Vir Biotechnology, Inc. [VIR] Filings

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Emerging growth company

10-Q 1 vir-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39083

Vir Biotechnology, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware	81-2730369
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
499 Illinois Street, Suite 500, San Francisco, California	94158
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (415) 906-4324

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

VIR

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2022, the registrant had 133,115,621 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (unaudited)	5
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)	6
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)	7
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90
Item 3.	Defaults Upon Senior Securities	91
Item 4.	Mine Safety Disclosures	91
Item 5.	Other Information	91
Item 6.	Exhibits	92
Signatures		93

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, research and development, potential of, and expectations for, our pipeline, planned clinical trials and preclinical studies, technology platforms, the timing and likelihood of regulatory filings and approvals for our product candidates, our ability to commercialize our product candidates, the potential benefits of collaborations, projected costs, prospects, plans, objectives of management, expected market growth, the timing of availability of clinical data, program updates and data disclosures, the ability of sotrovimab to treat and/or prevent COVID-19, our plans for sotrovimab and our COVID-19 portfolio and our ability to remediate any material weaknesses in internal controls over financial reporting, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions described in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report. Other sections of this report may include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements.

In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section titled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

RISK FACTOR SUMMARY

Investing in our securities involves a high degree of risk. Below is a summary of material factors that make an investment in our securities speculative or risky. Importantly, this summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, as well as other risks that we face, can be found under the heading “Risk Factors” in Part II, Item 1A. of this Quarterly Report on Form 10-Q.

Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common stock. These risks include, among others, the following:

•

We have incurred net losses and anticipate that we may continue to incur net losses in the foreseeable future and, therefore, may not be able to maintain profitability.

•

Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

•

We may require substantial additional funding to finance our operations. If we are unable to raise capital when needed, we could be forced to delay, reduce or terminate certain of our development programs or other operations.

•

Although we have an Emergency Use Authorization, or EUA, from the U.S. Food and Drug Administration, or FDA, for sotrovimab for the early treatment of COVID-19, the disease caused by the virus SARS-CoV-2, the FDA has excluded the use of sotrovimab in all U.S. regions, and sotrovimab has limitations on its use in some countries outside of the U.S. If the FDA does not reauthorize the use of sotrovimab in the U.S., the FDA revokes or terminates our EUA for sotrovimab, the federally-declared COVID-19 public health emergency ends, or countries outside of the U.S. continue to limit its use, we may be unable to sell sotrovimab in or outside of the U.S.

•

We are committing substantial financial resources and personnel and making substantial capital commitments with third parties in connection with therapies for COVID-19. Market demand and utilization of any of our COVID-19 product candidates has been, and may continue to be, adversely impacted by factors such as the development of monoclonal antibodies, or mAbs, of other third parties, the rollout of oral antivirals and vaccines, the emergence of new variants or subvariants and the current challenges in the delivery and administration of mAbs to patients.

•

Our near-term revenue is dependent on the continued sales and commercialization of sotrovimab for the early treatment of COVID-19, including our ability to enter into procurement contracts with government entities. If we are unable to continue to sell and/or commercialize sotrovimab in or outside of the U.S., our business, financial condition, results of operations and prospects may be adversely affected. In addition, sotrovimab may be rendered inferior or obsolete due to rapid changes in epidemiology and the emergence of new variants or subvariants.

•

Our future success is substantially dependent on the successful clinical development, regulatory approval and commercialization of our product candidates in a timely manner. If we are not able to obtain required regulatory approvals, we will not be able to commercialize our product candidates and our ability to generate product revenue will be adversely affected.

•

Success in preclinical studies or earlier clinical trials may not be indicative of results in future clinical trials and we cannot assure you that any ongoing, planned or future clinical trials will lead to results sufficient for the necessary regulatory approvals and marketing authorizations.

•

Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control.

•

We are a party to strategic collaboration and license agreements pursuant to which we are obligated to make substantial payments upon achievement of milestone events and, in certain cases, have relinquished important rights over the development and commercialization of certain current and future product candidates. We also intend to explore additional strategic collaborations, which may never materialize or may require that we relinquish rights to and control over the development and commercialization of our product candidates.

•

We intend to rely on third parties to produce clinical and commercial supplies of our product candidates.

•

If we are unable to obtain and maintain patent protection for our product candidates and technology, or if the scope of the patent protection obtained is not sufficiently broad or robust, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our product candidates and technology may be adversely affected.

•

We are highly dependent on our key personnel, and if we are not able to retain these members of our management team or recruit and retain additional management, clinical and scientific personnel, our business will be harmed.

•

Our business could be materially adversely affected by the effects of health pandemics or epidemics, including the COVID-19 pandemic and future pandemics.

•

If our information systems, or those maintained on our behalf, fail or suffer security breaches, such events could result in, without limitation, the following: a significant disruption of our product development programs; an inability to operate our business effectively; unauthorized access to or disclosure of the personal information we process; and other adverse effects on our business, financial condition, results of operations and prospects.

•

We have identified a material weakness in our internal control over financial reporting. This material weakness could adversely affect our ability to produce accurate and timely financial statements, which may adversely affect investor confidence in us and our financial reporting, materially and adversely affect our business and operating results and may negatively impact the trading price of our common stock.

