Adagio(IVVD) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Invivyd, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes on business and accounting policies - The financial statements are unaudited and prepared in conformity with U.S. GAAP[15][16] - The company operates as a single segment focused on discovering, developing, and commercializing products for infectious diseases[15] - Interim financial statements are condensed and should be read in conjunction with the company's audited annual consolidated financial statements for the year ended December 31, 2023[16][17] Condensed Consolidated Balance Sheets Total assets decreased to $161.9 million by September 30, 2024, primarily due to reduced cash, with increased liabilities and decreased equity Balance Sheet Key Metrics | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :----- | :-------------------------- | :-------------------------- | | Total Assets | $161,922 | $229,181 | | Cash and Cash Equivalents | $106,869 | $200,641 | | Total Liabilities | $78,761 | $51,713 | | Total Stockholders' Equity | $83,161 | $177,468 | Condensed Consolidated Statements of Operations and Comprehensive Loss Initial product revenue was reported in Q3 2024, but net loss significantly increased year-over-year due to higher R&D and SG&A expenses Statements of Operations Key Metrics | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Product Revenue, Net | $9,300 | $— | $11,564 | $— | | Total Operating Costs & Expenses | $71,611 | $43,060 | $169,211 | $136,006 | | Loss from Operations | $(62,311) | $(43,060) | $(157,647) | $(136,006) | | Net Loss | $(60,739) | $(39,440) | $(151,482) | $(124,989) | | Net Loss per Share (Basic & Diluted) | $(0.51) | $(0.36) | $(1.28) | $(1.14) | - Product revenue of $9.3 million (Q3 2024) and $11.6 million (9M 2024) was generated following the launch of PEMGARDA, with no revenue in the prior year periods[5] - Research and development expenses increased significantly to $57.85 million (Q3 2024) from $25.574 million (Q3 2023) and to $119.344 million (9M 2024) from $96.393 million (9M 2023)[5] Condensed Consolidated Statements of Stockholders' Equity (Deficit) Total stockholders' equity decreased to $83.161 million by September 30, 2024, primarily due to accumulated deficit, partially offset by stock issuances Stockholders' Equity Key Metrics | Metric (in thousands) | Dec 31, 2023 | Sep 30, 2024 | Change | | :-------------------- | :----------- | :----------- | :----- | | Common Shares Outstanding | 110,160,684 | 119,604,035 | +9,443,351 | | Additional Paid-in Capital | $909,539 | $966,718 | +$57,179 | | Accumulated Deficit | $(732,069) | $(883,551) | $(151,482) | | Total Stockholders' Equity | $177,468 | $83,161 | $(94,307) | - Issuance of common stock, net of issuance costs, contributed $39.056 million to additional paid-in capital for the nine months ended September 30, 2024[6] - Stock-based compensation expense added $16.731 million to additional paid-in capital for the nine months ended September 30, 2024[6][71] Condensed Consolidated Statements of Cash Flows Net cash decreased by $93.772 million for the nine months ended September 30, 2024, due to operating outflows, partially offset by financing activities Cash Flow Key Metrics | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(132,881) | $(113,924) | | Net cash (used in) provided by investing activities | $(145) | $202,766 | | Net cash provided by financing activities | $39,254 | $904 | | Net (decrease) increase in cash and cash equivalents | $(93,772) | $89,746 | | Cash and cash equivalents at end of period | $106,869 | $181,822 | - Operating cash outflow increased by $18.957 million, driven by a higher net loss and changes in operating assets and liabilities, including increases in inventory and accounts receivable[10][114] - Financing activities provided $39.254 million, primarily from the issuance of common stock under the Sales Agreement, a significant increase from $0.904 million in the prior year[10][116] Notes to Unaudited Condensed Consolidated Financial Statements These notes explain the company's business, accounting policies, fair value, and specific financial items, including inventory, expenses, agreements, and compensation - The company is a biopharmaceutical company focused on delivering protection from serious viral infectious diseases, starting with SARS-CoV-2, leveraging its INVYMAB™ platform[12] - PEMGARDA™ (pemivibart) received Emergency Use Authorization (EUA) from the FDA in March 2024 for pre-exposure prophylaxis of COVID-19, and an amendment request for treatment of mild-to-moderate symptomatic COVID-19 was submitted in July 2024[12] - The company has incurred significant losses and negative cash flows, leading to substantial doubt about its ability to continue as a going concern beyond one year without additional funding[14][119] 1. Nature of the Business and Basis of Presentation Invivyd develops mAbs for viral infectious diseases, received EUA for PEMGARDA, and is