Vir(VIR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (unaudited) This section presents the company's unaudited condensed consolidated financial statements and detailed notes on accounting policies and agreements Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets and stockholders' equity from December 31, 2024, to June 30, 2025, while total liabilities remained relatively stable | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $1,192,532 | $1,398,813 | | Total Liabilities | $245,060 | $248,428 | | Total Stockholders' Equity | $947,472 | $1,150,385 | Condensed Consolidated Statements of Operations The company reported a net loss for both the three and six months ended June 30, 2025, with a significant decrease in total revenues for the six-month period compared to the prior year, while research and development expenses increased for the six-month period | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Total Revenues | $1,214 | $3,075 | $4,246 | $59,451 | | Total Operating Expenses | $119,631 | $161,705 | $262,210 | $298,162 | | Net Loss | $(110,958) | $(138,378) | $(231,923) | $(203,654) | | Net Loss Per Share (basic & diluted) | $(0.80) | $(1.02) | $(1.68) | $(1.50) | Condensed Consolidated Statements of Comprehensive Loss The company reported a comprehensive loss for both the three and six months ended June 30, 2025, primarily driven by the net loss, with additional other comprehensive losses from unrealized investment losses | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Net Loss | $(110,958) | $(138,378) | $(231,923) | $(203,654) | | Total Other Comprehensive Loss | $(246) | $(482) | $(504) | $(2,064) | | Comprehensive Loss | $(111,204) | $(138,860) | $(232,427) | $(205,718) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from December 31, 2024, to June 30, 2025, primarily due to the net loss incurred during the period, partially offset by increases in additional paid-in capital from stock-based compensation and stock issuances | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :-------------------------- | :------------------------------- | :----------------------------- | | Total Stockholders' Equity | $1,150,385 | $947,472 | | Accumulated Deficit | $(759,784) | $(991,707) | | Additional Paid-in Capital | $1,911,872 | $1,941,386 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, the company experienced increased cash usage in operating activities and decreased cash provided by investing activities, resulting in a net decrease in cash, cash equivalents, and restricted cash | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(198,335) | $(187,237) | | Net cash provided by investing activities | $183,274 | $240,027 | | Net cash provided by financing activities | $2,644 | $3,094 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(12,417) | $55,884 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed disclosures on the company's business, accounting policies, fair value measurements, and various agreements, offering context to the financial statements Note 1. Organization Vir Biotechnology is a clinical-stage biopharmaceutical company focused on infectious diseases and cancer, with sufficient cash and investments to fund operations for at least twelve months - Vir Biotechnology is a clinical-stage biopharmaceutical company focused on discovering and developing medicines for serious infectious diseases and cancer[27] - As of June 30, 2025, the company had $892.1 million in cash, cash equivalents, and investments, which is believed to be sufficient to fund operations for at least twelve months[29] - The company also had $95.2 million in restricted cash and cash equivalents as of June 30, 2025, including a $75.0 million milestone payment due upon VIR-5525 achieving 'first in human dosing' by 2026, which occurred in July 2025[29] Note 2. Summary of Significant Accounting Policies This note outlines the company's accounting policies, including basis of presentation, segment reporting, treatment of cash, investments, R&D expenses, and new accounting pronouncements - The company operates as one reportable segment, focusing on discovering and developing medicines for serious infectious diseases and cancer[34] - Research and development expenses are recognized as incurred, and upfront payments for acquired licenses or product rights are expensed immediately if they do not relate to regulatory approval milestones or business combinations[39][40] - The company is evaluating the impact of new FASB Accounting Standards Updates (ASU 2023-09 on Income Tax Disclosures and ASU 2024-03 on Expense Disaggregation Disclosures) on its financial statements[43][44] Note 3. Fair Value Measurements The company measures financial assets and liabilities using a fair value hierarchy. Cash equivalents and available-for-sale securities are primarily Level 1 and Level 2, while contingent consideration is classified as Level 3, with its fair value decreasing due to a milestone payment | Asset Type | Valuation Hierarchy | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :------------------ | :----------------------------- | :------------------------------- | | Money