[Summary of Material Risks Associated with Our Business](index=3&type=section&id=SUMMARY%20OF%20MATERIAL%20RISKS%20ASSOCIATED%20WITH%20OUR%20BUSINESS) [Key Business Risks](index=3&type=section&id=3.1.%20Key%20Business%20Risks) Business risks: health epidemics, net losses, **posoleucel** dependency, funding needs, limited history, and intense competition - The business is highly dependent on its lead product candidate, **posoleucel**, and must complete clinical testing before seeking regulatory approval and commercialization[9](index=9&type=chunk) - The company is a late clinical-stage cell therapy company and has incurred net losses since inception, anticipating continued significant losses and may never achieve or maintain profitability[9](index=9&type=chunk) - Substantial additional funding will be needed, and inability to raise capital could force delays, reductions, or elimination of product discovery, development, or commercialization efforts[9](index=9&type=chunk) - The business could be adversely affected by health epidemics, including the ongoing **COVID-19 pandemic**, causing disruption in supplies and services from contracted third parties[9](index=9&type=chunk) [Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Nature of Forward-Looking Statements](index=4&type=section&id=5.1.%20Nature%20of%20Forward-Looking%20Statements) Forward-looking statements in this report are based on current beliefs but involve known and unknown risks - All statements in the report, other than historical facts, are forward-looking, covering aspects like product development, clinical trials, regulatory submissions, commercialization plans, funding, manufacturing, collaborations, intellectual property, market size, and financial performance[11](index=11&type=chunk) - Forward-looking statements are identifiable by terms such as 'anticipate,' 'believe,' 'expect,' 'intend,' 'may,' 'plan,' 'potential,' 'should,' 'will,' or 'would'[14](index=14&type=chunk) - These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from those expressed or implied[14](index=14&type=chunk) - Investors are cautioned not to unduly rely on these statements, and the company does not plan to publicly update or revise them unless required by law[15](index=15&type=chunk)[16](index=16&type=chunk) [PART I](index=4&type=section&id=PART%20I) [Business](index=4&type=section&id=Item%201.%20Business) **AlloVir** develops allogeneic T-cell therapies for viral diseases, with **posoleucel** as its lead candidate - **AlloVir** is a late clinical-stage cell therapy company developing allogeneic **VST** therapies to treat and prevent devastating viral diseases, leveraging a proprietary virus-specific T cell (**VST**) therapy platform[19](index=19&type=chunk) - The lead product candidate, **posoleucel** (**ALVR105**), is a multi-**VST** therapy targeting six viruses (**AdV**, **BKV**, **CMV**, **EBV**, **HHV-6**, **JCV**) and is in ongoing pivotal Phase 3 trials for virus-associated hemorrhagic cystitis (**HC**) and adenovirus (**AdV**) infections, and Phase 2 **POC** trials for multi-virus prevention in **HCT** and **BKV** treatment in kidney transplant[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - **posoleucel** has received **PRIME** designation from the **EMA** and two **RMAT** designations from the **FDA**, indicating critical medical need and potential for expedited regulatory review[22](index=22&type=chunk) - The company's pipeline also includes **ALVR106** for respiratory viruses, **ALVR107** for chronic **HBV**, and **ALVR109** for **SARS-CoV-2** (**COVID-19**), with **ALVR109** development demonstrating rapid response to emerging pathogens[25](index=25&type=chunk)[31](index=31&type=chunk) [Overview](index=6&type=section&id=Overview) **AlloVir** develops allogeneic T-cell therapies for viral diseases, with **posoleucel** in advanced trials - **AlloVir** is developing **four** allogeneic, off-the-shelf **VST** therapy candidates targeting **12** different devastating viruses[19](index=19&type=chunk) - **Posoleucel** has been granted **PRIME** designation by the **EMA** and **two RMAT** designations by the **FDA** for the treatment of serious infections caused by its targeted viruses in **HCT** patients[22](index=22&type=chunk) - The company's management team, including **CEO Diana Brainard** and **President/CFO Vikas Sinha**, has extensive experience in the biopharmaceutical industry[27](index=27&type=chunk)[28](index=28&type=chunk) Funding Raised | Funding Type | Amount (Millions) | | :------------- | :---------------- | | Private Financings | **$156.9** | | IPO | **$317.7** | [Our Pipeline](index=8&type=section&id=Our%20Pipeline) **AlloVir's** pipeline includes **four** allogeneic **VST** candidates targeting **12** viruses, with **posoleucel** in Phase 3 - **Posoleucel** (**ALVR105**) targets **six** common viruses (**AdV**, **BKV**, **CMV**, **EBV**, **HHV-6**, **JCV**) and showed a **93% clinical response rate** in a Phase 2 **POC** trial for **HCT** patients with treatment-refractory infections[31](index=31&type=chunk) - **ALVR106** is a multi-**VST** candidate for **four** respiratory viruses (**hMPV**, **influenza**, **PIV**, **RSV**), with a Phase 1/2 **POC** clinical trial initiated at the end of **2021**[31](index=31&type=chunk) - **ALVR107** is designed to target **HBV**-infected cells for chronic **HBV** infections, with preclinical and **IND**-enabling studies to be completed in **2022**[31](index=31&type=chunk) - **ALVR109** targets **SARS-CoV-2** and is available for compassionate use requests, demonstrating the platform's ability to respond to emerging viral pathogens[31](index=31&type=chunk) [Our Strategy](index=9&type=section&id=Our%20Strategy) **AlloVir's** strategy focuses on accelerating **posoleucel**, advancing pipeline, and building a global **VST** company - Accelerate **posoleucel** through pivotal and proof-of-concept trials for **five** indications with no **FDA**- or **EMA**-approved effective treatment options, aiming for **three** ongoing Phase 3 trials in **H1 2022**[33](index=33&type=chunk) - Capitalize on the allogeneic **VST** platform to advance **ALVR106** for respiratory viruses and **ALVR107** to cure chronic **HBV** infections[33](index=33&type=chunk) - Strengthen leadership in **VST** therapies through continuous pipeline expansion, exemplified by the rapid development of **ALVR109** for **COVID-19**[33](index=33&type=chunk) - Leverage proprietary **Cytokin™** and **Cytomatch™** algorithms for efficient donor selection and **HLA** matching to build a global supply chain and manufacturing network, including utilizing **ElevateBio's** expertise[33](index=33&type=chunk) - Build a fully integrated, global **VST** therapy company with bench-to-bedside capabilities, initially targeting high-volume transplant centers globally[33](index=33&type=chunk) [The Immune System and the Role of T Cells](index=10&type=section&id=The%20Immune%20System%20and%20the%20Role%20of%20T%20Cells) T cells are crucial for antiviral immunity; partial **HLA** matching is vital for effective allogeneic **VST** therapies - **CD8+** 'cytotoxic' T cells kill virus-infected cells, while **CD4+** 'helper' T cells produce cytokines for antiviral effects and support **CD8+** T-cell survival[35](index=35&type=chunk) - T cells recognize viruses via T-cell receptors (**TCRs**) that selectively bind to 'foreign' viral peptides displayed by compatible human leukocyte antigen (**HLA**) proteins[36](index=36&type=chunk) - Partial **HLA** matching between allogeneic **VST** therapy and the patient is essential for infused T cells to selectively kill virus-infected cells and minimize **GVHD**[37](index=37&type=chunk) [Transplantation and Immunosuppression](index=10&type=section&id=Transplantation%20and%20Immunosuppression) Immunosuppressed transplant patients face high viral infection risk, leading to morbidity and mortality - In **HCTs**, the conditioning process depletes immune cells, making patients highly vulnerable to life-threatening viral diseases until donor stem cells reconstitute a functional immune system[40](index=40&type=chunk) - Approximately **90%** of allogeneic **HCT** patients experience at least **one** viral infection, and over **60%** experience reactivation of more than **one** virus (**BKV**, **CMV**, **AdV**, **EBV**, **HHV-6**)[41](index=41&type=chunk) - **SOT** patients require lifelong immunosuppressive therapy, making them vulnerable to viral infections for longer durations, leading to worse outcomes like graft failure despite standard care[42](index=42&type=chunk) - Transplant patients represent a segment of a larger immunocompromised population (cancer patients, elderly, young children) who could benefit from allogeneic, off-the-shelf **VST** therapies[43](index=43&type=chunk) [Limitations of Current Therapies for Immunocompromised Patients](index=12&type=section&id=Limitations%20of%20Current%20Therapies%20for%20Immunocompromised%20Patients) Current antivirals for immunocompromised patients are often ineffective, toxic, or unapproved, needing **VST** therapies - There are no **FDA**- or **EMA**-approved antiviral drugs for the majority of viral diseases targeted by **AlloVir's VSTs**, and existing antivirals are often ineffective, toxic, or lead to resistance[44](index=44&type=chunk) - Prophylactic methods like vaccines are limited in immunosuppressed, elderly, and very young patients who cannot mount effective immune responses[44](index=44&type=chunk) - Adoptive transfer of ex vivo expanded **VSTs** has shown promising preliminary disease outcomes and safety data in over **300** allogeneic **HCT** patients, with product candidates generally well-tolerated and associated with clinical benefit[45](index=45&type=chunk) [Our Approach to Allogeneic Off-the-Shelf T-Cell Immunotherapy](index=13&type=section&id=Our%20Approach%20to%20Allogeneic%20Off-the-Shelf%20T-Cell%20Immunotherapy) **AlloVir** restores viral immunity using off-the-shelf **VSTs**, enabling rapid multi- and single-virus therapy development - **AlloVir's VSTs** are generated from a panel of healthy, third-party blood donors, forming a mini-bank that provides **HLA** coverage to over **95%** of targeted patients[48](index=48&type=chunk) - The partial **HLA** match allows infused T cells to recognize and selectively kill virus-infected cells, minimizing **GVHD** risk[47](index=47&type=chunk) - The versatile off-the-shelf **VST** platform enables rapid generation of therapies for a spectrum of viral diseases, including multi-virus (**posoleucel**, **ALVR106**) and single-virus (**ALVR109**, **ALVR107**) indications[49](index=49&type=chunk) [Our Proprietary Allogeneic VST Therapy Process](index=14&type=section&id=Our%20Proprietary%20Allogeneic%20VST%20Therapy%20Process) **AlloVir's VST** process uses **Cytokin™** for donor selection, scalable manufacturing, and **Cytomatch™** for patient matching - The **VST** production process involves **three** steps: virus-specific T-cell profiling and targeted donor selection (**Cytokin™**), rapid and scalable off-the-shelf **VST** manufacturing, and customized **VST**-patient matching (**Cytomatch™**)[53](index=53&type=chunk) - Key advantages include a rationally designed cell bank covering >**95%** of patients, minimized antigen competition, high yields (**hundreds of doses per run**), and long-term stability for on-demand availability[55](index=55&type=chunk) - Manufacturing is conducted at external **cGMP CDMOs** and **ElevateBio BaseCamp**, leveraging **ElevateBio's** cell therapy expertise[63](index=63&type=chunk) [Step 1: Profiling T-Cell Responses to Viruses and Donor Selection](index=15&type=section&id=Step%201:%20Profiling%20T-Cell%20Responses%20to%20Viruses%20and%20Donor%20Selection) This step identifies viral antigens and uses **Cytokin™** to select optimal donors for a **VST** mini-bank with >**95% HLA** coverage - The process identifies immunodominant viral antigens by evaluating the number of donors whose T cells recognize each antigen and the strength of the T-cell response[56](index=56&type=chunk) - The **Cytokin™** algorithm selects optimal donors to generate **VSTs**, creating a mini-bank that provides >**95% HLA** coverage for targeted patient populations[57](index=57&type=chunk) - At least **two** viral antigens are targeted for each virus to generate polyclonal **VSTs**, minimizing the risk of virus immune escape[56](index=56&type=chunk) [Step 2: Rapid and Scalable Off-the-Shelf VST Manufacturing](index=15&type=section&id=Step%202:%20Rapid%20and%20Scalable%20Off-the-Shelf%20VST%20Manufacturing) Polyclonal **VSTs** are expanded from donor **PBMCs**, yielding **hundreds of cryopreserved doses** for immediate patient access - Polyclonal **VSTs** are selectively activated and expanded from donor **PBMCs** using viral antigens over approximately **two weeks**[60](index=60&type=chunk) - The single-step process minimizes antigen competition, preserving polyclonality (**CD4+** helper and **CD8+** cytotoxic T cells) that recognize multiple viral peptides[61](index=61&type=chunk) - Each manufacturing run from an individual donor yields **hundreds of cryopreserved product candidate doses**, enabling immediate patient access[60](index=60&type=chunk) - Manufacturing for clinical trials is performed at external **cGMP CDMOs** and **ElevateBio BaseCamp**, leveraging specialized cell therapy expertise[63](index=63&type=chunk) [Step 3: Cytomatch™ and Immediate Patient Access to Our Allogeneic VST Therapy](index=16&type=section&id=Step%203:%20Cytomatch%E2%84%A2%20and%20Immediate%20Patient%20Access%20to%20Our%20Allogeneic%20VST%20Therapy) **Cytomatch™** selects optimal, partially **HLA**-matched **VSTs** for immediate shipment and infusion, ensuring quick patient access - The **Cytomatch™** algorithm guides the selection of the **VST** line for patient treatment based on **HLA** matching, with a minimum threshold of **two HLA allele matches**[64](index=64&type=chunk) - Selected **VST** therapies are rapidly identified, packed, and shipped as cryopreserved, off-the-shelf products, allowing for immediate thawing and infusion without additional manipulation[64](index=64&type=chunk) [Our Highly Innovative Allogeneic VST Therapy Candidates](index=16&type=section&id=Our%20Highly%20Innovative%20Allogeneic%20VST%20Therapy%20Candidates) **AlloVir's** pipeline includes **posoleucel** (Phase 3), **ALVR106** (respiratory), and **ALVR107** (**HBV**) for unmet needs - **Posoleucel** is a multi-**VST** therapy targeting **AdV**, **BKV**, **CMV**, **EBV**, **HHV-6**, and **JCV**, with the potential to transform treatment for immunocompromised individuals[66](index=66&type=chunk) - **Posoleucel** is being developed for treatment of virus-associated **HC** (**BKV** and/or **AdV**), treatment of **AdV** infections, prevention of multi-virus infections in **HCT** patients, and treatment of **BKV** infections in kidney transplant patients[67](index=67&type=chunk) - In the Phase 2 **CHARMS** trial, **posoleucel** demonstrated a **93% overall response rate** in **58** allogeneic **HCT** patients with treatment-refractory infections by **six weeks** post-infusion[80](index=80&type=chunk) - **ALVR106** is an off-the-shelf multi-**VST** therapy for **four** respiratory viruses (**RSV**, **influenza**, **PIV**, **hMPV**), with a Phase 1/2 **POC** clinical trial initiated at the end of **2021**[139](index=139&type=chunk) - **ALVR107** is an allogeneic, off-the-shelf **VST** therapy designed to cure chronic **HBV** infections, with preclinical and **IND**-enabling studies to be completed in **2022**[171](index=171&type=chunk)[172](index=172&type=chunk) [Posoleucel](index=16&type=section&id=Posoleucel) **Posoleucel**, **AlloVir's** lead multi-**VST**, targets **six** viruses in **HCT/SOT** patients, with **PRIME** and **RMAT** designations - **Posoleucel** is a multi-**VST** therapy targeting **AdV**, **BKV**, **CMV**, **EBV**, **HHV-6**, and **JCV**, with the potential to transform treatment for immunocompromised individuals[66](index=66&type=chunk) - It has received **PRIME** designation from the **EMA** and **two RMAT** designations from the **FDA** for serious infections and **HC/AdV** treatment in **HCT** patients, respectively[68](index=68&type=chunk) - In the Phase 2 **CHARMS** trial, **posoleucel** demonstrated a **93% overall response rate** in **58** allogeneic **HCT** patients with treatment-refractory infections by **six weeks** post-infusion[80](index=80&type=chunk) - The company projects an addressable transplant patient population for **posoleucel** of approximately **148,000 HCT and SOT patients annually by 2025**[119](index=119&type=chunk) [Posoleucel for Allogeneic HCT Patients](index=17&type=section&id=Posoleucel%20for%20Allogeneic%20HCT%20Patients) **Posoleucel** provides bridging immunity in immunocompromised **HCT** patients against life-threatening viral diseases - **Posoleucel** is designed to provide bridging immunity in **HCT** patients, restoring immune function between myeloablation and immune system reconstitution[69](index=69&type=chunk)[71](index=71&type=chunk) - Approximately **90%** of allogeneic **HCT** patients experience at least **one** viral reactivation, and over **60%** experience multiple viral reactivations, leading to significant morbidity and mortality[71](index=71&type=chunk) - There are currently no **FDA**- or **EMA**-approved therapies for most viral infections in the post-transplant setting, and existing antiviral therapies are associated with significant toxicity[71](index=71&type=chunk) [Posoleucel Phase 2 POC CHARMS Clinical Results in Allogeneic HCT Patients](index=18&type=section&id=Posoleucel%20Phase%202%20POC%20CHARMS%20Clinical%20Results%20in%20Allogeneic%20HCT%20Patients) The **CHARMS** trial showed **posoleucel** achieved a **93% overall clinical response rate** in **HCT** patients - The **CHARMS** trial evaluated **posoleucel** in **58** allogeneic **HCT** patients with treatment-refractory infections from **one or more of six target viruses**[72](index=72&type=chunk)[74](index=74&type=chunk) - By **six weeks** post-infusion, **93%** of patients achieved a clinical response (**17 CR**, **37 PR**)[80](index=80&type=chunk) - **Posoleucel** was generally well-tolerated, with no treatment-related Grade **4/5 SAEs** or de novo **GVHD**, and allogeneic **VSTs** persisted in **11 of 16 tested patients** for up to **12 weeks**[82](index=82&type=chunk)[81](index=81&type=chunk) CHARMS Clinical Trial Patient Demographics (N=59) | Characteristic | Number (%) | | :------------- | :--------- | | **Sex** | | | Male | **30 (50.8)** | | Female | **29 (49.2)** | | **Age** | | | Pediatric | **19 (32.2)** | | Adult | **40 (67.8)** | | **Race** | | | Black/African American | **3 (5.1)** | | White | **53 (89.8)** | | Asian | **3 (5.1)** | | **Viral Infections** | | | **BKV** | **18 (30.5)** | | **CMV** | **17 (28.8)** | | **AdV** | **8 (13.6)** | | **HHV-6** | **3 (5.1)** | | **EBV** | **1 (1.7)** | | **JCV** | **1 (1.7)** | | Multi-virus infections | **10 (17.0)** | | **Infusions per patient** | | | **1** | **44 (74.6)** | | **2** | **11 (18.6)** | | **3** | **4 (6.8)** | [Treatment of Virus-Associated Hemorrhagic Cystitis](index=22&type=section&id=Treatment%20of%20Virus-Associated%20Hemorrhagic%20Cystitis) Virus-associated **HC**, caused by **BKV** in **HCT** patients, lacks approved therapies; **posoleucel** showed **100% response** - **HC** is a primary clinical manifestation of **BKV** following **HCT**, affecting **8-25%** of pediatric and **7-54%** of adult patients, with **BKV** causing up to **90%** of cases[86](index=86&type=chunk) - **HC** is associated with increased mortality (**44%** in high **BK** viremia vs. **19%** in low) and significant kidney damage, with **18%** of high **BK** viremia patients requiring dialysis[89](index=89&type=chunk) - There are no **FDA**- or **EMA**-approved therapies for virus-associated **HC**; standard care is supportive, and off-label cidofovir has kidney toxicity[90](index=90&type=chunk) - In the Phase 2 **CHARMS** trial, **posoleucel** achieved a **100% overall response rate** for **BKV** across **25** evaluable patients, with rapid improvement in **HC** severity and **75%** resolution by **week 6**[91](index=91&type=chunk)[92](index=92&type=chunk)[94](index=94&type=chunk) [Clinical Development Plan (HC)](index=24&type=section&id=Clinical%20Development%20Plan%20(HC)) A Phase 3 trial for virus-associated **HC** is ongoing, with enrollment expected to complete in **H1 2023** - A Phase 3, multicenter, randomized, double-blind, placebo-controlled trial for virus-associated **HC** is ongoing, with primary endpoint being time to resolution of macroscopic hematuria[95](index=95&type=chunk) - Secondary endpoints include reduction in viral load for **AdV**, **CMV**, **EBV**, **HHV-6**, and **JCV**[97](index=97&type=chunk) - Enrollment for the Phase 3 **HC** trial is expected to complete in the **first half of 2023**[97](index=97&type=chunk) - **Posoleucel** has received **RMAT** designation from the **FDA** for **HC** caused by **BKV**, which is expected to increase **FDA** interactions and potentially expedite regulatory review[97](index=97&type=chunk) [Treatment of Adenovirus Infections](index=25&type=section&id=Treatment%20of%20Adenovirus%20Infections) **AdV** infections cause severe morbidity and mortality in **HCT** patients; **posoleucel** showed **75% response** - **AdV** viremia occurs in **32%** of pediatric and **6%** of adult allogeneic **HCT** patients, causing severe multi-organ disease and high mortality[98](index=98&type=chunk) - Off-label cidofovir is the current standard of care but has limited efficacy and significant kidney toxicity[98](index=98&type=chunk) - In the **CHARMS** trial, **posoleucel** achieved a **75% overall response rate** for **AdV** alone and **67%** for **AdV** co-infected patients by **six