advancing VYD2311, but faces substantial doubt about its going concern ability due to losses - Invivyd, Inc. is a biopharmaceutical company focused on delivering protection from serious viral infectious diseases, beginning with SARS-CoV-2, using its INVYMAB™ platform[12] - PEMGARDA™ (pemivibart) received EUA from the FDA in March 2024 for pre-exposure prophylaxis of COVID-19 and an amendment request for treatment of mild-to-moderate symptomatic COVID-19 was submitted in July 2024[12] - The company nominated VYD2311, a next-generation mAb candidate for COVID-19, in January 2024 and initiated a Phase 1 clinical trial in September 2024, with preliminary data expected in Q4 2024[12] - The company has incurred losses and negative cash flows since inception, with an accumulated deficit of $883.6 million as of September 30, 2024, leading to substantial doubt about its ability to continue as a going concern[14] 2. Summary of Significant Accounting Policies This note details accounting policies, including inventory capitalization post-EUA, PEMGARDA revenue recognition, and dependence on third-party manufacturers - Inventory costs for PEMGARDA began to be capitalized in March 2024, following EUA, as future economic benefit became probable; previously, these costs were expensed as R&D[19] - Product revenue from PEMGARDA sales, which began in April 2024, is recognized net of variable consideration including trade discounts, distributor fees, government chargebacks, rebates, and product returns[23][24][25] - The company is highly dependent on a single third-party contract manufacturer for product candidates and a limited number of third parties for license rights, posing supply and development risks[20] 3. Fair Value Measurements Financial assets measured at fair value primarily consist of cash equivalents (money market funds), classified as Level 1 due to quoted market prices Fair Value Measurements Summary | Asset (in thousands) | Sep 30, 2024 (Level 1) | Dec 31, 2023 (Level 1) | | :------------------- | :--------------------- | :--------------------- | | Money market funds | $101,553 | $198,193 | - Money market funds are valued using quoted market prices, classifying them as Level 1 fair value measurements[33] 4. Inventory As of September 30, 2024, the company reported $27.067 million in inventory, reflecting PEMGARDA manufacturing cost capitalization post-EUA Inventory Breakdown | Inventory (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :----------------------- | :----------- | :----------- | | Work in process | $26,216 | $— | | Finished goods | $851 | $— | | Total Inventory | $27,067 | $— | - The company had no inventory as of December 31, 2023, indicating the start of inventory capitalization in 2024[34] 5. Prepaid Expenses and Other Current Assets Prepaid expenses decreased to $9.011 million by September 30, 2024, primarily due to reduced prepaid R&D and manufacturing costs Prepaid Expenses and Other Current Assets Summary | Asset (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :------------------- | :----------- | :----------- | | Prepaid external R&D and manufacturing costs | $5,744 | $19,962 | | Prepaid insurance | $205 | $1,770 | | Prepaid compensation and other | $2,602 | $1,575 | | Interest receivable | $460 | $933 | | Total | $9,011 | $24,240 | - Prepaid external R&D and manufacturing costs decreased by $14.218 million, reflecting the utilization of prepayments[35] 6. Accrued Expenses Accrued expenses increased to $59.401 million by September 30, 2024, driven by higher R&D and manufacturing costs, and new accrued inventory Accrued Expenses Summary | Expense (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :--------------------- | :----------- | :----------- | | Accrued external R&D and manufacturing costs | $49,268 | $28,151 | | Accrued professional and consultant fees | $2,377 | $1,732 | | Accrued employee compensation | $3,280 | $10,752 | | Accrued inventory | $2,760 | $— | | Other | $1,716 | $225 | | Total | $59,401 | $40,860 | - Accrued external R&D and manufacturing costs increased by $21.117 million, indicating increased activity or timing of payments[37] - Accrued inventory of $2.760 million was reported for the first time, aligning with the capitalization of inventory post-EUA[37] 7. License and Collaboration Agreements Key agreements with Adimab and WuXi Biologics for antibody discovery and manufacturing involve milestone payments, royalties, and R&D expenses - Under the Adimab Assignment Agreement, the company paid $11.1 million in milestone payments through September 30, 2024, and expensed $0.5 million in royalties for the three and nine months ended September 30, 2024[38][39] - Quarterly fees to Adimab under the Collaboration Agreement decreased from $1.3 million to $0.6 million effective January 2024, resulting in $0.6 million (Q3 2024) and $1.8 million (9M 2024) in R&D expense[40] - The company recognized $3.0 million in IPR&D expense in September 2022 for the upfront consideration of the