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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 March 31, 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 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

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.

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.

•

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.

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.

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.

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.

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.

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.

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 $