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

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

OR

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.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

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

 

1


 

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.

 

 

2


 

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.

3


 

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.

4


 

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.

5


 

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.

6


 

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.

7


 

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