Vir Biotechnology, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. Audited Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 87 Consolidated Balance Sheets as of December 31, 2024 and 2023 89 Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 90 Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2024, 2023 and 2022 91 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, 2023 and 2022 92 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 93 Notes to Consolidated Financial Statements 95 86 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Vir Biotechnology, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Vir Biotechnology, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. 87 Table of Contents Expense accruals for clinical trials 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 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 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 We have served as the Company’s auditor since 2017. San Mateo, California February 26, 2025 88 Table of Contents VIR BIOTECHNOLOGY, INC. Consolidated Balance Sheets (in thousands, except share and per share data) December 31, 2024 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 222,947 $ 241,576 Short-term investments 678,051 1,270,980 Restricted cash and cash equivalents, current 89,385 13,268 Equity investments 4,350 9,853 Prepaid expenses and other current assets 47,725 52,549 Total current assets 1,042,458 1,588,226 Intangible assets, net 8,120 22,565 Goodwill 16,937 16,937 Property and equipment, net 63,183 96,018 Operating right-of-use assets 59,680 71,182 Restricted cash and cash equivalents, noncurrent 6,363 6,448 Long-term investments 190,015 105,275 Other assets 12,057 12,409 TOTAL ASSETS $ 1,398,813 $ 1,919,060 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 5,081 $ 6,334 Accrued and other liabilities 85,873 104,220 Deferred revenue, current 12,648 64,853 Contingent consideration obligation, current 16,060 — Total current liabilities 119,662 175,407 Operating lease liabilities, noncurrent 90,139 111,673 Contingent consideration obligation, noncurrent 24,050 25,960 Other long-term liabilities 14,577 15,784 TOTAL LIABILITIES 248,428 328,824 Commitments and contingencies (Note 10) STOCKHOLDERS’ EQUITY: Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized as of December 31, 2024 and 2023, respectively; no shares issued and outstanding as of December 31, 2024 and 2023 — — Common stock, $ 0.0001 par value; 300,000,000 shares authorized as of December 31, 2024 and 2023, respectively; 136,959,446 and 134,781,286 shares issued and outstanding as of December 31, 2024 and 2023, respectively 14 13 Additional paid-in capital 1,911,872 1,828,862 Accumulated other comprehensive loss ( 1,717 ) ( 815 ) Accumulated deficit ( 759,784 ) ( 237,824 ) TOTAL STOCKHOLDERS’ EQUITY 1,150,385 1,590,236 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,398,813 $ 1,919,060 The accompanying notes are an integral part of these consolidated financial statements. 89 Table of Contents VIR BIOTECHNOLOGY, INC. Consolidated Statements of Operations (in thousands, except share and per share data) Years Ended December 31, 2024 2023 2022 Revenues: Collaboration revenue $ 8,379 $ 37,266 $ 1,505,469 Contract revenue 55,333 2,228 52,714 License revenue from a related party — — 22,289 Grant revenue 10,493 46,686 35,325 Total revenues 74,205 86,180 1,615,797 Operating expenses: Cost of revenue 845 2,765 146,319 Research and development 506,499 579,720 474,648 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 (Loss) income from operations ( 587,165 ) ( 684,305 ) 833,068 Other income (loss): Change in fair value of equity investments ( 5,528 ) ( 21,888 ) ( 111,140 ) Interest income 71,809 86,990 28,092 Other (expense) income, net ( 2,221 ) ( 8,991 ) 4,260 Total other income (loss) 64,060 56,111 ( 78,788 ) (Loss) income before benefit from (provision for) income taxes ( 523,105 ) ( 628,194 ) 754,280 Benefit from (provision for) income taxes 1,145 13,077 ( 238,443 ) Net (loss) income ( 521,960 ) ( 615,117 ) 515,837 Net loss attributable to noncontrolling interest — ( 56 ) — 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 Weighted-average shares outstanding, diluted 136,246,865 134,130,924 134,810,908 The accompanying notes are an integral part of these consolidated financial statements. 90 Table of Contents VIR BIOTECHNOLOGY, INC. Consolidated Statements of Comprehensive (Loss) Income (in thousands) Years Ended December 31, 2024 2023 2022 Net (loss) income $ ( 521,960 ) $ ( 615,117 ) $ 515,837 Other comprehensive (loss) income: Unrealized gain (loss) on investments 503 9,310 ( 7,524 ) 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 VirBio $ ( 522,862 ) $ ( 606,754 ) $ 507,814 The accompanying notes are an integral part of these consolidated financial statements. 91 Table of Contents VIR BIOTECHNOLOGY, INC. Consolidated Statements of Stockholders’ Equity (in thousands, except share data) VirBio Stockholders’ Equity Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss (Accumulated Deficit) Retained Earnings Noncontrolling interest Total Stockholders’ Equity Share Amount Balance at December 31, 2021 131,161,404 $ 13 $ 1,571,535 $ ( 1,099 ) $ ( 138,600 ) $ — $ 1,431,849 Issuance of common stock in connection with a grant agreement 881,365 — 28,462 — — — 28,462 Vesting of restricted common stock 349,496 — — — — — — Exercise of stock options 696,963 — 4,534 — — — 4,534 Issuance of common stock under employee stock purchase plan 147,459 — 3,222 — — — 3,222 Stock-based compensation — — 102,082 — — — 102,082 Other comprehensive loss — — — ( 8,023 ) — — ( 8,023 ) Net income — — — — 515,837 — 515,837 Balance at December 31, 2022 133,236,687 13 1,709,835 ( 9,122 ) 377,237 — 2,077,963 Vesting of restricted common stock 734,662 — — — — — — Exercise of stock options 487,014 — 3,484 — — — 3,484 Issuance of common stock under employee stock purchase plan 322,923 — 4,283 — — — 4,283 Stock-based compensation — — 111,316 — — — 111,316 Other comprehensive income — — — 8,307 — — 8,307 Contributions from noncontrolling interest owners — — — — — 100 100 Increase in ownership interest in a subsidiary — — ( 56 ) — — ( 44 ) ( 100 ) Net loss — — — — ( 615,061 ) ( 56 ) ( 615,117 ) 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. 