weeks** post-infusion[99](index=99&type=chunk) [Clinical Development Plan (AdV)](index=25&type=section&id=Clinical%20Development%20Plan%20(AdV)) A Phase 3 trial for **AdV** infection in **HCT** patients was initiated in late **2021** to assess **posoleucel's** efficacy - A Phase 3, multicenter, randomized, double-blind, placebo-controlled trial for **AdV** infection in pediatric and adult allogeneic **HCT** patients was initiated at the end of **2021**[100](index=100&type=chunk) - The trial design includes an optional **24-week** cross-over period for patients experiencing disease progression after **Week 4**[102](index=102&type=chunk) [Prevention of Multi-Virus Infection and Associated Disease in HCT Patients](index=26&type=section&id=Prevention%20of%20Multi-Virus%20Infection%20and%20Associated%20Disease%20in%20HCT%20Patients) Multi-virus infections are common in **HCT** patients; **posoleucel** showed infection reduction in Phase 2, Phase 3 planned - Approximately **90%** of allogeneic **HCT** patients experience at least **one** infection, and over **60%** experience **two or more** of the **five** target viruses (**BKV**, **CMV**, **AdV**, **EBV**, **HHV-6**) within **100 days** post-**HCT**[103](index=103&type=chunk) - There are currently no **FDA**- or **EMA**-approved antiviral therapies for the prevention of multiple viral diseases or infections in transplant patients with **one single therapy**[103](index=103&type=chunk) - Preliminary data from an open-label Phase 2 multi-virus prevention study showed only **three** clinically significant infections through **Week 14** among **23** high-risk **HCT** patients, with no end-organ viral disease[104](index=104&type=chunk) - A Phase 3 registrational study for multi-virus prevention in high-risk allogeneic **HCT** patients is expected to initiate in the **first half of 2022**, following positive preliminary Phase 2 results[106](index=106&type=chunk) [Treatment of BKV Infections in Kidney Transplant Patients](index=27&type=section&id=Treatment%20of%20BKV%20Infections%20in%20Kidney%20Transplant%20Patients) **BKV** reactivation in kidney transplant patients leads to allograft injury; Phase 2 **POC** trial for **posoleucel** initiated - **BKV** reactivation in **KT** patients, caused by T-cell immune deficiencies from immunosuppression, leads to interstitial nephritis and progressive allograft injury[108](index=108&type=chunk) - Up to **20%** of **KT** patients develop **BK** viremia, and up to **50%** of those progress to **BK** nephropathy, resulting in decreased graft function and survival[108](index=108&type=chunk) - There are no **FDA**- or **EMA**-approved therapies for **BKV** in **KT** patients; treatment involves reducing immunosuppression, which increases the risk of allograft rejection[108](index=108&type=chunk) - A Phase 2 multicenter, randomized, double-blind, placebo-controlled **POC** trial for **posoleucel** in **KT** patients with **BK** viremia has been initiated, with preliminary data expected in the **first half of 2022**[110](index=110&type=chunk) [Prevention of Multi-Virus Infection and Associated Disease in SOT Patients](index=28&type=section&id=Prevention%20of%20Multi-Virus%20Infection%20and%20Associated%20Disease%20in%20SOT%20Patients) Preventing viral disease in **SOT** patients is crucial; **HCT** and kidney transplant data will inform **posoleucel POC** study - Prevention of viral disease is important for graft survival and overall health in **SOT** patients[111](index=111&type=chunk) - High and intermediate risk **SOT** patients (nearly **90%** of all **SOTs**) are recommended for **CMV** prophylaxis, but no single **FDA**- or **EMA**-approved antiviral therapy exists for multi-virus prevention in **SOT** patients[111](index=111&type=chunk) - Data from ongoing multi-virus prevention in **HCT** and **BKV** in kidney transplant studies will inform the potential for a **POC** study of **posoleucel** for multi-virus prevention in **SOT** patients[111](index=111&type=chunk) [Other Viruses Targeted by Posoleucel](index=28&type=section&id=Other%20Viruses%20Targeted%20by%20Posoleucel) **Posoleucel** targets **EBV**, **HHV-6**, and **JCV**, causing severe complications in immunocompromised patients - **EBV** reactivation can lead to life-threatening post-transplantation lymphoproliferative disorder (**PTLD**) in immunocompromised patients, with limited efficacy from off-label rituximab[112](index=112&type=chunk)[113](index=113&type=chunk) - **HHV-6** reactivation is the most frequent cause of encephalitis after **HCT**, with no **FDA**-approved treatments and off-label antivirals limited by toxicity[116](index=116&type=chunk) - **JCV** causes Progressive Multifocal Leukoencephalopathy (**PML**), with high mortality rates in **HCT** patients, and no **FDA**- or **EMA**-approved therapies[127](index=127&type=chunk) - In the **CHARMS** trial, **posoleucel** achieved a **100% overall response rate** for **EBV** and a **50-100% response rate** for **HHV-6** infections[113](index=113&type=chunk)[117](index=117&type=chunk) [Posoleucel Commercial Opportunity](index=29&type=section&id=Posoleucel%20Commercial%20Opportunity) **Posoleucel** targets a large global market for viral diseases in transplant patients, with **148,000 addressable patients** - **Posoleucel** targets a large global market opportunity to treat and prevent devastating viral diseases, with an estimated addressable transplant patient population of approximately **148,000 HCT and SOT patients annually by 2025**[118](index=118&type=chunk)[119](index=119&type=chunk) Projected Annual Addressable Patient Population for Posoleucel (2025) | Patient Population | Estimated Annual Patients (2025) | | :----------------- | :------------------------------- | | Allogeneic **HCT** (total) | **~42,000** | | **HCT** with virus-associated **HC** | **6,300** | | **HCT** with **AdV** viremia | **4,500** | | **HCT** for multi-virus prevention | **~38,000** | | **SOT** (total) | **~126,000** | | **KT** with **BK** viremia | >**14,000** | | **SOT** for multi-virus prevention | **~110,000** | - Virus-associated **HC** and multi-virus infections in **HCT** patients incur significantly greater healthcare reimbursement costs, with adjusted mean costs up to **$843,000** for patients with **3+** infections and **GVHD**[132](index=132&type=chunk)[135](index=135&type=chunk) - **Posoleucel** can address unmet medical needs by enabling more patients to benefit from curative haploidentical **HCT** procedures, which are the fastest-growing subset of allogeneic **HCTs**[124](index=124&type=chunk) [ALVR106 and ALVR109 VST Therapy for Respiratory Viruses](index=32&type=section&id=ALVR106%20and%20ALVR109%20VST%20Therapy%20for%20Respiratory%20Viruses) **AlloVir** develops **ALVR106** (respiratory viruses) and **ALVR109** (**SARS-CoV-2**) for unmet needs in high-risk patients - **ALVR106** is an allogeneic, off-the-shelf multi-**VST** therapy designed to treat or prevent **four** common respiratory viruses: **RSV**, **influenza**, **PIV**, and **hMPV**[139](index=139&type=chunk) - Preclinical in vitro data for **ALVR106** demonstrates potent and selective antiviral activity against target viruses, without affecting non-virus-infected cells[140](index=140&type=chunk)[142](index=142&type=chunk) - **ALVR109** is a **SARS-CoV-2**-specific T-cell product candidate that showed selective cytolytic activity against **SARS-CoV-2** antigens in preclinical studies and clinical improvement in early data from **four** patients[165](index=165&type=chunk)[166](index=166&type=chunk) - Respiratory viruses cause significant morbidity and mortality in high-risk populations, including **HCT** patients (up to **40%** infection rate, **20-45%** mortality for **LRTI**), **SOT** patients, the elderly, young children, and cancer patients[143](index=143&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk) [ALVR106: VST Therapy for the Treatment of Patients with Respiratory Viruses](index=33&type=section&id=ALVR106:%20VST%20Therapy%20for%20the%20Treatment%20of%20Patients%20with%20Respiratory%20Viruses) **ALVR106**, a multi-**VST** for **RSV**, **influenza**, **PIV**, and **hMPV**, is in Phase 1/2 trials for severe respiratory infections - **ALVR106** is an allogeneic, off-the-shelf **VST** therapy for **RSV**, **influenza**, **PIV**, and **hMPV**, with a Phase 1/2 **POC** clinical trial initiated at the end of **2021**[139](index=139&type=chunk) - Preclinical in vitro data show **ALVR106** has potent and selective antiviral activity against target viruses, leaving non-virus-infected cells intact[140](index=140&type=chunk)[142](index=142&type=chunk) - Respiratory tract infections from these viruses affect up to **40%** of allogeneic **HCT** patients, with progression to lower respiratory tract infections having **20-45%** mortality rates[143](index=143&type=chunk) - There are currently no **FDA**- or **EMA**-approved vaccines or treatments for **PIV** and **hMPV**, and existing options for **RSV** and **influenza** have limitations or resistance issues[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk) [ALVR109: VST Therapy for the Treatment of Patients with COVID-19](index=37&type=section&id=ALVR109:%20VST%20Therapy%20for%20the%20Treatment%20of%20Patients%20with%20COVID-19) **ALVR109**, a **SARS-CoV-2 VST** therapy, showed selective activity and clinical improvement, available for compassionate use - **ALVR109** is a **SARS-CoV-2**-specific T-cell product candidate, comprised of polyclonal **VSTs** targeting immunogenic viral antigens[165](index=165&type=chunk) - Preclinical in vitro data showed **ALVR109** demonstrated selective cytolytic activity against **SARS-CoV-2** antigens and provided antiviral activity against multiple variant strains[165](index=165&type=chunk) - Early clinical data from **four** transplant and non-transplant patients showed **ALVR109** was well-tolerated and associated with clinical improvement, with cells expanding and persisting post-infusion[166](index=166&type=chunk) - The **POC** trial for **ALVR109** was closed in **January 2022** due to the efficacy of available vaccines and therapies for the broad population, but it remains available for compassionate use for immunocompromised patients[168](index=168&type=chunk) [ALVR107: VST Therapy for the Treatment of Hepatitis B Virus](index=38&type=section&id=ALVR107:%20VST%20Therapy%20for%20the%20Treatment%20of%20Hepatitis%20B%20Virus) **ALVR107** is an allogeneic **VST** therapy designed to cure chronic **HBV** infections, affecting **hundreds of millions** - Chronic **HBV** infection affects approximately **260 million people globally**, leading to significant morbidity and mortality, including liver cirrhosis and cancer[169](index=169&type=chunk) - Current treatments for chronic **HBV** are life-long antiviral therapies that suppress replication but offer no cure, highlighting a critical unmet medical need[169](index=169&type=chunk) - **ALVR107** is an allogeneic, off-the-shelf **VST** therapy designed to cure **HBV**, leveraging the established proof-of-concept for adoptive T-cell therapy in achieving functional **HBV** cure[170](index=170&type=chunk)[171](index=171&type=chunk) - Preclinical and **IND**-enabling studies for **ALVR107** are scheduled for completion in **2022** to support its advancement into a proof-of-concept study[172](index=172&type=chunk) [Competition](index=39&type=section&id=Competition) **AlloVir** faces intense competition from pharmaceutical, biotech, and academic institutions with greater resources - **AlloVir** faces substantial competition from pharmaceutical and biotechnology companies, academic institutions, and research institutions, many with significantly greater financial, technical, and human resources[174](index=174&type=chunk)[175](index=175&type=chunk) - If approved, **AlloVir's VST** therapies will compete with existing antivirals and new therapies, including cell therapies, for the treatment and prevention of viral diseases[176](index=176&type=chunk) - There are currently no **FDA**- or **EMA**-approved cell therapies for treating or preventing the viral diseases **AlloVir** targets, but **Atara Biotherapeutics** is in Phase 3 for **EBV+PTLD**[177](index=177&type=chunk) - Existing antiviral therapies for some target indications (e.g., valganciclovir for **CMV**, cidofovir off-label for **BKV/AdV**) have limitations due to toxicity, limited efficacy, or drug resistance[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) [Intellectual Property](index=40&type=section&id=Intellectual%20Property) **AlloVir's IP**, licensed from **BCM**, covers **VST** therapies and manufacturing, with patents expiring **2030-2042** - **AlloVir's** patent portfolio includes **ten** patent families exclusively in-licensed from **Baylor College of Medicine** (**BCM**), covering **VST** cell therapies, product candidates (**posoleucel**, **ALVR106**, **ALVR109**, **ALVR107**, **ALVR108**), and manufacturing processes[182](index=182&type=chunk) - Issued patents are expected to expire between **2030** and **2033**, while patents from pending applications are expected to expire between **2030** and **2042**, absent extensions[182](index=182&type=chunk) - The portfolio includes **two** patent families for **posoleucel** (multi-**VST** compositions and methods), expected to expire in **2030** and **2033**[183](index=183&type=chunk) - The company also relies on trade secrets and confidentiality agreements with employees, consultants, and partners to protect proprietary information not amenable to patent protection[190](index=190&type=chunk) [Sponsored Research, Collaboration and License Agreements](index=41&type=section&id=Sponsored%20Research,%20Collaboration%20and%20License%20Agreements) **AlloVir** has key exclusive license and research collaboration agreements with **BCM**, involving milestone payments and royalties - **AlloVir** holds an exclusive worldwide license from **BCM** for Subject Technology and patent rights in the field of viral infection (**A&R License Agreement**), with rights to sublicense[191](index=191&type=chunk) - The **A&R License Agreement** requires **AlloVir** to pay **BCM** annual license maintenance fees, milestone payments (potentially exceeding **$40.0 million**), and tiered royalties (less than **1%** to low single-digits) on net sales[194](index=194&type=chunk)[196](index=196&type=chunk) - A **Second License Agreement** with **BCM** grants exclusive worldwide rights outside the viral infection field, with potential milestone payments exceeding **$30.0 million** and similar tiered royalties[198](index=198&type=chunk)[201](index=201&type=chunk) - A Research Collaboration Agreement with **BCM** involves payments of approximately **$2.0 million per year** for **three years** for research activities[205](index=205&type=chunk) [Manufacturing](index=43&type=section&id=Manufacturing) **AlloVir's VST** manufacturing platform supports rapid, scalable production using proprietary algorithms and external **CDMOs** - **AlloVir's VST** manufacturing platform enables rapid, robust, and scalable generation of single- and multi-virus specific cell therapeutic candidates[206](index=206&type=chunk) - Proprietary algorithms, **Cytokin™** (donor selection) and **Cytomatch™** (patient matching), are leveraged to build an efficient global supply chain[206](index=206&type=chunk) - The company currently manufactures **posoleucel** and **ALVR106 VSTs** at external **cGMP CDMOs** and utilizes **ElevateBio BaseCamp** for clinical trials and commercialization[207](index=207&type=chunk) [Government Regulation](index=43&type=section&id=Government%20Regulation) **AlloVir's** biological products are subject to extensive U.S. and foreign regulations from research to commercialization - Biological products in the U.S. are regulated under the **FD&C Act** and **PHS Act**, covering research, development, clinical trials, manufacturing, quality control, safety, efficacy, labeling, marketing, and post-approval monitoring[208](index=208&type=chunk) - The U.S. development process includes preclinical tests (**GLPs**), **IND** submission, **IRB** approval, human clinical trials (**GCPs**), **BLA** submission, **FDA** inspection of manufacturing facilities (**cGMPs**, **CGTPs**), and potential advisory committee review[209](index=209&type=chunk) - Expedited programs like **Fast Track**, **Breakthrough Therapy**, **Accelerated Approval**, and **RMAT** designation are available for serious or life-threatening conditions, potentially expediting development and review[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk)[239](index=239&type=chunk) - In the **EEA**, medicinal products, including **ATMPs** like **AlloVir's**, are subject to **EMA's** centralized procedure, with scientific evaluation by the **CAT** and **CHMP**, and potential **PRIME** designation for unmet medical needs[259](index=259&type=chunk)[260](index=260&type=chunk)[271](index=271&type=chunk) - Post-approval, products face rigorous ongoing requirements including **cGMP**, adverse event reporting, safety surveillance, and advertising/promotion compliance, with potential for significant penalties for non-compliance[240](index=240&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk)[274](index=274&type=chunk) [U.S. Biological Products Development Process](index=43&type=section&id=U.S.%20Biological%20Products%20Development%20Process) U.S. biological product development involves preclinical testing, **IND** submission, clinical trials, and **cGMP/CGTP** manufacturing - The process begins with preclinical laboratory tests and animal studies conducted according to **GLPs**[209](index=209&type=chunk)[211](index=211&type=chunk) - An **Investigational New Drug** (**IND**) application must be submitted to the **FDA** and become effective before human clinical trials can commence[209](index=209&type=chunk)[212](index=212&type=chunk) - Clinical trials are typically conducted in **three phases** (Phase 1 for safety, Phase 2 for safety/efficacy/dosage, Phase 3 for expanded efficacy/safety) under **Good Clinical Practices** (**GCPs**) and require **IRB** approval[216](index=216&type=chunk)[217](index=217&type=chunk) - Concurrent with clinical trials, manufacturing processes must be finalized to produce commercial quantities in accordance with **cGMP** and **CGTP** requirements, ensuring product quality and stability[220](index=220&type=chunk) [U.S. Review and Approval Processes](index=45&type=section&id=U.S.%20Review%20and%20Approval%20Processes) U.S. review involves **BLA** submission, **FDA** assessment of safety, purity, potency, and **cGMP** compliance - A **Biologics License Application** (**BLA**) is submitted to the **FDA**, including results from product development, nonclinical studies, clinical trials, manufacturing information, and proposed labeling[221](index=221&type=chunk) - The **FDA** reviews the **BLA** for safety, purity, potency, and **cGMP** compliance of manufacturing facilities, potentially involving advisory committees[223](index=223&type=chunk)[225](index=225&type=chunk) - Approval may be limited to specific indications or dosages, or require post-marketing clinical trials (Phase 4) or a **Risk Evaluation and Mitigation Strategy** (**REMS**)[219](index=219&type=chunk)[223](index=223&type=chunk)[228](index=228&type=chunk) - Failure to satisfy regulatory criteria can lead to delays, refusal of approval, or withdrawal of approval post-market[227](index=227&type=chunk)[228](index=228&type=chunk) [Orphan Drug Designation](index=46&type=section&id=Orphan%20Drug%20Designation) Orphan Drug Designation provides market exclusivity, tax credits, and fee waivers, but does not guarantee approval - Orphan designation is for drugs treating rare diseases (fewer than **200,000** individuals in the U.S.). **Posoleucel** has **ODD** for virus-associated **HC**[229](index=229&type=chunk) - Benefits include **seven years** of market exclusivity (if first approved for the designated indication), tax credits for research, and waiver of **BLA** application user fees[230](index=230&type=chunk)[232](index=232&type=chunk) - **ODD** does not shorten development or regulatory review time, nor does it increase the likelihood of approval[229](index=229&type=chunk) - Exclusivity can be lost if the designation request was materially defective, if a second applicant demonstrates clinical superiority, or if the manufacturer cannot assure sufficient quantities[230](index=230&type=chunk)[232](index=232&type=chunk) [Expedited Development and Review Programs](index=47&type=section&id=Expedited%20Development%20and%20Review%20Programs) **FDA** offers expedited programs for serious conditions, without altering approval standards - **FDA** programs (**Fast Track**, **Breakthrough Therapy**, **Accelerated Approval**, **Priority Review**) aim to expedite development and review for serious or life-threatening diseases with unmet medical needs[233](index=233&type=chunk) - **Fast Track** and **Breakthrough Therapy** designations offer benefits like rolling review and increased **FDA** interaction[233](index=233&type=chunk)[234](index=234&type=chunk) - **Accelerated Approval** allows approval based on surrogate or intermediate clinical endpoints, with required post-marketing trials to verify clinical benefit[236](index=236&type=chunk) - **Priority Review** aims for a **six-month** review period (vs. **ten months** standard) but does not change approval standards[235](index=235&type=chunk) [RMAT Designation](index=47&type=section&id=RMAT%20Designation) **RMAT** designation facilitates efficient development and expedited review for cell therapies treating serious conditions - **RMAT** designation is for cell therapies intended to treat serious or life-threatening conditions, with preliminary clinical evidence of addressing unmet medical needs[237](index=237&type=chunk)[239](index=239&type=chunk) - **Posoleucel** has