Adimab Platform Transfer Agreement, with annual fees recognized as R&D expense[43] 8. Population Health Partners, L.P. The agreement with Population Health Partners, L.P. for clinical development and regulatory advice terminated in July 2024, involving cash fees and a stock warrant - The PHP Master Services Agreement and Work Order terminated in July 2024, with no related R&D expense recognized in Q3 or 9M 2024, compared to $2.3 million in 9M 2023[46][47][82] - A warrant to purchase 6,824,712 shares of common stock was issued to PHP in November 2022, with an aggregate grant date fair value of $17.4 million, vesting upon market capitalization targets or a fundamental transaction[47][73] 9. Commitments and Contingencies The company has operating lease commitments and $38.3 million in noncancelable purchase obligations, while a securities class action lawsuit was dismissed in September 2024 Lease Cost Summary | Lease Cost (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Operating lease cost | $440 | $430 | $1,301 | $1,290 | | Variable lease cost | $4 | $11 | $11 | $34 | | Total lease cost | $444 | $441 | $1,312 | $1,324 | - Total remaining contractually binding commercial drug substance and drug product purchase obligations with WuXi Biologics amount to $38.3 million, due in 2024 and 2025[55][120] - A securities class action lawsuit filed against the company was dismissed in its entirety, with prejudice, on September 18, 2024, concluding the matter[57][130] 10. Common Stock As of September 30, 2024, 119.6 million common shares were outstanding, with $39.3 million raised from an ATM facility - As of September 30, 2024, 119,604,035 shares of common stock were issued and outstanding[4] - 45,909,485 shares of common stock were reserved for future issuance under equity incentive plans and the ESPP as of September 30, 2024[60] - The company sold 9,000,000 shares of common stock for $39.3 million in net proceeds under its ATM facility in February 2024, with $34.5 million remaining available[62][113] 11. Stock-Based Compensation Total unrecognized stock-based compensation expense was $21.5 million as of September 30, 2024, with $5.5 million accelerated due to former CEO's separation Stock-Based Compensation Expense | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | R&D Stock-based compensation expense | $932 | $1,235 | $3,497 | $5,116 | | SG&A Stock-based compensation expense | $1,934 | $3,029 | $13,234 | $9,225 | | Total Stock-based compensation expense | $2,866 | $4,264 | $16,731 | $14,341 | - Total unrecognized stock-based compensation expense was $21.5 million as of September 30, 2024, with a weighted-average recognition period of 2.3 years[70] - Approximately $5.5 million of selling, general, and administrative stock-based compensation expense was recognized in April 2024 due to the accelerated vesting of stock options for the former CEO[70] 12. Income Taxes No income tax benefits were recorded due to uncertainty of realization; the company monitors the Pillar Two framework for global minimum tax - No income tax benefits were recorded for net operating losses or R&D tax credits due to uncertainty of realization[74] - The company is monitoring the Pillar Two framework for global corporate minimum tax but does not expect a material impact on its effective tax rate[98] 13. Defined Contribution Plan The company maintains a 401(k) Plan, making non-elective contributions of 3% of compensation, totaling $0.2 million for Q3 2024 and $0.5 million for 9M 2024 401(k) Contributions | 401(k) Contributions (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :---------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Company contributions | $200 | $300 | $500 | $600 | 14. Net Loss per Share Basic and diluted net loss per share increased to $(0.51) for Q3 2024 and $(1.28) for 9M 2024, reflecting higher net losses Net Loss per Share Metrics | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to common stockholders (in thousands) | $(60,739) | $(39,440) | $(151,482) | $(124,989) | | Weighted-average common shares outstanding | 119,495,284 | 109,754,812 | 118,163,599 | 109,333,684 | | Net loss per share (basic and diluted) | $(0.51) | $(0.36) | $(1.28) | $(1.14) | - Potential dilutive securities, including stock options and warrants, were excluded from diluted EPS calculation due to their anti-dilutive effect[76][77] 15. Related-Party Transactions Ongoing related-party transactions with Adimab and previously Population Health Partners, L.P., involve fees, milestones, royalties, and R&D expenses - As of September 30, 2024, $1.3 million was due to Adimab under various agreements, an increase from $0.7 million at December 31, 2023[77] - IPR&D expense related to Adimab agreements was $0 for Q3 and 9M 2024, compared to $3.2 million (Q3 2023) and $3.6 million (9M 2023) for the Assignment Agreement, and $1.4 million (9M 2023) for the Collaboration Agreement[78][79] - Quarterly fees to Adimab under the Collaboration Agreement were $0.6 million (Q3 2024) and $1.8 million (9M 2024), reduced from $1.3 million (Q3 2023) and $3.9 million (9M 2023)[79] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, PEMGARDA commercialization, R&D, significant losses, liquidity, funding needs, and going concern doubt - The company received EUA for PEMGARDA in March 2024 and is focused on its commercialization and developing new mAb candidates like VYD2311 to address SARS-CoV-2 viral evolution[86] - The company incurred a net loss of $151.5 million for the nine months ended September 30, 2024, and has an accumulated deficit of $883.6 million, indicating substantial doubt about its ability to continue as a going concern[87][89] - Future funding will be required through revenues, equity offerings, grants, debt, or collaborations to support operations and growth strategy[89][119] Cautionary Note Regarding Forward-Looking Statements This section highlights forward-looking statements regarding future expectations and financial trends, subject to risks and uncertainties, cautioning against undue reliance - The report contains forward-looking statements about future events, financial trends, and strategies, including commercialization plans for PEMGARDA and development of new mAb candidates[84] - These statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from expectations[84][85] - The company does not plan to publicly update or revise forward-looking statements unless required by law, and readers should review risk factors in the 10-K and 10-Q[85] Overview Invivyd develops mAbs for viral infectious diseases, with PEMGARDA EUA and VYD2311 in Phase 1, but faces significant losses and going concern doubt - Invivyd is a biopharmaceutical company focused on SARS-CoV-2, leveraging its INVYMAB™ platform for rapid generation of new mAbs[86] - PEMGARDA™ received EUA in March 2024 for pre-exposure prophylaxis of COVID-19, and VYD2311, a next-generation mAb, entered Phase 1 clinical trials in September 2024[86] - The company has incurred a net loss of $151.5 million for the nine months ended September 30, 2024, and has an accumulated deficit of $883.6 million, leading to substantial doubt about its ability to continue as a going concern[87][89] Components of Our Results of Operations This section details product revenue, cost of revenue, R&D, acquired IPR&D, SG&A expenses, and other income, explaining their impact on financial results - Product revenue, net, began in March 2024 with PEMGARDA sales, and cost of product revenue includes manufacturing, labor, and royalties[90][91] - Research and development expenses are expensed as incurred, primarily external costs for nonclinical, preclinical, and clinical development, and manufacturing of product candidates[92][93] - Acquired IPR&D expenses are recognized for contingent milestone payments to acquire rights to Adimab's antibodies and platform technology, expensed due to no alternative future use[96] Results of Operations For the nine months ended September 30, 2024, product revenue was $11.6 million, but net loss increased to $151.5 million due to higher R&D and SG&A Results of Operations Summary | Metric (in thousands) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | | Product Revenue, Net | $11,564 | $— | | Cost of Product Revenue | $894 | $— | | Research and Development | $119,344 | $96,393 | | Acquired IPR&D | $— | $5,575 | | Selling, General and Administrative | $48,973 | $34,038 | | Net Loss | $(151,482) | $(124,989) | - Research and development expenses increased by $22.951 million, primarily due to contract manufacturing costs and nonclinical expenses for the VYD2311 program[107][108] - Selling, general and administrative expenses increased by $14.935 million, driven by commercialization efforts for PEMGARDA and a $4.0 million increase in stock-based compensation from the former CEO's accelerated vesting[110] Liquidity and Capital Resources As of September 30, 2024, cash was $106.9 million, with $132.9 million used in operations and $39.3 million provided by financing - As of September 30, 2024, cash and cash equivalents totaled $106.9 million[113] - Operating activities used $132.9 million in cash for the nine months ended September 30, 2024, an increase from $113.9 million in the prior year[114] - Financing activities provided $39.3 million, mainly from the sale of 9,000,000 shares of common stock under the Sales Agreement, generating $39.3 million in net proceeds[113][116] Funding Requirements Future funding requirements are substantial, depending on PEMGARDA revenue, R&D, clinical costs, manufacturing, and commercialization, necessitating additional capital - Funding requirements are highly dependent on PEMGARDA revenue, R&D progress, clinical trial scope and costs, manufacturing, and commercialization efforts[117] - The company will require additional funding through revenues, equity offerings, grants, debt, or collaborations to support continuing operations and growth[119] Substantial Doubt about Ability to Continue as a