10-Q 1 vir-20220331.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 March 31, 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 May 2, 2022, the registrant had 132,375,699 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 March 31, 2022 and December 31, 2021 (unaudited)

5

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (unaudited)

6

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2022 and 2021 (unaudited)

7

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021 (unaudited)

8

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 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

35

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

45

Item 4.

Controls and Procedures

46

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

47

Item 1A.

Risk Factors

47

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

87

Item 3.

Defaults Upon Senior Securities

87

Item 4.

Mine Safety Disclosures

87

Item 5.

Other Information

87

Item 6.

Exhibits

88

Signatures

89

 

 

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, 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, the expected number of therapeutic doses that Vir will be able to supply to patients, and the ability of sotrovimab to maintain activity against circulating COVID-19 variants or subvariants of concern and interest, 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 due to increases in the proportion of COVID-19 cases caused by the Omicron BA.2 subvariant. If the FDA revokes or terminates our EUA for sotrovimab, or the federally-declared COVID-19 public health emergency ends, we will be required to stop commercial distribution of sotrovimab in the United States unless we can obtain FDA approval for sotrovimab.
We are committing substantial financial resources and personnel and making substantial capital commitments with third parties in connection with sotrovimab as a therapy for COVID-19. Market demand and utilization of sotrovimab or any of our other COVID-19 product candidates may be adversely impacted by factors such as the development of monoclonal antibodies, or mAbs, of other third parties, the rollout of vaccines and oral antivirals, the emergence of new variants or subvariants and the current challenges in the delivery and administration of mAbs to patients.
Our near-term success is dependent on the successful commercialization of sotrovimab for the early treatment of COVID-19, including our ability to enter into additional procurement contracts with government entities. If we are unable to successfully commercialize sotrovimab, 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 sotrovimab and our other 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 ongoing COVID-19 pandemic and future outbreaks of the disease.
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.
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)

 

 

 

March 31,
2022

 

 

December 31,
2021

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

812,355

 

 

$

347,815

 

Short-term investments

 

 

399,829

 

 

 

217,182

 

Restricted cash and cash equivalents, current

 

 

14,402

 

 

 

8,594

 

Receivable from collaboration

 

 

1,223,161

 

 

 

773,079

 

Equity investments

 

 

47,890

 

 

 

143,148

 

Prepaid expenses and other current assets

 

 

69,911

 

 

 

73,003

 

Total current assets

 

 

2,567,548

 

 

 

1,562,821

 

Intangible assets, net

 

 

33,154

 

 

 

33,287

 

Goodwill

 

 

16,937

 

 

 

16,937

 

Property and equipment, net

 

 

65,583

 

 

 

42,834

 

Operating right-of-use assets

 

 

88,331

 

 

 

87,220

 

Restricted cash and cash equivalents, noncurrent

 

 

9,040

 

 

 

7,006

 

Long-term investments

 

 

103,535

 

 

 

201,388

 

Other assets

 

 

3,001

 

 

 

2,775

 

TOTAL ASSETS

 

$

2,887,129

 

 

$

1,954,268

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

10,955

 

 

$

6,521

 

Accrued and other liabilities

 

 

577,669

 

 

 

236,512

 

Deferred revenue, current portion

 

 

113,737

 

 

 

98,209

 

Contingent consideration, current portion

 

 

 

 

 

 

Total current liabilities

 

 

702,361

 

 

 

341,242

 

Deferred revenue, noncurrent

 

 

5,865

 

 

 

3,815

 

Operating lease liabilities, noncurrent

 

 

132,813

 

 

 

133,561

 

Contingent consideration, noncurrent

 

 

18,891

 

 

 

22,822

 

Deferred tax liability

 

 

18,439

 

 

 

18,439

 

Other long-term liabilities

 

 

7,746

 

 

 

2,540

 

TOTAL LIABILITIES

 

 

886,115

 

 

 

522,419

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of March 31, 2022 and
   December 31, 2021;
no shares issued and outstanding as of March 31, 2022 and
   December 31, 2021

 

 

 

 

 

 

Common stock, $0.0001 par value; 300,000,000 shares authorized as of March 31, 2022
   and December 31, 2021;
132,353,441 and 131,161,404 shares issued
   and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

 

13

 

 

 

13

 

Additional paid-in capital

 

 

1,625,785

 

 

 

1,571,535

 

Accumulated other comprehensive loss

 

