 — — — — 1

Exercise of stock options 322,366 — 790 — — — 790

Issuance of common stock under employee stock purchase plan 487,432 — 3,763 — — — 3,763

Stock-based compensation — — 78,457 — — — 78,457

Other comprehensive loss — — — ( 902 ) — — ( 902 )

Net loss — — — — ( 521,960 ) — ( 521,960 )

Balance at December 31, 2024 136,959,446 $ 14 $ 1,911,872 $ ( 1,717 ) $ ( 759,784 ) $ — $ 1,150,385

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

9 unchanged sentences

Depreciation and amortization 14,559 19,451 6,783

Amortization of intangible assets 531 532 533

Accretion of discounts on investments, net ( 8,706 ) ( 8,943 ) ( 244 )

Amortization of premiums (accretion of discounts) on investments, net 5,397 ( 8,706 ) ( 8,943 )

Noncash lease expense 5,248 7,658 8,709

4 unchanged sentences

In-process research and development impairment 14,550 9,658 —

Long-lived assets impairment and disposal loss 7,662 — —

Non-cash restructuring, long-lived assets impairment and related charges 24,173 7,662 —

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

Gain from a sublease termination — — ( 4,844 )

Other 153 ( 383 ) 697

Other non-cash items, net ( 182 ) 153 ( 383 )

Changes in operating assets and liabilities:

8 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment ( 21,573 ) ( 68,006 ) ( 21,817 )

Proceeds from sale of property and equipment 3,372 — —

Purchases of property, equipment and intangible assets ( 7,301 ) ( 21,573 ) ( 68,006 )

Purchases of investments ( 1,235,339 ) ( 2,016,189 ) ( 1,476,965 )

8 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock under the employee stock purchase plan 4,283 3,222 2,300

Proceeds from issuance of common stock under ESPP 3,763 4,283 3,222

Proceeds from exercise of stock options 790 3,484 4,534

Payment of principal on financing lease obligations ( 287 ) ( 260 ) ( 259 )

Contributions from noncontrolling interest owners 100 — —

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

Proceeds from issuance of common stock in connection with a collaboration agreement — — 85,213

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

Payment of contingent consideration — — ( 1,197 )

Other financing activities ( 165 ) ( 287 ) ( 260 )

Net cash provided by financing activities 4,388 7,480 34,761

Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents ( 606,676 ) 504,553 ( 88,072 )

Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents 57,403 ( 606,676 ) 504,553

Cash, cash equivalents and restricted cash and cash equivalents at beginning of period 261,292 867,968 363,415

6 unchanged sentences

Restricted cash and cash equivalents, noncurrent 6,363 6,448 6,656

Total cash, cash equivalents and restricted cash $ 261,292 $ 867,968 $ 363,415

Total cash, cash equivalents and restricted cash and cash equivalents $ 318,695 $ 261,292 $ 867,968

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

2 unchanged sentences

Vir Biotechnology, Inc.

(“Vir” or the “Company”) is an immunology company focused 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”).

In September 2022, the Company formed a new wholly-owned subsidiary in Switzerland, Vir Biotechnology International GmbH (“VBI”), a Swiss limited liability company.

The primary purpose of VBI is to support Vir's research and development and international commercial activities outside of the United States.

(“VirBio” or the “Company”) is a clinical-stage biopharmaceutical company focused on powering the immune system to transform lives by discovering and developing medicines for serious infectious diseases and cancer.

Its clinical-stage portfolio includes infectious disease programs for chronic hepatitis delta (“HDV”) and chronic hepatitis B infections (“HBV”) and multiple dual-masked T-cell engagers (“TCEs”) across validated targets in solid tumor indications.

VirBio also has a preclinical portfolio of programs across a range of infectious diseases and oncologic malignancies.

VirBio has exclusive rights to the PRO-XTEN™ masking platform for oncology and infectious disease.

PRO-XTEN™ is a trademark of Amunix Pharmaceuticals, Inc., a Sanofi company.

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

1 unchanged sentence

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

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

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

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

6 unchanged sentences

Although the Company recorded net income for the years ended December 31, 2022 and 2021, it has otherwise incurred net losses since inception.

The Company expects its earnings to be volatile and may continue to incur net losses over the next several years and may need to raise additional capital to fully implement its business plan.

The Company expects to continue to incur net losses over the next several years and may need to raise additional capital to fully implement its business plan.

As of December 31, 2024, the Company had accumulated deficit of $ 759.8 million.

1 unchanged sentence

Based on the Company’s current operating plan, management believes that the $ 1.1 billion as of December 31, 2024 will be sufficient to fund its operations through at least the next 12 months from the issuance date of these consolidated financial statements.

The Company also had $ 95.7 million in restricted cash and cash equivalents as of December 31, 2024.

Summary of Significant Accounting Policies

1 unchanged sentence

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.

The consolidated financial statements include the accounts of Vir and its wholly-owned subsidiaries.

The consolidated financial statements include the accounts of VirBio and its wholly-owned subsidiaries.

All intercompany balances and transactions have been eliminated upon consolidation.

12 unchanged sentences

Actual results could materially differ from those estimates.

The Company operates as one reportable segment.

The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for purposes of allocating resources.

Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance.

The Company manages the business activities on a consolidated basis and operates as one reportable segment that constitutes all of the consolidated entity, which is the business of powering the immune system to transform lives by discovering and developing medicines for serious infectious diseases and cancer.

Factors used in determining the reportable segment include the nature of the Company’s operating activities, the organizational and reporting structure, and the type of information regularly provided to the CODM to allocate resources and evaluate financial performance.

The Company’s CODM is its Chief Executive Officer.

The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

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.

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.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and investments.

2 unchanged sentences

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

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 third-party financial institutions.

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

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

2 unchanged sentences

As of December 31, 2024 and 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 is exposed to credit losses primarily through receivables from 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.

3 unchanged sentences

There was no allowance for losses on available-for-sale debt securities attributable to credit risk as of December 31, 2024 and 2023.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

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.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

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

10 unchanged sentences

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents represent money market funds to secure standby letters of credit and security deposits with financial institutions, both under office and laboratory space lease agreements.

Additionally, funds received from certain grants are restricted as to their use and are therefore classified as restricted cash and cash equivalents.

Restricted cash and cash equivalents primarily includes the $ 75.0 million milestone payment due upon VIR-5525 achieving “first in human dosing” by 2026, amounts that may need to be refunded to the Gates Foundation and money market funds to secure standby letters of credit and security deposits with financial institutions under lease agreements.

Property and Equipment, Net

9 unchanged sentences

The Company’s intangible assets were acquired via business combinations or asset acquisitions.

Indefinite-lived intangible assets represent the estimated fair value assigned to in-process research and development (“IPR&D”) acquired in a business combination.

In-process research and development (“IPR&D”) acquired as part of an asset acquisition is recorded at cost and expensed immediately if they have no alternative future uses.

IPR&D acquired in a business combination is recorded as indefinite-lived intangible assets using the estimated fair value.

The Company reviews indefinite-lived intangible assets for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value of the assets might not be recoverable.

If the carrying value of an indefinite-lived intangible asset exceeds its fair value, then it is written down to its fair value.

If a product candidate derived from the indefinite-lived intangible asset is commercialized, the useful life will be determined, and the carrying value will be amortized prospectively over that estimated useful life.

Alternatively, if a product candidate is abandoned, the carrying value of the intangible asset will be charged to research and development expenses.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

For IPR&D, if a product candidate derived from the indefinite-lived intangible asset is commercialized, the useful life will be determined, and the carrying value will be amortized prospectively over that estimated useful life.

Alternatively, if a product candidate is abandoned, the carrying value of the intangible asset will be charged to research and development expenses.

IPR&D assets acquired as part of an asset acquisition are recorded at cost and expensed immediately if they have no alternative future uses.

Finite-lived intangible assets acquired in a business combination are initially recognized at their fair value at the acquisition date.

18 unchanged sentences

For elements of collaboration arrangements that are accounted for pursuant to ASC 808 and are not subject to the guidance in ASC 606, the Company applies the revenue recognition model under ASC 606, including the royalty exception guidance and variable consideration guidance under ASC 606 as described below, or other guidance, as deemed appropriate.