received **two RMAT** designations from the **FDA**[22](index=22&type=chunk) - Benefits include early **FDA** interactions, potential for priority review or accelerated approval based on surrogate/intermediate endpoints, and flexible post-approval requirements (e.g., real-world evidence)[239](index=239&type=chunk) - **RMAT** designation does not change approval standards but may expedite the development or approval process[239](index=239&type=chunk) [Post-approval Requirements](index=48&type=section&id=Post-approval%20Requirements) Post-approval, biological products face rigorous **FDA** regulation, including **cGMP**, adverse event reporting, and marketing rules - Post-approval regulation includes **cGMP** requirements, record-keeping, adverse event reporting, periodic reporting, product sampling and distribution, and advertising/promotion compliance[240](index=240&type=chunk) - Manufacturers must comply with **cGMP** regulations, including quality control, quality assurance, and documentation, and are subject to periodic unannounced **FDA** inspections[240](index=240&type=chunk)[243](index=243&type=chunk) - Failure to comply can result in severe sanctions, such as refusal to approve pending applications, withdrawal of approval, clinical holds, warning letters, product recalls, fines, and criminal penalties[242](index=242&type=chunk) - Changes to manufacturing processes or facilities, or new indications, require further **FDA** review and approval[243](index=243&type=chunk) [Marketing Exclusivity](index=49&type=section&id=Marketing%20Exclusivity) Marketing exclusivity includes patent term extension and **12 years of data exclusivity** for biologics - U.S. patents may be eligible for up to **five years** of patent term extension under the **Hatch-Waxman Amendments**, compensating for time lost during development and **FDA** review, not exceeding **14 years** post-approval[245](index=245&type=chunk) - The **BPCIA** established an abbreviated approval pathway for biosimilar products and grants **12 years of data exclusivity** to **FDA**-licensed reference biological products[246](index=246&type=chunk)[247](index=247&type=chunk) - The **BPCIA** is complex and its ultimate impact, implementation, and potential for shortening the **12-year** exclusivity period are subject to significant uncertainty[248](index=248&type=chunk) - Pediatric market exclusivity, if granted based on voluntary pediatric studies, adds **six months** to existing exclusivity periods[248](index=248&type=chunk) [Additional Regulation](index=49&type=section&id=Additional%20Regulation) **AlloVir** is subject to environmental and hazardous substance laws; non-compliance risks liability and fines - The company is subject to state and federal environmental protection and hazardous substance laws, including **OSHA**, **RCRA**, and **TSCA**, which govern the use, handling, and disposal of hazardous materials and wastes[249](index=249&type=chunk) - Non-compliance with these laws could result in liability for damages and governmental fines[249](index=249&type=chunk) - The company believes it is in material compliance with applicable environmental laws and that continued compliance will not have a material adverse effect on its business[249](index=249&type=chunk) [U.S. Foreign Corrupt Practices Act, U.K. Bribery Act and Other Laws](index=49&type=section&id=U.S.%20Foreign%20Corrupt%20Practices%20Act,%20U.K.%20Bribery%20Act%20and%20Other%20Laws) **AlloVir's** international operations are subject to anti-corruption and trade control laws, risking penalties - The U.S. **Foreign Corrupt Practices Act** (**FCPA**) prohibits payments or offers of value to foreign government officials to obtain or retain business or secure improper advantages[250](index=250&type=chunk) - The U.K. **Bribery Act 2010** imposes similar prohibitions and can hold the company liable for failing to prevent bribery by associated persons[251](index=251&type=chunk) - Operations are also subject to other international trade control laws, including export control regulations, economic sanctions, and anti-money laundering laws[252](index=252&type=chunk) - Failure to comply with these anti-corruption and trade control laws could result in criminal and civil penalties, disgorgement, and other sanctions[252](index=252&type=chunk) [Government Regulation Outside of the United States](index=50&type=section&id=Government%20Regulation%20Outside%20of%20the%20United%20States) Outside the U.S., **AlloVir** faces diverse regulations for clinical trials, licensing, pricing, and reimbursement - Foreign jurisdictions have varying requirements for clinical trials, product licensing, pricing, and reimbursement, all conducted under **GCP** and **Declaration of Helsinki** ethical principles[253](index=253&type=chunk) - In the **EEA**, **ATMPs** (including somatic cell therapy products) are subject to extensive pre- and post-market regulation, requiring a **Marketing Authorization Application** (**MAA**) via the **EMA's** centralized procedure[259](index=259&type=chunk)[260](index=260&type=chunk) - The new **EU Clinical Trials Regulation** (**EU**) No **536/2014**, expected to be fully functional in **December 2021**, aims to simplify and streamline clinical trial approvals[256](index=256&type=chunk) - **EEA** market exclusivity includes **eight years** of data exclusivity and an additional **two years** of market exclusivity for innovative medicinal products, extendable to **eleven years** for new therapeutic indications with significant clinical benefit[263](index=263&type=chunk) - Orphan designation in the **EEA** provides **ten years** of market exclusivity for 'similar medicinal products' for the same indication, with potential for a **two-year** extension for pediatric studies[264](index=264&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) - The **PRIME** scheme encourages development in unmet medical needs, offering early regulatory dialogue, scientific advice, and accelerated **MAA** assessment[271](index=271&type=chunk) - **Brexit** has created uncertainty regarding the UK's regulatory framework, which may diverge from **EU** legislation, impacting product approval and regulatory requirements[275](index=275&type=chunk) [Coverage and Reimbursement](index=53&type=section&id=Coverage%20and%20Reimbursement) Commercial success depends on adequate coverage and reimbursement from third-party payors, a costly and uncertain process - Sales of **AlloVir's** products depend on coverage and reimbursement from third-party payors, including government health programs (**Medicare**, **Medicaid**) and commercial insurers[276](index=276&type=chunk) - The U.S. lacks a uniform coverage and reimbursement policy, and payors increasingly challenge prices, medical necessity, and cost-effectiveness, imposing controls to manage costs[276](index=276&type=chunk) - Obtaining coverage and adequate reimbursement is a time-consuming and costly process, requiring scientific and clinical support, with no assurance of success[276](index=276&type=chunk) - Factors influencing reimbursement decisions include whether the product is a covered benefit, safe, effective, medically necessary, appropriate for the patient, and cost-effective[279](index=279&type=chunk) - Even if covered, approved reimbursement amounts may not be high enough to ensure a sufficient return on investment, and prices in the **EU** tend to be significantly lower than in the U.S[278](index=278&type=chunk)[279](index=279&type=chunk) [Other Healthcare Laws and Compliance Requirements](index=55&type=section&id=Other%20Healthcare%20Laws%20and%20Compliance%20Requirements) **AlloVir** is subject to federal and state healthcare laws like **Anti-Kickback** and **False Claims Acts**, risking penalties - Operations are subject to federal **Anti-Kickback Statute**, prohibiting remuneration to induce referrals or purchases under federal healthcare programs[282](index=282&type=chunk) - Federal civil and criminal false claims laws, including the **False Claims Act**, prohibit presenting false or fraudulent claims for payment to federal healthcare programs[282](index=282&type=chunk) - **HIPAA** imposes privacy, security, and breach reporting obligations for individually identifiable health information on covered entities and business associates[282](index=282&type=chunk) - The **Physician Payments Sunshine Act** requires annual reporting of payments or transfers of value to physicians and teaching hospitals[282](index=282&type=chunk) - Non-compliance with these laws can result in administrative, civil, or criminal penalties, exclusion from federal healthcare programs, and reputational harm[291](index=291&type=chunk) [Data Privacy and Security Laws](index=57&type=section&id=Data%20Privacy%20and%20Security%20Laws) **AlloVir** is subject to U.S. and global data privacy laws (**HIPAA**, **GDPR**), imposing strict data handling requirements - The company is subject to U.S. data privacy and security laws, including **HIPAA** (privacy, security, breach reporting for health information) and state laws like the **CCPA** and **CPRA** (new individual privacy rights, increased obligations for personal data)[293](index=293&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) - Globally, the **GDPR** and UK **GDPR** impose numerous requirements on processing personal data, including health data, consent, information provision, security safeguards, breach notifications, and strict rules on cross-border data transfers[297](index=297&type=chunk) - Non-compliance with **GDPR/UK GDPR** can result in significant monetary penalties (up to **€20 million** or **4%** of annual global revenues; **£17.5 million** or **4%** of worldwide revenue, whichever is higher)[297](index=297&type=chunk) - The evolving regulatory framework, varying interpretations, and new proposed laws increase compliance costs, potential liability, and risk of fines, penalties, and litigation[298](index=298&type=chunk)[299](index=299&type=chunk) [Healthcare Reform](index=59&type=section&id=Healthcare%20Reform) U.S. healthcare reforms and proposals aim to control drug costs, impacting pricing and reimbursement - The **Affordable Care Act** (**ACA**) and subsequent legislation have significantly changed healthcare financing, impacting **Medicaid** rebates, imposing fees on branded drugs, and establishing **Medicare Part D** discount programs[300](index=300&type=chunk) - Ongoing judicial, Congressional, and executive challenges to the **ACA** create uncertainty regarding its future impact[301](index=301&type=chunk) - Legislative and regulatory proposals aim to increase transparency in drug pricing, reduce **Medicare** drug costs, and reform reimbursement methodologies, potentially leading to lower prices for prescription drugs[306](index=306&type=chunk)[307](index=307&type=chunk) - State-level legislation is also increasing to control pharmaceutical pricing, including price or patient reimbursement constraints and measures to encourage importation[310](index=310&type=chunk) - These reforms could limit the amounts the U.S. Federal Government will pay for healthcare drugs and services, resulting in reduced demand or additional pricing pressures for **AlloVir's** drug candidates[309](index=309&type=chunk)[310](index=310&type=chunk) [Human Capital](index=61&type=section&id=Human%20Capital) **AlloVir** had **107 employees** (**80 in R&D**) as of Dec 31, 2021, focusing on attracting and retaining talent - As of **December 31, 2021**, **AlloVir** had **107 full-time employees**, including **25** with **Ph.D.** or **M.D.** degrees, with **80 engaged in research and development activities**[311](index=311&type=chunk) - The company's human capital objectives include identifying, recruiting, retaining, incentivizing, and integrating employees, advisors, and consultants[311](index=311&type=chunk) - Equity incentive plans are used to attract, retain, and reward personnel, aiming to increase shareholder value and company success[311](index=311&type=chunk) - The relationship with employees is considered good, and none are represented by labor unions[311](index=311&type=chunk) [Available Information](index=61&type=section&id=Available%20Information) **AlloVir's SEC** filings (**10-K**, **10-Q**, **8-K**) are available free on its website and the **SEC's EDGAR** system - **AlloVir's SEC** filings, including **10-K**, **10-Q**, **8-K**, proxy statements, and amendments, are available free of charge on the 'Investors' portion of its website (**www.allovir.com**)[312](index=312&type=chunk) - Filings can also be accessed through the **SEC's Interactive Data Electronic Applications** system at **http://www.sec.gov**[312](index=312&type=chunk) - Statements in securities filings are made as of the document date, and the company does not undertake to update them unless legally required[312](index=312&type=chunk) [Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks that could materially and adversely affect **AlloVir's** business and financial condition - The business is subject to numerous risks and uncertainties, including those related to health epidemics, clinical development, regulatory review, competition, and financial condition[314](index=314&type=chunk) - The **COVID-19 pandemic** poses risks to supply chains, clinical trial timelines, patient enrollment, and overall economic stability[315](index=315&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) - The regulatory approval process for novel cell therapies is lengthy, expensive, and unpredictable, with no guarantee of success, and adverse events could delay or prevent approval[328](index=328&type=chunk)[343](index=343&type=chunk)[358](index=358&type=chunk) - The company faces substantial competition from larger, more established pharmaceutical and biotechnology companies, which could reduce sales and pricing power[368](index=368&type=chunk)[370](index=370&type=chunk) - **AlloVir** will need substantial additional funding to continue operations and commercialization, and inability to raise capital could force delays or termination of programs[483](index=483&type=chunk) [Risks Related to Current Novel Coronavirus (COVID-19) Pandemic](index=60&type=section&id=Risks%20Related%20to%20Current%20Novel%20Coronavirus%20(COVID-19)%20Pandemic) The **COVID-19 pandemic** poses significant risks to **AlloVir's** operations, including R&D, manufacturing, and clinical trials - The **COVID-19 pandemic** could adversely affect business operations, including disruptions to third-party **CROs** and **CDMOs**, and supply chain interruptions[315](index=315&type=chunk)[316](index=316&type=chunk) - Clinical trials may be delayed due to healthcare system prioritization of **COVID-19**, impacting site initiation, patient enrollment, and compliance with protocols[317](index=317&type=chunk) - The pandemic's economic impact could disrupt global financial markets, reducing access to capital and negatively affecting liquidity[318](index=318&type=chunk) - Increased demand for **COVID-19** vaccines may make it difficult to obtain materials or manufacturing slots for **AlloVir's** clinical trials, leading to delays[319](index=319&type=chunk) [Risks Related to the Clinical Development, Regulatory Review and Approval of Our Product Candidates](index=63&type=section&id=Risks%20Related%20to%20the%20Clinical%20Development,%20Regulatory%20Review%20and%20Approval%20of%20Our%20Product%20Candidates) **AlloVir** faces substantial risks in clinical development and regulatory approval for novel cell therapies - The company is early in its development efforts, with only a small number of product candidates in clinical development and the majority in preclinical stages[323](index=323&type=chunk) - Regulatory approval processes are lengthy, time-consuming, and inherently unpredictable, with no guarantee of success for any product candidate[328](index=328&type=chunk) - Clinical trials can be delayed, suspended, or terminated due to various factors, including regulatory disagreements, enrollment difficulties, safety issues, or manufacturing problems[344](index=344&type=chunk)[346](index=346&type=chunk)[347](index=347&type=chunk) - Results from preclinical studies or earlier clinical trials are not necessarily predictive of future results, and interim data may change[352](index=352&type=chunk)[356](index=356&type=chunk) - Undesirable side effects could delay or prevent regulatory approval, lead to restrictive labeling, or result in significant negative consequences post-approval[358](index=358&type=chunk)[360](index=360&type=chunk) - **RMAT** designation and **PRIME** eligibility do not change approval standards or guarantee expedited review or approval[379](index=379&type=chunk) [Risks Related to Clinical Development](index=63&type=section&id=Risks%20Related%20to%20Clinical%20Development) **AlloVir's** early-stage candidates face significant clinical development risks, including delays, failures, and safety concerns - The company's ability to generate revenues depends heavily on the successful development and commercialization of its product candidates, which are mostly in preclinical or early clinical stages[323](index=323&type=chunk) - Clinical testing is expensive, lengthy, and uncertain, with potential for failure at any stage, and delays can occur due to various factors including regulatory disagreements, enrollment issues, or third-party performance[343](index=343&type=chunk)[344](index=344&type=chunk) - Results of preclinical studies or earlier clinical trials are not necessarily predictive of future results, and later-stage trials may not demonstrate adequate efficacy and safety[352](index=352&type=chunk) - Interim or preliminary data from clinical trials are subject to change upon comprehensive review and audit, potentially differing materially from final results[356](index=356&type=chunk) - Undesirable side effects from product candidates could cause trial interruptions, delays, or termination, leading to a more restrictive label or denial of regulatory approval[358](index=358&type=chunk) [Risks Related to the Industry](index=65&type=section&id=Risks%20Related%20to%20the%20Industry) The biopharmaceutical industry faces risks from regulatory disruptions, complex gene/cell therapy regulations - Disruptions at the **FDA** and other government agencies (e.g., due to funding shortages or global health concerns like **COVID-19**) could delay product development, approval, or commercialization[333](index=333&type=chunk)[334](index=334&type=chunk) - The regulatory landscape for gene and cell therapy product candidates is rigorous, complex, and uncertain, potentially leading to heightened scrutiny and delays for **AlloVir's** novel **VST** approach[335](index=335&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk) - Adverse developments in preclinical studies or clinical trials by others in the gene therapy field could cause regulatory bodies to amend approval requirements for **AlloVir's** product candidates[339](index=339&type=chunk) - There is no assurance that manufacturing processes will yield sufficient, satisfactory, safe, pure, and potent products, or that they will be scalable or profitable[340](index=340&type=chunk) - Actual or perceived safety issues, or new therapeutic approaches, may influence patient participation in trials or physician adoption of approved products[341](index=341&type=chunk) [Risks Related to Our Business and Commercialization](index=72&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Commercialization) **AlloVir** faces intense competition, sales/marketing challenges, uncertain market acceptance, a