market funds | Level 1 | $140,188 | $146,505 | | U.S. government treasuries | Level 2 | $379,426 | $589,483 | | Corporate bonds | Level 2 | $212,811 | $253,455 | | Equity securities | Level 1 | $7,270 | $4,350 | - The estimated fair value of contingent consideration related to the Humabs acquisition decreased from $40.1 million at December 31, 2024, to $33.6 million at June 30, 2025, following a $17.5 million clinical milestone payment[54][55] - The company recognized an unrealized loss of $3.4 million for the three months ended June 30, 2025, and an unrealized gain of $3.0 million for the six months ended June 30, 2025, from changes in the fair value of equity investments[52] Note 4. Grant Agreements The company holds various grant agreements with the Gates Foundation totaling up to $35.0 million to support HIV vaccine, HIV vaccinal antibody, and malaria vaccinal antibody programs. Certain HIV and tuberculosis programs were phased out in August 2024 - The company has grant agreements with the Gates Foundation totaling up to $35.0 million for HIV vaccine, HIV vaccinal antibody, and malaria vaccinal antibody programs, with some agreements expiring in the first half of 2025[57] - In August 2024, the company announced a strategic realignment that included phasing out certain research programs, such as the HIV vaccine program and tuberculosis vaccine program funded by Gates Foundation grants[59] | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Grant Revenue | $200 | $300 | $1,400 | $2,200 | Note 5. Collaboration and License Agreements The company entered into a license agreement with Sanofi for PRO-XTEN™ technology and TCEs, involving an upfront payment and milestone obligations. An amended agreement with Alnylam Pharmaceuticals resulted in a $30.0 million payment and a shift from profit-sharing to a milestone and royalty-based structure for elebsiran - In September 2024, the company closed a license agreement with Sanofi for exclusive worldwide rights to the PRO-XTEN™ universal masking technology and three early clinical-stage dual-masked TCEs for oncology and infectious disease[61] - Under the Sanofi Agreement, the company made an upfront payment of $100.0 million and placed a $75.0 million milestone payment into escrow, contingent on VIR-5525 achieving 'first in human dosing' by 2026, which occurred in July 2025[62] - In March 2025, an amendment to the Alnylam Agreement resulted in a $30.0 million payment to Alnylam, recorded as R&D expense, and Alnylam electing not to opt-in to the profit-sharing arrangement for elebsiran, shifting to a milestone and royalty-based structure[67][70] Note 6. Balance Sheet Components This note details the composition of property and equipment, net, which saw a slight decrease, and accrued and other liabilities, which remained stable, with research and development expenses being the largest component | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Total Property and Equipment, net | $60,795 | $63,183 | | Total Accrued and Other Liabilities | $82,661 | $85,873 | | R&D Expenses (Accrued) | $39,332 | $29,225 | Note 7. Commitments and Contingencies The company has unaccrued unpaid commitments for manufacturing agreements related to tobevibart and elebsiran, totaling approximately $24 million as of June 30, 2025. The company is not currently involved in any material legal proceedings - As of June 30, 2025, the company had unaccrued unpaid commitments of approximately $17 million under Tobevibart Agreements and $7 million under Elebsiran Agreements[76] - The company is not currently party to any material legal proceedings and is unaware of any pending or threatened legal proceedings that could have a material adverse effect[77][160] Note 8. Stock-Based Awards Stock-based compensation expense decreased for both the three and six months ended June 30, 2025, compared to the prior year, reflecting changes in awards granted to employees and non-employees | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Total Stock-Based Compensation | $12,451 | $22,162 | $26,510 | $45,919 | Note 9. Net Loss Per Share Basic and diluted net loss per share for the three months ended June 30, 2025, was $(0.80), an improvement from $(1.02) in the prior year, while for the six months, it worsened to $(1.68) from $(1.50) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss Per Share (basic & diluted) | $(0.80) | $(1.02) | $(1.68) | $(1.50) | Note 10. Income Taxes The company recorded a nominal provision for income taxes for the three and six months ended June 30, 2025, compared to a benefit in the prior year. The company is evaluating the potential impacts of the recently signed One Big Beautiful Bill Act (OBBBA) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | (Provision for) benefit from income taxes | $(170) | $1,512 | $(186) | $1,236 | | Effective tax rate | (0.2%) | 1.1% | (0.1%) | 0.6% | - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, and the company is evaluating its potential impacts on income taxes[88] Note 11. Segment Reporting The company manages its business activities on a consolidated basis and operates as one reportable segment, focusing on