Adagio(IVVD) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The company reported its first product revenue of $2.3 million, a net loss of $47.2 million, and a significant decrease in cash to $147.9 million, raising going concern doubts Condensed Consolidated Balance Sheets Total assets decreased to $177.3 million, driven by lower cash, while liabilities and stockholders' equity also declined Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $147,881 | $200,641 | | Accounts receivable, net | $2,888 | $— | | Inventory, net | $5,333 | $— | | Total current assets | $173,011 | $224,881 | | Total assets | $177,346 | $229,181 | | Liabilities & Equity | | | | Accounts payable | $7,499 | $7,953 | | Accrued expenses | $26,822 | $40,860 | | Total current liabilities | $36,704 | $50,291 | | Total liabilities | $36,704 | $51,713 | | Total stockholders' equity | $140,642 | $177,468 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported its first product revenue of $2.3 million and a net loss of $47.2 million, with reduced R&D expenses offsetting increased SG&A costs Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Product revenue, net | $2,264 | $— | | Research and development | $30,334 | $43,618 | | Selling, general and administrative | $21,089 | $10,107 | | Loss from operations | ($49,247) | ($53,875) | | Net loss | ($47,247) | ($50,228) | | Net loss per share | ($0.40) | ($0.46) | Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $91.8 million, partially offset by $39.2 million from financing, resulting in a $52.8 million net cash decrease Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($91,813) | ($78,572) | | Net cash (used in) provided by investing activities | ($140) | $107,631 | | Net cash provided by financing activities | $39,193 | $812 | | Net (decrease) increase in cash | ($52,760) | $29,871 | | Cash at end of period | $147,881 | $121,947 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the PEMGARDA EUA, substantial doubt about going concern, new accounting policies, significant contractual commitments, and stock-based compensation - The company received Emergency Use Authorization (EUA) from the FDA for PEMGARDA™ for pre-exposure prophylaxis of COVID-19 on March 22, 2024, and submitted a request in July 2024 to amend the EUA for treatment use[14] - Management has concluded there is substantial doubt about the company's ability to continue as a going concern, as current cash is insufficient to fund operations for more than one year without additional financing or revenue[15] - The company has significant financial commitments, including up to $24.6 million in potential milestone payments under the Adimab Assignment Agreement and noncancelable purchase obligations of $52.6 million for drug substance and $24.7 million for materials with WuXi Biologics[37][54] - In February 2024, the company sold 9 million shares of common stock through its At-The-Market (ATM) facility, raising $39.3 million in net proceeds[61] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses PEMGARDA's commercial launch, Q2 2024 financial results including decreased R&D and increased SG&A, and reiterates going concern doubts due to insufficient cash Comparison of Results of Operations (in thousands) | Line Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Product revenue, net | $2,264 | $— | $2,264 | | Research and development | $30,334 | $43,618 | ($13,284) | | Selling, general and administrative | $21,089 | $10,107 | $10,982 | | Net loss | ($47,247) | ($50,228) | $2,981 | - The decrease in R&D expenses for Q2 2024 was primarily due to a $29.1 million reduction in contract costs for commercial manufacturing of VYD222, partially offset by costs for the new VYD2311 program[101] - The increase in SG&A expenses for Q2 2024 was driven by a $6.9 million increase in personnel-related costs (including a large stock-based compensation charge for the former CEO) and a $3.3 million increase in professional fees related to PEMGARDA's commercialization[103] - The company explicitly states there is substantial doubt about its ability to continue as a going concern, as cash and cash equivalents of $147.9 million are not sufficient to fund operations and capital requirements beyond one year[87][118] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing market risk disclosures - As a smaller reporting company, Invivyd is not required to provide quantitative and qualitative disclosures about market risk[123] Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2024, with no material changes to internal control over financial reporting - The Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[124] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[125] PART II. OTHER INFORMATION Legal Proceedings The company is vigorously defending a securities class action lawsuit alleging false statements about ADG20's effectiveness against the Omicron variant - A securities class action lawsuit (Brill v. Invivyd, Inc.) was filed against the company and former officers concerning statements about ADG20's effectiveness against the Omicron variant[57][127] - A motion to dismiss was heard on May 10, 2024, and the court has taken the matter under advisement; the company intends to vigorously defend against the action[57][127] Risk Factors A new risk factor was added concerning third-party vendor reliance, specifically a potential AVNA contamination impacting PEMGARDA potency data - A new risk factor was added concerning reliance on third-party vendors for nonclinical activities and clinical trials[129] - The company was informed in July 2024 by its third-party AVNA vendor of a possible contamination event that may have impacted the potency value for pemivibart against the JN.1 variant, which may require revisions to the PEMGARDA Fact Sheet[129][130] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered equity securities were issued or repurchased during the three months ended June 30, 2024 - No unregistered equity securities were issued during the three months ended June 30, 2024[130] Other Information The Chief Technology & Manufacturing Officer adopted a Rule 10b5-1 trading plan for the potential sale of up to 257,291 shares - Stacy Price, Chief Technology & Manufacturing Officer, adopted a Rule 10b5-1 trading plan on June 28, 2024, covering up to 257,291 shares[131] Exhibits This section lists exhibits filed with the quarterly report, including employment agreements and officer certifications