92 Table of Contents VIR BIOTECHNOLOGY, INC. Consolidated Statements of Cash Flows (in thousands) Years Ended December 31, 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ ( 521,960 ) $ ( 615,117 ) $ 515,837 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Changes in estimated constraint on profit-sharing amount 685 ( 28,118 ) 369,535 Depreciation and amortization 14,559 19,451 6,783 Amortization of premiums (accretion of discounts) on investments, net 5,397 ( 8,706 ) ( 8,943 ) Noncash lease expense 5,248 7,658 8,709 Change in fair value of equity investments 5,528 21,888 111,140 Change in estimated fair value of contingent consideration 14,149 1,024 2,115 Stock-based compensation 78,457 111,316 102,082 Change in deferred income taxes ( 2,949 ) ( 1,063 ) ( 15,186 ) In-process research and development impairment 14,550 9,658 — 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 ) Other non-cash items, net ( 182 ) 153 ( 383 ) Changes in operating assets and liabilities: Receivable from collaboration ( 6,513 ) ( 565 ) 770,038 Prepaid expenses and other current assets 10,186 64,970 ( 39,358 ) Other assets 353 2,161 ( 11,795 ) Accounts payable ( 988 ) 732 797 Accrued liabilities and other long-term liabilities ( 10,287 ) ( 356,498 ) ( 15,513 ) Operating lease liabilities ( 23,027 ) ( 13,046 ) ( 5,502 ) Deferred revenue ( 53,731 ) ( 2,345 ) ( 33,300 ) Net cash (used in) provided by operating activities ( 446,352 ) ( 778,785 ) 1,663,253 CASH FLOWS FROM INVESTING ACTIVITIES: 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 ) Maturities and sales of investments 1,738,635 2,202,391 351,510 Net cash provided by (used in) investing activities 499,367 164,629 ( 1,193,461 ) The accompanying notes are an integral part of these consolidated financial statements 93 Table of Contents VIR BIOTECHNOLOGY, INC. Consolidated Statements of Cash Flows (in thousands) Years Ended December 31, 2024 2023 2022 CASH FLOWS FROM FINANCING ACTIVITIES: 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 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 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 Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 318,695 $ 261,292 $ 867,968 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Net refund received (cash paid) for income tax $ 786 $ 2,676 $ ( 252,030 ) RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS TO THE CONSOLIDATED BALANCE SHEETS: Cash and cash equivalents $ 222,947 $ 241,576 $ 848,631 Restricted cash and cash equivalents, current 89,385 13,268 12,681 Restricted cash and cash equivalents, noncurrent 6,363 6,448 6,656 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. 94 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements 1 . Organization Vir Biotechnology, Inc. (“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. (“Encentrio”), was incorporated in the State of Delaware. 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’ outstanding voting shares to 100 %. The primary purpose of Encentrio is to conduct research and development of oncology therapeutics. Sales Agreement In November 2023, the Company entered into a sales agreement (“Sales Agreement”) with Cowen and Company, LLC, as sales agent (“TD Cowen”), pursuant to which the Company may from time to time offer and sell shares of its common stock for an aggregate offering price of up to $ 300.0 million, through or to TD Cowen, acting as sales agent or principal. The shares will be offered and sold under the Company’s shelf registration statement on Form S-3 and a related prospectus filed with the Securities and Exchange Commission (“SEC”) on November 3, 2023. The Company will pay TD Cowen a commission of up to 3.0 % of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide TD Cowen with customary indemnification and contribution rights. As of December 31, 2024, no shares have been issued under the Sales Agreement. Need for Additional Capital 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 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. The Company had $ 1.1 billion in cash, cash equivalents, and investments as of December 31, 2024. 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. 2 . Summary of Significant Accounting Policies Basis of Presentation 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 VirBio and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Foreign Currency The functional currency of the Company’s foreign subsidiaries is the U.S. dollar. Monetary assets and liabilities of foreign subsidiaries are translated into U.S. dollars at period-end exchange rates, and non-monetary assets and liabilities are translated to U.S. dollars using historical exchange rates. Revenue and expenses are translated at average exchange rates throughout the respective periods. Transaction gains and losses are included in other (expense) income, net on the consolidated statements of operations. 95 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates. Segments 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 Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and investments. Cash and cash equivalents are deposited in checking and sweep accounts at financial institutions. Such deposits may, at times, exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents. Management believes that the Company is not currently exposed to significant credit risk as the Company’s investments are held in custody at reputable third-party financial institutions. The Company’s investment policy limits investments to certain types of securities issued by the U.S. government, its agencies and institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents and investments and issuers of the investments to the extent recorded on the consolidated balance sheets. 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 collaborators and through its available-for-sale debt securities. The Company’s expected loss allowance methodology for the receivables is developed using historical collection experience, current and future economic market conditions, a review of the current aging status and financial condition of the entities. Specific allowance amounts are established to record the appropriate allowance for customers that have a higher probability of default. Balances are written off when determined to be uncollectible. The Company’s expected loss allowance methodology for the debt securities is developed by reviewing the extent of the unrealized loss, the size, term, geographical location, and industry of the issuer, the issuers’ credit ratings and any changes in those ratings, as well as reviewing current and future economic market conditions and the issuers’ current status and financial condition. There was no allowance for losses on available-for-sale debt securities attributable to credit risk as of December 31, 2024 and 2023. 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. 96 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Investments Investments include available-for-sale debt securities and equity investments, which are carried at fair value. Available-for-Sale Debt Securities The Company’s valuations of marketable securities are generally derived from independent pricing services based on quoted prices in active markets for similar securities at period end. Generally, investments with original maturities beyond three months at the date of purchase and which mature at, or less than 12 months from the consolidated balance sheet date are considered short-term investments, with all others considered to be long-term investments. Unrealized gains and losses deemed temporary in nature are reported as a component of accumulated other comprehensive loss. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the consolidated statements of operations. The cost of securities sold is based on the specific identification method. Equity Investments The Company measures its investment in equity securities at fair value at each reporting date based on the market price at period end if it has a readily determinable fair value. Otherwise, the investments in equity securities are measured at cost less impairment, adjusted for observable price changes for identical or similar investments of the same issuer unless the Company has significant influence or control over the investee. Changes in fair value resulting from observable price changes are presented as change in fair value of equity investments, and changes in fair value resulting from foreign currency translation are included in other (expense) income, net on the consolidated statements of operations. 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 Property and equipment are stated at cost, net of accumulated depreciation and amortization and, if applicable, impairment charges. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years . Leasehold improvements are amortized over the lesser of their useful lives or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet, and the resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (group) may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows that the asset (group) is expected to generate. If such asset (group) is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset (group) exceeds its fair value projected discounted future net cash flows arising from the asset (group). Acquired Intangible Assets The Company’s intangible assets were acquired via business combinations or asset acquisitions. 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. 97 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Finite-lived intangible assets acquired in a business combination are initially recognized at their fair value at the acquisition date. Finite-lived intangible assets acquired in an asset acquisition are initially recognized at cost. Amortization is computed using the straight-line method over the estimated useful lives of the respective finite-lived intangible assets, generally seven to 15 years. Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (group) may not be recoverable, like that of property and equipment. Goodwill Goodwill represents the excess of the purchase price over the estimated fair value of the net tangible and intangible assets acquired in a business combination. The Company tests goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that this asset may be impaired. In testing for goodwill impairment, the Company has the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If the Company elects to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that the carrying value exceeds its fair value, the Company performs a quantitative goodwill impairment test to compare the fair value of its reporting unit to its carrying value, including goodwill. If the carrying value, including goodwill, exceeds the reporting unit’s fair value, the Company will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value (but not in excess of the carrying value of goodwill). Revenue Recognition Collaboration, License and Contract Revenue Under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when the Company’s customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods and services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as the Company satisfies a performance obligation. For collaborative arrangements that fall within the scope of ASC 808, Collaborative Arrangements (“ASC 808”), the Company first determines which elements of the collaboration are deemed to be a performance obligation with a customer within the scope of ASC 606. 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. 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. The Company uses these estimates to determine whether payments due to it under its collaboration arrangements, such as profit-share payments, should be recognized as revenue in the period that they become due, or whether any portion of the payments due should be constrained from revenue recognition because it is not probable that recognizing such amounts will not result in a significant reversal of cumulative revenues recognized in future reporting periods. 98 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Prior to recognizing revenue, the Company estimates the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are re-assessed each reporting period as required. These agreements may include the following types of consideration: non-refundable upfront payments, reimbursement for research and development services, research, development or regulatory milestone payments, profit-sharing arrangements, and royalty and commercial sales milestone payments. If there are multiple distinct performance obligations, the Company allocates the transaction price to each distinct performance obligation based on their estimated standalone selling prices (“SSP”). The Company estimates the SSP for each distinct performance obligation by considering information such as market conditions, entity-specific factors, and information about its customer that is reasonably available. The Company considers estimation approaches that allow it to maximize the use of observable inputs. These estimation approaches may include the adjusted market assessment approach, the expected cost plus a margin approach or the residual approach. The Company also considers whether to use a different estimation approach or a combination of approaches to estimate the SSP for each distinct performance obligation. Developing certain assumptions (e.g., treatable patient population, expected market share, probability of success and product profitability, and discount rate based on weighted-average cost of capital) to estimate the SSP of a distinct performance obligation requires significant judgment. For performance obligations satisfied over time, the Company estimates the efforts needed to complete the performance obligation and recognizes revenue by measuring the progress towards complete satisfaction of the performance obligation using an input measure. For arrangements that include sales-based royalties, including commercial milestone payments based on pre-specified levels of sales, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Achievement of these royalties and commercial milestones may solely depend upon the performance of the licensee. Grant Revenue Grants received, including cost reimbursement agreements, are assessed to determine if the agreement should be accounted for as an exchange transaction or a contribution. 