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents unaudited condensed consolidated financial statements, notes, and management's assessment of financial condition and operations [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Presents AlloVir's unaudited condensed consolidated financial statements and accompanying notes, detailing financial position and performance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents AlloVir's financial position, including assets, liabilities, and equity, as of September 30, 2021, and December 31, 2020 Condensed Consolidated Balance Sheets (in thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Cash and cash equivalents | $243,187 | $122,661 | | Short-term investments | $32,654 | $233,663 | | Total current assets | $281,872 | $361,317 | | Total assets | $316,530 | $370,821 | | Total current liabilities | $24,173 | $12,294 | | Total liabilities | $49,226 | $17,757 | | Total stockholders' equity | $267,304 | $353,064 | - Cash and cash equivalents significantly increased from **$122.7 million** at December 31, 2020, to **$243.2 million** at September 30, 2021. Short-term investments decreased from **$233.7 million** to **$32.7 million** over the same period[19](index=19&type=chunk) - Total liabilities increased from **$17.8 million** at December 31, 2020, to **$49.2 million** at September 30, 2021, primarily driven by increases in accrued expenses and operating lease liabilities[19](index=19&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Details AlloVir's revenues, expenses, and net loss for the three and nine months ended September 30, 2021 and 2020 Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development | $33,062 | $17,182 | $79,132 | $32,906 | | General and administrative | $12,442 | $6,718 | $34,890 | $12,987 | | Total operating expenses | $45,504 | $23,900 | $114,022 | $45,893 | | Net loss | $(45,510) | $(23,614) | $(114,021) | $(44,585) | | Net loss per share (basic and diluted) | $(0.72) | $(0.58) | $(1.82) | $(2.93) | - Net loss for the three months ended September 30, 2021, increased to **$45.5 million** from **$23.6 million** in the prior year period, primarily due to increased R&D and G&A expenses[23](index=23&type=chunk) - For the nine months ended September 30, 2021, net loss significantly increased to **$114.0 million** compared to **$44.6 million** in the same period of 2020, reflecting substantial increases in operating expenses[23](index=23&type=chunk) [Condensed Consolidated Statements of Convertible Preferred Stock and Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Changes%20in%20Stockholders'%20Equity) Outlines changes in AlloVir's convertible preferred stock and stockholders' equity for the nine months ended September 30, 2021 Condensed Consolidated Statements of Convertible Preferred Stock and Changes in Stockholders' Equity (in thousands) | Metric | Dec 31, 2020 | Sep 30, 2021 | | :-------------------- | :----------- | :----------- | | Common Stock Shares | 61,931,255 | 63,177,928 | | Additional Paid-In Capital | $478,272 | $506,554 | | Accumulated Deficit | $(125,103) | $(239,124) | | Total Stockholders' Equity | $353,064 | $267,304 | - The accumulated deficit increased significantly from **$125.1 million** at December 31, 2020, to **$239.1 million** at September 30, 2021, reflecting ongoing net losses[29](index=29&type=chunk) - Total stockholders' equity decreased from **$353.1 million** to **$267.3 million**, primarily due to the accumulated deficit, partially offset by increases in additional paid-in capital from stock-based compensation and stock option exercises[29](index=29&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Reports AlloVir's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2021 Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(78,251) | $(39,718) | | Net cash provided by (used in) investing activities | $199,506 | $(171,419) | | Net cash provided by financing activities | $167 | $292,329 | | Net increase in cash, cash equivalents, and restricted cash | $121,378 | $81,166 | | Cash, cash equivalents, and restricted cash at end of period | $244,039 | $142,250 | - Net cash used in operating activities increased to **$78.3 million** for the nine months ended September 30, 2021, from **$39.7 million** in the prior year, driven by higher net losses[31](index=31&type=chunk)[158](index=158&type=chunk) - Net cash provided by investing activities was **$199.5 million** for the nine months ended September 30, 2021, a significant change from net cash used of **$171.4 million** in the prior year, primarily due to maturities of short-term investments[31](index=31&type=chunk)[161](index=161&type=chunk) - Net cash provided by financing activities decreased substantially to **$0.2 million** in 2021 from **$292.3 million** in 2020, as the prior year included proceeds from the initial public offering[31](index=31&type=chunk)[162](index=162&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Nature of the Business](index=11&type=section&id=1.%20Nature%20of%20the%20Business) Describes AlloVir's focus on developing allogeneic T-cell therapies for viral diseases and its lead product candidates - AlloVir is a late clinical-stage cell therapy company developing allogeneic T-cell therapies for viral diseases, with five VST therapy candidates targeting 13 different viruses[33](index=33&type=chunk) - The lead product candidate, posoleucel (ALVR105), targets six viruses and is in pivotal trials for virus-associated hemorrhagic cystitis and proof-of-concept trials for multi-virus prevention in HSCT and BKV in kidney transplant[33](index=33&type=chunk)[34](index=34&type=chunk) - The company has prioritized its multi-virus prevention program in allogeneic HSCT patients, delaying planned Phase 3 CMV treatment trials to focus resources[34](index=34&type=chunk) - ALVR106 targets respiratory viral diseases, with a Phase 1/2 study planned for Q4 2021. ALVR109 for COVID-19 is being monitored for future use in immunocompromised patients, and preclinical work on ALVR108 has been paused due to declining incidence of HHV-8 associated diseases[34](index=34&type=chunk) [Going Concern](index=13&type=section&id=Going%20Concern) Addresses AlloVir's recurring losses and accumulated deficit, along with its ability to fund operations for the next twelve months - AlloVir has incurred recurring losses since inception, with net losses of **$45.5 million** and **$114.0 million** for the three and nine months ended September 30, 2021, respectively, and an accumulated deficit of **$239.1 million**[40](index=40&type=chunk) - The company believes its **$243.2 million** in cash and cash equivalents and **$32.7 million** in short-term investments at September 30, 2021, are sufficient to fund planned operations for at least twelve months[41](index=41&type=chunk) [COVID-19 Considerations](index=13&type=section&id=COVID-19%20Considerations) Discusses the impact of the COVID-19 pandemic on AlloVir's operations, clinical trials, and financial condition - The COVID-19 pandemic has impacted the company's operations, including delays in preclinical and clinical trial activities and potential supply chain disruptions[42](index=42&type=chunk) - Quarantines and travel restrictions could delay planned pivotal clinical trials, impede patient enrollment, and affect employees or third-party service providers[42](index=42&type=chunk)[44](index=44&type=chunk) - The company is still assessing the full impact of the pandemic on its ability to advance drug candidates and raise financing[45](index=45&type=chunk) [2. Summary of Significant Accounting Policies](index=15&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the key accounting principles and policies used in preparing AlloVir's interim financial statements - The interim financial statements are unaudited and prepared on the same basis as annual statements, reflecting normal recurring adjustments[46](index=46&type=chunk) - Restricted cash of **$852 thousand** at September 30, 2021, serves as collateral for a letter of credit for a leased facility[47](index=47&type=chunk) - The functional currency for AlloVir International and AlloVir Italia was determined to be the U.S. Dollar in September 2021, with no material impact on financial statements[49](index=49&type=chunk) - The company adopted ASU 2019-12 on January 1, 2021, with no material impact, and expects ASU 2016-13 (effective 2022) to also have no material impact[52](index=52&type=chunk)[53](index=53&type=chunk) [3. Short-Term Investments](index=17&type=section&id=3.%20Short-Term%20Investments) Details AlloVir's short-term investment portfolio, primarily U.S. government treasury securities, and their fair value Short-Term Investments (in thousands) | Metric | Amortized Cost (Sep 30, 2021) | Fair Value (Sep 30, 2021) | | :-------------------- | :---------------------------- | :------------------------ | | U.S. government treasury securities | $32,654 | $32,654 | Short-Term Investments (in thousands) | Metric | Amortized Cost (Dec 31, 2020) | Fair Value (Dec 31, 2020) | | :-------------------- | :---------------------------- | :------------------------ | | U.S. government treasury securities | $233,687 | $233,663 | - All short-term investments are classified as available-for-sale and had contractual maturities within one year at both September 30, 2021, and December 31, 2020[56](index=56&type=chunk) [4. Fair Value Measurements](index=17&type=section&id=4.%20Fair%20Value%20Measurements) Presents the fair value hierarchy for AlloVir's financial assets, including money market funds and treasury securities Fair Value Measurements (in thousands) | Metric | Level 1 (Sep 30, 2021) | Total (Sep 30, 2021) | | :-------------------- | :--------------------- | :------------------- | | Money market fund | $208,841 | $208,841 | | U.S. government treasury securities | $32,654 | $32,654 | Fair Value Measurements (in thousands) | Metric | Level 1 (Dec 31, 2020) | Total (Dec 31, 2020) | | :-------------------- | :--------------------- | :------------------- | | Money market fund | $55,505 | $55,505 | | U.S. government treasury securities | $233,663 | $233,663 | - All money market funds and U.S. government treasury securities are classified as Level 1 assets, valued using quoted market prices in active markets[59](index=59&type=chunk) [5. Leases](index=18&type=section&id=5.%20Leases) Provides information on AlloVir's operating lease agreements, expenses, and liabilities, including new property leases - Total short-term lease expense was **$0.4 million** for the three months ended September 30, 2021, and **$0.6 million** for the nine months ended September 30, 2021[61](index=61&type=chunk) - The company entered into new operating lease agreements in September 2021 for property in Waltham, Massachusetts, resulting in a Right-of-Use (ROU) asset and lease liability of **$6.0 million** for the lease and **$17.3 million** for the sublease[68](index=68&type=chunk) Maturity of Operating Lease Liabilities (in thousands) | Maturity of Operating Lease Liabilities | Amount (Sep 30, 2021) | | :------------------------------------- | :-------------------- | | 2021 (remaining 3 months) | $2,260 | | 2022 | $7,167 | | 2023 | $5,273 | | 2024 | $3,177 | | 2025 | $3,255 | | Thereafter | $16,582 | | Total lease payments | $37,714 | | Less: interest (3.40% - 5.75%) | $(6,364) | | Total lease liability | $31,350 | | Lease liability – current | $6,297 | | Lease liability – long-term | $25,053 | - Total lease costs were **$2.0 million** and **$4.4 million** for the three and nine months ended September 30, 2021, respectively[70](index=70&type=chunk) [6. Accrued Expenses](index=21&type=section&id=6.%20Accrued%20Expenses) Details the composition and changes in AlloVir's accrued expenses, including employee compensation and R&D accruals Accrued Expenses (in thousands) | Accrued Expenses | Sep 30, 2021 | Dec 31, 2020 | | :------------------------------ | :----------- | :----------- | | Employee compensation and benefits | $4,198 | $3,314 | | Professional fees | $755 | $696 | | Research and development | $10,436 | $3,347 | | Other | $409 | $173 | | Total accrued expenses | $15,798 | $7,530 | - Total accrued expenses increased significantly from **$7.5 million** at December 31, 2020, to **$15.8 million** at September 30, 2021, primarily due to a substantial increase in research and development accruals[72](index=72&type=chunk) [7. Sponsored Research, Collaboration and License Agreements](index=21&type=section&id=7.%20Sponsored%20Research,%20Collaboration%20and%20License%20Agreements) Describes AlloVir's exclusive license agreements with Baylor College of Medicine and related financial obligations - AlloVir has an exclusive worldwide license agreement with Baylor College of Medicine (BCM) for viral infection technology, with potential milestone payments exceeding **$40.0 million** and tiered royalties[73](index=73&type=chunk)[76](index=76&type=chunk) - A second exclusive license agreement with BCM, signed in November 2020, covers patent rights outside the viral infection field, with potential milestone payments exceeding **$30.0 million** and tiered royalties[79](index=79&type=chunk)[82](index=82&type=chunk) - Payments to BCM for services under these agreements totaled **$0.7 million** and **$2.8 million** for the three and nine months ended September 30, 2021, respectively, classified as R&D expense[85](index=85&type=chunk) - The company accrued **$0.2 million** in milestone expenses during the nine months ended September 30, 2021[85](index=85&type=chunk) [8. Funding Arrangements](index=24&type=section&id=8.%20Funding%20Arrangements) Summarizes AlloVir's past grant funding arrangements, including the CPRIT Grant and SBIR grant - The CPRIT Grant of **$9.0 million** was terminated in December 2019, with **$2.6 million** returned. No royalty payments were made under this license agreement during the nine months ended September 30, 2021 and 2020[87](index=87&type=chunk) - The SBIR grant from NIH for **$3.0 million** was completed in June 2021, with no proceeds received in the three or nine months ended September 30, 2021[88](index=88&type=chunk) [9. Stockholder's Equity](index=24&type=section&id=9.%20Stockholder's%20Equity) Provides details on AlloVir's common stock outstanding and shares reserved for issuance under equity plans - As of September 30, 2021, the company had **63,177,928 shares** of common stock outstanding[29](index=29&type=chunk) Shares Reserved for Issuance | Shares Reserved for Issuance | Sep 30, 2021 | Dec 31, 2020 | | :--------------------------- | :----------- | :----------- | | Unvested restricted stock | 3,126,635 | 3,410,979 | | Options to purchase common stock | 6,028,476 | 3,972,909 | | Stock available for grant under 2020 Plan | 4,068,527 | 3,895,961 | | Total | 13,223,638 | 11,279,849 | [10. Stock-Based Compensation](index=25&type=section&id=10.%20Stock-Based%20Compensation) Outlines AlloVir's stock-based compensation plans, activity, and related expenses for the reported periods - The 2020 Stock Option and Grant Plan was approved in July 2020, with **3,255,343 shares** added on January 1, 2021, and **4,068,527 shares** reserved for future issuance as of September 30, 2021[94](index=94&type=chunk)[95](index=95&type=chunk) Restricted Common Stock Activity | Restricted Common Stock Activity | Shares (Nine Months Ended Sep 30, 2021) | | :------------------------------- | :-------------------------------------- | | Unvested at January 1, 2021 | 3,410,979 | | Granted | 1,047,613 | | Forfeited | (94,709) | | Vested | (1,237,248) | | Unvested at September 30, 2021 | 3,126,635 | Stock Option Activity | Stock Option Activity | Shares (Nine Months Ended Sep 30, 2021) | Weighted Average Exercise Price | | :-------------------- | :-------------------------------------- | :------------------------------ | | Options outstanding at January 1, 2021 | 3,972,909 | $17.84 | | Granted | 2,264,138 | $33.09 | | Exercised | (9,425) | $17.00 | | Forfeited | (199,146) | $25.29 | | Options outstanding at September 30, 2021 | 6,028,476 | $23.33 | Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :---------------------------------------------- | :------------------------------ | :----------------------------- | | Research and development | $4,010 | $11,274 | | General and administrative | $6,276 | $16,841 | | Total stock-based compensation expense | $10,286 | $28,115 | - Total stock-based compensation expense for the nine months ended September 30, 2021, was **$28.1 million**, a significant increase from **$5.0 million** in the prior year[103](index=103&type=chunk) [11. Income Taxes](index=26&type=section&id=11.%20Income%20Taxes) Explains AlloVir's income tax position, noting no current or deferred tax expense due to historical losses - The company did not record current or deferred income tax expense or benefit for the three and nine months ended September 30, 2021 and 2020, due to current and historical losses[105](index=105&type=chunk) [12. Net Loss per Share](index=28&type=section&id=12.%20Net%20Loss%20per%20Share) Presents AlloVir's basic and diluted net loss per share calculations and related weighted-average shares outstanding Net Loss per Share | Metric | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :----- | :------------------------------ | :----------------------------- | | Net loss – basic and diluted | $(45,510) | $(114,021) | | Weighted-average common shares outstanding – basic and diluted | 62,962,434 | 62,588,898 | | Net loss per share – basic and diluted | $(0.72) | $(1.82) | - Potential common shares from options and unvested restricted stock were excluded from diluted EPS calculation as their inclusion would be anti-dilutive due to net losses[109](index=109&type=chunk)[110](index=110&type=chunk) [13. Related Party Transactions](index=28&type=section&id=13.%20Related%20Party%20Transactions) Details AlloVir's transactions and agreements with related parties, including ElevateBio, and associated expenses - The company has a Shared Services Agreement with ElevateBio for various operational services, incurring **$0.6 million** and **$4.1 million** in expenses for the three and nine months ended September 30, 2021, respectively[111](index=111&type=chunk) - Amount due to related party (ElevateBio) increased from **$0.6 million** at December 31, 2020, to **$1.9 million** at September 30, 2021[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses AlloVir's financial condition, operating results, product pipeline, and strategic priorities, including funding needs [Overview](index=29&type=section&id=Overview) Provides a high-level summary of AlloVir's business, financial performance, and future funding expectations - AlloVir is a late clinical-stage cell therapy company focused on allogeneic T-cell therapies for viral diseases, with posoleucel (ALVR105) as its most advanced candidate in pivotal and proof-of-concept trials[116](index=116&type=chunk) - The company leverages ElevateBio's expertise for manufacturing and has prioritized multi-virus prevention programs, delaying some CMV treatment studies[116](index=116&type=chunk) - AlloVir incurred net losses of **$45.5 million** and **$114.0 million** for the three and nine months ended September 30, 2021, respectively, with an accumulated deficit of **$239.1 million**[118](index=118&type=chunk) - The company expects to incur significant and increasing operating losses due to ongoing R&D, clinical trials, and public company operating costs, requiring substantial additional funding[118](index=118&type=chunk)[119](index=119&type=chunk) - Cash, cash equivalents, and short-term investments totaled **$275.8 million** at September 30, 2021, projected to fund operations into 2023[120](index=120&type=chunk) [Relationship with ElevateBio](index=32&type=section&id=Relationship%20with%20ElevateBio) Describes AlloVir's affiliation with ElevateBio and potential conflicts of interest due to shared executives - AlloVir is an affiliate of ElevateBio, leveraging its expertise and manufacturing subsidiary. Key executives hold dual roles at both companies, potentially creating conflicts of interest[124](index=124&type=chunk) [Initial Public Offering](index=32&type=section&id=Initial%20Public%20Offering) Details the completion of AlloVir's IPO in August 2020, including shares issued and net proceeds - The company completed its IPO on August 3, 2020, issuing **18,687,500 shares** at **$17.00 per share**, generating **$292.0 million** in net proceeds[125](index=125&type=chunk) - All outstanding convertible preferred stock converted into **39,859,139 shares** of common stock upon IPO closing[125](index=125&type=chunk) [Components of Results of Operations](index=32&type=section&id=Components%20of%20Results%20of%20Operations) Explains the key components contributing to AlloVir's operating results, including R&D and G&A expenses - Research and development expenses include costs for drug discovery, clinical trials, manufacturing, employee-related expenses, and upfront/maintenance fees for licenses[126](index=126&type=chunk)[127](index=127&type=chunk) - General and administrative expenses primarily cover employee-related costs, professional services (legal, accounting), and other administrative overhead[131](index=131&type=chunk) - Total Other Income (Loss), Net includes interest income from cash and investments, and other income/loss from investment amortization/accretion and government grants[133](index=133&type=chunk)[134](index=134&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Analyzes AlloVir's financial performance, focusing on changes in operating expenses and net loss for the reported periods Results of Operations (in thousands) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Change | | :-------------------- | :------------------------------ | :------------------------------ | :----- | | Research and Development | $33,062 | $17,182 | $15,880 | | General and Administrative | $12,442 | $6,718 | $5,724 | | Net Loss | $(45,510) | $(23,614) | $(21,896) | - Research and development expenses increased by **$15.9 million** for the three months ended September 30, 2021, compared to the prior year, driven by posoleucel manufacturing and clinical trials, ALVR106 and ALVR109 development, and higher personnel costs[138](index=138&type=chunk)[140](index=140&type=chunk) - General and administrative expenses increased by **$5.7 million** for the three months ended September 30, 2021, primarily due to increased payroll, stock-based compensation, professional fees, and insurance costs[141](index=141&type=chunk) Results of Operations (in thousands) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | | Research and Development | $79,132 | $32,906 | $46,226 | | General and Administrative | $34,890 | $12,987 | $21,903 | | Net Loss | $(114,021) | $(44,585) | $(69,436) | - Research and development expenses increased by **$46.2 million** for the nine months ended September 30, 2021, compared to the prior year, primarily due to posoleucel manufacturing and clinical trials, ALVR106 and ALVR109 development, and a **$21.4 million** increase in personnel-related costs[146](index=146&type=chunk)[147](index=147&type=chunk) - General and administrative expenses increased by **$21.9 million** for the nine months ended September 30, 2021, mainly due to a **$17.3 million** increase in payroll and stock-based compensation, along with higher professional fees and insurance[148](index=148&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses AlloVir's sources of liquidity, current cash position, and future capital requirements for operations - The company's liquidity is primarily from equity financings, including **$156.3 million** from preferred stock sales and **$292.0 million** net proceeds from its August 2020 IPO[150](index=150&type=chunk) - As of September 30, 2021, cash, cash equivalents, and short-term investments totaled **$275.8 million**, expected to fund operations into 2023[151](index=151&type=chunk) - Future capital requirements are substantial and depend on the progress of product candidates, regulatory