Vir Biotechnology, Inc. 10-Q

Item 1. Financial Statements. VIR BIOTECHNOLOGY, INC. Condensed Consolidated Balance Sheets (in thousands, except share and per share data) (unaudited) June 30, 2025 December 31, 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 211,104 $ 222,947 Short-term investments 387,645 678,051 Restricted cash and cash equivalents, current 88,218 89,385 Equity investments 7,270 4,350 Prepaid expenses and other current assets 41,469 47,725 Total current assets 735,706 1,042,458 Intangible assets, net 7,998 8,120 Goodwill 16,937 16,937 Property and equipment, net 60,795 63,183 Operating lease right-of-use assets 64,853 59,680 Restricted cash and cash equivalents, noncurrent 6,956 6,363 Long-term investments 286,099 190,015 Other assets 13,188 12,057 TOTAL ASSETS $ 1,192,532 $ 1,398,813 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 12,234 $ 5,081 Accrued and other liabilities 82,661 85,873 Deferred revenue, current 10,109 12,648 Contingent consideration obligation, current — 16,060 Total current liabilities 105,004 119,662 Operating lease liabilities, noncurrent 93,405 90,139 Contingent consideration obligation, noncurrent 33,620 24,050 Other long-term liabilities 13,031 14,577 TOTAL LIABILITIES 245,060 248,428 Commitments and contingencies (Note 7) STOCKHOLDERS’ EQUITY: Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized as of June 30, 2025 and December 31, 2024; no shares issued and outstanding as of June 30, 2025 and December 31, 2024 — — Common stock, $ 0.0001 par value; 300,000,000 shares authorized as of June 30, 2025 and December 31, 2024; 138,886,274 and 136,959,446 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 14 14 Additional paid-in capital 1,941,386 1,911,872 Accumulated other comprehensive loss ( 2,221 ) ( 1,717 ) Accumulated deficit ( 991,707 ) ( 759,784 ) TOTAL STOCKHOLDERS’ EQUITY 947,472 1,150,385 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,192,532 $ 1,398,813 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents VIR BIOTECHNOLOGY, INC. Condensed Consolidated Statements of Operations ( in thousands, except share and per share data ) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenues: Collaboration revenue $ ( 495 ) $ 55 $ ( 565 ) $ ( 932 ) Contract revenue 1,526 886 3,390 53,077 Grant revenue 183 2,134 1,421 7,306 Total revenues 1,214 3,075 4,246 59,451 Operating expenses: Cost of revenue 11 52 11 111 Research and development 97,509 105,113 216,154 205,238 Selling, general and administrative 22,283 30,265 46,227 66,586 Restructuring, long-lived assets impairment and related charges, net ( 172 ) 26,275 ( 182 ) 26,227 Total operating expenses 119,631 161,705 262,210 298,162 Loss from operations ( 118,417 ) ( 158,630 ) ( 257,964 ) ( 238,711 ) Other income: Change in fair value of equity investments ( 3,382 ) 429 3,000 ( 5,486 ) Interest income 10,785 18,846 23,073 40,129 Other income (expense), net 226 ( 535 ) 154 ( 822 ) Total other income 7,629 18,740 26,227 33,821 Loss before (provision for) benefit from income taxes ( 110,788 ) ( 139,890 ) ( 231,737 ) ( 204,890 ) (Provision for) benefit from income taxes ( 170 ) 1,512 ( 186 ) 1,236 Net loss $ ( 110,958 ) $ ( 138,378 ) $ ( 231,923 ) $ ( 203,654 ) Net loss per share, basic and diluted $ ( 0.80 ) $ ( 1.02 ) $ ( 1.68 ) $ ( 1.50 ) Weighted-average shares outstanding, basic and diluted 138,447,469 136,223,725 137,960,888 135,757,187 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents VIR BIOTECHNOLOGY, INC. Condensed Consolidated Statements of Comprehensive Loss ( in thousands) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net loss $ ( 110,958 ) $ ( 138,378 ) $ ( 231,923 ) $ ( 203,654 ) Other comprehensive loss: Unrealized loss on investments ( 295 ) ( 491 ) ( 598 ) ( 1,902 ) Pension actuarial gain (loss) 49 9 94 ( 162 ) Total other comprehensive loss ( 246 ) ( 482 ) ( 504 ) ( 2,064 ) Comprehensive loss $ ( 111,204 ) $ ( 138,860 ) $ ( 232,427 ) $ ( 205,718 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents VIR BIOTECHNOLOGY, INC. Condensed Consolidated Statements of Stockholders’ Equity (in thousands, except share amounts) (unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at March 31, 2025 138,063,698 $ 14 $ 1,926,529 $ ( 1,975 ) $ ( 880,749 ) $ 1,043,819 Vesting of restricted common stock 286,057 — — — — — Exercise of stock options 138,179 — 649 — — 649 Issuance of common stock under employee stock purchase plan 398,340 — 1,757 — — 1,757 Stock-based compensation — — 12,451 — — 12,451 Other comprehensive loss — — — ( 246 ) — ( 246 ) Net loss — — — — ( 110,958 ) ( 110,958 ) Balance at June 30, 2025 138,886,274 $ 14 $ 1,941,386 $ ( 2,221 ) $ ( 991,707 ) $ 947,472 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at March 31, 2024 135,843,560 $ 14 $ 1,852,839 $ ( 2,397 ) $ ( 303,100 ) $ 1,547,356 Vesting of restricted common stock 289,451 — — — — — Exercise of stock options 141,255 — 410 — — 410 Issuance of common stock under employee stock purchase plan 315,831 — 2,602 — — 2,602 Stock-based compensation — — 22,162 — — 22,162 Other comprehensive loss — — — ( 482 ) — ( 482 ) Net loss — — — — ( 138,378 ) ( 138,378 ) Balance at June 30, 2024 136,590,097 $ 14 $ 1,878,013 $ ( 2,879 ) $ ( 441,478 ) $ 1,433,670 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents VIR BIOTECHNOLOGY, INC. Condensed Consolidated Statements of Stockholders’ Equity (in thousands, except share amounts) (unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at December 31, 2024 136,959,446 $ 14 $ 1,911,872 $ ( 1,717 ) $ ( 759,784 ) $ 1,150,385 Vesting of restricted common stock 1,297,685 — — — — — Exercise of stock options 230,803 — 1,247 — — 1,247 Issuance of common stock under employee stock purchase plan 398,340 — 1,757 — — 1,757 Stock-based compensation — — 26,510 — — 26,510 Other comprehensive loss — — — ( 504 ) — ( 504 ) Net loss — — — — ( 231,923 ) ( 231,923 ) Balance at June 30, 2025 138,886,274 $ 14 $ 1,941,386 $ ( 2,221 ) $ ( 991,707 ) $ 947,472 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at December 31, 2023 134,781,286 $ 13 $ 1,828,862 $ ( 815 ) $ ( 237,824 ) $ 1,590,236 Vesting of restricted common stock 1,239,705 1 — — — 1 Exercise of stock options 253,275 — 630 — — 630 Issuance of common stock under employee stock purchase plan 315,831 — 2,602 — — 2,602 Stock-based compensation — — 45,919 — — 45,919 Other comprehensive loss — — — ( 2,064 ) — ( 2,064 ) Net loss — — — — ( 203,654 ) ( 203,654 ) Balance at June 30, 2024 136,590,097 $ 14 $ 1,878,013 $ ( 2,879 ) $ ( 441,478 ) $ 1,433,670 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents VIR BIOTECHNOLOGY, INC. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 231,923 ) $ ( 203,654 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 5,784 8,777 Amortization of premiums on investments, net 6,610 2,875 Noncash lease expense 2,358 2,919 Change in fair value of equity investments ( 3,000 ) 5,486 Change in estimated fair value of contingent consideration 11,010 4,639 Payment of contingent consideration in excess of acquisition date fair value ( 17,140 ) — Stock-based compensation 26,510 45,919 In-process research and development impairment — 3,512 Long-lived assets impairment and disposal loss 399 26,467 Other non-cash items, net 59 ( 363 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets 5,937 11,255 Other assets ( 1,132 ) ( 882 ) Accounts payable 7,444 ( 2,158 ) Accrued liabilities and other long-term liabilities ( 5,458 ) ( 34,798 ) Operating lease liabilities ( 3,253 ) ( 7,554 ) Deferred revenue ( 2,540 ) ( 49,677 ) Net cash used in operating activities ( 198,335 ) ( 187,237 ) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of equipment 326 912 Purchases of property and equipment ( 4,167 ) ( 2,538 ) Purchases of investments ( 366,065 ) ( 834,339 ) Maturities and sales of investments 553,180 1,075,992 Net cash provided by investing activities 183,274 240,027 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 1,247 630 Issuance of common stock under ESPP 1,757 2,602 Other financing activities ( 360 ) ( 138 ) Net cash provided by financing activities 2,644 3,094 Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents ( 12,417 ) 55,884 Cash, cash equivalents and restricted cash and cash equivalents at beginning of period 318,695 261,292 Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 306,278 $ 317,176 NONCASH INVESTING AND FINANCING ACTIVITIES: Obtaining a right-of-use asset in exchange for a lease liability $ 7,591 $ — SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Net cash paid for income tax $ ( 2,266 ) $ — RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS TO THE CONDENSED CONSOLIDATED BALANCE SHEETS: Cash and cash equivalents $ 211,104 $ 296,864 Restricted cash and cash equivalents, current 88,218 13,946 Restricted cash and cash equivalents, noncurrent 6,956 6,366 Total cash, cash equivalents and restricted cash and cash equivalents $ 306,278 $ 317,176 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements 1. Organization Business Overview Vir Biotechnology, Inc. (Vir Bio 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 programs for chronic hepatitis delta and multiple dual-masked T-cell engagers (TCEs) across validated targets in solid tumor indications. Vir Bio also has a preclinical portfolio of programs across a range of infectious diseases and oncologic malignancies. Vir Bio 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. Liquidity and Capital Resources 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 U.S. 