Vir(US:VIR)2024-05-03 20:16PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the first quarter of 2024 Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for Vir Biotechnology, Inc. as of March 31, 2024, and for the three months ended March 31, 2024 and 2023 Condensed Consolidated Balance Sheets Total assets decreased from $1.92 billion at year-end 2023 to $1.79 billion as of March 31, 2024, primarily due to reduced cash and investments, while total liabilities also decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $160,711 | $241,576 | | Short-term investments | $985,125 | $1,270,980 | | Total current assets | $1,213,097 | $1,588,226 | | Total Assets | $1,793,969 | $1,919,060 | | Liabilities & Equity | | | | Total current liabilities | $94,068 | $175,407 | | Total Liabilities | $246,613 | $328,824 | | Total Stockholders' Equity | $1,547,356 | $1,590,236 | Condensed Consolidated Statements of Operations The company reported a net loss of $65.3 million for Q1 2024, a significant improvement from $140.9 million in Q1 2023, driven by lower operating expenses despite a slight revenue decrease Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Collaboration revenue | $(987) | $46,574 | | Contract revenue | $52,191 | $138 | | Total revenues | $56,376 | $62,957 | | Research and development | $100,125 | $157,643 | | Selling, general and administrative | $36,273 | $46,778 | | Total operating expenses | $136,457 | $206,328 | | Loss from operations | $(80,081) | $(143,371) | | Net loss attributable to Vir | $(65,276) | $(140,900) | | Net loss per share, basic and diluted | $(0.48) | $(1.06) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities decreased to $109.4 million in Q1 2024, while net cash provided by investing activities also decreased, resulting in an $80.8 million total cash decrease Cash Flow Highlights (in thousands) | Activity | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(109,390) | $(125,782) | | Net cash provided by investing activities | $28,420 | $98,079 | | Net cash provided by financing activities | $152 | $2,344 | | Net decrease in cash, cash equivalents and restricted cash | $(80,818) | $(25,359) | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail accounting policies, business overview, and financial arrangements, including the company's focus on infectious diseases, liquidity, collaboration agreements, and a recent restructuring plan - The company is an immunology firm focused on treating and preventing infectious diseases, with a clinical pipeline targeting HDV, HBV, and HIV27 - As of March 31, 2024, the company had $1.51 billion in cash, cash equivalents, and investments, which is believed to be sufficient to fund operations for at least the next twelve months30 - In Q1 2024, collaboration revenue with GSK was negative $(0.987) million due to profit-sharing adjustments for sotrovimab. However, the company recognized $51.7 million in contract revenue as GSK's rights to select two additional non-influenza pathogens expired8489 - A restructuring plan initiated in December 2023 involves closing two R&D facilities and eliminating approximately 75 positions (12% of workforce). The company expects to incur an additional $25 million to $35 million in restructuring charges, primarily for facility closures9497 Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for Q1 2024, detailing pipeline progress, revenue fluctuations, and liquidity Significant Developments The company reported significant clinical pipeline progress, including completed enrollment for hepatitis delta and B trials, anticipated HIV vaccine data, and plans for multiple IND filings, alongside a CFO transition - The Phase 2 SOLSTICE trial for chronic hepatitis delta (CHD) completed enrollment, with 24-week treatment data expected in Q4 2024121 - Initial immunogenicity data from the Phase 1 trial of VIR-1388, an investigational HIV vaccine, is expected in the second half of 2024123 - The company expects to file multiple Investigational New Drug (IND) applications within the next 18 months for candidates targeting HPV, COVID-19, influenza, and RSV/MPV125 - The Executive Vice President and Chief Financial Officer, Sung Lee, will be stepping down, and a search for a successor has been initiated125 Results of Operations Total revenues decreased to $56.4 million in Q1 2024, primarily due to a $47.6 million drop in collaboration revenue offset by a $52.1 million increase in contract revenue, while net loss narrowed to $65.3 million due to reduced R&D expenses Comparison of Results of Operations (in thousands) | Item | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $56,376 | $62,957 | $(6,581) | | Collaboration revenue | $(987) | $46,574 | $(47,561) | | Contract revenue | $52,191 | $138 | $52,053 | | Total operating expenses | $136,457 | $206,328 | $(69,871) | | Research and development | $100,125 | $157,643 | $(57,518) | | Net loss attributable to Vir | $(65,276) | $(140,900) | $75,624 | - The decrease in R&D expenses was primarily due to lower clinical and contract manufacturing costs associated with winding down the Phase 2 PENINSULA trial for VIR-2482150 Liquidity, Capital Resources and Capital Requirements As of March 31, 2024, the company held $1.51 billion in cash and investments, deemed sufficient for at least the next 12 months, with potential for additional capital raises and existing manufacturing commitments - As of March 31, 2024, the company possessed $1.51 billion in cash, cash equivalents, and investments, which is expected to fund operations for at least the next 12 months156158 - The company has an agreement to sell up to $300.0 million in common stock, but no shares had been sold under this agreement as of March 31, 2024156 - The company has unpaid commitments of approximately $20 million for the manufacturing of tobevibart as of March 31, 2024163 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rates, foreign currency, and equity investments, with a primary focus on capital preservation - The company's exposure to interest rate risk is considered not significant, and a 1% movement in market interest rates would not have a significant impact on its portfolio value171 - The company holds an equity investment in Brii Bio Parent valued at $3.9 million as of March 31, 2024. A hypothetical 10% change in the stock price would impact its fair value by approximately $0.4 million173 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - Management concluded that as of the end of the period, the company's disclosure controls and procedures were effective174 - No material changes to the company's internal control over financial reporting occurred during the fiscal quarter ended March 31, 2024175 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other disclosures relevant to the company's operations and governance Legal Proceedings The company is not currently involved in any