approvals, commercialization costs, and intellectual property protection[153](index=153&type=chunk)[154](index=154&type=chunk) - The company may need to raise additional capital through equity offerings, debt financings, or collaborations, which could dilute existing shareholders or impose restrictive covenants[155](index=155&type=chunk) [Cash Flows](index=38&type=section&id=Cash%20Flows) Provides a detailed analysis of AlloVir's cash flows from operating, investing, and financing activities Cash Flow Activity (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(78,251) | $(39,718) | | Net cash provided by (used in) investing activities | $199,506 | $(171,419) | | Net cash provided by financing activities | $167 | $292,329 | - Operating cash outflow increased by **$38.5 million** year-over-year, primarily due to higher R&D and G&A expenses[160](index=160&type=chunk) - Investing activities shifted from a net cash outflow of **$171.4 million** in 2020 to a net cash inflow of **$199.5 million** in 2021, mainly due to maturities of short-term investments[161](index=161&type=chunk) - Financing cash inflow decreased significantly from **$292.3 million** in 2020 (due to IPO proceeds) to **$0.2 million** in 2021 (from stock option exercises)[162](index=162&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) Highlights AlloVir's reliance on estimates and judgments in financial reporting and the impact of the COVID-19 pandemic - The company's financial statements rely on estimates and judgments, particularly regarding asset and liability valuations, with potential future impacts from the COVID-19 pandemic remaining unclear[164](index=164&type=chunk) - No significant changes to critical accounting policies were reported since the December 31, 2020, Annual Report on Form 10-K[164](index=164&type=chunk) [Emerging Growth Company Status](index=40&type=section&id=Emerging%20Growth%20Company%20Status) Explains AlloVir's status as an emerging growth company and smaller reporting company, and its implications for financial reporting - AlloVir is an emerging growth company (EGC) and has elected the extended transition period for complying with new or revised accounting standards, which may affect comparability with other public companies[165](index=165&type=chunk)[166](index=166&type=chunk) - The company also qualifies as a 'smaller reporting company,' allowing for reduced disclosure obligations[168](index=168&type=chunk) [Off-Balance Sheet Arrangements](index=41&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms that AlloVir had no off-balance sheet arrangements during the reported periods - The company did not have any off-balance sheet arrangements during the periods presented[169](index=169&type=chunk) [Recently Issued Accounting Pronouncements](index=41&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Refers to Note 2 for a description of recent accounting pronouncements relevant to AlloVir - A description of recent accounting pronouncements is provided in Note 2 to the condensed consolidated financial statements[170](index=170&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, AlloVir is not required to provide quantitative and qualitative disclosures about market risk - AlloVir is exempt from disclosing quantitative and qualitative information about market risk due to its status as a smaller reporting company[171](index=171&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management assessed disclosure controls and procedures as effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of September 30, 2021[173](index=173&type=chunk) - No material changes in internal control over financial reporting occurred during the period[174](index=174&type=chunk) - The report does not include a management's assessment or auditor's attestation report on internal control over financial reporting due to the company's transition period as a newly public company[174](index=174&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) Presents other required information, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) AlloVir is not currently a party to any material arbitration or legal proceedings, though it acknowledges the potential for future claims arising in the ordinary course of business - The company is not currently involved in any material arbitration or legal proceedings[176](index=176&type=chunk) - Future claims or proceedings are unpredictable and could adversely impact the business due to costs and diversion of management resources[176](index=176&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) Details numerous risks and uncertainties impacting AlloVir's business, including clinical development, regulatory, commercialization, and financial factors [Risks Related to Current Novel Coronavirus (COVID-19) Pandemic](index=42&type=section&id=Risks%20Related%20to%20Current%20Novel%20Coronavirus%20(COVID-19)%20Pandemic) Discusses the adverse impacts of the COVID-19 pandemic on AlloVir's operations, clinical trials, and financial stability - The COVID-19 pandemic could adversely affect AlloVir's business by disrupting third-party research, development, and manufacturing facilities, clinical trial sites, and supply chains[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) - Clinical trials may face delays in site initiation and patient enrollment due to healthcare resource prioritization and patient travel restrictions[181](index=181&type=chunk) - The pandemic's economic impact could reduce access to capital and affect the value of common stock[182](index=182&type=chunk) - Demand for COVID-19 vaccines may make it harder to obtain materials or manufacturing slots for AlloVir's clinical trials, leading to delays[183](index=183&type=chunk) [Risks Related to the Clinical Development, Regulatory Review and Approval of Our Product Candidates](index=43&type=section&id=Risks%20Related%20to%20the%20Clinical%20Development,%20Regulatory%20Review%20and%20Approval%20of%20Our%20Product%20Candidates) Addresses the challenges and uncertainties in clinical development, regulatory approval, and commercialization of AlloVir's product candidates - The company is in early development, with only a few product candidates in clinical stages, and success depends heavily on positive clinical trial results and regulatory approvals[185](index=185&type=chunk)[186](index=186&type=chunk) - Regulatory approval processes are lengthy, unpredictable, and may require additional data or studies, potentially delaying or preventing commercialization[188](index=188&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk) - Disruptions at the FDA and other government agencies, including those caused by funding shortages or global health concerns like COVID-19, could hinder timely product development and approval[193](index=193&type=chunk)[195](index=195&type=chunk) - The novel nature of gene and cell therapy product candidates may lead to heightened regulatory scrutiny, delays, and challenges in manufacturing and commercialization[196](index=196&type=chunk)[197](index=197&type=chunk) - Clinical trials are expensive and uncertain; delays can occur due to various factors, including regulatory holds, recruitment issues, or unforeseen safety concerns[202](index=202&type=chunk)[203](index=203&type=chunk)[205](index=205&type=chunk) - Results from preclinical studies or earlier clinical trials are not necessarily predictive of future outcomes, and later-stage trials may fail to demonstrate adequate efficacy and safety[210](index=210&type=chunk)[211](index=211&type=chunk) - Interim or preliminary clinical data may change upon comprehensive review, potentially impacting regulatory approval and commercialization prospects[214](index=214&type=chunk)[215](index=215&type=chunk) - Undesirable side effects from product candidates could delay or prevent regulatory approval, lead to restrictive labeling, or result in significant negative consequences post-approval[216](index=216&type=chunk)[217](index=217&type=chunk) - Failure to obtain or maintain orphan drug designation for product candidates could limit revenue potential, as such designations do not guarantee faster development or approval[218](index=218&type=chunk)[219](index=219&type=chunk)[234](index=234&type=chunk) - Failure to obtain regulatory approval in international jurisdictions would prevent product candidates from being marketed abroad, diminishing commercial prospects[235](index=235&type=chunk)[236](index=236&type=chunk) - Even with regulatory approval, extensive ongoing regulatory requirements and review could lead to significant additional expenses and future development difficulties[237](index=237&type=chunk)[238](index=238&type=chunk) [Risks Related to Our Business and Commercialization](index=54&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Commercialization) Covers risks associated with competition, sales, marketing, market acceptance, healthcare legislation, and operational challenges - AlloVir faces substantial competition from pharmaceutical and biotechnology companies, which could impact sales, pricing, and market acceptance of its products[223](index=223&type=chunk)[225](index=225&type=chunk) - The company may be unable to establish effective sales and marketing capabilities or secure third-party agreements, hindering revenue generation[227](index=227&type=chunk)[228](index=228&type=chunk) - Inaccurate estimates of target patient populations for posoleucel or other candidates could adversely affect revenue and profitability[229](index=229&type=chunk)[230](index=230&type=chunk) - Commercial success depends on market acceptance by physicians, patients, and healthcare payors, influenced by efficacy, safety, cost, and reimbursement[244](index=244&type=chunk)[245](index=245&type=chunk) - Failure to obtain adequate coverage and reimbursement from third-party payors could harm the business, as government and private insurers increasingly focus on cost containment[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - The business is highly dependent on posoleucel, and failure to complete clinical testing and obtain regulatory approval would substantially harm the company[249](index=249&type=chunk)[250](index=250&type=chunk) - Current and future healthcare legislation, including pricing regulations and reform initiatives, could increase costs, delay approvals, and affect product pricing[252](index=252&type=chunk)[253](index=253&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk) - Product candidates, if approved as biologics, may face competition sooner than anticipated due to biosimilar pathways, potentially impacting market share and pricing[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) - Relationships with healthcare stakeholders are subject to anti-kickback, fraud and abuse, and other laws, non-compliance with which could lead to significant penalties and reputational harm[270](index=270&type=chunk)[272](index=272&type=chunk) - Changes in and failures to comply with privacy and data protection laws (e.g., HIPAA, GDPR, CCPA) could adversely affect operations and financial performance, leading to fines and litigation[273](index=273&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk) - High dependence on key personnel and anticipated hiring of new staff pose risks to business strategy implementation if the company cannot attract and retain qualified individuals[277](index=277&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk) - Potential conflicts of interest exist due to certain directors and officers holding positions with ElevateBio[281](index=281&type=chunk) - The need to grow the organization and manage this growth effectively poses challenges to financial performance and commercialization efforts[282](index=282&type=chunk)[283](index=283&type=chunk) - Employee misconduct or noncompliance with regulatory standards could lead to significant liability and harm the company's reputation[285](index=285&type=chunk)[286](index=286&type=chunk) - Inability to adequately protect information systems from cyberattacks could result in data disclosure, reputational damage, and financial/legal exposure[287](index=287&type=chunk)[288](index=288&type=chunk) - Failures or security breaches in internal or third-party computer systems could disrupt development programs and business operations[290](index=290&type=chunk) - Business disruptions from natural disasters or other events could harm revenue, financial condition, and increase costs[291](index=291&type=chunk) - Changes in U.S. tax law could adversely affect the business and financial condition[292](index=292&type=chunk)[294](index=294&type=chunk) - The ability to use U.S. net operating loss carryforwards may be limited by future taxable income generation or ownership changes[295](index=295&type=chunk)[297](index=297&type=chunk) - Unstable market and economic conditions could have serious adverse consequences on the business, financial condition, and stock price[298](index=298&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk) [Risks Related to Litigation](index=69&type=section&id=Risks%20Related%20to%20Litigation) Highlights potential risks from securities class action and product liability lawsuits, including costs and reputational harm - The company faces an increased risk of securities class action litigation, which could result in substantial costs and diversion of management attention[301](index=301&type=chunk) - Product liability lawsuits related to clinical trials or commercial sales could lead to substantial liabilities, decreased demand, reputational harm, and financial losses[302](index=302&type=chunk)[304](index=304&type=chunk) [Risks Related to Intellectual Property Litigation](index=70&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20Litigation) Addresses risks concerning intellectual property infringement claims, enforcement, and protection of trade secrets - The company's commercial success depends on not infringing third-party intellectual property rights; infringement claims could be costly, time-consuming, and delay development[305](index=305&type=chunk)[306](index=306&type=chunk)[309](index=309&type=chunk) - Lawsuits to protect or enforce intellectual property could be expensive, time-consuming, and unsuccessful, potentially harming the business[312](index=312&type=chunk)[315](index=315&type=chunk) - Claims of misappropriating confidential information or trade secrets from third parties could limit the ability to develop product candidates[316](index=316&type=chunk)[317](index=317&type=chunk) [Risks Related to Our Financial Condition, Capital Needs and Ownership of Our Common Stock](index=72&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition,%20Capital%20Needs%20and%20Ownership%20of%20Our%20Common%20Stock) Discusses financial risks, including recurring losses, capital requirements, stock price volatility, and corporate governance - AlloVir has incurred significant net losses since inception and anticipates continued losses, potentially never achieving profitability, due to substantial R&D and operational expenses[319](index=319&type=chunk)[320](index=320&type=chunk)[321](index=321&type=chunk) - The company has a limited operating history, making it difficult to evaluate past success and future viability, especially given the novel nature of its cell therapies[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk) - Substantial additional funding is required for product development and commercialization; inability to raise capital could force delays or elimination of programs[326](index=326&type=chunk)[327](index=327&type=chunk)[329](index=329&type=chunk) - There is no guarantee an active, liquid, and orderly trading market for common stock will develop or be sustained, potentially making it difficult for stockholders to sell shares[331](index=331&type=chunk) - The trading price of common stock is highly volatile, influenced by clinical trial results, regulatory decisions, personnel changes, and broader market factors[332](index=332&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk) - Principal stockholders and management own a significant percentage of stock, allowing them to exert substantial influence over stockholder approval matters[336](index=336&type=chunk) - Raising additional capital may dilute existing stockholders, impose operational restrictions, or require relinquishing rights to product candidates on unfavorable terms[337](index=337&type=chunk)[339](index=339&type=chunk)[340](index=340&type=chunk) - The company does not intend to pay dividends, limiting stockholder returns to stock appreciation[341](index=341&type=chunk) - As an emerging growth company and smaller reporting company, reduced reporting requirements may make common stock less attractive to investors[342](index=342&type=chunk)[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - Operating as a public company incurs significant increased costs and requires substantial management time for compliance initiatives[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk) - Sales of a substantial number of shares by existing stockholders could depress the market price of common shares[349](index=349&type=chunk) - Management has broad discretion over cash and cash equivalents, and ineffective use could harm operating results and stock value[350](index=350&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could delay or prevent a change of control, limiting stock price and frustrating stockholder attempts to replace management[350](index=350&type=chunk)[351](index=351&type=chunk)[352](index=352&type=chunk) - Designated exclusive forums in bylaws for certain actions could limit stockholders' ability to obtain a favorable judicial forum and impose additional litigation costs[354](index=354&type=chunk)[355](index=355&type=chunk)[356](index=356&type=chunk) - Failure to establish and maintain proper internal control over financial reporting could harm operating results and business operations[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk) - Lack of research or inaccurate/unfavorable research by securities or industry analysts could cause stock price and trading volume to decline[361](index=361&type=chunk)[362](index=362&type=chunk) [Risks Related to Manufacturing](index=81&type=section&id=Risks%20Related%20to%20Manufacturing) Covers manufacturing risks, including delays in process qualification, compliance with regulations, and scaling up production - Delays in process performance qualification for manufacturing could delay regulatory approvals and limit revenue generation[363](index=363&type=chunk) - Failure to comply with cGMP and cGTP regulations, or issues with achieving adequate clinical-grade materials, could lead to significant delays or termination of clinical trials[364](index=364&type=chunk)[365](index=365&type=chunk) - Scaling up production to meet market demand for approved product candidates is a difficult and uncertain task, with risks of cost overruns and supply disruptions[366](index=366&type=chunk) [Risks Related to Third Party Manufacturing](index=82&type=section&id=Risks%20Related%20to%20Third%20Party%20Manufacturing) Addresses risks associated with relying on third-party manufacturers and suppliers, including compliance and supply chain disruptions - Reliance on third-party partners for manufacturing entails risks such as inadequate know-how transfer, non-compliance with regulations, and potential product loss due to contamination or equipment failure[368](index=368&type=chunk)[369](index=369&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk) - Problems with third-party suppliers could delay development and commercialization, as the company relies on a limited number of suppliers for critical components and materials[374](index=374&type=chunk)[375](index=375&type=chunk)[377](index=377&type=chunk)[381](index=381&type=chunk) - Failure by third-party manufacturers to comply with environmental, health, and safety laws could result in fines, penalties, or substantial costs[387](index=387&type=chunk)[388](index=388&type=chunk)[390](index=390&type=chunk) - Damage or interruption at sole raw material suppliers or manufacturing facilities could negatively affect the business by delaying clinical studies or reducing commercial product sales[390](index=390&type=chunk)[391](index=391&type=chunk) [Risks Related to Our Dependence on Third Parties](index=87&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) Discusses risks from dependence on third parties for clinical trials, licensed intellectual property, and strategic alliances - Reliance on third parties (CROs, investigators) for clinical trials means their performance directly impacts development timelines and costs, and non-compliance could deem data unreliable[393](index=393&type=chunk)[394](index=394&type=chunk) - Substantial dependence on intellectual property licensed from third parties, particularly BCM, means termination of these licenses could result in significant loss of rights and harm the business[395](index=395&type=chunk)[397](index=397&type=chunk)[399](index=399&type=chunk) - Failure to realize benefits from future strategic alliances or product acquisitions/licenses could lead to increased costs, dilution, or disruption of management[400](index=400&type=chunk)[401](index=401&type=chunk) [Risks Related to Our Intellectual Property](index=88&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Covers challenges in obtaining and maintaining intellectual property protection, including patentability and global enforcement - Inability to obtain and maintain sufficient intellectual property protection for product candidates and manufacturing processes could adversely affect commercialization and competitive position[402](index=402&type=chunk)[403](index=403&type=chunk)[408](index=408&type=chunk) - The patentability of inventions and the validity/enforceability of patents in biotechnology