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 June 30, 2025, no shares have been sold under the Sales Agreement. As of June 30, 2025, the Company had $ 892.1 million in cash, cash equivalents, and investments, which the Company believes would be sufficient to fund its operations for a period through at least twelve months from the issuance date of these unaudited condensed consolidated financial statements. The Company also had $ 95.2 million in restricted cash and cash equivalents as of June 30, 2025, including the $ 75.0 million milestone payment due to the former shareholders of Amunix Pharmaceuticals, Inc. upon VIR-5525 achieving “first in human dosing” by 2026. In July 2025, the first patient was dosed in phase 1 study evaluating VIR-5525. 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and applicable rules and regulations of the SEC regarding interim financial reporting. All intercompany balances and transactions have been eliminated upon consolidation. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s financial information. The unaudited condensed consolidated results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any other future annual or interim period. Certain information and footnote disclosures typically included in the Company’s annual consolidated financial statements have been condensed or omitted. As such, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Annual Report on Form 10-K for the year ended December 31, 2024. Use of Estimates The preparation of the unaudited condensed 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 unaudited condensed 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. 9 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements 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. Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents, which consist of amounts invested primarily in money market funds and are stated at fair value. Investments 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 that mature at, or less than 12 months from, the unaudited condensed consolidated balance sheet date are considered short-term investments, with all others considered to be long-term investments. Unrealized gains and losses deemed temporary in nature are reported as a component of accumulated other comprehensive loss. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the unaudited condensed consolidated statements of operations. The cost of securities sold is based on the specific identification method. 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 funds to secure standby letters of credit and security deposits with financial institutions under lease agreements. In July 2025, the first patient was dosed in phase 1 study evaluating VIR-5525. 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. 10 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements The Company’s expense accruals for clinical trials and manufacturing are based on estimates of contracted services provided by third-party vendors not yet billed. 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 . 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 , 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 annual 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 and interim periods within annual reporting periods beginning after December 15, 2027. 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 condensed consolidated statements of cash flows to conform to the current period presentation and enhance comparability. As a result, certain amounts related to collaboration receivables, previously reflected in changes in operating assets and liabilities – receivable from collaboration , were reclassified to changes in operating assets and liabilities – prepaid assets and other current assets . 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 that 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 certain financial instruments, including accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. 