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, usually when the specified research and development activities are performed. Acquisitions 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. 99 Table of Contents 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 To date, research and development expenses have related primarily to discovery efforts and preclinical and clinical development of product candidates. Research and development expenses are recognized as incurred, and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Research and development expenses include expenses related to license and collaboration agreements; contingent consideration from business acquisitions; personnel-related expenses, including salaries, benefits, and stock-based compensation for personnel contributing to research and development activities; expenses incurred under agreements with third-party contract manufacturing organizations, contract research organizations, and consultants; clinical costs, including laboratory supplies and costs related to compliance with regulatory requirements; and other allocated expenses, including expenses for rent, facilities maintenance, and depreciation and amortization. The Company has acquired and may continue to acquire the rights to develop and commercialize new product candidates from third parties. 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. 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. When billing terms under these contracts do not coincide with the timing of when the work is performed, the Company is required to make estimates of its outstanding obligations to those third parties as of the period end. The accrual estimates are based on a number of factors, including the Company’s knowledge of the research and development programs and clinical manufacturing activities, the status of the programs and activities, invoicing to date, and the provisions in the contracts. The Company obtains information regarding unbilled services directly from these service providers and performs procedures to support its estimates based on its internal understanding of the services provided to date. However, the Company may also be required to estimate these services based on information available to its internal clinical and manufacturing administrative staff if such information is not able to be obtained timely from its service providers. Stock-based Compensation 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. Stock-based compensation is recognized using the straight-line method for awards that vest only upon the employee’s or non-employee’s continued service to the Company. Stock-based compensation expense of the employees’ purchase rights under the ESPP is recognized over the offering period. Forfeitures are recognized as they occur. 100 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Leases 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. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable. On the lease commencement date, the Company estimates and includes in its lease payments any lease incentive amounts based on future events when (1) the events are within the Company’s control and (2) the event triggering the right to receive the incentive is deemed reasonably certain to occur. 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. 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. 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. The Company elected to not separate lease and non-lease components for any leases within its existing classes of assets and, as a result, accounts for the lease and non-lease components as a single lease component. The Company also elected to not apply the recognition requirement to any leases within its existing classes of assets with a term of 12 months or less. ROU assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (group) may not be recoverable, like that of property and equipment. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year. Deferred income tax assets and liabilities are determined based on the differences between the financial statement reporting and tax bases of assets and liabilities and net operating losses and credit carryforwards and are measured using the enacted tax rates and laws that will be in effect when such items are expected to reverse. Deferred income tax assets are reduced, as necessary, by a valuation allowance when management determines it is more likely than not that some or all of the tax benefits will not be realized. The Company’s tax positions are subject to income tax audits. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit which is more likely than not to be realized upon settlement with the taxing authority. The Company evaluates uncertain tax positions on a regular basis. The evaluations are based on several factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of the audit, and effective settlement of audit issues. The provision for income taxes includes the effects of any accruals that the Company believes are appropriate, as well as any related net interest and penalties. Net (Loss) Income Per Share 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. 101 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements New Accounting Pronouncement Not Yet Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the impact the adoption of ASU 2023-09 may have on its consolidated financial statements and related disclosures. 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. 3. Fair Value Measurements The Company determines the fair value of financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows: • Level 1: Inputs which include quoted prices in active markets for identical assets and liabilities. • Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of the Company’s financial instruments, including accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. 102 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Cash Equivalents and Available-for-Sale Securities The following tables summarize the Company’s Level 1 and Level 2 financial assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): December 31, 2024 Valuation Hierarchy Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Aggregate Fair Value Assets: Money market funds Level 1 $ 146,505 $ — $ — $ 146,505 U.S. government treasuries Level 2 588,794 722 ( 33 ) 589,483 U.S. 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 Reconciliation to cash, cash equivalents and investments on consolidated balance sheet Minus: Restricted cash equivalents invested in money market funds ( 20,281 ) Plus: Cash deposits 32,524 Total cash, cash equivalents and investments $ 1,095,363 December 31, 2023 Valuation Hierarchy Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Aggregate Fair Value Assets: Money market funds Level 1 $ 278,187 $ — $ — $ 278,187 U.S. government treasuries Level 2 1,162,124 1,017 ( 80 ) 1,163,061 U.S. 