 

(4,805

)

 

 

(1,099

)

Retained earnings (accumulated deficit)

 

 

380,021

 

 

 

(138,600

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

2,001,014

 

 

 

1,431,849

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

2,887,129

 

 

$

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 March 31,

 

 

 

2022

 

 

2021

 

Revenue:

 

 

 

 

 

 

Collaboration revenue

 

$

1,229,656

 

 

$

 

Contract revenue

 

 

282

 

 

 

605

 

Grant revenue

 

 

2,521

 

 

 

1,371

 

Total revenue

 

 

1,232,459

 

 

 

1,976

 

Operating expenses:

 

 

 

 

 

 

Cost of revenue

 

 

90,149

 

 

 

 

Research and development

 

 

90,227

 

 

 

134,870

 

Selling, general and administrative

 

 

38,255

 

 

 

25,739

 

Total operating expenses

 

 

218,631

 

 

 

160,609

 

Income (loss) from operations

 

 

1,013,828

 

 

 

(158,633

)

Other income (expense):

 

 

 

 

 

 

Change in fair value of equity investments

 

 

(95,039

)

 

 

 

Interest income

 

 

388

 

 

 

164

 

Other income (expense), net

 

 

2,730

 

 

 

(10,246

)

Total other expense

 

 

(91,921

)

 

 

(10,082

)

Income (loss) before provision for income taxes

 

 

921,907

 

 

 

(168,715

)

Provision for income taxes

 

 

(403,286

)

 

 

(196

)

Net income (loss)

 

$

518,621

 

 

$

(168,911

)

Net income (loss) per share, basic

 

$

3.93

 

 

$

(1.32

)

Net income (loss) per share, diluted

 

$

3.85

 

 

$

(1.32

)

Weighted-average shares outstanding, basic

 

 

132,079,391

 

 

 

127,742,614

 

Weighted-average shares outstanding, diluted

 

 

134,535,766

 

 

 

127,742,614

 

 

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 March 31,

 

 

 

2022

 

 

2021

 

Net income (loss)

 

$

518,621

 

 

$

(168,911

)

Other comprehensive income (loss):

 

 

 

 

 

 

Unrealized loss on investments

 

 

(3,696

)

 

 

(40

)

Amortization of actuarial (loss) gain

 

 

(10

)

 

 

14

 

Other comprehensive loss

 

 

(3,706

)

 

 

(26

)

Comprehensive income (loss)

 

$

514,915

 

 

$

(168,937

)

 

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 share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

Retained Earnings

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

(Accumulated

 

 

Stockholders'

 

 

 

Share

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit)

 

 

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

 

 

 

 

 

 

28,462

 

 

 

 

 

 

 

 

 

28,462

 

Vesting of restricted common stock

 

 

216,886

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

93,786

 

 

 

 

 

 

484

 

 

 

 

 

 

 

 

 

484

 

Stock-based compensation

 

 

 

 

 

 

 

 

25,304

 

 

 

 

 

 

 

 

 

25,304

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(3,706

)

 

 

 

 

 

(3,706

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

518,621

 

 

 

518,621

 

Balance at March 31, 2022

 

 

132,353,441

 

 

$

13

 

 

$

1,625,785

 

 

$

(4,805

)

 

$

380,021

 

 

$

2,001,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Share

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

127,416,740

 

 

$

13

 

 

$

1,385,301

 

 

$

(1,278

)

 

$

(667,184

)

 

$

716,852

 

Issuance of common stock in connection with a
  collaboration agreement

 

 

1,924,927

 

 

 

 

 

 

85,213

 

 

 

 

 

 

 

 

 

85,213

 

Vesting of restricted common stock

 

 

52,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

497,226

 

 

 

 

 

 

2,352

 

 

 

 

 

 

 

 

 

2,352

 

Stock-based compensation

 

 

 

 

 

 

 

 

15,471

 

 

 

 

 

 

 

 

 

15,471

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(26

)

 

 

 

 

 

(26

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(168,911

)

 

 

(168,911

)

Balance at March 31, 2021

 

 

129,891,856

 

 

$

13

 

 

$

1,488,337

 

 

$

(1,304

)

 

$

(836,095

)

 

$

650,951

 

 

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

 

8


VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss)

 

$

518,621

 

 

$

(168,911

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,419

 

 

 

1,269

 

Amortization of intangible assets

 