11 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements Cash Equivalents and Available-for-Sale Securities The following tables summarize the Company’s Level 1 and Level 2 financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as of June 30, 2025 and December 31, 2024 (in thousands): June 30, 2025 Valuation Hierarchy Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Aggregate Fair Value Assets: Money market funds Level 1 $ 140,188 $ — $ — $ 140,188 U.S. government treasuries Level 2 379,284 172 ( 30 ) 379,426 U.S. government agency bonds and discount notes Level 2 68,990 12 ( 15 ) 68,987 Asset-backed securities Level 2 74,206 203 ( 1 ) 74,408 Corporate bonds Level 2 212,334 484 ( 7 ) 212,811 Equity securities Level 1 N/A N/A N/A 7,270 Total financial assets $ 875,002 $ 871 $ ( 53 ) $ 883,090 Reconciliation to cash, cash equivalents and investments on condensed consolidated balance sheet Minus: Restricted cash equivalents invested in money market funds ( 11,891 ) Plus: Cash deposits 20,919 Total cash, cash equivalents and investments $ 892,118 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 condensed 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 Accrued interest receivables excluded from both the fair value and amortized cost basis of the available-for-sale debt securities are presented within prepaid expenses and other current assets in the unaudited condensed consolidated balance sheets. Accrued interest receivables amounted to $ 5.2 million and $ 5.0 million as of June 30, 2025 and December 31, 2024, respectively. The Company did not write off any accrued interest receivables during the six months ended June 30, 2025 and 2024. The Company recognized total net unrealized gains of $ 0.8 million and $ 1.4 million in accumulated other comprehensive loss as of June 30, 2025 and December 31, 2024, respectively. The gross unrealized losses as of June 30, 2025 were due to changes in interest rates and temporary in nature. The Company currently does not intend, and it is highly unlikely that it will be required, to sell these securities before recovery of their amortized cost basis. As of June 30, 2025, no securities have contractual maturities (or weighted average life for asset-backed securities) of longer than two years . 12 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements As of June 30, 2025, 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 June 30, 2025, the Company remeasured the equity investment at a fair value of $ 7.3 million. The Company recognized an unrealized loss of $ 3.4 million and an unrealized gain of $ 0.4 million for the three months ended June 30, 2025 and 2024, respectively, and an unrealized gain of $ 3.0 million and an unrealized loss of $ 5.5 million for the six months ended June 30, 2025 and 2024, respectively, as part of other income in the unaudited condensed consolidated statement of operations. For the three and six months ended June 30, 2025 and 2024, the unrealized gains or losses related to foreign currency remeasurement were not material. 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 June 30, 2025 and December 31, 2024. The estimated fair value of the contingent consideration related to the Humabs acquisition was determined by calculating the probability-weighted regulatory and commercial milestone payments based on the assessment of the likelihood and estimated timing that certain milestones would be achieved. During the three months ended March 31, 2025, the Company achieved a $ 17.5 million clinical milestone upon the enrollment of the first patient in phase 3 ECLIPSE registrational program for chronic hepatitis delta, which was paid out in April 2025. As of June 30, 2025, the Company calculated the estimated fair value of the remaining regulatory milestone related to tobevibart using the following significant unobservable inputs: Unobservable input Value Discount rates 10.1 % Probability of achievement 85.5 % For the commercial milestones, the Company used a Monte Carlo simulation because of the availability of discrete revenue forecasts. As of June 30, 2025, 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 11.0 % Probability of achievement 85.5 % The discount rate captures the credit risk associated with the payment of the contingent consideration when earned and due. As of June 30, 2025 and December 31, 2024, the estimated fair value of the contingent consideration related to the Humabs acquisition was $ 33.6 million and $ 40.1 million, respectively, with changes in the estimated fair value recorded in research and development expenses in the unaudited condensed consolidated statements of operations. The estimated fair value of the contingent consideration related to the Humabs acquisition involves significant estimates and assumptions, which give rise to measurement uncertainty. The following table sets forth the changes in the estimated fair value of the Company’s contingent consideration obligations (in thousands): Contingent Consideration Obligation Balance at December 31, 2024 $ 40,110 Changes in fair value 11,010 Payment ( 17,500 ) Balance at June 30, 2025 $ 33,620 13 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements 4. 