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 Reconciliation to cash, cash equivalents and investments on consolidated balance sheet Minus: Restricted cash equivalents invested in money market funds ( 19,716 ) Plus: 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. Accrued interest receivable amounted to $ 5.0 million and $ 4.0 million as of December 31, 2024 and 2023, respectively. 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 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, 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, 2024, no securities have contractual maturities (or weighted average life for asset-backed securities) of longer than two years . 103 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements As of December 31, 2024, the Company’s equity investment consisted solely of ordinary shares of Brii Biosciences Limited (“Brii Bio Parent”). The equity securities of Brii Bio Parent are listed on the Stock Exchange of Hong Kong Limited and are considered to be marketable equity securities measured at fair value at each reporting date. 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, 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”) 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, 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 (Weighted-Average) (1) Discount rates 10.8 % - 12.3 % ( 11.5 %) Probability of achievement 16.2 % - 95.0 % ( 69.7 %) ____________________________________________ (1) Unobservable inputs were weighted based on the relative fair value of the clinical and regulatory milestone payments. For the commercial milestones, the Company used a Monte Carlo simulation because of the availability of discrete revenue forecasts. As of December 31, 2024, the Monte Carlo simulation assumed a commercial product launch and associated discrete revenue forecasts, as well as the following significant unobservable inputs for the remaining commercial milestones related to tobevibart: Unobservable input Value Volatility 55.0 % Discount rate 10.0 % Probability of achievement 56.2 % The discount rate captures the credit risk associated with the payment of the contingent consideration when earned and due. 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. The following table sets forth the changes in the estimated fair value of the Company’s contingent consideration (in thousands): Contingent Consideration Balance at December 31, 2023 $ 25,961 Changes in fair value 14,149 Balance at December 31, 2024 $ 40,110 104 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements 4. Goodwill and Intangible assets Goodwill Goodwill of $ 16.9 million represents the excess of the purchase price over the estimated fair value of the net assets acquired from Humabs. There was no impairment for the years ended December 31, 2024, 2023 and 2022. Intangible Assets The following table summarizes the carrying amount of the finite-lived intangible assets (in thousands): December 31, Weighted-Average Remaining Useful Life (Years) 2024 2023 Developed technology $ 4,260 $ 4,260 4.8 Contract-based intangible assets 914 502 8.5 Finite-lived intangible assets, gross 5,174 4,762 Less accumulated amortization ( 3,576 ) ( 3,270 ) Finite-lived intangible assets, net $ 1,598 $ 1,492 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. The estimated future amortization expense for the next five years is as follows (in thousands): Years Ending December 31: 2025 $ 270 2026 296 2027 296 2028 296 2029 241 Total $ 1,399 Indefinite-Lived Intangible Assets 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. 5. Grant Agreements 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. 105 Table of Contents 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. The premium received by the Company is deferred and recognized over the same period as the grant proportionally. The Company recognized grant revenue of $ 4.6 million, $ 13.3 million, and $ 8.6 million for the years ended December 31, 2024 , 2023, and 2022, respectively. 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, 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 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, 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. 6. 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. 106 Table of Contents 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) 3,975 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 . 107 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Collaboration Agreements with GSK 2020 GSK Agreement In 2020, the Company, Glaxo Wellcome UK Limited and Beecham S.A. entered into a collaboration agreement (the “2020 GSK Agreement”). Subsequently, Beecham S.A. assigned and transferred all its rights, title, interest, and benefit in the 2020 GSK Agreement to GlaxoSmithKline Biologicals S.A. (Glaxo Wellcome UK Limited and GlaxoSmithKline Biologicals S.A., referred to, individually and together, as “GSK”). Under the terms of the 2020 GSK Agreement, the Company and GSK agreed to collaborate to research, develop and commercialize products for the prevention, treatment and prophylaxis of diseases caused by SARS-CoV-2, the virus that causes COVID-19, and potentially other coronaviruses. The collaboration initially focused on the development and commercialization of three programs: (1) antibodies targeting SARS-CoV-2 and potentially other coronaviruses (the “Antibody Program”); (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 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. 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 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. 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. In periods when allowable expenses exceed amounts recognized for net product sales of sotrovimab, negative revenue will be reported in our consolidated statements of operations. The Company’s contractual share of the profit-sharing amounts is subject to potential future adjustments to allowable expenses, which represents a form of variable consideration. 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. 108 Table of Contents 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, 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. The Company re-assesses these estimates each reporting period. During the years ended December 31, 2024, 2023, and 2022, the Company recorded profit-sharing amounts, profit-sharing amounts constrained, and profit-sharing amounts previously constrained, released as components of collaboration revenue in the consolidated statements of operations, as follows (in thousands): Years Ended December 31, 2024 2023 2022 Collaboration revenue, net Profit-sharing amount $ 9,078 $ 1,536 $ 1,875,147 Profit-sharing amount constrained ( 699 ) — ( 369,678 ) Profit-sharing amount previously constrained, released — 35,730 — 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. 