When the Company is considered an agent in elements of collaboration arrangements within the scope of ASC 808, it records its share of collaboration revenue in the period in which such sales occur.

The Company is considered an agent when the collaboration partner controls the product before transfer to the customers and has the ability to direct the use of and obtain substantially all of the remaining benefits from the product.

In these instances, collaboration revenue is based upon the net sales reported by the Company's collaboration partners, net of cost of goods sold and allowable expenses (e.g., manufacturing, distribution, medical affairs, selling, and marketing expenses) in the period.

The Company is considered an agent in elements of collaboration arrangements within the scope of ASC 808 when the collaboration partner controls the product before transfer to the customers and has the ability to direct the use of and obtain substantially all of the remaining benefits from the product.

In these instances, collaboration revenue is recorded in the period in which such sales occur and is based upon the net sales reported by the Company’s collaboration partners, net of cost of goods sold and allowable expenses (e.g., manufacturing, distribution, medical affairs, selling, and marketing expenses) in the period.

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.

2 unchanged sentences

Notes to Consolidated Financial Statements

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

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

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

15 unchanged sentences

An agreement is accounted for as a contribution if the resource provider does not receive commensurate value in return for the assets transferred.

Contributions are recognized as grant revenue when all donor-imposed conditions have been met.

Contributions are recognized as grant revenue when all donor-imposed conditions have been met, usually when the specified research and development activities are performed.

The Company evaluates acquisitions and other similar transactions using the guidance in ASC Topic 805, Business Combinations (“ASC 805”), to determine whether the transaction should be accounted for as a business combination or an acquisition of asset(s) 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 acquisition of asset(s).

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

If determined to be an acquisition of asset(s), the Company accounts the transaction using the cost accumulation and allocation method under ASC 805-50.

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 certain 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.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Business combinations are accounted for using the acquisition method of accounting.

Under the acquisition method, assets acquired, including IPR&D projects, and liabilities assumed are recorded at their respective fair values as of the acquisition date.

Any excess fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill.

Contingent consideration obligations incurred in connection with the business combination are recorded at their fair values on the acquisition date, are remeasured each subsequent reporting period until the related contingencies are resolved and are classified as contingent consideration on the consolidated balance sheets.

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.

Research and Development Expenses

9 unchanged sentences

Upfront payments and research and development milestone payments made in connection with acquired licenses or product rights are expensed as incurred, provided that they do not relate to a regulatory approval milestone or assets acquired in a business combination.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

The Company’s expense accruals for clinical trials and manufacturing are based on estimates of contracted services provided by third-party vendors not yet billed.

4 unchanged sentences

Stock-based Compensation

The Company recognizes stock-based compensation to employees over the requisite service period based on the grant-date fair value of the awards.

The Company calculates the estimated fair value of stock options and employees’ purchase rights under the Company’ 2019 employee stock purchase plan (“ESPP”) using the Black-Scholes valuation model, which requires the use of subjective assumptions including volatility and expected term, among others.

The Company’s stock-based compensation programs grant awards that have included stock options, restricted stock units, restricted stock awards, and shares issued under its employee stock purchase plan.

Grants are awarded to employees, directors, and non-employee service providers.

The Company calculates the estimated fair value of stock options and employees’ purchase rights under the Company’s 2019 employee stock purchase plan (“ESPP”) using the Black-Scholes valuation model, which requires the use of subjective assumptions including volatility and expected term, among others.

The fair value of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) is based on the market value of the Company’s common stock on the date of grant.

2 unchanged sentences

Forfeitures are recognized as they occur.

Business combinations are accounted for using the acquisition method of accounting.

Under the acquisition method, assets acquired, including IPR&D projects, and liabilities assumed are recorded at their respective fair values as of the acquisition date.

Any excess fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill.

When the Company determines that an entity acquired does not meet the definition of a business, the transaction is accounted for as an acquisition of assets.

Therefore, the consideration paid to acquire IPR&D is expensed, and no goodwill is recorded.

Any contingent consideration is generally recognized only when it becomes payable or is paid.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

In accordance with ASC 842, Leases, the Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset.

4 unchanged sentences

If the lease incentive received is greater or less than the amount recognized at lease commencement, the Company recognizes the difference as an adjustment to ROU asset and/or lease liability, as applicable.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

As the implicit rate in the Company’s leases is generally unknown, the Company uses an incremental borrowing rate estimated based on the information available at the lease commencement date in determining the present value of future lease payments.

When calculating its estimated incremental borrowing rates, the Company considers its credit risk, the lease term, the total lease payments and the impact of collateral, as necessary.

The lease terms may include options to extend or terminate the lease when the Company is reasonably certain it will exercise such options.

ROU assets and lease liabilities are remeasured upon certain modifications to leases using the present value of remaining lease payments and estimated incremental borrowing rate upon lease modification.

The lease terms may include options to extend or terminate the lease.

The Company reassesses lease terms each period.

When the Company is reasonably certain it will exercise the options to extend or terminate the lease, the lease term is re-assessed to include such options.

ROU assets and lease liabilities are remeasured upon lease term re-assessment and upon certain lease modifications using the present value of remaining lease payments and estimated incremental borrowing rate upon lease modification.

Rent expense for the Company’s operating leases is recognized on a straight-line basis within operating expenses over the reasonably assured lease term.

13 unchanged sentences

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.

Basic net (loss) income per common share is computed by dividing the net (loss) income attributable to VirBio 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 VirBio 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.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

New Accounting Pronouncement Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) No.

2023-09, Income Taxes (Topic 740):

5 unchanged sentences

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

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (“ASU 2024-03”), which requires entities to disclose specific information on the types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The guidance is effective for annual periods beginning after December 15, 2026.

Early adoption is permitted.

ASU 2024-03 should be applied on a prospective basis, but retrospective application is permitted.

The Company is currently evaluating the impact the adoption of ASU 2024-03 may have on its consolidated financial statements and related disclosures.

Reclassification

Certain reclassifications have been made to prior period amounts on the Company’s consolidated balance sheets to conform to the current period presentation and enhance comparability.

As a result, the prior period amounts from deferred revenue, noncurrent were reclassified to other long-term liabilities .

These reclassifications had no impact on previously reported total assets, total liabilities, or total stockholders' equity.

Certain reclassifications have been made to prior period amounts on the Company’s consolidated statements of operations to conform to the current period presentation and enhance comparability.

As a result, certain amounts related to restructuring activities and long-lived assets impairment and disposal gains or losses, previously reflected in research and development and selling, general and administrative , were reclassified to restructuring, long-lived assets impairment and related charges .

These reclassifications had no impact on previously reported total revenues, total operating expenses, or net loss.

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 Consolidated Financial Statements

Cash Equivalents and Available-for-Sale Securities

2 unchanged sentences

Losses Aggregate

Money market funds (1)

Level 1 $ 278,187 $ — $ — $ 278,187

Money market funds Level 1 $ 146,505 $ — $ — $ 146,505

government treasuries Level 2 588,794 722 ( 33 ) 589,483

government agency bonds and discount notes Level 2 38,081 17 ( 19 ) 38,079

Asset-back securities Level 2 51,038 220 ( 10 ) 51,248

Corporate bonds Level 2 252,935 529 ( 9 ) 253,455

Equity securities Level 1 N/A N/A N/A 4,350

Total financial assets $ 1,077,353 $ 1,488 $ ( 71 ) $ 1,083,120

____________________________________________

(1) Includes $ 19.7 million of restricted cash equivalents.

Reconciliation to cash, cash equivalents and investments on consolidated balance sheet

Restricted cash equivalents invested in money market funds ( 20,281 )

Cash deposits 32,524

Total cash, cash equivalents and investments $ 1,095,363

December 31, 2023

1 unchanged sentence

Losses Aggregate

Money market funds (1)

Level 1 $ 909,342 $ — $ — $ 909,342

Money market funds Level 1 $ 278,187 $ — $ — $ 278,187

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

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

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

Total financial assets $ 1,621,500 $ 1,044 $ ( 130 ) $ 1,632,267

____________________________________________

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

Reconciliation to cash, cash equivalents and investments on consolidated balance sheet

Restricted cash equivalents invested in money market funds ( 19,716 )

Cash deposits 15,133

Total cash, cash equivalents and investments $ 1,627,684

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 consolidated balance sheets.