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 $ 35.0 million to support its HIV vaccine program, HIV vaccinal antibody program and malaria vaccinal antibody program. Certain grant agreements expired during the first half of 2025. The term of the remaining grant agreements will expire at various dates through June 2027, unless terminated earlier 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 projects. 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 included the HIV vaccine program and the tuberculosis vaccine program 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 $ 0.2 million and $ 0.3 million for the three months ended June 30, 2025 and 2024, respectively, and $ 1.4 million and $ 2.2 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025 and December 31, 2024, the Company had deferred revenue of $ 10.1 million and $ 11.1 million, respectively. As of June 30, 2025 and December 31, 2024, the Company had $ 11.1 million and $ 11.6 million, respectively, within accrued and other liabilities, which may need to be refunded to the Gates Foundation. 5. 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 (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 oncology indications. 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 held in escrow is under the control of the Company and is classified as restricted cash and cash equivalents, current in the unaudited condensed consolidated balance sheets. In July 2025, the first patient was dosed in phase 1 study evaluating VIR-5525. 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 Vir Bio receiving certain sublicense income related to the licenses obtained from the Sanofi Agreement, Sanofi may be eligible to receive a portion of such income. 14 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements 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): In-process research and development $ 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 . 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, including elebsiran, for all uses and purposes including the treatment of hepatitis B virus (HBV) and hepatitis delta virus (HDV). Under the Alnylam Agreement, the Company also held options to obtain similar licenses to siRNA product candidates for up to four other infectious disease targets selected by Vir Bio, but following an amendment and restatement of the Alnylam Agreement in March 2025 (the Restated Alnylam Agreement), those options (and all rights and obligations related to those infectious disease targets) were terminated. At the same time Alnylam elected to not opt-in to the profit-sharing arrangement with respect to any approved siRNA product candidates, including elebsiran, directed to HBV or HDV. The Company remains solely responsible, at its expense, for conducting all development, manufacture and commercialization activities for elebsiran in HBV and HDV indications, and the Company is required to use commercially reasonable efforts to develop and commercialize elebsiran for the treatment of HBV or HDV in the United States and specified major markets. 15 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements In connection with the Restated Alnylam Agreement and Alnylam’s election to not opt-in to the profit-sharing arrangement, the Company paid Alnylam $ 30.0 million, which was recorded as part of research and development expenses in the Company’s unaudited condensed statement of operations for the six months ended June 30, 2025. After this payment, the remaining amount of the development and regulatory milestones is up to $ 145.0 million, down from the $ 175.0 million as previously disclosed in the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024. Any development and regulatory milestones for an elebsiran product will be payable to Alnylam only once, irrespective of dosage, formulation forms, route of administration or indication. 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 elebsiran products directed to HBV, whether for the treatment of HBV or HDV. The Company will 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, subject to specified reductions and offsets. 