discovering and developing medicines for serious infectious diseases and cancer - The company operates as a single reportable segment, with its Chief Executive Officer serving as the chief operating decision maker (CODM)[91] | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Segment Revenue | $1,214 | $3,075 | $4,246 | $59,451 | | Segment and Consolidated Net Loss | $(110,958) | $(138,378) | $(231,923) | $(203,654) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial condition, results of operations, liquidity, and capital resources, highlighting key changes in revenues, expenses, and cash flows Overview Vir Biotechnology is a clinical-stage biopharmaceutical company focused on developing medicines for serious infectious diseases and cancer, with its pipeline including programs for Chronic Hepatitis Delta (CHD) and multiple dual-masked T-cell engagers (TCEs) for solid tumors - The company is a clinical-stage biopharmaceutical company focused on powering the immune system to transform lives by discovering and developing medicines for serious infectious diseases and cancer[96] - Its clinical-stage portfolio includes programs for Chronic Hepatitis Delta (CHD) and multiple dual-masked T-cell engagers (TCEs) across validated targets in solid tumor indications[96] - The ECLIPSE registrational program for HDV is fully underway, and Phase 1 clinical studies are advancing for dual-masked TCEs VIR-5818, VIR-5500, and VIR-5525 for various solid tumors[97] Significant Developments Recent significant developments include the full initiation of the ECLIPSE registrational program for Chronic Hepatitis Delta, advancement of multiple T-cell engager programs for solid tumors with promising early safety data, and presentation of functional cure data for Chronic Hepatitis B CHD The ECLIPSE registrational program for Chronic Hepatitis Delta (CHD) is fully underway, with ECLIPSE 2 and ECLIPSE 3 trials initiated to compare the combination of tobevibart and elebsiran to bulevirtide monotherapy - The ECLIPSE registrational program for Chronic Hepatitis Delta (CHD) is fully underway, with all three trials initiated[100] - ECLIPSE 2 and ECLIPSE 3 trials are designed to compare the combination of tobevibart and elebsiran to bulevirtide monotherapy in CHD participants[100] Solid Tumors The company dosed the first patient in a Phase 1 clinical study for VIR-5525 (EGFR-targeting TCE) in July 2025. Early Phase 1 data for VIR-5818 (HER2-targeting TCE) and VIR-5500 (PSMA-targeting TCE) showed promising safety profiles with no dose-limiting cytokine release syndrome - The first patient was dosed in the Phase 1 clinical study of VIR-5525, an investigational PRO-XTEN™ dual-masked T-cell engager targeting EGFR, in July 2025[104] - Early Phase 1 data for VIR-5818 and VIR-5500, reported in January 2025, showed promising safety profiles with no dose-limiting cytokine release syndrome (CRS) observed and no CRS greater than grade 2 reported[104] - VIR-5500 received Investigational New Drug clearance from the FDA to evaluate it in combination with androgen receptor pathway inhibitors for earlier lines of metastatic castration-resistant prostate cancer treatment[104] Chronic Hepatitis B (CHB) Functional cure data from the MARCH Part B Phase 2 clinical study for Chronic Hepatitis B (CHB) was presented, showing that 17-21% of participants with baseline HBsAg<1,000 IU/mL achieved undetectable HBsAg at 24 weeks post-treatment - Functional cure data from the 24-week follow-up of the MARCH Part B Phase 2 clinical study for CHB was presented at EASL Congress 2025[101] - The study-defined primary endpoint, proportion of participants with undetectable hepatitis B surface antigen (HBsAg) at 24 weeks post-end of treatment, was achieved by 17% to 21% of participants with baseline HBsAg<1,000 IU/mL[101] Preclinical Pipeline Candidates The company is advancing multiple undisclosed PRO-XTEN™ dual-masked T-cell engagers against clinically validated targets for solid tumors, leveraging its antibody discovery platform and proprietary dAIsY™ AI engine - The company continues to progress multiple undisclosed PRO-XTEN™ dual-masked TCEs against clinically validated targets with potential applications across a number of solid tumors[102] - These preclinical candidates integrate the PRO-XTEN™ masking technology with novel TCEs discovered and engineered using the company's antibody discovery platform and proprietary dAIsY™ (data AI structure and antibody) AI engine[102] Our Collaboration, License and Grant Agreements The company has various collaboration, license, and grant agreements, with details provided in the notes to the financial statements, which are crucial for its product development and financial arrangements - The company has entered into collaboration, license, and grant arrangements with various third parties, with details provided in Note 4 and Note 5 of the unaudited condensed consolidated financial statements[103] Components of Operating Results This section outlines the components of operating results, including revenue streams, operating expenses, and other income/expense items, providing context for financial performance - Revenues