1 unchanged sentence

The Company did not write off any accrued interest receivable during the years ended December 31, 2024, 2023 and 2022.

The Company recognized total net unrealized gain of $ 0.9 million and total net unrealized loss of $ 8.4 million in accumulated other comprehensive loss as of December 31, 2023 and 2022, respectively.

The Company recognized total net unrealized gains of $ 1.4 million and $ 0.9 million in accumulated other comprehensive loss as of December 31, 2024 and 2023, respectively.

The gross unrealized losses as of December 31, 2024 and 2023 were due to changes in interest rates.

The Company determined that the gross unrealized losses on our investments as of December 31, 2023 were temporary in nature.

The Company determined that the gross unrealized losses on our investments as of December 31, 2024 and 2023 were temporary in nature.

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

As of December 31, 2023, no securities have contractual maturities of longer than two years .

As of December 31, 2024, no securities have contractual maturities (or weighted average life for asset-backed securities) of longer than two years .

VIR BIOTECHNOLOGY, INC.

3 unchanged sentences

As of December 31, 2024, the Company remeasured the equity investment at a fair value of $ 4.4 million.

For the years ended December 31, 2023, 2022 and 2021, the Company recognized an unrealized (loss) income of $( 21.9 ) million, $( 111.1 ) million and $ 138.0 million, respectively, as other income (loss) in the consolidated statements of operations.

For the years ended December 31, 2024, 2023 and 2022, the Company recognized unrealized losses of $ 5.5 million, $ 21.9 million and $ 111.1 million, respectively, as other income (loss) in the consolidated statements of operations.

For the years ended December 31, 2024, 2023 and 2022, the unrealized loss related to foreign currency translation were immaterial.

Contingent Consideration

Contingent consideration primarily includes potential milestone payments in connection with the acquisitions of Humabs BioMed SA (“Humabs”).

See further discussion in Note 4—Acquisitions.

Contingent consideration primarily includes potential milestone payments in connection with the acquisitions of Humabs BioMed SA (“Humabs”) in 2017.

The Company classifies the contingent consideration as Level 3 financial liabilities within the fair value hierarchy as of December 31, 2024 and 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 December 31, 2023, the Company calculated the estimated fair value of the remaining clinical and regulatory milestones related to tobevibart (formerly as VIR-3434) using the following significant unobservable inputs:

As of December 31, 2024, the Company calculated the estimated fair value of the remaining clinical and regulatory milestones related to tobevibart using the following significant unobservable inputs:

Unobservable input Range

11 unchanged sentences

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

As of December 31, 2023 and 2022, the estimated fair value of the contingent consideration related to the Humabs acquisition was $ 26.0 million and $ 23.4 million, respectively, with changes in the estimated fair value recorded in research and development expenses in the consolidated statements of operations based on the nature of the relevant underlying activities.

As of December 31, 2024 and 2023, the estimated fair value of the contingent consideration related to the Humabs acquisition was $ 40.1 million and $ 26.0 million, respectively, with changes in the estimated fair value recorded in research and development expenses in the consolidated statements of operations.

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

4 unchanged sentences

Balance at December 31, 2024 $ 40,110

In August 2017, the Company acquired all of the outstanding equity of Humabs, a private Swiss company, which discovers and develops monoclonal antibodies (“mAbs”) derived from individuals whose immune systems have successfully responded to major diseases.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

The Company acquired all of Humabs’ rights, title and interest in and to substantially all of the assets of Humabs except for rights under certain license agreements with third parties.

The Company is obligated to pass through to the former Humabs shareholders any amounts received by Humabs under such license agreements, net of any program expenses.

The transaction was accounted for as an acquisition of a business.

In addition to the cash payment and issuance of common stock to the former Humabs shareholders at the acquisition date, the Company also agreed to pay additional amounts in cash upon the achievement of specified milestone events:

(i) up to $ 135.0 million upon the achievement of clinical, regulatory and commercial milestones for tobevibart;

and (ii) up to $ 105.0 million upon the achievement of clinical, regulatory and commercial milestones for another product, which the Company elected as sotrovimab, a severe acute respiratory syndrome coronavirus 2 (“SARS-CoV-2”) product.

During the year ended December 31, 2020, the Company achieved two of the specified clinical milestones for tobevibart and sotrovimab totaling $ 20.0 million.

During the year ended December 31, 2021, the Company achieved the specified regulatory milestone of $ 35.0 million and sales milestones totaling $ 60.0 million related to sotrovimab.

The estimated fair value of the remaining contingent consideration was $ 26.0 million as of December 31, 2023.

The acquired developed technologies that have associated patents issued are classified as finite-lived intangible assets and are amortized on a straight-lined basis over their estimated remaining useful lives, generally between seven to 12 years.

The Company also acquired indefinite-lived intangible assets consisting of IPR&D.

These assets will not be amortized until regulatory approval is obtained in a major market.

At that time, the Company will determine the useful life of the asset and begin amortization.

If the associated research and development effort is abandoned or otherwise impaired, the related IPR&D assets will be written-off, and an impairment charge will be recorded.

Goodwill and Intangible assets

6 unchanged sentences

Developed technology $ 4,260 $ 4,260 4.8

Contract-based intangible asset 502 502 11.9

Contract-based intangible assets 914 502 8.5

Finite-lived intangible assets, gross 5,174 4,762

1 unchanged sentence

Finite-lived intangible assets, net $ 1,598 $ 1,492

The contract-based intangible asset resulted from the product approval of a sublicensed intellectual property right in December 2020.

The intellectual property right was previously accounted for as IPR&D.

Amortization expense related to finite-lived intangible assets, included in research and development expenses on the consolidated statements of operations, totaled $ 0.5 million, $ 0.5 million and $ 0.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The developed technology primarily includes the antibody platform acquired in connection with the business combination of Humabs in 2017.

The contract-based intangible assets include intangibles from the product approval of a sublicensed intellectual property right in December 2020, which was previously accounted for as IPR&D, and intangibles recognized for workforce capitalized under the Company’s Sanofi Agreement (as defined in Note 6 Collaboration and License Agreements ).

Amortization expense related to finite-lived intangible assets totaled $ 0.3 million, $ 0.5 million and $ 0.5 million for the years ended December 31, 2024, 2023 and 2022, respectively, primarily included as research and development expenses on the consolidated statements of operations.

There was no impairment for the years ended December 31, 2024, 2023 and 2022.

Based on the finite-lived intangible assets recorded as of December 31, 2023, the estimated future amortization expense for the next five years is as follows (in thousands):

The estimated future amortization expense for the next five years is as follows (in thousands):

Years Ending December 31:

Total $ 1,399

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Indefinite-Lived Intangible Assets

As of December 31, 2023 and 2022, the Company had indefinite-lived intangible assets of $ 21.1 million and $ 30.7 million, respectively, related to the purchased IPR&D from the Humabs acquisition.

For the year ended December 31, 2023, $ 9.7 million impairment losses were recorded as part of research and development expenses for abandoned IPR&D assets related to non-prioritized research programs.

No impairment losses had been recorded for the years ended December 31, 2022 and 2021.

As of December 31, 2024 and 2023, the Company had indefinite-lived intangible assets of $ 6.5 million and $ 21.1 million, respectively, related to the IPR&D from the Humabs acquisition.

For the years ended December 31, 2024 and 2023, $ 14.6 million and $ 9.7 million impairment losses were recorded as part of research and development expenses for IPR&D assets related to non-prioritized or abandoned research programs, respectively.

No impairment losses were recorded for the year ended December 31, 2022.

Grant Agreements

Bill & Melinda Gates Foundation Grants

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 earlier terminated 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 project.

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.

Gates Foundation Grants

The Company has entered into various grant agreements with the Gates Foundation (formerly known as the Bill & Melinda Gates Foundation), under which it is currently 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 earlier terminated by the 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 Gates Foundation reasonably believes may threaten the success of the project.

VIR BIOTECHNOLOGY, INC.