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. Alnylam may also be entitled to receive a portion of any consideration the Company receives as a result of granting a sublicense under the licenses granted to Vir Bio by Alnylam under the Alnylam Agreement. The term of the Restated Alnylam Agreement will continue, on a product-by-product and country-by-country basis, until expiration of all royalty payment obligations under the Restated Alnylam Agreement. 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 Restated Alnylam Agreement on 30 days’ notice. 6. Balance Sheet Components Property and Equipment, net Property and equipment, net consists of the following (in thousands). Depreciation expenses were $ 2.9 million and $ 4.2 million for the three months ended June 30, 2025 and 2024, respectively, and $ 5.7 million and $ 8.6 million six months ended June 30, 2025 and 2024, respectively. Useful life (in years) June 30, 2025 December 31, 2024 Leasehold improvements 8 - 12 $ 53,827 $ 53,992 Laboratory equipment 5 39,773 39,428 Furniture and fixtures 5 2,705 2,696 Computer equipment 3 2,645 2,778 Construction in progress N/A 3,408 1,074 Property and equipment, gross 102,358 99,968 Less: accumulated depreciation ( 41,563 ) ( 36,785 ) Total property and equipment, net $ 60,795 $ 63,183 16 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements Accrued and Other Liabilities Accrued and other liabilities consist of the following (in thousands): June 30, 2025 December 31, 2024 Research and development expenses $ 39,332 $ 29,225 Payroll and related expenses 17,414 31,165 Excess funds payable under grant agreements 11,119 11,589 Operating lease liabilities, current 8,825 7,752 Other professional and consulting expenses 2,987 2,268 Other accrued expenses 2,984 3,874 Total accrued and other liabilities $ 82,661 $ 85,873 7. 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 (Tobevibart Agreements). As of June 30, 2025, the Company had unaccrued unpaid commitments of approximately $ 17 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 (Elebsiran Agreements). As of June 30, 2025, the Company had unaccrued unpaid commitments of approximately $ 7 million under the Elebsiran Agreements. Legal Proceedings The Company may from time to time be party to claims and legal proceedings that arise in the normal course of its business and that may or may not have, individually or in the aggregate, a material adverse effect on its results of operations, financial condition or liquidity. 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 unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of operations, or unaudited condensed consolidated statements of cash flows. 8. Stock-Based Awards The Company has maintained a stock incentive plan for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, other stock awards and performance cash awards, to employees, non-employee directors, and consultants. The Company also has an employee stock purchase plan (ESPP) for its employees. 17 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements 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: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Expected term of options (in years) 5.5 - 6.1 5.5 - 6.1 5.5 - 6.1 5.5 - 6.1 Expected stock price volatility 87.6 % - 88.7 % 90.2 % - 91.8 % 87.6 % - 89.9 % 89.2 % - 91.8 % Risk-free interest rate 4.0 % - 4.2 % 4.4 % - 4.6 % 4.0 % - 4.5 % 4.3 % - 4.6 % 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 in the foreseeable future. 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 non-employees and the ESPP in the unaudited condensed consolidated statements of operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Research and development $ 6,946 $ 13,073 $ 13,951 $ 26,679 Selling, general and administrative 5,505 9,089 12,559 19,240 Total stock-based compensation $ 12,451 $ 22,162 $ 26,510 $ 45,919 9. Net Loss Per Share Basic net loss per common share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per common share is computed by dividing the net loss 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. 