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 (“VIR-2482 Option”); (2) an expansion of the parties’ current Functional Genomics Program to focus on functional genomics screens directed to targets associated with respiratory viruses (the “Expanded Functional Genomics Program”); and (3) additional programs to develop neutralizing mAbs directed to up to three non-influenza target pathogens selected by GSK (the “Selected Pathogens” and such programs, the “Additional Programs”). 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, 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. 109 Table of Contents 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 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 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. To date, the Company has not exercised any of its options. In July 2022, Brii Bio exercised its option to obtain exclusive rights to develop and commercialize compounds and products arising from tobevibart in the China Territory. 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. The Company evaluated the tobevibart transaction under ASC 606 and identified one performance obligation consisting of the license granted to Brii Bio. Under the Brii Agreement, Brii Bio is responsible for performing all research and development activities, and the Company does not have any other performance obligations within the context of ASC 606 under the arrangement after the option exercise. The transaction price was determined to be $ 22.3 million, which consists of the $ 20.0 million option exercise fee and $ 2.3 million of the deferred revenue allocated to the tobevibart option at the inception of the Brii Agreement. The Company determined that the license is considered a functional intellectual property that is a distinct performance obligation. Specifically, the Company believes the license is capable of being distinct, as Brii Bio has the capabilities to develop the license either on its own or by contracting with other third parties. 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. 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. 110 Table of Contents 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. The term of the Alnylam Agreement will continue, on a product-by-product and country-by-country basis, until the expiration of all royalty payment obligations under the Alnylam Agreement. If the Company does not exercise its option for an infectious disease program directed to one of its selected targets, the Alnylam Agreement will expire upon the expiration of the applicable option period with respect to such program. The Company may terminate the Alnylam Agreement on a program-by-program basis or in its entirety for any reason on 90 days’ written notice. 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 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. Xencor 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, 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. Either party may terminate each agreement for the other party’s uncured material breach upon 60 days’ written notice (or 30 days in the case of non-payment) or in the event of bankruptcy of the other party immediately upon written notice. 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. 111 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements 7. Balance Sheet Components Property and Equipment, net 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. December 31, Useful life (in years) 2024 2023 Leasehold improvements 8 - 12 $ 53,992 $ 80,290 Laboratory equipment 5 39,428 43,728 Computer equipment 3 2,778 2,783 Furniture and fixtures 5 2,696 2,887 Construction in progress NA 1,074 226 Property and equipment, gross 99,968 129,914 Less: accumulated depreciation and amortization ( 36,785 ) ( 33,896 ) Total property and equipment, net $ 63,183 $ 96,018 Accrued and Other Liabilities Accrued and other liabilities consist of the following (in thousands): December 31, 2024 2023 Payroll and related expenses $ 31,165 $ 41,322 Research and development expenses 29,225 33,129 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 Other accrued expenses 3,874 4,282 Total accrued and other liabilities $ 85,873 $ 104,220 8. 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 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. 112 Table of Contents 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) — 13,559 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) 34,995 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. 9. Leases 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 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. These additional charges are considered variable lease costs and are recognized in the period in which the costs are incurred. 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. 113 Table of Contents 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): Years Ended December 31, 2024 2023 2022 Operating lease cost $ 11,446 $ 13,934 $ 15,910 Variable lease cost 10,306 10,996 10,176 Total lease cost $ 21,752 $ 24,930 $ 26,086 Other Information Weighted average remaining lease term (in years) 9.0 8.9 10.0 Weighted average incremental borrowing rate (%) 5.2 5.1 5.2 Cash paid for amounts included in the measurement of operating lease liabilities $ 28,566 $ 19,584 $ 12,716 The maturity of the Company’s operating lease liabilities as of December 31, 2024 was as follows (in thousands): Amounts 2025 $ 12,637 2026 12,625 2027 12,912 2028 13,265 2029 13,547 Thereafter 58,523 Total lease payments 123,509 Less: imputed interest ( 25,618 ) Present value of operating lease liabilities $ 97,891 The following amounts were recorded in the consolidated balance sheets as of December 31, 2024 and 2023 (in thousands) for various operating leases: December 31, 2024 2023 Operating ROU assets 59,680 71,182 Accrued and other liabilities $ 7,752 $ 12,867 Operating lease liabilities, noncurrent 90,139 111,673 Total operating lease liabilities $ 97,891 $ 124,540 10. 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. 114 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Indemnification In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Under such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. In addition, the Company has entered into indemnification agreements with its directors and certain officers that may require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. 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. 