Notes to 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 Gates Foundation, under which the 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 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 Gates Foundation based on its fair market value on the closing date and determined that the premium paid by the Gates Foundation should be included in the deferred revenue from the vaccinal antibody grant.

In August 2024, the Company announced a strategic realignment that included phasing out certain research programs, which include the HIV vaccine program and the tuberculosis vaccine program currently funded by Gates Foundation grants.

The Company continues to pursue a cure for HIV in collaboration with the Gates Foundation.

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.

2 unchanged sentences

As of December 31, 2024 and 2023, the Company had deferred revenue of $ 11.1 million and $ 13.1 million, respectively.

As of December 31, 2023 and 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 BMGF.

As of December 31, 2024 and 2023, the Company had $ 11.6 million and $ 9.2 million, respectively, within accrued and other liabilities, which may need to be refunded to the Gates Foundation.

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.

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

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

The Base Period (September 2022 to January 2026) for the BARDA Agreement includes government funding of approximately $ 55.0 million to reimburse a portion of expenses incurred by the Company to support the development of VIR-2482, an investigational prophylactic monoclonal antibody designed with the aim to protect against seasonal and pandemic influenza, including expenses related to the Phase 2 pre-exposure prophylaxis trial of VIR-2482.

The BARDA Agreement also provides for additional BARDA funding after the exercise by BARDA of up to twelve options to further support the development of pre-exposure prophylactic antibodies including and beyond VIR-2482 for the prevention of influenza illness or possibly supporting medical countermeasures for other pathogens of pandemic potential.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

In September 2022, the Company entered into a multi-year agreement (the “BARDA Agreement”) under Other Transaction Authority (OTA) 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, with the potential for up to $ 1.0 billion to advance the development of a full portfolio of innovative solutions to address influenza and potentially other infectious disease threats.

Under the BARDA Agreement, the Company was initially awarded $ 55.0 million for the development of VIR-2482, an investigational prophylactic monoclonal antibody designed with the aim to protect against seasonal and pandemic influenza.

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

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

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

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

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

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

The Company recognized grant revenue related to BARDA of $ 33.4 million and $ 26.4 million for the years ended December 31, 2023 and 2022, respectively, and other receivables in prepaid expenses and other current assets of $ 7.6 million and $ 26.4 million as of December 31, 2023 and 2022, respectively.

As of December 31, 2023, $ 56.5 million of potential future reimbursement remains available out of $ 116.3 million total awarded amount under the Amended BARDA Agreement.

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

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

Additionally, the Company was awarded up to $ 11.2 million of additional funding to wind down activities related to VIR-2482.

In September 2024, the Company and BARDA entered into Amendment No.

P00003 to the BARDA Agreement, pursuant to which the parties agreed to partially de-obligate certain funds previously awarded to the development of VIR-7229.

Under this Amendment the current BARDA commitment was decreased by $ 42.1 million.

In October 2024, the Company notified BARDA of intent to terminate the OTA on December 31, 2024.

All remaining funds were de-obligated upon the date of termination.

The Company receives BARDA funding as it incurs eligible costs.

The Company recognized grant revenue related to BARDA of $ 5.9 million, $ 33.4 million.

and $ 26.4 million for the years ended December 31, 2024, 2023, and 2022, respectively, and other receivables in prepaid expenses and other current assets of $ 0.1 million and $ 7.6 million as of December 31, 2024 and 2023, respectively.

Collaboration and License Agreements

License Agreement with Sanofi

On September 9, 2024 (Acquisition Date), the Company closed the license agreement with Amunix Pharmaceuticals, Inc., a Sanofi company, previously announced on August 1, 2024 (the “Sanofi Agreement”).

The Sanofi Agreement provides the Company with an exclusive worldwide license to use of the proprietary PRO-XTEN ™ universal masking technology for oncology and infectious disease, excluding the ophthalmological field, and to three early clinical-stage dual-masked TCEs that all leverage the PRO-XTEN ™ universal masking platform within a range of cancer indications.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Under the Sanofi Agreement the Company made an upfront payment to Sanofi in the amount of $ 100.0 million and placed into escrow a $ 75.0 million milestone payment due to former shareholders of Amunix Pharmaceuticals, Inc., which is subject to VIR-5525 achieving “first in human dosing” by 2026.

The cash paid into escrow is under the control of the Company and is classified as restricted cash and cash equivalents, current in the consolidated balance sheets.

Sanofi will also be eligible to receive up to an additional $ 323.0 million in future development and regulatory milestone payments, up to an additional $ 1.49 billion in commercial net sales-based milestone payments, and low single-digit to low double-digit tiered royalties on worldwide net sales.

In addition, if, within a two-year period from the execution of the Sanofi Agreement, the Company executes a transaction that gives rise to VirBio receiving certain sublicense income related to the licenses obtained from the Sanofi Agreement, Sanofi may be eligible to receive a portion of such income.

Additionally, as part of the Sanofi Agreement, the Company paid $ 3.7 million to acquire certain lab equipment and cash deposits primarily related to contract manufacturing agreements.

Shortly after the closing of the Sanofi Agreement, the Company hired certain former Sanofi personnel.

The Company incurred approximately $ 4.6 million of transaction costs associated with the closing of the Sanofi Agreement.

The following table summarizes the aggregate amount paid for the assets acquired by the Company in connection with the Sanofi Agreement as of the acquisition date (in thousands):

Upfront $ 100,000

Equipment 1,150

Deposits 2,580

Transaction costs 4,612

Total purchase consideration $ 108,342

The Company accounted for the Sanofi Agreement as an asset acquisition in accordance ASC 805-50 as substantially all of the fair value of the assets acquired is concentrated in a group of similar identifiable assets.

The three early clinical stage oncology TCEs use the same universal PRO-XTEN ™ masking technology and have similar development timelines, probabilities of risk, and loss of patent exclusivity, among other characteristics.

ASC 805-50 requires the acquiring entity in an asset acquisition to recognize assets acquired and liabilities assumed based on the cost to the acquiring entity on a relative fair value basis, which includes consideration given.

The total purchase price was allocated to the acquired assets based on their relative fair values as of the Acquisition Date as follows (in thousands):

IPR&D $ 102,836

Property and equipment 1,119

Prepaid expenses and other current assets (1)

Assembled workforce 412

Total purchase consideration $ 108,342

__________________________________________________________

(1) Includes acquired cash deposits primarily related to contract manufacturing agreements.

The fair value of the IPR&D was estimated using a multi-period excess earnings income approach that discounts expected cash flows to present value by applying a discount rate that represents the estimated rate that market participants would require for the intangible asset.

The expected cash flows and related discount rate are significant unobservable inputs categorized within Level 3 of the fair value hierarchy.

In accordance with ASC 730, as the three early clinical stage oncology TCEs have not achieved regulatory approval when acquired, the portion of the purchase price allocated to the IPR&D was immediately expensed to research and development expenses as they had no alternative future use.

Contingent milestone payments were determined to be within the scope of ASC 450 and will be recognized when the contingency is resolved and the consideration is paid or becomes payable.

Any milestone payments made in the future will either be expensed as research and development or capitalized as a developed asset based on when regulatory approval is obtained.

The Company will recognize sales-based milestone and royalty payments in cost of sales as revenue from product sales is recognized.

The fair value of the assembled workforce was estimated using a replacement cost method.

The assembled workforce is classified as intangible assets, net and is amortized over an expected useful life of five years .

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Collaboration Agreements with GSK

9 unchanged sentences

(2) vaccines targeting SARS-CoV-2 and potentially other coronaviruses (the “Vaccine Program”), and (3) products based on genome-wide CRISPR screening of host targets expressed in connection with exposure to SARS-CoV-2 and potentially other coronaviruses (the “Functional Genomics Program”).

On February 8, 2023, the Company and GSK entered into Amendment No.

2 and Amendment No.

3 to the 2020 GSK Agreement.

Pursuant to Amendment No.

2, the Company and GSK agreed to remove the Vaccine Program from the 2020 GSK Agreement, and to wind down and terminate the cost-sharing arrangements and all ongoing activities in relation to the Vaccine Program.

As of the effective date of Amendment No.