Going Concern Substantial doubt exists about the company's ability to continue as a going concern beyond one year without additional funding, potentially diluting stockholders - The company has concluded there is substantial doubt about its ability to continue as a going concern beyond one year without additional funding[119] - Additional funding may dilute stockholders' interests or impose restrictive covenants if obtained through equity or debt financing[119] Contractual Obligations and Commitments As of September 30, 2024, the company has $38.3 million in noncancelable purchase obligations with WuXi Biologics and $17.0 million for material procurement - Noncancelable purchase obligations for commercial drug substance and product manufacturing with WuXi Biologics total $38.3 million, due in 2024 and 2025[120] - An additional $17.0 million in purchase obligations for material procurement is expected to be paid in 2024 and 2025[120] Critical Accounting Policies and Significant Judgments and Estimates Financial statements rely on significant estimates and judgments for revenue, expenses, and inventory, with no material changes to critical accounting policies from 2023 Form 10-K - Financial statements require significant estimates and judgments, particularly for revenue, expenses, and inventory[121] - No significant changes to critical accounting policies and estimates from the 2023 Form 10-K[121] Recently Issued Accounting Pronouncements The company is evaluating ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures), effective after December 15, 2023, and December 15, 2024 - The company is evaluating ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures)[29][122] - ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and ASU 2023-09 for annual periods beginning after December 15, 2024[29] Emerging Growth Company Status As an "emerging growth company," Invivyd benefits from exemptions from certain disclosure and accounting standard compliance requirements - Invivyd is an "emerging growth company" and intends to rely on exemptions from certain disclosure requirements[123] - The company can delay adoption of new accounting standards until they apply to private companies[124] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Invivyd, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide market risk disclosures[126] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of September 30, 2024, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated as effective at a reasonable assurance level as of September 30, 2024[127] - No material changes in internal control over financial reporting occurred during the period[128] PART II. OTHER INFORMATION Item 1. Legal Proceedings A securities class action lawsuit against the company and former officers was dismissed with prejudice in September 2024, closing the matter - A securities class action lawsuit (Brill v. Invivyd, Inc., et. al.) was filed on January 31, 2023, alleging violations of the Exchange Act concerning ADG20's effectiveness[130] - The court granted the defendants' motion to dismiss the second amended complaint in its entirety, with prejudice, on September 18, 2024, closing the matter[57][130] Item 1A. Risk Factors This section updates risk factors from the 2023 Form 10-K, highlighting new risks related to product commercialization and the impact of third-party data on PEMGARDA's market acceptance - No material changes to risk factors from the 2023 Form 10-K, except for new risks related to product commercialization[131] - Publicly available neutralization data from academic or third-party labs, even if contested or inconsistent with Invivyd's data, could adversely impact regulatory authorization and market acceptance of PEMGARDA[132][133] - An FDA Fact Sheet update in August 2024, referencing contested third-party data, caused confusion and negatively impacted PEMGARDA's net product revenue growth, despite subsequent re-issuance with accurate data[132] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not issue any unregistered equity securities or purchase any of its own equity securities during the three months ended September 30, 2024 - No unregistered equity securities were issued during the three months ended September 30, 2024[134] - The company did not purchase any of its equity securities during the three months ended September 30, 2024[134] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended September 30, 2024 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 2024[135] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including corporate organizational documents, certifications, and XBRL documents - The exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Certifications of Principal Executive and Financial Officers, and Inline XBRL documents[138] Signatures The report was signed by William Duke, Jr., Chief Financial Officer, on November 14, 2024 - The report was signed by William Duke, Jr., Chief Financial Officer, on November 14, 2024[140]