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vir-10q_20200630.htm

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 June 30, 2020

☐	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, 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 August 7, 2020, the registrant had 127,054,463 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	5
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019 (unaudited)	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	91
Item 3.	Defaults Upon Senior Securities	91
Item 4.	Mine Safety Disclosures	91
Item 5.	Other Information	91
Item 6.	Exhibits	92
Signatures		94

SPECIAL 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 and expected market growth, 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.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

	June 30, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	371,781		$	109,335
Short-term investments		180,599			274,101
Restricted cash and cash equivalents, current		11,024			6,181
Prepaid expenses and other current assets		15,357			13,378
Total current assets		578,761			402,995
Intangible assets, net		35,082			35,694
Goodwill		16,937			16,937
Property and equipment, net		16,311			16,308
Operating right-of-use assets		15,177			—
Restricted cash and cash equivalents, noncurrent		1,192			7,300
Long-term investments		—			24,290
Other assets		8,778			8,547
TOTAL ASSETS	$	672,238		$	512,071
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		4,382		$	5,881
Accrued and other liabilities		38,560			26,495
Deferred revenue, current portion		7,298			6,181
Contingent consideration, current portion		4,700			8,200
Derivative liability		—			12,449
Total current liabilities		54,940			59,206
Deferred revenue, noncurrent		3,815			12,670
Operating lease liabilities, noncurrent		12,762			—
Contingent consideration, noncurrent		30,670			9,380
Deferred tax liability		3,305			3,305
Other long-term liabilities		2,967			3,568
TOTAL LIABILITIES		108,459			88,129
Commitments and contingencies (Note 8)
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of June 30, 2020 and December 31, 2019; no shares issued and outstanding as of June 30, 2020 and December 31, 2019		—			—
Common stock, $0.0001 par value; 300,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 117,727,086 and 107,648,925 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		12			11
Additional paid-in capital		1,040,988			793,051
Accumulated other comprehensive loss		(295	)		(601	)
Accumulated deficit		(476,926	)		(368,519	)
TOTAL STOCKHOLDERS’ EQUITY		563,779			423,942
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	672,238		$	512,071

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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenues:
Grant revenue	$	719		$	1,961		$	5,950		$	5,605
License revenue from a related party		22,747			—			22,747			—
Contract revenue		43,522			86			44,009			103
Total revenue		66,988			2,047			72,706			5,708
Operating expenses:
Research and development		79,653			29,805			144,632			55,677
General and administrative		16,386			8,011			29,035			16,570
Total operating expenses		96,039			37,816			173,667			72,247
Loss from operations		(29,051	)		(35,769	)		(100,961	)		(66,539	)
Other income (expense):
Interest income		825			2,307			2,580			4,552
Other income (expense), net		(2,895	)		(447	)		(9,964	)		(592	)
Total other income (expense)		(2,070	)		1,860			(7,384	)		3,960
Loss before provision for income taxes		(31,121	)		(33,909	)		(108,345	)		(62,579	)
Provision for income taxes		(46	)		(19	)		(62	)		(19	)
Net loss	$	(31,167	)	$	(33,928	)	$	(108,407	)	$	(62,598	)
Net loss per share, basic and diluted	$	(0.27	)	$	(3.64	)	$	(0.97	)	$	(6.83	)
Weighted-average shares outstanding, basic and diluted		114,980,652			9,327,651			111,684,283			9,165,311

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

VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net loss	$	(31,167	)	$	(33,928	)	$	(108,407	)	$	(62,598	)
Other comprehensive income (loss):
Unrealized gain (loss) on investments		(549	)		145		295				254
Amortization of actuarial loss		6			—		11				—
Other comprehensive income (loss)		(543	)		145			306			254
Comprehensive loss	$	(31,710	)	$	(33,783	)	$	(108,101	)	$	(62,344	)

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

VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(unaudited)

											Accumulated
									Additional		Other						Total
	Convertible Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Share		Amount		Share		Amount		Capital		Income (Loss)			Deficit			Equity (Deficit)
Balance at March 31, 2020		—	$	—		108,350,368	$	11	$	825,833	$	248		$	(445,759	)	$	380,333
Issuance of common stock in connection with the achievement of a milestone		—		—		1,111,111		—		—		—			—			—
Issuance of common stock in connection with a collaboration agreement		—		—		6,626,027		1		206,698		—			—			206,699
Issuance of common stock for cashless exercise of warrant		—		—		211,774		—		—		—			—			—
Vesting of restricted common stock		—		—		612,546		—		462		—			—			462
Exercise of stock options		—		—		815,260		—		2,245		—			—			2,245
Stock-based compensation		—		—		—		—		5,750		—			—			5,750
Other comprehensive loss		—		—		—		—		—		(543	)		—			(543	)
Net loss		—		—		—		—		—		—			(31,167	)		(31,167	)
Balance at June 30, 2020		—	$	—		117,727,086	$	12	$	1,040,988	$	(295	)	$	(476,926	)	$	563,779

											Accumulated
									Additional		Other						Total
	Convertible Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Share		Amount		Share		Amount		Capital		Income (Loss)			Deficit			Equity (Deficit)
Balance at March 31, 2019		88,112,733	$	636,612		9,101,154	$	1	$	17,192	$	95		$	(222,506	)	$	(205,218	)
Vesting of restricted common stock		—		—		197,983		—		—		—			—			—
Exercise of stock options		—		—		423,701		—		635		—			—			635
Stock-based compensation		—		—		—		—		1,399		—			—			1,399
Other comprehensive income		—		—		—		—		—		145			—			145
Net loss		—		—		—		—		—		—			(33,928	)		(33,928	)
Balance at June 30, 2019		88,112,733	$	636,612		9,722,838	$	1	$	19,226	$	240		$	(256,434	)	$	(236,967	)

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

VIR BIOTECHNOLOGY, INC.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(unaudited)

Accumulated

Additional

Other