•

The market price of our common stock has been, and in the future, may be, volatile and fluctuate substantially, which could result in substantial losses for purchasers of our common stock.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)


	September 30, 2022			December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	963,735		$	347,815
Short-term investments		1,359,945			217,182
Restricted cash and cash equivalents, current		12,955			8,594
Receivable from collaboration		—			773,079
Equity investments		22,801			143,148
Prepaid expenses and other current assets		54,180			73,003
Total current assets		2,413,616			1,562,821
Intangible assets, net		32,888			33,287
Goodwill		16,937			16,937
Property and equipment, net		100,226			42,834
Operating right-of-use assets		84,716			87,220
Restricted cash and cash equivalents, noncurrent		7,276			7,006
Long-term investments		34,102			201,388
Other assets		6,209			2,775
TOTAL ASSETS	$	2,695,970		$	1,954,268
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	2,722		$	6,521
Accrued and other liabilities		282,616			236,512
Deferred revenue, current portion		22,865			98,209
Total current liabilities		308,203			341,242
Deferred revenue, noncurrent		54,653			3,815
Operating lease liabilities, noncurrent		126,942			133,561
Contingent consideration, noncurrent		30,712			22,822
Deferred tax liability		18,439			18,439
Other long-term liabilities		7,166			2,540
TOTAL LIABILITIES		546,115			522,419
Commitments and contingencies (Note 8)
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of September 30, 2022 and December 31, 2021; no shares issued and outstanding as of September 30, 2022 and December 31, 2021		—			—
Common stock, $0.0001 par value; 300,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 133,027,358 and 131,161,404 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		13			13
Additional paid-in capital		1,682,882			1,571,535
Accumulated other comprehensive loss		(11,880	)		(1,099	)
Retained earnings (accumulated deficit)		478,840			(138,600	)
TOTAL STOCKHOLDERS’ EQUITY		2,149,855			1,431,849
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,695,970		$	1,954,268

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

VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Revenue:
Collaboration revenue	$	309,145		$	102,398		$	1,483,860		$	107,731
Contract revenue		39,998			315			52,534			169,581
License revenue from a related party		22,289			—			22,289			—
Grant revenue		3,125			903			7,704			5,356
Total revenue		374,557			103,616			1,566,387			282,668
Operating expenses:
Cost of revenue		22,253			7,836			140,323			8,988
Research and development		114,166			98,669			319,475			319,665
Selling, general and administrative		43,174			50,496			123,019			105,016
Total operating expenses		179,593			157,001			582,817			433,669
Income (loss) from operations		194,964			(53,385	)		983,570			(151,001	)
Other income (expense):
Change in fair value of equity investments		(13,590	)		164,072			(120,019	)		164,072
Interest income		9,332			11			11,920			272
Other income (expense), net		27,026			64			30,447			(9,430	)
Total other income (expense)		22,768			164,147			(77,652	)		154,914
Income before provision for income taxes		217,732			110,762			905,918			3,913
Provision for income taxes		(42,420	)		(334	)		(288,478	)		(583	)
Net income	$	175,312		$	110,428		$	617,440		$	3,330
Net income per share, basic	$	1.32		$	0.85		$	4.66		$	0.03
Net income per share, diluted	$	1.30		$	0.82		$	4.58		$	0.02
Weighted-average shares outstanding, basic		132,729,530			130,665,831			132,422,028			129,520,837
Weighted-average shares outstanding, diluted		134,963,317			133,854,419			134,711,777			133,318,979

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

VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2022			2021		2022			2021
Net income	$	175,312		$	110,428	$	617,440		$	3,330
Other comprehensive (loss) income:
Unrealized (loss) gain on investments		(4,318	)		13		(10,754	)		(71	)
Amortization of actuarial (loss) gain		(9	)		14		(27	)		42
Other comprehensive (loss) income		(4,327	)		27		(10,781	)		(29	)
Comprehensive income	$	170,985		$	110,455	$	606,659		$	3,301

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

VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except shares amounts)

(unaudited)


							Accumulated
					Additional		Other			Retained Earnings			Total
	Common Stock				Paid-in		Comprehensive			(Accumulated			Stockholders'
	Share		Amount		Capital		Loss			Deficit)			Equity
Balance at June 30, 2022		132,597,812	$	13	$	1,656,024	$	(7,553	)	$	303,528		$	1,952,012
Vesting of restricted common stock		53,102		—		—		—			—			—
Exercise of stock options		376,444		—		2,044		—			—			2,044
Stock-based compensation		—		—		24,814		—			—			24,814
Other comprehensive loss		—		—		—		(4,327	)		—			(4,327	)
Net loss		—		—		—		—			175,312			175,312
Balance at September 30, 2022		133,027,358	$	13	$	1,682,882	$	(11,880	)	$	478,840		$	2,149,855

							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Share		Amount		Capital		Loss			Deficit			Equity
Balance at June 30, 2021		130,479,975	$	13	$	1,512,928	$	(1,334	)	$	(774,282	)	$	737,325
Issuance of common stock to settle a contingent consideration		42,737		—		1,860		—		$	—			1,860
Vesting of restricted common stock		1,852		—		—		—			—			—
Exercise of stock options		301,558		—		3,690		—			—			3,690
Stock-based compensation		—		—		22,944		—			—			22,944
Other comprehensive loss		—		—		—		27			—			27
Net income		—		—		—		—			110,428			110,428
Balance at September 30, 2021		130,826,122	$	13	$	1,541,422	$	(1,307	)	$	(663,854	)	$	876,274

							Accumulated
					Additional		Other			(Accumulated			Total
	Common Stock				Paid-in		Comprehensive			Deficit)			Stockholders'
	Share		Amount		Capital		Income (Loss)			Retained Earnings			Equity
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

Vir Biotechnology, Inc. [VIR] Filings
10-Q	[2022-11-03]
10-Q	[2022-08-09]
10-Q	[2022-05-05]
10-K	[2022-02-28]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-25]
10-Q	[2020-11-10]
10-Q	[2020-08-11]
S-1	[2020-07-06]
10-Q	[2020-05-12]
10-K	[2020-03-26]
10-Q	[2019-11-19]
S-1	[2019-09-03]