material legal proceedings, nor is it aware of any pending or threatened actions - The company is not currently party to any material legal proceedings177 Risk Factors This section details significant risks across financial position, development, third-party reliance, intellectual property, and operations that could adversely affect the company - The company has a history of net losses and anticipates they will continue for the foreseeable future179181 - The company does not expect meaningful future revenue from its COVID-19 treatment, sotrovimab, and its future success is substantially dependent on the successful development and approval of other product candidates179186 - The company may require substantial additional funding and raising capital could cause dilution to stockholders or restrict operations179195 - The company relies on third parties for manufacturing and clinical trials, and any failure by these parties could harm the business181269283 Risks Related to Our Financial Position and Capital Needs This subsection outlines financial risks, including a history of net losses, no expected future revenue from sotrovimab, and the potential need for substantial dilutive additional funding - The company has incurred net losses and anticipates continuing to do so in the foreseeable future, with an accumulated deficit of $303.1 million as of March 31, 2024181 - The company does not expect meaningful future revenue from sotrovimab for COVID-19, as it is not currently authorized for use in any U.S. region and the company does not plan to file a BLA at this time186189 - The company may need to raise additional capital, which could cause dilution to stockholders, restrict operations, or require relinquishing rights to product candidates195201 Risks Related to Development and Commercialization This subsection details risks in product development and commercialization, including dependency on clinical success, regulatory approval, market acceptance, and intense competition - Future success is substantially dependent on the successful clinical development, regulatory approval, and commercialization of its product candidates206 - Success in preclinical or early clinical trials may not be indicative of results in future trials, as exemplified by the Phase 2 trial of VIR-2482 for influenza A, which did not meet its endpoints217218 - The company faces substantial competition from other biopharmaceutical companies, which may have greater financial resources and develop products more successfully or rapidly238241 - Even if products receive marketing approval, they may fail to achieve market adoption by physicians, patients, and payors, which is necessary for commercial success244 Risks Related to Our Dependence on Third Parties This subsection highlights the company's reliance on third-party CDMOs and CROs for manufacturing and clinical trials, exposing it to supply, compliance, and geopolitical risks, particularly with Chinese suppliers - The company is dependent on third-party CDMOs for the manufacturing of its product candidates and does not own or operate its own full-scale manufacturing facilities269 - The company relies on CROs to conduct, supervise, and monitor its preclinical studies and clinical trials, and is responsible for ensuring their compliance with regulations like GLP and GCP283284 - The company faces risks related to its reliance on foreign suppliers and manufacturers, particularly in China. Proposed U.S. legislation like the BIOSECURE Act could restrict its ability to work with Chinese CDMOs such as WuXi Biologics273281 Risks Related to Our Intellectual Property This subsection discusses intellectual property risks, including challenges in obtaining and maintaining patent protection, potential infringement lawsuits, trade secret protection, and the Bill & Melinda Gates Foundation's license rights - The company's success depends on its ability to obtain and maintain patent protection for its products and technology, but the patent position of biotech companies is highly uncertain288289 - The company may be subject to legal proceedings from third parties alleging infringement of their intellectual property rights, which could be costly and uncertain300 - The company relies on trade secrets and confidentiality agreements to protect its competitive position, but these may be breached or may not be effective318319 - The Bill & Melinda Gates Foundation has the right to a non-exclusive license to certain of the company's IP for use in developing countries if the company defaults on its agreement, which could adversely impact its market position324326327 Risks Related to Our Business Operations, Employee Matters and Managing Growth This subsection covers operational risks, including dependence on key personnel, business disruptions, cybersecurity threats, data privacy compliance, and potential limitations on utilizing net operating losses - The company is highly dependent on its key management and scientific personnel, and the loss of their services could impede objectives. Recent leadership changes, including a CEO transition, create uncertainty328329 - Business operations could be seriously harmed by disruptions such as earthquakes, public health pandemics (like COVID-19), and geopolitical events336338 - Information systems are vulnerable to security breaches and cyber-attacks, which could disrupt development programs and lead to unauthorized disclosure of sensitive information343 - The company is subject to complex and evolving data privacy laws (e.g., GDPR, U.S. state laws), and failure to comply could result in significant fines and reputational harm347348 Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This section is not applicable for the reporting period - Not applicable377 Defaults Upon Senior Securities This section is not applicable for the reporting period - Not applicable378 Mine Safety Disclosures This section is not applicable for the reporting period - Not applicable379 Other Information This section discloses the adoption of Rule 10b5-1 trading plans by certain directors and officers, including sell-to-cover tax withholding arrangements - On February 29, 2024, Board Chair Vicki Sato, Ph.D., adopted a Rule 10b5-1 trading plan for the potential sale of up to 263,040 shares of common stock for estate and financial planning reasons382 - On January 31, 2024, EVP and CTO Ann Hanly, Ph.D., adopted a Rule 10b5-1 trading plan for the sale of up to 22,518 shares from vested stock options383 - Several officers, including the CEO, CFO, and CTO, entered into Rule 10b5-1 trading arrangements for automatic sell-to-cover transactions to satisfy tax withholding obligations upon the vesting of RSUs384 Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents and certifications Signatures The report is duly signed on May 3, 2024, by the Chief Executive Officer and Chief Financial Officer