are highly uncertain and subject to complex legal, scientific, and factual considerations[405](index=405&type=chunk)[407](index=407&type=chunk) - Obtaining and enforcing biopharmaceutical patents is costly, time-consuming, and complex, with no guarantee of successful issuance or enforcement[410](index=410&type=chunk)[411](index=411&type=chunk) - Patents have a limited lifespan, and delays in clinical trials or regulatory approvals could reduce the period of exclusive marketing under patent protection[413](index=413&type=chunk)[414](index=414&type=chunk) - Inability to protect intellectual property rights globally, especially in countries with weaker patent laws, could allow competitors to use technologies and erode competitive advantage[416](index=416&type=chunk)[417](index=417&type=chunk) - Breaching license agreements with partners, such as BCM, could lead to loss of significant intellectual property rights and adversely affect development and commercialization[418](index=418&type=chunk)[419](index=419&type=chunk) - Inadequate protection of trademarks and trade names could hinder brand recognition and adversely affect the business[420](index=420&type=chunk)[421](index=421&type=chunk) - Failure to protect the confidentiality of trade secrets and other proprietary information could allow competitors to duplicate technology, harming competitive position[422](index=422&type=chunk)[423](index=423&type=chunk)[425](index=425&type=chunk)[426](index=426&type=chunk) [Risks Related to Patents](index=92&type=section&id=Risks%20Related%20to%20Patents) Addresses risks concerning patent maintenance, changes in patent laws, and uncertainties in patent validity and enforceability - Maintaining patent protection requires compliance with various procedural and fee payment requirements; non-compliance could lead to loss of patent rights[427](index=427&type=chunk) - Changes in U.S. or foreign patent laws, such as the America Invents Act, could diminish the value of patents, increase prosecution costs, and create uncertainties in enforcement[429](index=429&type=chunk)[430](index=430&type=chunk) - U.S. Supreme Court rulings have narrowed patent protection scope, creating uncertainty regarding patent validity and enforceability in the biopharmaceutical field[431](index=431&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=93&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds were reported[431](index=431&type=chunk) [Item 3. Defaults Upon Senior Securities](index=93&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities to report - No defaults upon senior securities were reported[432](index=432&type=chunk) [Item 4. Mine Safety Disclosures](index=93&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to AlloVir, Inc - Mine Safety Disclosures are not applicable to the registrant[432](index=432&type=chunk) [Item 5. Other Information](index=93&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information was reported[432](index=432&type=chunk) [Item 6. Exhibits](index=94&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including organizational documents, agreements, and certifications - Exhibits include the Third Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Specimen Common Stock Certificate, and Sublease and Lease agreements[434](index=434&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act are also filed[434](index=434&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation) are included for interactive data filing[434](index=434&type=chunk)

PART I [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Presents AlloVir's unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Details AlloVir's financial position, including assets, liabilities, and stockholders' equity at specific reporting dates | (in thousands) | June 30, 2021 | December 31, 2020 | |:---------------|:--------------|:------------------| | **Assets** | | | | Cash and cash equivalents | $225,447 | $122,661 | | Short-term investments | $87,890 | $233,663 | | Total current assets | $316,045 | $361,317 | | Total assets | $327,511 | $370,821 | | **Liabilities and Stockholders' Equity** | | | | Accounts payable | $4,202 | $963 | | Accrued expenses | $9,975 | $7,530 | | Total current liabilities | $20,708 | $12,294 | | Total liabilities | $25,042 | $17,757 | | Additional paid-in capital | $496,101 | $478,272 | | Accumulated deficit | $(193,614) | $(125,103) |\ | Total stockholders' equity | $302,469 | $353,064 | | Total liabilities and stockholders' equity | $327,511 | $370,821 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Details AlloVir's revenues, expenses, and net loss over specific periods, including comprehensive loss | (in thousands, except share and per share amounts) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | |:---------------------------------------------------|:---------------------------------|:---------------------------------|:-------------------------------|:-------------------------------| | Operating expenses: | | | | | | Research and development | $25,677 | $8,885 | $46,070 | $15,724 | | General and administrative | $11,978 | $3,268 | $22,448 | $6,269 | | Total operating expenses | $37,655 | $12,153 | $68,518 | $21,993 | | Loss from operations | $(37,655) | $(12,153) | $(68,518) | $(21,993) | | Total other income (loss), net: | | | | | | Interest income | $475 | $166 | $980 | $623 | | Other (loss) income, net | $(408) | $355 | $(973) | $399 | | Net loss | $(37,588) | $(11,632) | $(68,511) | $(20,971) | | Net loss per share — basic and diluted | $(0.60) | $(4.43) | $(1.10) | $(8.66) | | Weighted-average common shares outstanding — basic and diluted | 62,344,718 | 2,625,648 | 62,399,034 | 2,420,797 | | Comprehensive loss | $(37,626) | $(11,766) | $(68,424) | $(20,929) | [Condensed Consolidated Statements of Convertible Preferred Stock and Changes in Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Changes%20in%20Stockholders'%20Equity%20(Deficit)) Outlines changes in AlloVir's stockholders' equity, including common shares, additional paid-in capital, and accumulated deficit - The company's total stockholders' equity decreased from **$353,064 thousand** at December 31, 2020, to **$302,469 thousand** at June 30, 2021, primarily due to a net loss of **$37,588 thousand** and other comprehensive losses, partially offset by stock-based compensation[29](index=29&type=chunk) Total Stockholders' Equity (in thousands, except share amounts) | (in thousands, except share amounts) | December 31, 2020 | March 31, 2021 | June 30, 2021 | |:-------------------------------------|:------------------|:---------------|:--------------| | Common Shares | 61,931,255 | 62,451,094 | 62,792,043 | | Additional Paid-In Capital | $478,272 | $486,375 | $496,101 | | Accumulated Other Comprehensive Income (Loss) | $(112) | $13 | $(25) | | Accumulated Deficit | $(125,103) | $(156,026) | $(193,614) | | Total Stockholders' Equity | $353,064 | $330,369 | $302,469 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes AlloVir's cash inflows and outflows from operating, investing, and financing activities | (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | |:---------------|:-------------------------------|:-------------------------------| | Net cash used in operating activities | $(41,814) | $(21,661) | | Net cash provided by investing activities | $144,539 | $38,844 | | Net cash provided by financing activities | $0 | $0 | | Net increase in cash and cash equivalents | $102,786 | $17,183 | | Cash and cash equivalents at end of period | $225,447 | $78,627 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of significant accounting policies, financial instruments, and various agreements [1. Nature of the Business](index=11&type=section&id=1.%20Nature%20of%20the%20Business) AlloVir, Inc. is a late clinical-stage cell therapy company focused on developing allogeneic T-cell therapies for viral diseases - AlloVir is a late clinical-stage cell therapy company developing allogeneic T-cell therapies for viral diseases, with **posoleucel** as its lead candidate targeting six viruses in ongoing pivotal and proof-of-concept trials[33](index=33&type=chunk)[34](index=34&type=chunk) - The company has incurred recurring net losses since inception, totaling **$193.6 million** accumulated deficit as of June 30, 2021, and anticipates continued losses[40](index=40&type=chunk) - As of June 30, 2021, AlloVir had **$225.4 million** in cash and cash equivalents and **$87.9 million** in short-term investments, which are expected to fund operations for at least 12 months[41](index=41&type=chunk) - The COVID-19 pandemic has caused delays in clinical trials and may continue to adversely affect the company's operations, supply chain, and ability to conduct preclinical studies and clinical trials[42](index=42&type=chunk)[43](index=43&type=chunk) [2. Summary of Significant Accounting Policies](index=13&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) The company's interim financial statements are unaudited but prepared on the same basis as audited annual statements, reflecting normal recurring adjustments - Interim financial statements are unaudited but prepared consistently with audited annual statements, including normal recurring adjustments[45](index=45&type=chunk) - The company adopted ASU 2019-12 (Income Taxes) on January 1, 2021, with no material impact on consolidated financial statements[48](index=48&type=chunk) - As an emerging growth company, AlloVir has elected the extended transition period for complying with new or revised financial accounting standards[47](index=47&type=chunk) [3. Short-Term Investments](index=14&type=section&id=3.%20Short-Term%20Investments) The company's short-term investments consist entirely of U.S. government treasury securities, classified as available-for-sale Short-Term Investments (in thousands) | (in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | |:---------------|:---------------|:-----------------|:------------------|:-----------| | **June 30, 2021** | | | | | | U.S. government treasury securities | $87,887 | $3 | $- | $87,890 | | Totals | $87,887 | $3 | $- | $87,890 | | **December 31, 2020** | | | | | | U.S. government treasury securities | $233,687 | $- | $(24) | $233,663 | | Totals | $233,687 | $- | $(24) | $233,663 | - All short-term investments, primarily U.S. government treasury securities, had contractual maturities within one year as of June 30, 2021, and December 31, 2020[51](index=51&type=chunk) [4. Fair Value Measurements](index=14&type=section&id=4.%20Fair%20Value%20Measurements) The company measures its financial assets and liabilities at fair value on a recurring basis, classifying money market funds and U.S. government treasury securities as Level 1 assets Fair Value Measurements (in thousands) | (in thousands) | Level 1 | Level 2 | Level 3 | Total | |:---------------|:--------|:--------|:--------|:------| | **June 30, 2021** | | | | | | Cash equivalents: Money market fund | $192,431 | $- | $- | $192,431 | | Short-term investments: U.S. government treasury securities | $87,890 | $- | $- | $87,890 | | **December 31, 2020** | | | | | | Cash equivalents: Money market fund | $55,505 | $- | $- | $55,505 | | Cash equivalents: U.S. government treasury securities | $39,998 | $- | $- | $39,998 | | Short-term investments: U.S. government treasury securities | $233,663 | $- | $- | $233,663 | - All money market funds and U.S. government treasury securities are classified as Level 1 assets, valued using quoted market prices in active markets[55](index=55&type=chunk) [5. Leases](index=16&type=section&id=5.%20Leases) AlloVir has short-term and operating leases for office and manufacturing spaces, with total lease costs increasing in 2021 - Total lease costs increased to **$1.3 million** for the three months ended June 30, 2021, from **$0.9 million** in the prior year, and to **$2.5 million** for the six months ended June 30, 2021, from **$1.8 million** in the prior year[62](index=62&type=chunk) - The company entered a Statement of Work in April 2021 to lease a dedicated manufacturing suite, with the lease agreement terminating on February 5, 2022[57](index=57&type=chunk) - At June 30, 2021, the weighted average remaining lease term for operating leases was **1.95 years**, and the weighted average discount rate was **4.76%**[62](index=62&type=chunk) [6. Accrued Expenses](index=18&type=section&id=6.%20Accrued%20Expenses) Accrued expenses increased to $9,975 thousand at June 30, 2021, primarily due to higher research and development accruals and professional fees Accrued Expenses (in thousands) | (in thousands) | June 30, 2021 | December 31, 2020 | |:---------------|:--------------|:------------------| | Employee compensation and benefits | $2,689 | $3,314 | | Professional fees | $1,156 | $696 | | Research and development | $5,971 | $3,347 | | Other | $159 | $173 | | Total accrued expenses | $9,975 | $7,530 | - Accrued research and development expenses significantly increased from **$3,347 thousand** at December 31, 2020, to **$5,971 thousand** at June 30, 2021[63](index=63&type=chunk) [7. Sponsored Research, Collaboration and License Agreements](index=18&type=section&id=7.%20Sponsored%20Research,%20Collaboration%20and%20License%20Agreements) AlloVir has several exclusive license and research collaboration agreements with Baylor College of Medicine (BCM), involving milestone payments and royalties - AlloVir holds exclusive worldwide licenses from BCM for patent rights and intellectual property in both viral and non-viral infection fields, with the first license potentially incurring over **$40.0 million** in milestone payments and the second over **$30.0 million**[64](index=64&type=chunk)[68](index=68&type=chunk)[70](index=70&type=chunk)[73](index=73&type=chunk) - The company is obligated to pay BCM tiered royalties on net sales (less than 1% to low single-digits) and tiered sublicense income (mid-single to low double-digits) if it sublicenses its rights[68](index=68&type=chunk)[73](index=73&type=chunk) - Payments to BCM for services increased from **$0.8 million** for the six months ended June 30, 2020, to **$2.1 million** for the same period in 2021, with **$0.2 million** in accrued milestone expenses[78](index=78&type=chunk) [8. Funding Arrangements](index=22&type=section&id=8.%20Funding%20Arrangements) AlloVir previously received a $9.0 million CPRIT Grant and a $3.0 million SBIR grant from NIH, which was fully received by December 31, 2020 - The **$9.0 million** CPRIT Grant for a Phase IIB clinical trial was terminated in November 2019, with **$2.6 million** of funds returned[79](index=79&type=chunk) - The **$3.0 million** SBIR grant from NIH was fully received by December 31, 2020, and the grant period ended on June 30, 2021[80](index=80&type=chunk) - SBIR grant funding is recognized as 'Other income (loss), net' because NIH is not defined as a customer under ASC 606[81](index=81&type=chunk) [9. Stockholder's Equity](index=22&type=section&id=9.%20Stockholder's%20Equity) Following its IPO on August 3, 2020, AlloVir's certificate of incorporation authorizes 10,000,000 shares of preferred stock and 150,000,000 shares of common stock - The IPO on August 3, 2020, involved the issuance of **18,687,500** common shares and the conversion of **39,859,139** preferred shares into common stock[82](index=82&type=chunk)[84](index=84&type=chunk) Shares Reserved for Issuance | Shares Reserved for Issuance | June 30, 2021 | December 31, 2020 | |:-----------------------------|:--------------|:------------------| | Unvested restricted stock | 3,502,002 | 3,410,979 | | Options to purchase common stock | 6,097,072 | 3,972,909 | | Stock available for grant under the 2020 Stock Option and Grant Plan | 4,065,178 | 3,895,961 | | Total | 13,664,252 | 11,279,849 | [10. Stock-Based Compensation](index=24&type=section&id=10.%20Stock-Based%20Compensation) AlloVir operates under the 2018 Equity Incentive Plan and the 2020 Stock Option and Grant Plan, with significant increases in stock-based compensation expense - Stock-based compensation expense increased significantly to **$9.7 million** for the three months ended June 30, 2021 (from **$0.5 million** in 2020) and to **$17.8 million** for the six months ended June 30, 2021 (from **$1.1 million** in 2020), driven by increased headcount[97](index=97&type=chunk) - As of June 30, 2021, there was **$39.6 million** of unrecognized stock-based compensation cost for restricted stock (weighted average period of **3.36 years**) and **$90.4 million** for unvested stock options (weighted average period of **3.29 years**)[90](index=90&type=chunk)[94](index=94&type=chunk) Stock Option Activity (in thousands, except share and per share data) | Stock Option Activity (in thousands, except share and per share data) | Shares | Weighted Average Exercise Price | Weighted Average Contractual Life (in years) | Aggregate Intrinsic Value | |:------------------------------------------------------|:----------|:--------------------------------|:---------------------------------------------|:--------------------------| | Options outstanding at January 1, 2021 | 3,972,909 | $17.84 | 9.6 | $81,822 | | Granted | 2,158,388 | $33.73 | — | — | | Forfeited | (34,225) | $29.43 | — | $53 | | Options outstanding at June 30, 2021 | 6,097,072 | $23.40 | 9.3 | $11,256 | | Options vested and exercisable at June 30, 2021 | 184,361 | $14.37 | 9.0 | $990 | [11. Income Taxes](index=27&type=section&id=11.%20Income%20Taxes) AlloVir did not record current or deferred income tax expense or benefit due to historical and current operating losses - No income tax expense or benefit was recorded for the three and six months ended June 30, 2021 and 2020, due to recurring net losses[100](index=100&type=chunk) - All losses before income taxes are attributable to domestic operations[100](index=100&type=chunk) [12. Net Loss per Share](index=27&type=section&id=12.%20Net%20Loss%20per%20Share) The basic and diluted net loss per share for the three months ended June 30, 2021, was $(0.60), compared to $(4.43) in the prior year Net Loss per Share (in thousands, except share and per share data) | (in thousands, except share and per share data) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | |:------------------------------------------------|:---------------------------------|:---------------------------------|:-------------------------------|:-------------------------------| | Net loss – basic and diluted | $(37,588) | $(11,632) | $(68,511) | $(20,971) | | Weighted-average common shares outstanding – basic and diluted | 62,344,718 | 2,625,648 | 62,399,034 | 2,420,797 | | Net loss per share – basic and diluted | $(0.60) | $(4.43) | $(1.10) | $(8.66) | - Potential common shares from preferred stock, options, and unvested restricted stock were excluded from diluted net loss per share calculations for both periods as their inclusion would have been anti-dilutive[102](index=102&type=chunk)[103](index=103&type=chunk) [13. Related Party Transactions](index=27&type=section&id=13.