2, the Vaccine Program had not yet advanced to its predefined development candidate stage.

On February 8, 2023, the Company and GSK entered into two amendments to the 2020 GSK Agreement.

Pursuant to the amendments, the Company and GSK agreed to remove the Vaccine Program from the 2020 GSK Agreement, and to wind down and terminate the cost-sharing arrangements and all ongoing activities in relation to the Vaccine Program.

As of the effective date of the amendments, the Vaccine Program had not yet advanced to its predefined development candidate stage.

The Company retains the right to progress development of vaccine products directed to SARS-CoV-2 and other coronaviruses independently (including with or for third parties) outside the scope of the 2020 GSK Agreement, subject to the payment of tiered royalties to GSK on net sales of any vaccine products covered by certain GSK intellectual property rights in the low single digits.

Pursuant to Amendment No.

3, the Company and GSK agreed to modify the Antibody Program to remove from the collaboration all coronavirus antibodies other than sotrovimab and VIR-7832, and certain variants thereof.

Sotrovimab and VIR-7832, and certain variants thereof, remain subject to the terms of the 2020 GSK Agreement, and the Company retains the sole right to progress the development and commercialization of the terminated antibody products independently (including with or for third parties), subject to the payment of tiered royalties to GSK on net sales of such terminated antibody products at percentages ranging from the very low single digits to the mid-single digits, depending on the nature of the antibody product being commercialized.

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 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.

In addition, the Company and GSK agreed to modify the Antibody Program to remove from the collaboration all coronavirus antibodies other than sotrovimab and VIR-7832, and certain variants thereof, which remain subject to the terms of the 2020 GSK Agreement.

The Company retains the sole right to progress the development and commercialization of the terminated antibody products independently (including with or for third parties), subject to the payment of tiered royalties to GSK on net sales of such terminated antibody products at percentages ranging from the very low single digits to the mid-single digits, depending on the nature of the antibody product being commercialized.

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 sotrovimab, except that GSK has the sole right to develop (including to seek, obtain or maintain regulatory approvals), manufacture and commercialize sotrovimab in and for People’s Republic of China, Hong Kong, Macau and Taiwan at GSK’s sole cost and expense, and equal sharing of such costs for the functional genomics products.

The 2020 GSK Agreement will remain in effect with respect to sotrovimab for as long as it is being commercialized by the lead party.

Either party has the right to terminate the 2020 GSK Agreement in the case of the insolvency of the other party, an uncured material breach of the other party with respect to a collaboration program or collaboration product, or as mutually agreed by the parties.

In May 2021, the U.S.

Food and Drug Administration (“FDA”) granted an EUA in the United States for sotrovimab, the first collaboration product under the Antibody Program.

Food and Drug Administration (“FDA”) granted an emergency use authorization (“EUA”) in the United States for sotrovimab, the first collaboration product under the Antibody Program.

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

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

As the lead party for all manufacturing and commercialization activities, GSK incurs all of the manufacturing, sales and marketing expenses and is the principal on sales transactions with third parties.

As described in Note 2—Summary of Significant Accounting Policies, the Company’s accounting policy related to the profit-share is to consider the agreed-upon share of the profit-sharing amounts each quarter and evaluate whether those amounts are subject to potential future adjustments based on the latest available facts and circumstances.

As the Company is the agent, the Company recognizes its contractual share of the profit-sharing amounts or royalties (in case of an opt-out) as revenue, based on sales net of various estimated deductions such as rebates, discounts, chargebacks, credits and returns, less cost of sales and allowable expenses (including manufacturing, distribution, medical affairs, selling, and marketing expenses) in the period the sale occurs.

In December 2024, the FDA revoked EUA granted to sotrovimab.

GSK is the lead party for manufacturing and commercialization of sotrovimab.

As the agent, the Company recognizes its contractual share of the profit-sharing amounts as revenue, based on sales net of various estimated deductions such as rebates, discounts, chargebacks, credits and returns, less cost of sales and allowable expenses (including manufacturing, distribution, medical affairs, selling, and marketing expenses) in the period the sale occurs.

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.

2 unchanged sentences

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

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

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 a constraint on its cumulative profit-sharing amounts.

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 assessment of profit-sharing amounts to be constrained.

For the year ended December 31, 2024 and 2023, the Company paid GSK $ 0.7 million and $ 341.3 million relating to these manufacturing expenses.

GSK may continue to adjust the allowable manufacturing expenses.

As of December 31, 2024, the accrued liability balance for the Company’s share of the remaining estimated manufacturing expenses related to excess sotrovimab supply and binding reserved manufacturing capacity not utilized is immaterial.

8 unchanged sentences

Total collaboration revenue, net $ 8,379 $ 37,266 $ 1,505,469

Royalties earned by third-party licensors on net sales of sotrovimab are reported as cost of revenue on the consolidated statement of operations, which the Company recognized $ 0.8 million, $ 2.8 million, $ 146.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Costs associated with co-development activities performed under the 2020 GSK Agreement are included in research and development expenses on the 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 $ 7.7 million, $ 23.4 million, and $ 31.4 million during the years ended December 31, 2024, 2023, and 2022, respectively.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

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 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;

(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”);

1 unchanged sentence

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 remove the Influenza Program 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.

As of the effective date of the Letter Agreement, 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.

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.

GSK is primarily responsible for commercial manufacturing and commercialization activities for products under the Expanded Functional Genomics Program and Additional Programs, if and when selected by GSK.

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 and can select up to two additional non-influenza target pathogens prior to March 25, 2024.

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

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

As of December 31, 2023, the total unrecognized transaction price of $ 51.7 million is classified as current deferred revenue on the Company's consolidated balance sheet related to the remaining performance obligations, being the material rights to select up to two additional non-influenza target pathogens under the Additional Programs.

As of the effective date of the Letter Agreement, the VIR-2482 Option was terminated.

As it relates to the Expanded Functional Genomics Program, the Company and GSK mutually rejected all targets selected in the first quarter of 2024, with remaining exclusivity to such targets expiring in mid-2025.

Regarding the Additional Programs, GSK selected respiratory syncytial virus (“RSV”) as its first pathogen in 2022, and as a result the Company recognized the $ 39.8 million as contract revenue.

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

During the fourth quarter of 2024, the Company opted-out of the RSV program.

GSK continues to pursue the development and commercialization of the RSV program unilaterally.

If the RSV program is commercialized, GSK will pay to the Company a royalty on net sales at the low single digits.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

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

During the years ended December 31, 2023, 2022, and 2021, the Company recognized additional net research and development expenses of $ 2.2 million, $ 2.3 million and $ 0.5 million, respectively.

During the year ended December 31, 2022, the Company recognized the $ 39.8 million as contract revenue related to GSK’s selection of RSV as its first pathogen under the Additional Programs.

During the year ended December 31, 2024, the Company recognized reimbursement of research and development expenses of $ 0.8 million.

During the years ended December 31, 2023, and 2022, the Company recognized additional net research and development expenses of $ 2.2 million and $ 2.3 million, respectively.

Brii Biosciences

In 2018, the Company entered into a collaboration, option and license agreement (the “Brii Agreement”) with Brii Bio Parent and Brii Bio, pursuant to which the Company granted to Brii Bio, with respect to up to four of the Company’s programs, an exclusive option to obtain exclusive rights to develop and commercialize compounds and products arising from such programs in China, Taiwan, Hong Kong and Macau (collectively, the “China Territory”) for the treatment, palliation, diagnosis, prevention or cure of acute and chronic diseases of infectious pathogen origin or hosted by pathogen infection (the “Field of Use”).

To date, Brii Bio has opted in for elebsiran (formerly as VIR-2218) and tobevibart to develop and commercialize in the China Territory under the Brii Agreement.

In 2018, the Company entered into a collaboration, option and license agreement (the “Brii Agreement”) with Brii Bio Parent and Brii Biosciences Offshore Limited (“Brii Bio”), pursuant to which the Company granted to Brii Bio, with respect to up to four of the Company’s programs, an exclusive option to obtain exclusive rights to develop and commercialize compounds and products arising from such programs in People’s Republic of China, Taiwan, Hong Kong and Macau (collectively, the “China Territory”) for the treatment, palliation, diagnosis, prevention or cure of acute and chronic diseases of infectious pathogen origin or hosted by pathogen infection (the “Field of Use”).