 

133

 

 

 

133

 

Amortization of premiums (accretion of discounts) on investments, net

 

 

1,073

 

 

 

409

 

Payment for contingent consideration in excess of acquisition date fair value

 

 

(93,803

)

 

 

 

Noncash lease expense

 

 

2,111

 

 

 

1,484

 

Change in fair value of equity investments

 

 

95,039

 

 

 

 

Change in estimated fair value of contingent consideration

 

 

(3,931

)

 

 

44,462

 

Stock-based compensation

 

 

25,304

 

 

 

15,471

 

Other

 

 

209

 

 

 

19

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Receivable from collaboration

 

 

(450,082

)

 

 

 

Prepaid expenses and other current assets

 

 

(247

)

 

 

943

 

Other assets

 

 

(227

)

 

 

(63

)

Accounts payable

 

 

3,829

 

 

 

(1,317

)

Accrued liabilities and other long-term liabilities

 

 

433,556

 

 

 

(18,827

)

Operating lease liabilities

 

 

(493

)

 

 

4

 

Deferred revenue

 

 

17,578

 

 

 

35,395

 

Net cash provided by (used in) operating activities

 

 

550,089

 

 

 

(89,529

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Proceeds from sale of an equipment

 

 

12

 

 

 

 

Purchases of property and equipment

 

 

(15,841

)

 

 

(667

)

Purchases of investments

 

 

(89,563

)

 

 

(5,000

)

Maturities of investments

 

 

 

 

 

93,201

 

Net cash provided by (used in) investing activities

 

 

(105,392

)

 

 

87,534

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of common stock in connection with a grant agreement

 

 

28,462

 

 

 

 

Proceeds from issuance of common stock in connection with a collaboration agreement

 

 

 

 

 

85,213

 

Payment of principal on financing lease obligation

 

 

(64

)

 

 

(62

)

Proceeds from exercise of stock options

 

 

484

 

 

 

2,352

 

Payment of contingent consideration

 

 

(1,197

)

 

 

 

Net cash provided by financing activities

 

 

27,685

 

 

 

87,503

 

Net increase in cash, cash equivalents and restricted cash and cash equivalents

 

 

472,382

 

 

 

85,508

 

Cash, cash equivalents and restricted cash and cash equivalents at beginning of period

 

 

363,415

 

 

 

451,487

 

Cash, cash equivalents and restricted cash and cash equivalents at end of period

 

$

835,797

 

 

$

536,995

 

NONCASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

Property and equipment purchases included in accounts payable and accrued liabilities

 

$

8,338

 

 

$

378

 

Operating lease liabilities obtained in exchange of right-of-use asset

 

$

3,222

 

 

$

 

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED
   CASH TO THE CONDENSED CONSOLIDATED BALANCE SHEETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

812,355

 

 

$

521,396

 

Restricted cash and cash equivalents, current

 

 

14,402

 

 

 

8,601

 

Restricted cash and cash equivalents, noncurrent

 

 

9,040

 

 

 

6,998

 

Total cash, cash equivalents and restricted cash

 

$

835,797

 

 

$

536,995

 

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

 

9


 

VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization

Vir Biotechnology, Inc. (“Vir” or the “Company”) is a commercial-stage immunology company focused on combining immunologic insights with cutting-edge technologies to treat and prevent serious infectious diseases. Its current pipeline consists of sotrovimab (previously VIR-7831; and where marketing authorization has been granted, marketed under the brand name Xevudy®) and other product candidates targeting coronavirus disease 2019 (“COVID-19”), hepatitis B virus (“HBV”), influenza A virus, and human immunodeficiency virus (“HIV”). Vir has assembled four technology platforms that are designed to stimulate and enhance the immune system by exploiting critical observations of natural immune processes.

Sales Agreement

In November 2020, the Company entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”), under 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 Cowen, acting as sales agent or principal. The shares will be offered and sold under the Company’s shelf registration statement on Form S-3 and a related prospectus filed with the Securities and Exchange Commission (the “SEC”) on November 10, 2020. The Company will pay 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 Cowen with customary indemnification and contribution rights. As of March 31, 2022, no shares have been issued under the Sales Agreement.