%20Related%20Party%20Transactions) AlloVir has a Shared Services Agreement with ElevateBio, its affiliate, for various operational services and also subleases office space - Expenses from ElevateBio and affiliates increased to **$3.6 million** for the six months ended June 30, 2021, compared to **$2.5 million** for the same period in 2020[107](index=107&type=chunk) - The amount due to ElevateBio, recorded as 'Amount due to related party,' increased from **$0.6 million** at December 31, 2020, to **$1.7 million** at June 30, 2021[107](index=107&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of AlloVir's business, financial condition, and results of operations, highlighting its focus on allogeneic T-cell therapies for viral diseases [Overview](index=30&type=section&id=Overview) Provides a high-level summary of AlloVir's business, financial condition, and operational highlights - AlloVir is a late clinical-stage cell therapy company developing allogeneic T-cell therapies for viral diseases, with **posoleucel** as its most advanced candidate[111](index=111&type=chunk)[112](index=112&type=chunk) - The company completed an IPO on August 3, 2020, raising **$292.0 million** in net proceeds, and has incurred significant operating losses since inception, with an accumulated deficit of **$193.6 million** as of June 30, 2021[113](index=113&type=chunk)[114](index=114&type=chunk) - AlloVir expects to incur significant and increasing expenses for the foreseeable future due to ongoing R&D, clinical trials, and operating as a public company, necessitating substantial additional funding[115](index=115&type=chunk)[116](index=116&type=chunk) - Cash, cash equivalents, and short-term investments totaled **$313.3 million** at June 30, 2021, projected to fund operations into 2023, but this estimate is subject to change[117](index=117&type=chunk) [Relationship with ElevateBio](index=32&type=section&id=Relationship%20with%20ElevateBio) Describes AlloVir's affiliation with ElevateBio, including shared expertise and management personnel - AlloVir is an affiliate of ElevateBio, leveraging its expertise for manufacturing VST therapies and sharing key management personnel, including the CEO and CFO[112](index=112&type=chunk)[120](index=120&type=chunk) [Initial Public Offering](index=32&type=section&id=Initial%20Public%20Offering) Details the company's IPO, including shares issued, net proceeds, and conversion of preferred stock - The company completed its IPO on August 3, 2020, issuing **18,687,500** shares at **$17.00 per share**, generating **$292.0 million** in net proceeds, and converting all outstanding preferred stock into **39,859,139** common shares[121](index=121&type=chunk) [Components of Results of Operations](index=32&type=section&id=Components%20of%20Results%20of%20Operations) Analyzes the key drivers of AlloVir's operating expenses and other income/loss components [Operating Expenses](index=32&type=section&id=Operating%20Expenses) Explains the nature and components of AlloVir's research and development, and general and administrative expenses - Research and development expenses are expensed as incurred, including external costs for CROs/CMOs, manufacturing materials, employee-related costs, and intellectual property acquisition[122](index=122&type=chunk) - General and administrative expenses primarily cover employee-related costs, professional services (legal, accounting), and insurance, expected to increase with company growth and public company operations[129](index=129&type=chunk) [Total Other Income (Loss), Net](index=34&type=section&id=Total%20Other%20Income%20(Loss),%20Net) Describes the sources of AlloVir's interest income and other income or loss, net - Interest income is derived from cash, cash equivalents, and short-term investments[130](index=130&type=chunk) - Other income (loss), net, includes investment amortization/accretion and income from government grants[131](index=131&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Compares AlloVir's financial performance across different reporting periods, highlighting changes in expenses and net loss [Comparison of the three months ended June 30, 2021 and 2020](index=34&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030,%202021%20and%202020) Compares AlloVir's financial results for the three months ended June 30, 2021 and 2020 | (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Change | |:---------------|:---------------------------------|:---------------------------------|:-------| | Research and Development | $25,677 | $8,885 | $16,792 | | General and Administrative | $11,978 | $3,268 | $8,710 | | Total Operating Expenses | $37,655 | $12,153 | $25,502 | | Net Loss | $(37,588) | $(11,632) | $(25,956) | - Research and development expenses increased by **$16.8 million**, primarily due to a **$5.1 million** increase for posoleucel development (manufacturing and clinical trials), a **$0.5 million** increase for ALVR106, a **$1.0 million** increase for ALVR109 (COVID-19 trials), and an **$8.6 million** increase in personnel-related costs[136](index=136&type=chunk) - General and administrative expenses rose by **$8.7 million**, mainly from a **$6.9 million** increase in payroll and personnel-related costs (including **$5.4 million** in stock-based compensation) due to headcount growth, and a **$1.2 million** increase in insurance[137](index=137&type=chunk) [Comparison of the six months ended June 30, 2021 and 2020](index=35&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030,%202021%20and%202020) Compares AlloVir's financial results for the six months ended June 30, 2021 and 2020 | (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | Change | |:---------------|:-------------------------------|:-------------------------------|:-------| | Research and Development | $46,070 | $15,724 | $30,346 | | General and Administrative | $22,448 | $6,269 | $16,179 | | Total Operating Expenses | $68,518 | $21,993 | $46,525 | | Net Loss | $(68,511) | $(20,971) | $(47,540) | - Research and development expenses increased by **$30.3 million**, driven by a **$9.5 million** increase for posoleucel, **$1.4 million** for ALVR106, **$2.0 million** for ALVR109, and a **$15.3 million** increase in personnel-related costs (including **$7.0 million** in stock-based compensation)[143](index=143&type=chunk) - General and administrative expenses increased by **$16.2 million**, primarily due to a **$12.4 million** increase in payroll and personnel-related costs (including **$9.7 million** in stock-based compensation) and a **$2.4 million** increase in insurance[144](index=144&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses AlloVir's ability to meet financial obligations and fund future operations through available capital - AlloVir's operations are funded primarily through equity financings, including **$156.3 million** from preferred stock sales and **$292.0 million** net proceeds from its IPO[146](index=146&type=chunk) - As of June 30, 2021, cash, cash equivalents, and short-term investments totaled **$313.3 million**, expected to fund operations into 2023[147](index=147&type=chunk) - The company anticipates significant future expenses for clinical development, regulatory approval, and potential commercialization, requiring additional capital through equity, debt, or collaborations[148](index=148&type=chunk)[150](index=150&type=chunk) Cash Flow Summary (in thousands) | (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | |:---------------|:-------------------------------|:-------------------------------| | Net cash used in operating activities | $(41,814) | $(21,661) | | Net cash provided by investing activities | $144,539 | $38,844 | | Net cash provided by financing activities | $0 | $0 | | Net increase in cash and cash equivalents | $102,786 | $17,183 | - Net cash used in operating activities increased by **$20.2 million** to **$41.8 million** for the six months ended June 30, 2021, compared to **$21.7 million** in the prior year, due to higher R&D and G&A expenses[154](index=154&type=chunk)[156](index=156&type=chunk) - Net cash provided by investing activities significantly increased to **$144.5 million** for the six months ended June 30, 2021, from **$38.8 million** in the prior year, primarily due to higher investment maturities[157](index=157&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) Discusses key accounting policies and the significant judgments and estimates used in financial statement preparation - The preparation of financial statements requires estimates and judgments, particularly regarding assets, liabilities, costs, and expenses, with no significant changes to critical accounting policies since December 31, 2020[160](index=160&type=chunk)[163](index=163&type=chunk) [Emerging Growth Company Status](index=40&type=section&id=Emerging%20Growth%20Company%20Status) Explains AlloVir's status as an emerging growth company and its implications for reporting requirements - AlloVir is an 'emerging growth company' under the JOBS Act, allowing it to use an extended transition period for new accounting standards and reduced reporting requirements, including exemption from auditor attestation on internal controls[164](index=164&type=chunk)[165](index=165&type=chunk) - The company will remain an emerging growth company for up to five years post-IPO, or until certain revenue or market capitalization thresholds are met[166](index=166&type=chunk) [Off-Balance Sheet Arrangements](index=40&type=section&id=Off-Balance%20Sheet%20Arrangements) Reports on any material off-balance sheet arrangements affecting AlloVir's financial position - AlloVir did not have any off-balance sheet arrangements during the reported periods[168](index=168&type=chunk) [Recently Issued Accounting Pronouncements](index=40&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Summarizes the impact of recently issued accounting pronouncements on AlloVir's financial statements - A description of recently issued accounting pronouncements is provided in Note 2 to the condensed consolidated financial statements[169](index=169&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Explains AlloVir's exemption from market risk disclosures due to its smaller reporting company status - AlloVir is exempt from disclosing quantitative and qualitative information about market risk due to its status as a smaller reporting company[169](index=169&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Evaluates the effectiveness of AlloVir's disclosure controls and internal control over financial reporting - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2021[172](index=172&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by this report[173](index=173&type=chunk) - The company is exempt from management's assessment and auditor attestation reports on internal control over financial reporting due to a transition period for newly public companies[173](index=173&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Reports on any material legal proceedings or arbitration involving AlloVir - AlloVir is not currently involved in any material arbitration or legal proceedings[176](index=176&type=chunk) - Future litigation could adversely impact the business due to defense costs, diversion of management resources, and unpredictable outcomes[176](index=176&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks and uncertainties that could materially affect AlloVir's business, financial condition, results of operations, and growth prospects [Risks Related to Current Novel Coronavirus (COVID-19) Pandemic](index=42&type=section&id=Risks%20Related%20to%20Current%20Novel%20Coronavirus%20(COVID-19)%20Pandemic) Details how the COVID-19 pandemic could adversely affect AlloVir's business, operations, and clinical trials - The COVID-19 pandemic could adversely affect AlloVir's business by disrupting third-party CROs/CMOs, clinical trial sites, and supply chains, leading to delays in preclinical and clinical activities[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) - The pandemic's economic impact may reduce access to capital and affect the value of common stock, while demand for COVID-19 vaccines could make it harder to secure manufacturing slots and materials for AlloVir's trials[182](index=182&type=chunk)[183](index=183&type=chunk) [Risks Related to the Clinical Development, Regulatory Review and Approval of Our Product Candidates](index=43&type=section&id=Risks%20Related%20to%20the%20Clinical%20Development,%20Regulatory%20Review%20and%20Approval%20of%20Our%20Product%20Candidates) Outlines risks associated with clinical development, regulatory approval, and the complex landscape for cell therapies [Risks Related to Clinical Development](index=43&type=section&id=Risks%20Related%20to%20Clinical%20Development) Highlights challenges in clinical development, including early-stage status and dependence on successful trials - AlloVir is in early development, with most product candidates in preclinical stages, and its ability to generate revenue depends heavily on successful development and commercialization, which is subject to numerous factors including positive clinical trial results and regulatory approvals[184](index=184&type=chunk)[185](index=185&type=chunk) [Regulatory Approval Dependence](index=44&type=section&id=Our%20future%20success%20is%20dependent%20on%20the%20regulatory%20approval%20of%20our%20product%20candidates.%20The%20regulatory%20approval%20processes%20of%20the%20FDA%20and%20comparable%20foreign%20authorities%20are%20lengthy,%20time%20consuming%20and%20inherently%20unpredictable,%20and%20if%20we%20are%20ultimately%20unable%20to%20obtain%20regulatory%20approval%20for%20our%20product%20candidates,%20our%20business%20will%20be%20substantially%20harmed.) AlloVir's future success depends on timely regulatory approval, a lengthy, expensive, and unpredictable process - The company's business is substantially dependent on obtaining timely regulatory approval for its product candidates, a process that is lengthy, expensive, and unpredictable, with no guarantee of success[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - Failure to obtain regulatory approval could stem from disagreements on trial design, insufficient safety/efficacy data, or manufacturing issues, potentially leading to delays, limited indications, or denial of approval[189](index=189&type=chunk)[190](index=190&type=chunk) [Risks Related to the Industry](index=45&type=section&id=Risks%20Related%20to%20the%20Industry) Discusses industry-specific risks, including potential disruptions at regulatory agencies affecting product review - Disruptions at regulatory agencies like the FDA due to funding shortages or global health concerns (e.g., COVID-19) could delay product review and approval, adversely affecting AlloVir's business[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) [Regulatory Landscape for Cell Therapy](index=45&type=section&id=The%20regulatory%20landscape%20that%20applies%20to%20gene%20and%20cell%20therapy%20product%20candidates%20is%20rigorous,%20complex,%20uncertain%20and%20subject%20to%20change.%20Our%20single-%20and%20multi-VST-cell%20therapy%20product%20candidates%20represent%20new%20therapeutic%20approaches%20that%20could%20result%20in%20heightened%20regulatory%20scrutiny,%20delays%20in%20clinical%20development%20or%20delays%20in%20or%20our%20ability%20to%20achieve%20regulatory%20approval,%20if%20at%20all,%20and%20commercialization%20or%20payor%20coverage%20and%20reimbursement%20of%20our%20product%20candidates,%20if%20approved.) The rigorous, complex, and uncertain regulatory landscape for cell therapies poses significant development and approval risks - The novel nature of AlloVir's single- and multi-VST-cell therapies subjects them to a rigorous, complex, and uncertain regulatory landscape, potentially leading to heightened scrutiny and delays in development, approval, and commercialization[195](index=195&type=chunk) - Challenges include obtaining regulatory approval from agencies with limited experience in T-cell immunotherapies, developing consistent manufacturing processes, ensuring donor material quality, and establishing safe administration and long-term follow-up[196](index=196&type=chunk) - Adverse developments in gene therapy trials by others or changes in regulatory requirements could impact AlloVir's clinical trials and approval timelines[197](index=197&type=chunk)[198](index=198&type=chunk) [Clinical Development Challenges](index=48&type=section&id=Clinical%20drug%20development%20involves%20a%20lengthy%20and%20expensive%20process%20with%20an%20uncertain%20outcome,%20and%20the%20inability%20to%20successfully%20and%20timely%20conduct%20clinical%20trials%20and%20obtain%20regulatory%20approval%20for%20our%20product%20candidates%20would%20substantially%20harm%20our%20business.) Clinical drug development is lengthy, expensive, and uncertain, with potential for delays and failure at any stage - Clinical drug development is lengthy, expensive, and uncertain, with potential for failure at any stage, and delays can arise from regulatory disagreements, site issues, patient enrollment difficulties, or unforeseen safety concerns[202](index=202&type=chunk)[203](index=203&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) - Delays or quality issues in clinical trials would harm approval and commercial prospects, increase costs, and potentially reduce the period of commercial exclusivity[209](index=209&type=chunk)[210](index=210&type=chunk) [Predictive Value of Early Clinical Data](index=51&type=section&id=The%20results%20of%20preclinical%20studies%20or%20earlier%20clinical%20trials%20are%20not%20necessarily%20predictive%20of%20future%20results.%20Our%20existing%20product%20candidates%20in%20clinical%20trials,%20and%20any%20other%20product%20candidate%20we%20advance%20into%20clinical%20trials,%20may%20not%20have%20favorable%20results%20in%20later%20clinical%20trials%20or%20receive%20regulatory%20approval.) Early clinical data may not predict future results, and open-label trials are subject to bias, impacting later-stage outcomes - Success in preclinical or early-stage clinical trials does not guarantee favorable results in later-stage trials, and prior promising results may not be replicated[211](index=211&type=chunk)[212](index=212&type=chunk) - Open-label trial designs, used in all of AlloVir's clinical trials to date, are subject to patient and investigator bias, and their results may not be predictive of future controlled trials[212](index=212&type=chunk) [Interim Data Reliability](index=52&type=section&id=Interim,%20%22top%20line%22%20or%20preliminary%20data%20from%20our%20clinical%20trials%20that%20we%20may%20announce%20or%20share%20with%20regulatory%20authorities%20from%20time%20to%20time%20may%20change%20as%20more%20patient%20data%20become%20available%20and%20are%20subject%20to%20audit%20and%20verification%20procedures%20that%20could%20result%20in%20material%20changes%20in%20the%20final%20data.) Interim clinical trial data are subject to change and may differ materially from final results upon comprehensive review - Interim or preliminary clinical trial data are subject to change upon comprehensive review and audit, and may differ materially from final results, potentially impacting regulatory approval and commercialization[215](index=215&type=chunk)[216](index=216&type=chunk) [Undesirable Side Effects](index=52&type=section&id=Our%20product%20candidates,%20the%20methods%20used%20to%20deliver%20them%20or%20their%20dosage%20levels%20may%20cause%20undesirable%20side%20ef%20ects%20or%20have%20other%20properties%20that%20could%20delay%20or%20prevent%20their%20regulatory%20approval,%20limit%20the%20commercial%20profile%20of%20an%20approved%20label%20or%20result%20in%20significant%20negative%20consequences%20following%20any%20regulatory%20approval.) Product candidates may cause undesirable side effects, potentially delaying approval or leading to post-approval consequences - Undesirable side effects from product candidates, delivery methods, or dosage levels could delay or prevent regulatory approval, lead to restrictive labeling, or result in significant negative consequences post-approval, including market withdrawal or fines[217](index=217&type=chunk)[218](index=218&type=chunk) [Orphan Drug Designation](index=53&type=section&id=We%20may%20not%20be%20able%20to%20obtain%20or%20maintain%20orphan%20drug%20designation%20to%20our%20product%20candidates,%20or%20to%20obtain%20and%20maintain%20the%20benefits%20associated%20with%20orphan%20drug%20designation.) Obtaining and maintaining orphan drug designation is uncertain, and associated benefits may be limited or lost - AlloVir's posoleucel has received orphan drug designation in the EU for treating serious infections in HSCT patients, but this does not guarantee faster development, review, or approval, nor does it prevent competition from different drugs for the same condition[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) - Orphan drug exclusivity can be limited or lost under certain conditions, such as a showing of clinical superiority by a competitor or inability to supply sufficient quantities[221](index=221&type=chunk)[222](index=222&type=chunk) [International Regulatory Approval](index=56&type=section&id=Failure%20to%20obtain%20regulatory%20approval%20in%20international%20jurisdictions%20would%20prevent%20our%20product%20candidates%20from%20being%20marketed%20abroad.) Failure to obtain international regulatory approvals would prevent product candidates from being marketed abroad - Failure to obtain separate regulatory approvals and comply with varying requirements in international jurisdictions (e.g., EU, Asia) would prevent product candidates from being marketed abroad, significantly diminishing commercial prospects[237](index=237&type=chunk) [Ongoing Regulatory Requirements](index=56&type=section&id=Even%20if%20our%20product%20candidates%20receive%20regulatory%20approval,%20we%20will%20still%20face%20extensive%20ongoing%20regulatory%20requirements%20and%20continued%20regulatory%20review,%20which%20may%20result%20in%20significant%20additional%20expense,%20and%20our%20products%20may%20still%20face%20future%20development%20and%20regulatory%20dif%20iculties.) Approved products face extensive ongoing regulatory requirements and review, leading to significant expenses and potential restrictions - Even after approval, product candidates are subject to extensive ongoing regulatory requirements (manufacturing, labeling, safety surveillance) and continued review, which can lead to significant additional expenses, restrictions, or even withdrawal of approval[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) - Non-compliance with regulations or changes in policies could result in fines, injunctions, suspension of trials, refusal of applications, or product recalls[239](index=239&type=chunk)[240](index=240&type=chunk)[242](index=242&type=chunk) [Impact of Regulations and Guidelines](index=57&type=section&id=Regulations,%20guidelines%20and%20recommendations%20published%20by%20various%20government%20agencies%20and%20organizations%20may%20af%20ect%20the%20use%20of%20our%20product%20candidates.) Changes in regulations, guidelines, or recommendations could adversely affect the use of approved products - Changes in regulations, recommendations, or guidelines advocating alternative therapies could decrease the use of AlloVir's approved products[243](index=243&type=chunk) [Risks Related to Our Business and Commercialization](index=57&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Commercialization) Covers risks related to product identification, market acceptance, reimbursement, and healthcare reforms [New Product Candidate Development](index=57&type=section&id=We%20may%20not%20successfully%20identify,%20acquire,%20develop%20or%20commercialize%20new%20potential%20product%20candidates.) AlloVir may not successfully identify, acquire, develop, or commercialize new potential product candidates - AlloVir's strategy to expand its pipeline through identifying, in-licensing, or acquiring new product candidates may fail due to inability to identify relevant candidates or reach acceptable terms with third parties[244](index=244&type=chunk) [Market Acceptance](index=57&type=section&id=Our%20commercial%20success%20depends%20upon%20attaining%20significant%20market%20acceptance%20of%20our%20product%20candidates,%20if%20approved,%20among%20physicians,%20patients,%20healthcare%20payors%20and%20the%20medical%20community,%20including%20hospitals%20and%20outpatient%20clinics.) Commercial success depends on significant market acceptance of approved product candidates among physicians, patients, and healthcare payors - Commercial success