To date, Brii Bio has opted in for elebsiran and tobevibart to develop and commercialize in the China Territory under the Brii Agreement.

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

2 unchanged sentences

In consideration of the Company’s grant to Brii Bio of an exclusive license related to tobevibart in the China Territory, the Company received a $ 20.0 million option exercise fee in connection with the option exercise.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

The Company evaluated the tobevibart transaction under ASC 606 and identified one performance obligation consisting of the license granted to Brii Bio.

4 unchanged sentences

Brii Bio can benefit from the license at the time of grant and, therefore, the related performance obligation is satisfied at a point in time.

For the years ended December 31, 2023 and 2021, no license revenue from a related party was recognized.

For the year ended December 31, 2022, the Company recognized $ 22.3 million as license revenue from a related party.

In 2017, the Company entered into a collaboration and license agreement with Alnylam (the “Alnylam Agreement”) for the development of siRNA products for the treatment of HBV, and following the exercise of certain program options, the development and commercialization of siRNA therapeutic products directed to up to four other infectious disease targets selected by the Company.

Under the Alnylam Agreement, the Company obtained a worldwide, exclusive license to develop, manufacture and commercialize the HBV siRNA product candidates, including elebsiran, for all uses and purposes other than agricultural, horticultural, forestry, aquaculture and other residential applications (such excluded fields, the “Excluded Fields”).

In addition, Alnylam granted the Company an exclusive option, for each of the infectious disease siRNA programs directed to the Company’s selected targets, to obtain a worldwide, exclusive license to develop, manufacture and commercialize siRNA products directed to the target of each such program for all uses and purposes other than the Excluded Fields.

The Company holds a minority equity interest in Brii Bio through Brii Bio Parent (refer to Note 3 Fair Value Measurements ).

Through the second quarter of 2024, one member of the Company’s board of directors had served on Brii Bio Parent’s board of directors, and thus Brii Bio Parent and Brii Bio were considered the Company’s related parties.

For the year ended December 31, 2024 and 2023, the Company recognized no license revenue from a related party.

For the years ended December 31, 2022, the Company recognized $ 22.3 million license revenue from a related party.

As of December 31, 2024, the Company recorded $ 1.5 million deferred revenue, which represents Brii Bio’s option to opt in up to two of the Company’s programs that will expire in May 2025.

Alnylam Pharmaceuticals, Inc.

In October 2017, the Company and Alnylam Pharmaceuticals, Inc.

(Alnylam) entered into a collaboration and license agreement (the Alnylam Agreement).

Under the Alnylam Agreement, the Company obtained a worldwide, exclusive license to develop, manufacture and commercialize siRNA product candidates directed to HBV, including elebsiran, for all uses and purposes including the treatment of HBV and HDV.

In addition, Alnylam granted the Company an exclusive option, for each of the infectious disease siRNA programs directed to the Company’s four selected targets, to obtain a worldwide, exclusive license to develop, manufacture and commercialize siRNA products directed to the target of each such program for all uses and purposes other than certain excluded fields.

Following the Company’s exercise of an option for a program and payment of the program option exercise fee and any outstanding program costs due to Alnylam, the Company is solely responsible, at the Company’s expense (subject to Alnylam’s exercise of a profit-sharing option), for conducting all development, manufacture and commercialization activities for products arising from each such program.

If Alnylam exercises its profit-sharing option, the parties will negotiate and enter into a profit-sharing agreement for such product.

The Company will be required to pay Alnylam up to $ 190.0 million in the aggregate for the achievement of specified development and regulatory milestones by the first siRNA product directed to HBV.

Following commercialization, the Company will be required to pay to Alnylam up to $ 250.0 million in the aggregate for the achievement of specified levels of net sales by siRNA products directed to HBV.

The Company may also be required to pay Alnylam tiered royalties at percentages ranging from the low double-digits to mid-teens on annual net sales of HBV products.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

The Company is required to pay Alnylam up to $ 190.0 million in the aggregate for the achievement of specified development and regulatory milestones for the first siRNA product directed to HBV, whether for the treatment of HBV or HDV.

The Company achieved a specified development milestone relating to elebsiran and paid Alnylam $ 15.0 million in 2020, thereby reducing the $ 190.0 million initial amount to $ 175.0 million of potential development and regulatory milestones remaining to be paid related to elebsiran.

Following commercialization, the Company will be required to pay to Alnylam up to $ 250.0 million in the aggregate for the first achievement of specified levels of net sales by siRNA products directed to HBV, whether for the treatment of HBV or HDV related to elebsiran.

The Company may also be required to pay Alnylam tiered royalties at percentages ranging from the low double-digits to mid-teens on annual net sales of siRNA products directed to HBV, such as elebsiran, whether for the treatment of HBV or HDV.

The royalties are payable on a product-by-product and country-by-country basis until the later of the expiration of all valid claims of specified patents covering such product in such country and 10 years after the first commercial sale of such product in such country.

3 unchanged sentences

Either party may terminate the agreement for cause for the other party’s uncured material breach on 60 days’ written notice (or 30 days’ notice for payment breach), or if the other party challenges the validity or enforceability of any patent licensed to it under the Alnylam Agreement on 30 days’ notice.

The Company incurred expenses under the Alnylam Agreement of $ 1.7 million, $ 1.4 million, and $ 11.2 million during the years ended December 31, 2023, 2022 and 2021, respectively.

In 2020, the Company entered into a patent license agreement (the “2020 Xencor Agreement”), with Xencor under which the Company obtained a non-exclusive, sublicensable (only to its affiliates and subcontractors) license to incorporate Xencor’s licensed technologies into, and to evaluate, antibodies that target any component of a coronavirus, including SARS-CoV-2, SARS-CoV and MERS-CoV, and a worldwide, non-exclusive, sublicensable license to develop and commercialize products containing such antibodies incorporating such technologies for all uses.

These technologies are used in sotrovimab, incorporating Xencor’s Xtend technology.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

In consideration for the grant of the license, the Company is obligated to pay royalties based on net sales of licensed products at the mid-single-digits.

The Company did not incur any expenses under the Alnylam Agreement during the year ended December 31, 2024 and incurred expenses of $ 1.7 million and $ 1.4 million during the years ended December 31, 2023 and 2022, respectively.

In August 2019, the Company entered into a patent license agreement, which was amended in February 2021, with Xencor (the “2019 Xencor Agreement”).

In 2020, the Company entered into a patent license agreement (the “2020 Xencor Agreement”).

Under these agreements, the Company obtained non-exclusive, sublicensable (only to its affiliates and subcontractors) licenses to incorporate Xencor’s licensed technologies into, and to evaluate, antibodies that target influenza A, HBV, and any component of a coronavirus, including SARS-CoV-2, SARS-CoV and MERS-CoV, and worldwide, non-exclusive, sublicensable licenses to develop and commercialize products containing such antibodies incorporating such technologies for all uses.

These technologies are used in tobevibart and sotrovimab, incorporating Xencor’s Xtend technology.

In consideration for the grant of the license, the Company is obligated to pay regulatory and commercial milestones along with tiered royalties based on net sales of licensed products ranging from the low- to mid-single-digits.

The royalties are payable, on a product-by-product and country-by-country basis, until the later of the expiration of the last to expire valid claim in the licensed patents covering such product in such country or 12 years.

During the years ended December 31, 2023, 2022, and 2021, the Company recognized $ 2.2 million, $ 114.5 million, and $ 52.7 million, respectively, as cost of revenue for royalties due to Xencor from the sale of sotrovimab.

The 2020 Xencor Agreement will remain in force, on a product-by-product and country-by-country basis, until the expiration of all royalty payment obligations under each of the respective agreements.

During the years ended December 31, 2024, 2023, and 2022, the Company recognized $ 0.6 million, $ 2.2 million, and $ 114.5 million, respectively, as cost of revenue for royalties due to Xencor from the sales of sotrovimab.

The 2019 Xencor Agreement and 2020 Xencor Agreement will remain in force, on a product-by-product and country-by-country basis, until the expiration of all royalty payment obligations under each of the respective agreements.