11. Stock-Based Awards 2019 Equity Incentive Plan In September 2019, the Company’s board of directors adopted, with the approval of its stockholders, the 2019 Equity Incentive Plan (the “2019 Plan”) for the issuance of incentive stock options (“ISO”), non-qualified stock options (“NSO”), stock appreciation rights (“SARs”), restricted stock, other stock awards and performance cash awards, to employees, non-employee directors, and consultants. The 2019 Plan became effective concurrent with the Company’s initial public offering (“IPO”). Awards granted under the 2019 Plan expire no later than 10 years from 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. As of December 31, 2024, there are 22,086,974 shares available for the Company to grant under the 2019 Plan. 2016 Equity Incentive Plan In September 2016, the Company adopted the 2016 Equity Incentive Plan (the “2016 Plan”) for the issuance of ISO, NSO, SARs, restricted stock and other stock awards, to employees, non-employee directors, and consultants under terms and provisions established by the Company’s board of directors and approved by the stockholders. Awards granted under the 2016 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. Options granted typically vest over a four-year period but may be granted with different vesting terms. In conjunction with adopting the 2019 Plan, the Company discontinued the 2016 Plan with respect to the new equity awards. 2019 Employee Stock Purchase Plan In September 2019, the Company’s board of directors adopted, with the approval of its stockholders, the Employee Stock Purchase Plan (“ESPP”). The ESPP became effective on the completion of the Company’s IPO. The ESPP initially authorized the issuance of 1,280,000 shares of the Company’s common stock under purchase rights granted to its employees or employees of any of the Company’s designated affiliates. The number of shares of the Company’s common stock reserved for issuance is subject to an automatic increase at each calendar year. Under the ESPP, the Company may specify offerings with durations of not more than 27 months and may specify shorter purchase periods within each offering. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15 % of their earnings, subject to any plan limitations. Unless otherwise determined by the Company’s board of directors, employees can purchase shares at 85 % of the lower of the fair market value of the Company’s common stock on the first date of an offering or the purchase date. During the year ended December 31, 2024, 487,432 shares were issued under the ESPP. 115 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Stock Option Activity Activity under the Company’s stock option plans is set forth below: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (Years) (in thousands) Outstanding at December 31, 2023 11,352,219 $ 30.47 7.1 Granted 2,908,450 $ 9.71 Exercised ( 322,366 ) $ 2.45 Forfeited ( 4,332,712 ) $ 30.70 Outstanding at December 31, 2024 9,605,591 $ 25.03 6.9 $ 2,938 Vested and expected to vest at December 31, 2024 9,605,591 $ 25.03 6.9 $ 2,938 Vested and exercisable at December 31, 2024 5,903,872 $ 30.72 5.6 $ 2,938 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. 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. As of December 31, 2024, the Company expects to recognize the remaining unamortized stock-based compensation expense of $ 41.5 million related to stock options, over an estimated weighted average period of 2.5 years. Stock Options Granted to Employees The fair value of stock options granted to employees was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Years Ended December 31, 2024 2023 2022 Expected term of options (in years) 5.5 – 6.1 5.5 – 6.1 5.3 – 6.1 Expected stock price volatility 89.2 % – 91.8 % 99.0 % – 101.5 % 101.4 % – 111.2 % Risk-free interest rate 3.5 % – 4.6 % 3.4 % – 4.9 % 1.6 % – 4.3 % Expected dividend yield — — — The valuation assumptions for stock options were determined as follows: 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— 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. Treasury securities with similar maturities as of the date of the grant. 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. 116 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Employees Stock Purchase Plan In June 2021, the Company initiated its first offering period under the ESPP. Each offering period is six months , which commences on the grant date on or after June 1 and December 1 of each year and ends on the purchase date on or before November 30 and May 31 of each year. The fair value of employees’ purchase rights under the ESPP was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Years Ended December 31, 2024 2023 2022 Expected term of ESPP (in years) 0.5 0.5 0.5 Expected stock price volatility 56.6 % - 64.4 % 41.2 % - 95.1 % 59.0 % - 86.0 % Risk-free interest rate 4.3 % - 5.2 % 4.5 % - 5.2 % 0.1 % - 4.5 % Expected dividend yield — — — The expected term of employees’ purchase rights is equal to the purchase period. The expected volatility was determined based on the Company’s historical volatility. The risk-free interest rate is based on the constant maturity rate of U.S. Treasury securities with similar maturities as of the date of the grant over the expected term of the employees’ purchase rights. 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. 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. Restricted Stock Activity The Company’s RSUs activity was summarized as follows: Shares Weighted Average Grant Date Fair Value Per Share Unvested as of December 31, 2023 4,804,967 $ 28.56 Granted 4,086,171 $ 9.66 Vested ( 1,368,362 ) $ 30.62 Forfeited ( 2,541,694 ) $ 20.26 Unvested as of December 31, 2024 4,981,082 $ 16.73 The unvested shares of RSUs have not been included in the shares issued and outstanding. As of December 31, 2024, there was $ 58.2 million of total unrecognized compensation cost related to unvested restricted stock units, all of which is expected to be recognized over a remaining weighted-average period of 2.7 years. Stock-Based Compensation Expense Stock-based compensation is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. The following table sets forth the total stock-based compensation expense for all awards granted to employees and the ESPP in the consolidated statements of operations (in thousands): Years Ended December 31, 2024 2023 2022 Research and development $ 43,917 $ 62,745 $ 53,153 Selling, general and administrative 34,540 48,571 48,929 Total stock-based compensation $ 78,457 $ 111,316 $ 102,082 117 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements 12. Net (Loss) Income Per Share Basic net (loss) income per common share is computed by dividing the net (loss) income 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 by the sum of the weighted-average number of common shares outstanding during the period plus any potential dilutive effects of common stock equivalents outstanding during the period calculated in accordance with the treasury stock method. For periods that the Company was in a net loss position, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common securities outstanding would have been anti-dilutive. The following is a calculation of the basic and diluted net (loss) income per share (in thousands, except share and per share data): Years ended December 31, 2024 2023 2022 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 Weighted-average effect of dilutive securities: Options to purchase common stock — — 2,130,212 Restricted shares subject to future vesting — — 73,851 Shares to purchase under Employee Stock Purchase Plan — — 78 Weighted-average shares outstanding, diluted 136,246,865 134,130,924 134,810,908 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 Options issued and outstanding 9,605,591 11,124,181 8,853,734 Restricted shares subject to future vesting 4,981,082 5,260,229 2,646,748 Total 14,586,673 16,384,410 11,500,482 13. Defined Contribution Plan The Company sponsors a 401(k) retirement savings plan for the benefit of its employees. Eligible employees may contribute a percentage of their compensation to this plan, subject to statutory limitations. 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. 118 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements 14. Income Taxes (Loss) income before benefit from (provision for) income taxes consists of the following (in thousands): Years Ended December 31, 2024 2023 2022 Domestic $ ( 499,680 ) $ ( 608,134 ) $ 692,445 Foreign ( 23,425 ) ( 20,060 ) 61,835 Total (loss) income before benefit from (provision for) income taxes $ ( 523,105 ) $ ( 628,194 ) $ 754,280 The components of benefit from (provision for) income taxes consist of the following (in thousands): Years Ended December 31, 2024 2023 2022 Current: Federal $ ( 965 ) $ 12,774 $ ( 238,550 ) State 1,254 ( 685 ) ( 2,432 ) Foreign ( 2,093 ) ( 75 ) ( 12,647 ) ( 1,804 ) 12,014 ( 253,629 ) Deferred: Federal 2,105 406 15,186 State 900 598 — Foreign ( 56 ) 59 — 2,949 1,063 15,186 Benefit from (provision for) income taxes $ 1,145 $ 13,077 $ ( 238,443 ) A reconciliation between the U.S. federal statutory income tax rate and the reported effective income tax rate is as follows: Years Ended December 31, 2024 2023 2022 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % Foreign tax at less than federal statutory rate ( 0.1 ) — ( 0.3 ) State taxes, net of federal benefit ( 0.7 ) 5.3 0.1 Research and development tax credit 2.4 2.4 ( 2.0 ) Permanent items ( 2.4 ) ( 1.6 ) ( 7.4 ) Changes in valuation allowance ( 18.5 ) ( 24.2 ) 21.1 Other ( 1.5 ) ( 0.8 ) ( 0.9 ) Effective income tax rate 0.2 % 2.1 % 31.6 % 119 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities as of December 31, 2024, and 2023, are related to the following (in thousands): December 31, 2024 2023 Deferred tax assets: 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 Lease liabilities 20,502 29,047 Reserves and accruals 7,543 21,745 Valuation allowance ( 453,394 ) ( 356,833 ) Deferred tax assets 25,534 41,030 Deferred tax liabilities: ROU assets ( 12,219 ) ( 16,536 ) Property and equipment ( 10,628 ) ( 19,610 ) Unrealized gain on investments — ( 1,190 ) IPR&D ( 1,928 ) ( 5,884 ) Deferred tax liabilities ( 24,775 ) ( 43,220 ) 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. Based on the available objective evidence, the Company cannot conclude it is more likely than not that the deferred tax assets will be fully realizable. Accordingly, the Company has provided a valuation allowance against its deferred tax assets. For the year ended December 31, 2024, the Company recorded a valuation allowance increase of $ 96.6 million. As of December 31, 2024, the Company has net operating loss carryforwards of $ 645.3 million for federal purposes and $ 450.2 million for state tax purposes. If not utilized, these carryforwards will begin to expire in 2036 for federal and in 2037 for state tax purposes. As of December 31, 2024, the Company also has net operating loss carryforwards of $ 31.9 million for Australian tax purposes, which have an indefinite carryforward period, and $ 29.5 million net operating loss carryforwards for Swiss tax purposes, which have a seven-year carryforward period. Under the Tax Reform Act of 1986, the amounts of and benefits from net operating loss carryforwards may be impaired or limited in certain circumstances. Events which cause limitations in the amount of net operating losses that the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. 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, 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 . The California credits can be carried forward indefinitely. The Tax Cuts and Jobs Act of 2017 subjects a U.S. shareholder to current tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. 120 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Consolidated Financial Statements Uncertain Tax Positions 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 %. Other unrecognized tax benefits as of December 31, 2024, if recognized, would be in the form of net operating loss and tax credit carryforwards, which attract a full valuation allowance offset, and would not impact the Company’s effective tax rate. There are no provisions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. Because the statute of limitations does not expire until after the net operating loss and credit carryforwards are actually used, the statutes are still open on calendar years ending December 31, 2017 and forward for federal and state purposes. The Company recognized $ 1.0 million expense for interest and penalties related to uncertain tax positions during 2024, all of which was recorded as accrued and other liabilities as of December 31, 2024. The Company files U.S. federal, state, Switzerland and Australia tax returns. The Company’s tax years remain open for all years. As of December 31, 2024, the Company was not under examination by the Internal Revenue Service or any state or foreign tax jurisdiction. A reconciliation of the beginning and ending amounts of the liability for uncertain tax positions is as follows (in thousands): Years Ended December 31, 2024 2023 2022 Gross unrecognized tax benefits at January 1 $ 13,583 $ 10,638 $ 7,422 Addition for tax positions taken in the prior years 2,014 29 — Reduction for tax positions taken in the prior years ( 20 ) — ( 12 ) Addition for tax positions taken in current year 2,369 2,916 3,228 Gross unrecognized tax benefits at December 31 $ 17,946 $ 13,583 $ 10,638 15 . Segment Reporting 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. 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. 121 Table of Contents 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 Less: 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 — Plus: 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 U.S. 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. 122 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.