Need for Additional Capital

Although the Company recorded net income for the year ended December 31, 2021 and the quarter ended March 31, 2022, it has otherwise incurred net losses since inception. The Company expects its earnings to be volatile and may continue to incur net losses over the next several years and may need to raise additional capital to fully implement its business plan. As of March 31, 2022, the Company had retained earnings of $380.0 million. The Company had, excluding restricted cash, $1.4 billion of cash, cash equivalents, investments and the equity investment in Brii Biosciences Limited (“Brii Bio Parent”) as of March 31, 2022, and after excluding the equity investment in Brii Bio Parent, the Company had $1.3 billion. Based on the Company’s current operating plan, management believes that the $1.3 billion as of March 31, 2022 will be sufficient to fund its operations through at least the next 12 months from the issuance date of these unaudited condensed consolidated financial statements.

2. Summary of Significant Accounting Policies

Basis of Presentation

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. The unaudited condensed consolidated financial statements include the accounts of Vir and its wholly-owned subsidiaries. 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 condensed consolidated results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, 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, 2021, filed with the SEC on February 28, 2022.

10


VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

 

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 revenue and expense 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.

Concentration of Credit Risk, Credit Loss and Other Risks and Uncertainties

The Company has implemented a number of plans and policies designed to address and mitigate the impact of the ongoing COVID-19 pandemic on its business. The Company anticipates that the COVID-19 pandemic and geopolitical events, including civil or political unrest (such as the ongoing war between Ukraine and Russia), will continue to have an impact on the clinical development timelines for some of its clinical programs. The extent to which the COVID-19 pandemic impacts the Company’s business, clinical development and regulatory efforts, corporate development objectives and the value of and market for its common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time.

Although the Company received Emergency Use Authorization (“EUA”), temporary authorization or marketing approval for sotrovimab (under the brand name Xevudy®), it is still subject to a number of other challenges and risks similar to other biopharmaceutical companies in the early stage, including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its other product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of sotrovimab and other product candidates and protection of proprietary technology. If the Company does not successfully obtain regulatory approval, commercialize or partner sotrovimab or any of its other product candidates, it will be unable to generate significant revenue from product sales or maintain profitability. In addition, to the extent the ongoing COVID-19 pandemic, including the emergence of new variants or subvariants, adversely affects the Company’s business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties discussed above.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and investments. Cash and cash equivalents are deposited in checking and sweep accounts at a financial institution. Such deposits may, at times, exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

The Company’s investment policy limits investments to certain types of securities issued by the U.S. government, its agencies and institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents and investments, and issuers of the investments to the extent recorded on the unaudited condensed consolidated balance sheets. As of March 31, 2022, the Company has no off-balance sheet concentrations of credit risk.

The Company is exposed to credit losses primarily through receivables from customers and collaborators and through its available-for-sale debt securities. The Company’s expected loss allowance methodology for the receivables is developed using historical collection experience, current and future economic market conditions, a review of the current aging status and financial condition of the entities. Specific allowance amounts are established to record the appropriate allowance for customers that have a higher probability of default. Balances are written off when determined to be uncollectible. The Company’s expected loss allowance methodology for the debt securities is developed by reviewing the extent of the unrealized loss, the size, term, geographical location, and industry of the issuer, the issuers’ credit ratings and any changes in those ratings, as well as reviewing current and future economic market conditions and the issuers’ current status and financial condition. The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and interest rate policies and determined that the estimate of credit losses was not significantly impacted. During the three months ended March 31, 2022 and 2021, there was no allowance for losses on available-for-sale debt securities attributable to credit risk.

 

11


VIR BIOTECHNOLOGY, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

 

Investments

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

Available-for-Sale Debt Securities

The Company’s valuations of marketable securities are generally derived from independent pricing services based on quoted prices in active markets for similar securities at period end. Generally, investments with original maturities beyond three months at the date of purchase and which mature at, or less than 12 months from, the 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 comprehensive income (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.

Equity Investments

Under Accounting Standards Update (“ASU”) No. 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, the Company measures its investment in equity securities at fair value at each reporting date based on the market price at period end if it has a readily determinable fair value. Otherwise, the investments in equity securities are measured at cost less impairment, adjusted for observable price changes for identical or similar investments of the same issuer unless the Company has significant influence or control over the investee. Changes in fair value resulting from observable price changes are presented as change in fair value of equity investments and changes in fair value resulting from foreign currency translation are included in other income (expense), net on the unaudited condensed consolidated statements of operations.

Restricted Cash and Cash Equivalents