The Company may terminate each agreement in its entirety, or on a target-by-target basis, for convenience upon 60 days’ written notice.

1 unchanged sentence

Xencor may terminate each agreement immediately upon written notice if the Company challenges, or upon 30 days’ written notice if any of the Company’s sublicensees challenge, the validity or enforceability of any patent licensed to the Company under each respective agreement.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Balance Sheet Components

1 unchanged sentence

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

Depreciation and amortization expenses were $ 14.2 million, $ 18.9 million, and $ 6.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.

(in years) 2024 2023

Leasehold improvements 8 - 12

$ 53,992 $ 80,290

Laboratory equipment 5 39,428 43,728

1 unchanged sentence

Furniture and fixtures 5 2,696 2,887

Leasehold improvements 80,290 84,422

Construction in progress 226 —

Construction in progress NA 1,074 226

Property and equipment, gross 99,968 129,914

1 unchanged sentence

Total property and equipment, net $ 63,183 $ 96,018

Depreciation and amortization expenses were $ 18.9 million, $ 6.3 million and $ 5.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Accrued and Other Liabilities

2 unchanged sentences

Research and development expenses 29,225 33,129

Operating lease liabilities, current 12,867 4,137

Excess funds payable under grant agreements 11,589 9,202

Operating lease liabilities, current 7,752 12,867

Other professional and consulting expenses 2,268 3,418

Accrued royalties 816 10,447

Accrued income taxes 149 15,228

Net profit-sharing — 357,762

Other accrued expenses 3,874 4,282

Total accrued and other liabilities $ 85,873 $ 104,220

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Restructuring, Impairment and Other Costs

Restructuring, Impairment and Related 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 (“2023 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 is included in research and development expense and $ 1.9 million is 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.

The Company expects to incur additional charges of approximately $ 25 million to $ 35 million, primarily related to facility closures in the future.

In addition to these strategic steps, 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 consolidation of facilities and disposal of equipment used in the small molecule platform that was discontinued.

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

Commitments and Contingencies

Lease Agreements

The Company has various operating lease arrangements for office and laboratory spaces located in California, Oregon, Missouri, and Switzerland with contractual lease periods expiring at various dates through 2033.

Louis, Missouri and Portland, Oregon were closed in 2024.

In addition, approximately 75 net positions, or 12 % of the workforce, were 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.

In August 2024, the Company initiated a strategic restructuring to advance the development of its hepatitis programs and focus on the highest near-term value opportunities (“2024 Restructuring Plan”).

The organizational realignment and optimization included phasing out programs in influenza, COVID-19, and the Company’s T cell-based viral vector platform, as well as a workforce reduction of approximately 25 % or approximately 140 employees.

The actions related to 2023 Restructuring Plan and 2024 Restructuring Plan were substantially completed by the end of 2024.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

The following table is a summary of restructuring charges incurred under both the 2023 and 2024 Restructuring Plans and a roll forward of accrued restructuring costs (in thousands).

Severance and other employee-related expenses Long-lived assets impairment and disposal losses Lease termination gain Total

Accrued restructuring charges at December 31, 2022 $ — $ — $ — $ —

Restructuring charges, net 5,898 7,661 (1)

Cash payment ( 1,444 ) — — ( 1,444 )

Non-cash activity — ( 7,661 ) — ( 7,661 )

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

Restructuring charges, net 10,822 26,499 (2)

( 2,326 ) (3)

Cash payment ( 13,664 ) — — ( 13,664 )

Non-cash activity — ( 26,499 ) 2,326 ( 24,173 )

Accrued restructuring charges at December 31, 2024 $ 1,612 $ — $ — $ 1,612

Reconciliation of accrued restructuring charges to the consolidated balance sheets

Accrued and other liabilities $ 1,612 $ — $ — $ 1,612

(1) Disclosed amount primarily consists of $ 5.4 million impairment charges recorded upon the Company ceasing to use the leased space at 499 Illinois Street, San Francisco, California, former corporate headquarter in 2023.

The related ROU assets and leasehold improvements were evaluated for impairment as a separate asset group, the carrying value of which was determined to be not recoverable.

$ 4.2 million impairment related to the ROU assets and $ 1.2 million impairment related the leasehold improvements were recognized to reduce the carrying value to an estimated fair value of zero.

(2) Disclosed amount primarily consists of $ 25.3 million impairment charges recorded due to the closure of the R&D facilities in St.

Louis, Missouri and Portland, Oregon in 2024.

The related ROU assets and leasehold improvements were evaluated for impairment as two separate asset groups and determined to be abandoned upon the closure of the R&D facilities.

$ 20.3 million impairment related to the leasehold improvements and $ 5.0 million related to the ROU assets were recognized to write off the carrying value.

The lease agreement related to the R&D facility in St.

Louis, Missouri was terminated in December 2024.

(3) Disclosed amount relates to the $ 2.3 million gain from the de-recognition of lease liability upon the termination of the lease agreement related to the R&D facility in St.

Louis, Missouri in December 2024.

The Company has various operating lease arrangements for office and laboratory spaces located in California and Switzerland with contractual lease periods expiring at various dates through 2035.

These leases require monthly lease payments that may be subject to annual increases throughout the lease term.

Certain lease agreements also provide the Company with the option to renew for five years .

These renewal options are not considered in the remaining lease term unless it is reasonably certain that the Company will exercise such options.

In December 2023, the Company announced that the R&D facilities in Missouri and Oregon will be closed in 2024.

Certain lease agreements also provide the Company with the option to renew for five years or the option to terminate the lease early.

These options are not considered in the lease term unless it is reasonably certain that the Company will exercise such options, upon which the ROU assets and lease liabilities are remeasured.

Throughout the term of the lease agreements, the Company is responsible for paying certain operating costs, in addition to rent, such as common area maintenance, taxes, utilities and insurance.

1 unchanged sentence

The discount rate used to determine the present value of the lease payments is our estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as we generally cannot determine the interest rate implicit in the leases.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

The following table contains a summary of the lease costs recognized under ASC 842 and additional information related to operating leases (in thousands, except weighted average amounts):

8 unchanged sentences

Cash paid for amounts included in the measurement of operating lease liabilities $ 28,566 $ 19,584 $ 12,716

ROU assets obtained in exchange for new operating lease liabilities $ 957 $ 4,046 $ 77,187

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

The maturity of the Company’s operating lease liabilities as of December 31, 2024 was as follows (in thousands):

4 unchanged sentences

Present value of operating lease liabilities $ 97,891

The following amounts were recorded in the consolidated balance sheets as of December 31, 2023 and 2022 (in thousands):

Operating Leases

Prepaid expenses and other current assets (1)

The following amounts were recorded in the consolidated balance sheets as of December 31, 2024 and 2023 (in thousands) for various operating leases:

Operating ROU assets 59,680 71,182

2 unchanged sentences

Total operating lease liabilities $ 97,891 $ 124,540

____________________________________________

(1) For certain operating leases, lease incentives expected to be received exceeds the minimum lease payments expected to be paid over the next 12 months, therefore the net amount is recorded in prepaid expenses and other current assets.

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 December 31, 2024, the Company had unaccrued unpaid commitments of approximately $ 23 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 December 31, 2024, the Company had unaccrued unpaid commitments of approximately $ 9 million under the Elebsiran Agreements.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Indemnification

5 unchanged sentences

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 Company’s consolidated balance sheets, consolidated statements of operations, or consolidated statements of cash flows.

Related Party Transactions

As a result of the Brii Agreement, the Company holds a minority equity interest in Brii Bio through its parent company, Brii Bio Parent.

As of December 31, 2023, one member of the Company’s board of directors serves on Brii Bio Parent’s board of directors.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Stock-Based Awards

3 unchanged sentences

Awards granted under the 2019 Plan expire no later than 10 years from the date of grant.

For ISO and NSO, the option price shall not be less than 100 % of the estimated fair value on the date of grant.

For ISO and NSO, the option price generally shall not be less than 100 % of the estimated fair value on the date of grant.

Options granted typically vest over a four-year period but may be granted with different vesting terms.