depends on significant market acceptance of approved product candidates among physicians, patients, and payors, influenced by efficacy, safety, pricing, reimbursement, and marketing efforts[245](index=245&type=chunk)[246](index=246&type=chunk) [Reimbursement Challenges](index=58&type=section&id=Even%20if%20we%20are%20able%20to%20commercialize%20our%20product%20candidates,%20the%20products%20may%20not%20receive%20coverage%20and%20adequate%20reimbursement%20from%20third-party%20payors%20in%20the%20United%20States%20and%20in%20other%20countries%20in%20which%20we%20seek%20to%20commercialize%20our%20products,%20which%20could%20harm%20our%20business.) Obtaining adequate coverage and reimbursement from third-party payors is crucial for commercialization and remains uncertain - Commercialization success is contingent on obtaining coverage and adequate reimbursement from government and private third-party payors, which is uncertain due to cost containment trends and varying reimbursement policies[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) [Dependence on Posoleucel](index=58&type=section&id=Our%20business%20is%20highly%20dependent%20on%20our%20lead%20product%20candidate,%20posoleucel,%20and%20we%20must%20complete%20clinical%20testing%20before%20we%20can%20seek%20regulatory%20approval%20and%20begin%20commercialization%20of%20any%20of%20our%20product%20candidates.) AlloVir's business is highly dependent on the successful clinical development and regulatory approval of posoleucel - AlloVir's business is highly dependent on the successful completion of clinical testing and regulatory approval for its lead product candidate, posoleucel, with no guarantee of success[250](index=250&type=chunk)[251](index=251&type=chunk) - Negative results for posoleucel could impact approval for other product candidates due to shared technology, and resource allocation decisions may cause the company to miss other commercial opportunities[252](index=252&type=chunk)[253](index=253&type=chunk) [Healthcare Reform and Pricing Regulations](index=59&type=section&id=Current%20and%20future%20legislation,%20including%20potentially%20unfavorable%20pricing%20regulations%20or%20other%20healthcare%20reform%20initiatives,%20may%20increase%20the%20dif%20iculty%20and%20cost%20for%20us%20to%20obtain%20regulatory%20approval%20of%20and%20commercialize%20our%20product%20candidates%20and%20af%20ect%20the%20prices%20we%20may%20obtain.) Current and future healthcare legislation and pricing regulations could increase costs and affect product pricing - Current and future healthcare legislation, such as the Affordable Care Act (ACA) and various proposals to control drug costs, could increase the difficulty and cost of obtaining regulatory approval and commercializing product candidates, and negatively impact pricing[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - Uncertainty surrounding the ACA's future and various executive orders and legislative proposals aimed at lowering drug prices could lead to reduced demand, increased pricing pressure, and significant changes to the healthcare system[256](index=256&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk)[262](index=262&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) [Foreign Price Controls](index=63&type=section&id=Price%20controls%20may%20be%20imposed%20in%20foreign%20markets,%20which%20may%20adversely%20af%20ect%20our%20future%20profitability.) Governmental price controls in foreign markets may adversely affect future profitability and pricing negotiations - Governmental price controls in foreign markets, particularly in the European Union, could significantly complicate pricing negotiations and reduce profitability for AlloVir's products[270](index=270&type=chunk) [Biologics Competition](index=63&type=section&id=We%20expect%20the%20product%20candidates%20we%20develop%20will%20be%20regulated%20biologics%20and%20therefore%20they%20may%20be%20subject%20to%20competition%20sooner%20than%20anticipated.) AlloVir's biologic product candidates may face biosimilar competition sooner than anticipated, impacting commercial prospects - AlloVir's product candidates, as regulated biologics, may face competition from biosimilar products sooner than anticipated due to the Biologics Price Competition and Innovation Act (BPCIA), potentially impacting commercial prospects and pricing[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk) [Healthcare Fraud and Abuse Laws](index=63&type=section&id=Our%20relationships%20with%20customers,%20third-party%20payors,%20physicians%20and%20healthcare%20providers%20will%20be%20subject%20to%20applicable%20anti-kickback,%20fraud%20and%20abuse,%20and%20other%20laws%20and%20regulations,%20which%20could%20expose%20us%20to%20criminal%20sanctions,%20civil%20penalties,%20contractual%20damages,%20reputational%20harm,%20and%20diminished%20profits.) Relationships with healthcare stakeholders are subject to fraud and abuse laws, risking significant penalties and reputational harm - Relationships with healthcare stakeholders are subject to anti-kickback, fraud and abuse, and other healthcare laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Sunshine Act), which could lead to significant penalties, reputational harm, or exclusion from government programs if violated[275](index=275&type=chunk)[277](index=277&type=chunk) [Privacy and Data Protection Laws](index=65&type=section&id=Changes%20in%20and%20failures%20to%20comply%20with%20U.S.%20federal%20and%20state%20and%20foreign%20privacy%20and%20data%20protection%20laws,%20regulations%20and%20standards%20may%20adversely%20af%20ect%20our%20business,%20operations%20and%20financial%20performance.) Non-compliance with evolving privacy and data protection laws could result in significant penalties and reputational harm - Non-compliance with evolving privacy and data protection laws, such as HIPAA, CCPA, and GDPR, could result in significant civil/criminal penalties, private litigation, and reputational harm, especially given the sensitive nature of health information[278](index=278&type=chunk)[279](index=279&type=chunk) [Key Personnel Dependence](index=66&type=section&id=We%20are%20highly%20dependent%20on%20our%20key%20personnel%20and%20anticipate%20hiring%20new%20key%20personnel.%20If%20we%20are%20not%20successful%20in%20attracting%20and%20retaining%20highly%20qualified%20personnel,%20we%20may%20not%20be%20able%20to%20successfully%20implement%20our%20business%20strategy.) AlloVir is highly dependent on key personnel, and inability to attract or retain them could harm business strategy - AlloVir is highly dependent on its key managerial, scientific, and medical personnel, and the inability to attract and retain qualified individuals could delay product development and harm business strategy[280](index=280&type=chunk)[281](index=281&type=chunk)[283](index=283&type=chunk) - Conflicts of interest may arise due to shared management positions and equity interests with ElevateBio, potentially impacting decision-making[284](index=284&type=chunk) [Organizational Growth Management](index=66&type=section&id=We%20may%20need%20to%20grow%20the%20size%20of%20our%20organization,%20and%20we%20may%20experience%20dif%20iculties%20in%20managing%20this%20growth.) Managing expected organizational growth, including increased headcount and facilities, poses significant challenges - Expected organizational growth, including increased headcount and facilities, will impose significant responsibilities on management and could lead to difficulties in managing preclinical/clinical studies, recruiting, and improving systems[285](index=285&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk) [Employee Misconduct Risk](index=68&type=section&id=Our%20employees%20may%20engage%20in%20misconduct%20or%20other%20improper%20activities,%20including%20noncompliance%20with%20regulatory%20standards%20and%20requirements,%20which%20could%20cause%20significant%20liability%20for%20us%20and%20harm%20our%20reputation.) Employee misconduct or noncompliance with regulatory standards could cause significant liability and reputational harm - The company is exposed to risks of employee fraud or misconduct, including noncompliance with regulatory standards, which could result in significant liability, fines, reputational harm, and operational disruption[288](index=288&type=chunk)[289](index=289&type=chunk) [Risks Related to our Business](index=68&type=section&id=Risks%20Related%20to%20our%20Business) Addresses risks including cybersecurity, system failures, business disruptions, and tax law changes [Cybersecurity Risks](index=68&type=section&id=We%20may%20be%20unable%20to%20adequately%20protect%20our%20information%20systems%20from%20cyberattacks,%20which%20could%20result%20in%20the%20disclosure%20of%20confidential%20or%20proprietary%20information,%20including%20personal%20data,%20damage%20our%20reputation,%20and%20subject%20us%20to%20significant%20financial%20and%20legal%20exposure.) Inadequate protection against cyberattacks could lead to data breaches, reputational damage, and financial exposure - Failure to protect information systems from cyberattacks could lead to theft of intellectual property, data breaches, disruption of operations, and significant financial and legal exposure, harming the company's reputation[290](index=290&type=chunk)[292](index=292&type=chunk) [System Failures and Breaches](index=69&type=section&id=Our%20internal%20computer%20systems,%20or%20those%20used%20by%20our%20third-party%20CROs%20or%20other%20contractors%20or%20consultants,%20may%20fail%20or%20suf%20er%20security%20breaches,%20which%20could%20result%20in%20a%20material%20disruption%20of%20the%20development%20programs%20of%20our%20product%20candidates.) Failures or security breaches in computer systems could disrupt development programs and delay regulatory approval - Failures or security breaches in internal or third-party computer systems could materially disrupt development programs, delay regulatory approval, increase costs, and lead to loss or damage of data[293](index=293&type=chunk) [Business Disruptions](index=69&type=section&id=Business%20disruptions%20could%20seriously%20harm%20our%20future%20revenue%20and%20financial%20condition%20and%20increase%20our%20costs%20and%20expenses.) Business disruptions from natural disasters or epidemics could seriously harm revenue and financial condition - Natural disasters, epidemics, or man-made disruptions affecting operations or third-party manufacturers could seriously harm revenue, financial condition, and increase costs, as the company is predominantly self-insured for such events[294](index=294&type=chunk) [Tax Law Changes](index=69&type=section&id=Legislation%20or%20other%20changes%20in%20U.S.%20tax%20law%20could%20adversely%20af%20ect%20our%20business%20and%20financial%20condition.) Changes in U.S. tax law could adversely affect AlloVir's business and financial condition - Changes in U.S. federal, state, and local tax laws, such as the TCJA and CARES Act, could adversely affect AlloVir's business and financial condition by increasing tax liability or requiring operational changes[295](index=295&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk) [Net Operating Loss Limitations](index=70&type=section&id=Our%20ability%20to%20use%20our%20U.S.%20net%20operating%20loss%20carryforwards%20and%20certain%20other%20U.S.%20tax%20attributes%20may%20be%20limited.) AlloVir's ability to use net operating loss carryforwards may be limited by future taxable income or ownership changes - AlloVir's ability to use its U.S. federal and state net operating loss carryforwards (approximately **$20.9 million** as of December 31, 2020) may be limited by future taxable income generation or 'ownership changes' under the Internal Revenue Code, potentially increasing tax liability[298](index=298&type=chunk)[299](index=299&type=chunk) [Market and Economic Instability](index=70&type=section&id=Unstable%20market%20and%20economic%20conditions%20may%20have%20serious%20adverse%20consequences%20on%20our%20business,%20financial%20condition%20and%20stock%20price.) Unstable market and economic conditions may adversely affect AlloVir's business, financial condition, and stock price - Unstable global credit and financial markets could adversely affect AlloVir's business strategy, making debt or equity financing more difficult and costly, and potentially impacting its stock price[301](index=301&type=chunk)[302](index=302&type=chunk) [Risks Related to Litigation](index=70&type=section&id=Risks%20Related%20to%20Litigation) Covers risks from securities class action litigation and product liability lawsuits - AlloVir faces an increased risk of securities class action litigation, which could result in substantial costs and diversion of management attention[303](index=303&type=chunk) - Product liability lawsuits related to clinical trials or commercial sales could lead to substantial liabilities, decreased demand, reputational damage, and financial losses exceeding insurance coverage[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) [Risks Related to Intellectual Property Litigation](index=72&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20Litigation) Addresses risks of patent infringement claims, intellectual property enforcement, and trade secret misappropriation - AlloVir faces risks of third-party patent infringement claims, which could be costly, time-consuming, and potentially force the company to cease development or commercialization, or require expensive licenses[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk)[312](index=312&type=chunk) - Lawsuits to protect or enforce intellectual property rights are expensive and uncertain, potentially leading to invalidation of patents, loss of rights, or diversion of management resources[315](index=315&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk) - Claims of misappropriation of confidential information or trade secrets by employees or contractors could limit AlloVir's ability to develop product candidates and result in litigation costs[313](index=313&type=chunk)[314](index=314&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) [Risks Related to Our Financial Condition, Capital Needs and Ownership of Our Common Stock](index=75&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition,%20Capital%20Needs%20and%20Ownership%20of%20Our%20Common%20Stock) Examines risks concerning financial condition, capital requirements, and the ownership of common stock [Risks Related to Financial Condition](index=75&type=section&id=Risks%20Related%20to%20Financial%20Condition) Highlights AlloVir's history of net losses, accumulated deficit, and the uncertainty of future profitability - AlloVir has incurred significant net losses since inception (**$193.6 million** accumulated deficit as of June 30, 2021) and expects to continue incurring substantial losses as it advances product candidates, making profitability uncertain[321](index=321&type=chunk)[322](index=322&type=chunk) - The company has a limited operating history since 2013, making it difficult to assess future viability, especially given the novel nature of its cell therapies and the need to transition to commercial activities[324](index=324&type=chunk)[325](index=325&type=chunk) [Risks Related to Capital Needs](index=76&type=section&id=Risks%20Related%20to%20Capital%20Needs) Discusses the need for substantial additional funding and the risks of inability to raise capital on acceptable terms - AlloVir will require substantial additional funding for preclinical and clinical development, regulatory approvals, and commercialization, with no committed sources of capital[326](index=326&type=chunk)[327](index=327&type=chunk)[328](index=328&type=chunk)[330](index=330&type=chunk) - Inability to raise capital on acceptable terms could force delays, reductions, or termination of product development and commercialization efforts, or relinquishing rights to product candidates[330](index=330&type=chunk) - Existing cash, cash equivalents, and short-term investments (**$313.3 million** as of June 30, 2021) are estimated to fund operations into 2023, but this estimate is subject to change[330](index=330&type=chunk)[331](index=331&type=chunk) [Risks Related to Ownership of our Common Stock](index=78&type=section&id=Risks%20Related%20to%20Ownership%20of%20our%20Common%20Stock) Covers risks related to stock market volatility, dilution, anti-takeover provisions, and public company operating costs - An active, liquid, and orderly trading market for AlloVir's common stock may not develop or be sustained post-IPO, making it difficult for stockholders to sell shares[332](index=332&type=chunk) - The trading price of common stock is highly volatile, influenced by clinical trial results, regulatory decisions, competition, and general market conditions[333](index=333&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) - Principal stockholders and management own approximately **65%** of common stock, allowing them to exert significant influence over stockholder approval matters[336](index=336&type=chunk) - Future equity offerings or debt financings could dilute existing stockholders, impose restrictive covenants, or require relinquishing rights to product candidates[337](index=337&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk)[340]

Financial Performance - The company reported net losses of $23.6 million and $44.6 million for the three and nine months ended September 30, 2020, respectively, with an accumulated deficit of $99.9 million[130]. - The net loss for the three months ended September 30, 2020, was $23.6 million, compared to a net loss of $7.3 million for the same period in 2019, representing an increase of $16.3 million[150]. - The company recognized no revenue for the nine months ended September 30, 2020, compared to $0.2 million for the same period in 2019 due to the termination of the CPRIT grant[156]. - Net cash used in operating activities was $39.7 million for the nine months ended September 30, 2020, compared to $11.3 million for the same period in 2019, reflecting a significant increase in operating losses[169][170]. - The increase in cash used in operating activities of $28.4 million for the nine months ended September 30, 2020, was primarily due to higher research and development expenses related to the development of Viralym-M and ALVR106[171]. - General and administrative expenses for the three months ended September 30, 2020, were $6.7 million, up $3.9 million from $2.8 million in the same period of 2019[153]. - General and administrative expenses for the nine months ended September 30, 2020, were $13.0 million, up $5.2 million from $7.8 million in the same period of 2019[159]. Cash and Investments - As of September 30, 2020, the company had cash, cash equivalents, and short-term investments of $378.5 million, which it believes will fund operations into 2023[133]. - The company had $378.5 million in cash, cash equivalents, and short-term investments as of September 30, 2020[161]. - As of September 30, 2020, the company held cash, cash equivalents, and short-term investments of $378.5 million, a significant increase from $126.1 million as of December 31, 2019[183]. - Net cash used in investing activities was $171.4 million for the nine months ended September 30, 2020, compared to $99.5 million for the same period in 2019, driven by the purchase of investments totaling $242.4 million[172]. - Net cash provided by financing activities was $292.3 million for the nine months ended September 30, 2020, due to proceeds from the IPO, compared to $120.9 million in the same period of 2019 from the issuance of Series B Preferred Stock[173]. - The company had no debt outstanding as of September 30, 2020, eliminating exposure to interest rate risk related to debt[184]. Research and Development - The company has generated five innovative, allogeneic, off-the-shelf VST therapy candidates targeting 12 different viruses, with the lead product candidate, Viralym-M, having treated over 275 patients[126][127]. - The company plans to initiate three Phase 3 pivotal and three Phase 2 proof-of-concept trials for Viralym-M in 2020 and 2021, representing potential commercial opportunities[127]. - The company anticipates filing an IND application for its second cell therapy, ALVR106, in the second half of 2020, targeting severe respiratory diseases[127]. - Research and development expenses for the three months ended September 30, 2020, were $17.2 million, an increase of $11.5 million from $5.7 million in the same period of 2019[150]. - Research and development expenses for the nine months ended September 30, 2020, totaled $32.9 million, an increase of $23.3 million from $9.6 million in the same period of 2019[157]. - The company expects to incur significant expenses and operating losses as it advances its product candidates through clinical development and seeks regulatory approval[164]. Operational Challenges - The company is assessing the impact of the COVID-19 pandemic on its operations, which has caused delays in clinical trials[133][135]. - The company expects to incur significant and increasing expenses and operating losses as it initiates additional clinical trials and expands its product development efforts[131]. Corporate Actions - The company completed an IPO on August 3, 2020, issuing 18,687,500 shares at $17.00 per share, resulting in net proceeds of $292.0 million[128]. - The company has not generated any revenue from product sales to date and relies on equity financings for funding[128][137]. - The company has a relationship with ElevateBio, leveraging its expertise for rapid manufacturing of VST therapies[136]. - The company anticipates that general and administrative expenses will increase in the future as it expands its headcount to support ongoing research activities[147].

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