18 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements The following is a calculation of the basic and diluted net loss per share (in thousands, except share and per share data): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net loss $ ( 110,958 ) $ ( 138,378 ) $ ( 231,923 ) $ ( 203,654 ) Weighted-average shares outstanding, basic and diluted 138,447,469 136,223,725 137,960,888 135,757,187 Net loss per share, basic and diluted $ ( 0.80 ) $ ( 1.02 ) $ ( 1.68 ) $ ( 1.50 ) Securities that could potentially dilute basic net loss per common share in the future that were not included in the computation of diluted net loss per common share because to do so would have been antidilutive for the periods presented were as follows: Three and Six Months Ended June 30, 2025 2024 Options issued and outstanding 10,017,308 11,697,125 Restricted shares subject to future vesting 6,281,058 5,859,182 Total 16,298,366 17,556,307 10. Income Taxes The table below presents our loss before (provision for) benefit from income taxes, (provision for) benefit from income taxes and effective tax rate for the three and six months ended June 30, 2025 and 2024 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Loss before (provision for) benefit from income taxes $ ( 110,788 ) $ ( 139,890 ) $ ( 231,737 ) $ ( 204,890 ) (Provision for) benefit from income taxes $ ( 170 ) $ 1,512 $ ( 186 ) $ 1,236 Effective tax rate ( 0.2 %) 1.1 % ( 0.1 %) 0.6 % The Company is subject to income taxes in the United States and foreign jurisdictions. These foreign jurisdictions have statutory tax rates different from those in the United States. Accordingly, the Company’s effective tax rates will vary depending on the relative proportion of foreign to United States income/loss, the utilization of net operating loss and tax credit carry forwards and carrybacks, changes in jurisdictional mix of income and expense, changes in management’s assessment of matters such as the ability to realize deferred tax assets, and changes in tax laws. Unrecognized tax benefits were $ 17.2 million and $ 17.9 million as of June 30, 2025 and December 31, 2024, respectively, and if recognized, would favorably affect the effective tax rate in future periods. On July 4, 2025, legislation formally titled An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, commonly referred to as the One Big Beautiful Bill Act (OBBBA), was signed into law by President Trump. The Company is evaluating the potential impacts of the OBBBA. 19 Table of Contents VIR BIOTECHNOLOGY, INC. Notes to Unaudited Condensed Consolidated Financial Statements 11. 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 that also is reported on the condensed consolidated statements of operations as consolidated net loss. The measure of segment assets is reported on the condensed consolidated balance sheet as total consolidated assets. The CODM uses segment net loss 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. The segment revenue, segment profit or loss, and significant segment expenses regularly provided to CODM are summarized as follows (in thousands). Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Segment revenue $ 1,214 $ 3,075 $ 4,246 $ 59,451 Less: Segment expenses (1) Cost of revenue 11 52 11 111 Research and development Clinical costs 20,361 12,318 40,967 23,925 Contract manufacturing 14,063 10,524 23,399 20,193 Personnel (2) 33,165 43,670 66,883 89,860 Licenses, collaborations and contingent consideration 11,301 5,182 47,892 10,878 Other R&D (3) 18,619 33,419 37,013 60,382 Selling, general and administrative (2) 22,283 30,265 46,227 66,586 Restructuring, long-lived assets impairment and related charges, net ( 172 ) 26,275 ( 182 ) 26,227 Plus: Other segment items (4) 7,459 20,252 26,041 35,057 Segment and consolidated net loss $ ( 110,958 ) $ ( 138,378 ) $ ( 231,923 ) $ ( 203,654 ) (1) Refer to Note 6 Balance Sheet Components for depreciation and amortization expenses included in segment expenses. (2) Refer to Note 8 Stock-Based Awards for stock-based compensation expenses included in segment expenses. (3) Other research and development expenses primarily includes non-personnel research expenses, allocated facility and IT expenses, IPR&D impairment, and depreciation expenses. (4) Other segment items include change in fair value of equity investments, interest income, other income (expense), net, and (provision for) benefit from income taxes, all of which were presented on the condensed 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, contract revenue generated from clinical supplies provided to foreign companies, and license revenue from the Company’s collaboration with Brii Bio. Three Months Ended June 30, Six Months Ended June 30, Segment revenues attributed to: 2025 2024 2025 2024 U.S. customers $ 183 $ 2,489 $ 1,421 $ 7,661 Foreign customers GSK ( 495 ) 55 ( 565 ) 50,749 Other 1,526 531 3,390 1,041 Total segment and consolidated revenue $ 1,214 $ 3,075 $ 4,246 $ 59,451 The Company’s long-lived assets are primarily located in the U.S. 20 Table of Contents