15 unchanged sentences

During the year ended December 31, 2024, 487,432 shares were issued under the ESPP.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Stock Option Activity

13 unchanged sentences

The aggregate intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022 was $ 2.4 million, $ 5.9 million, and $ 12.1 million, respectively.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

During the years ended December 31, 2024, 2023, and 2022, the estimated weighted-average grant date fair value of the options granted was $ 7.40 , $ 19.13 , and $ 22.69 per share, respectively.

14 unchanged sentences

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) as the Company has limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants.

Expected Volatility— Since inception the expected volatility was determined by examining the historical volatilities for industry peers and using an average of historical volatilities of the Company’s industry peers.

Beginning the first quarter of 2022, the expected volatility is determined by using a blended approach of the Company and its industry peers’ historical volatilities.

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

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

1 unchanged sentence

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

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Employees Stock Purchase Plan

18 unchanged sentences

Based on the Black-Scholes option-pricing model, the estimated weighted-average grant date fair value of the employees’ purchase rights granted for the years ended December 31, 2024, 2023 and 2022 was $ 2.99 , $ 4.93 and $ 9.09 per share, respectively.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Restricted Stock Activity

16 unchanged sentences

Total stock-based compensation $ 78,457 $ 111,316 $ 102,082

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

Net (Loss) Income Per Share

2 unchanged sentences

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.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

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

1 unchanged sentence

2024 2023 2022

Net (loss) income attributable to Vir $ ( 615,061 ) $ 515,837 $ 528,584

Net (loss) income attributable to VirBio $ ( 521,960 ) $ ( 615,061 ) $ 515,837

Weighted-average shares outstanding, basic 136,246,865 134,130,924 132,606,767

3 unchanged sentences

Shares to purchase under Employee Stock Purchase Plan — — 78

Contingently issuable shares — — 3,233

Weighted-average shares outstanding, diluted 136,246,865 134,130,924 134,810,908

Net (loss) income attributable to Vir per share, basic $ ( 4.59 ) $ 3.89 $ 4.07

Net (loss) income attributable to Vir per share, diluted $ ( 4.59 ) $ 3.83 $ 3.96

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

As of December 31,

Net (loss) income per share attributable to VirBio, basic $ ( 3.83 ) $ ( 4.59 ) $ 3.89

Net (loss) income per share attributable to VirBio, diluted $ ( 3.83 ) $ ( 4.59 ) $ 3.83

Securities that could potentially dilute basic net (loss) income per common share in the future that were not included in the computation of diluted net (loss) income per common share because to do so would have been antidilutive for the years presented were as follows:

Years ended December 31,

2024 2023 2022

6 unchanged sentences

The Company made contributions to the plan for eligible participants, and recorded contribution expenses of $ 4.3 million, $ 4.6 million, and $ 4.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

(Loss) income before benefit from (provision for) income taxes consists of the following (in thousands):

4 unchanged sentences

Total (loss) income before benefit from (provision for) income taxes $ ( 523,105 ) $ ( 628,194 ) $ 754,280

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

The components of benefit from (provision for) income taxes consist of the following (in thousands):

27 unchanged sentences

Net operating loss carryforwards $ 180,130 $ 138,257

Capitalized research and development 175,835 136,962

Intangible assets 40,593 19,060

Research and development tax credit carryforward 30,549 17,917

Equity compensations 23,776 34,875

Reserves and accruals 21,745 85,977

Capitalized research and development 136,962 75,680

Lease liabilities 20,502 29,047

Intangible assets 19,060 18,348

Reserves and accruals 7,543 21,745

Valuation allowance ( 453,394 ) ( 356,833 )

6 unchanged sentences

Deferred tax liabilities ( 24,775 ) ( 43,220 )

Net deferred tax liabilities $ ( 2,190 ) $ ( 3,253 )

Net deferred tax assets (liabilities) $ 759 $ ( 2,190 )

Although the Company has taxable income for the years ended December 31, 2022, and 2021, it has otherwise incurred accumulated tax losses since inception.

8 unchanged sentences

The Company completed its Section 382 analysis as of December 31, 2024, and based on this analysis, it does not expect that the annual limitations will significantly impact its ability to utilize its net operating loss or tax credit carryforwards prior to expiration.

As of December 31, 2023, the Company has research tax credit carryforwards of $ 0.4 million and $ 21.4 million for federal and state tax purposes, respectively.

As of December 31, 2024, the Company has research and development tax credit carryforwards of $ 11.6 million and $ 26.5 million for federal and state tax purposes, respectively.

If not utilized, the federal carryforward will expire in various amounts beginning in 2036 .

8 unchanged sentences

Uncertain Tax Positions

As of December 31, 2023, and 2022, the Company had an unrecognized tax benefit balance of $ 13.6 million and $ 10.6 million, respectively, related to transfer pricing and research and development tax credits.

As of December 31, 2024, and 2023, the Company had an unrecognized tax benefit balance of $ 17.9 million and $ 13.6 million, respectively, primarily related to transfer pricing and research and development tax credits.

A portion of the unrecognized tax benefits as of December 31, 2024, if recognized, would increase the Company’s effective tax rate by 1.8 %.

15 unchanged sentences

Gross unrecognized tax benefits at December 31 $ 17,946 $ 13,583 $ 10,638

Segment Reporting

The Company’s CODM is its Chief Executive Officer.

The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

The measure of segment profit or loss is segment net (loss) income that also is reported on the consolidated statements of operations as consolidated net (loss) income.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The CODM uses segment net (loss) income to monitor spending, assess performance for the Company and management, evaluate the progress of completing corporate goals, decide how to allocate resources among the Company’s clinical and pre-clinical portfolios, and make strategic decisions about business development opportunities.

VIR BIOTECHNOLOGY, INC.

Notes to Consolidated Financial Statements

The segment revenue, segment profit or loss, and significant segment expenses regularly provided to CODM are summarized as follows (in thousands).

Years Ended December 31,

2024 2023 2022

Segment revenue $ 74,205 $ 86,180 $ 1,615,797

Segment expenses (1)

Cost of sales 845 2,765 146,319

Research and development

Contract manufacturing 40,081 114,262 47,960

Clinical costs 57,624 121,422 118,849

Personnel (2)

162,960 189,418 157,167

Licenses, collaborations and contingent consideration (3)

129,846 30,215 54,087

Other R&D (4)

115,988 124,403 96,585

Selling, general and administrative (2)

119,031 174,441 161,762

Restructuring, long-lived assets impairment and related charges 34,995 13,559 —

Other segment items (5)

65,205 69,188 ( 317,231 )

Segment and consolidated net (loss) income $ ( 521,960 ) $ ( 615,117 ) $ 515,837

(1) Refer to Note 7 Balance Sheet Components for depreciation and amortization expenses included in segment expenses.

(2) Refer to Note 11 Stock-Based Awards for stock-based compensation expenses included in segment expenses.

(3) 2024 license collaboration and contingent consideration expenses include $ 102.8 million expenses related to the portion of the upfront payment under the Sanofi license agreement that was allocated to IPR&D and expensed.

Refer to Note 6 Collaboration and License Agreements for more details.

(4) Other research and development expenses primarily includes non-personnel research expenses, allocated facility and IT expenses, IPR&D impairment, and depreciation expenses.

(5) Other segment items include change in fair value of equity investments, interest income, other (expense) income, net, and benefit from (provision for) income taxes, all of which were presented on the consolidated statements of operations.

The following table summarizes segment revenues by geographic area (in thousands).

The revenues attributed to foreign customers primarily include collaboration and contract revenues recognized under the Company’s collaboration agreements with GSK (refer to Note 6 Collaboration and License Agreements for further details), contract revenue generated from clinical supplies provided to foreign companies, and license revenue from the Company’s collaboration with Brii Bio.

Years Ended December 31,

Segment revenues attributed to:

2024 2023 2022

customers $ 11,525 $ 47,138 $ 39,699

Foreign customers

GSK 60,309 37,265 1,552,229

Other 2,371 1,777 23,869

Total segment and consolidated revenue $ 74,205 $ 86,180 $ 1,615,797

The Company’s long-lived assets primarily locate in the U.S.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data