consist of collaboration revenue (profit-share from sotrovimab, expected to be nominal in 2025), contract revenue (license rights, R&D services, clinical supply), and grant revenue (government-sponsored and private organizations)[106][108][109] - Research and development expenses, primarily related to discovery and preclinical/clinical development, are expected to increase substantially as product candidates advance[111][113] - Selling, general and administrative expenses are expected to increase in absolute dollars in the long-term to support commercialization activities[118] Results of Operations The company's net loss increased for the six months ended June 30, 2025, primarily due to a significant decrease in contract and grant revenues, and higher R&D expenses, partially offset by lower selling, general and administrative expenses and restructuring charges | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Total Revenues | $1,214 | $3,075 | $4,246 | $59,451 | | Research and Development | $97,509 | $105,113 | $216,154 | $205,238 | | Selling, General and Administrative | $22,283 | $30,265 | $46,227 | $66,586 | | Net Loss | $(110,958) | $(138,378) | $(231,923) | $(203,654) | - The decrease in contract revenue for the six months ended June 30, 2025, was primarily due to $51.7 million of deferred revenue recognized in the first quarter of 2024 when GSK's rights to select additional target pathogens expired[126] - Research and development expenses increased for the six months ended June 30, 2025, primarily due to a $30.0 million expense from the Restated Alnylam Agreement and higher clinical costs for the ECLIPSE registrational program and oncology programs[129][132] Liquidity, Capital Resources and Capital Requirements The company's liquidity is primarily supported by its cash, cash equivalents, and investments, which are expected to fund operations for at least the next 12 months. However, substantial additional funding will likely be required for long-term development and commercialization, potentially through equity, debt, or collaborations - As of June 30, 2025, the company had $892.1 million in cash, cash equivalents, and investments, and $95.2 million in restricted cash, which is believed to be sufficient to fund operations for at least the next 12 months[138][140] - The company expects to finance future cash needs through public or private equity or debt financings, third-party funding, and marketing/distribution arrangements, as well as other collaborations[141] - Cash used in operating activities increased during the six months ended June 30, 2025, primarily due to milestone payments for the ECLIPSE program and higher clinical costs, partially offset by cost savings from headcount reductions and program de-prioritization[147] Critical Accounting Policies and Estimates The company's financial statements are prepared using GAAP, requiring management to make estimates and assumptions. There have been no significant changes in critical accounting policies during the six months ended June 30, 2025 - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts[150] - There have been no significant changes in critical accounting policies during the six months ended June 30, 2025, compared to those disclosed in the Annual Report on Form 10-K for 2024[151] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks primarily related to interest rates, foreign currency, and equity investments. Its interest rate risk is not significant due to short-term, investment-grade securities, and foreign currency transaction gains/losses were not material. Equity investment fair value is subject to stock market volatility - The company's exposure to interest rate risk is not significant, as its investments are primarily short-term U.S. government treasuries, agency bonds, and discount notes[153] - The company is exposed to foreign currency risk primarily related to the Euro, Swiss Franc, and Australian dollar, but transaction gains and losses were not material for the periods presented[154] - Equity investment risk stems from holding ordinary shares of Brii Bio Parent, valued at approximately $7.3 million as of June 30, 2025, with fair value changes impacted by stock market volatility[155] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, and there were no material changes in internal control over financial reporting during the quarter - Management, with the participation of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[156] - There have been no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the fiscal quarter ended June 30, 2025[157] PART II. OTHER INFORMATION This section provides information on legal proceedings, risk factors, equity security sales, defaults, other information, and exhibits Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings and is unaware of any pending or threatened legal actions that could significantly impact its business, operating results, or financial condition - The company is not currently party to any material legal proceedings and is not aware of any pending or threatened legal proceeding against it that could have an adverse effect on its business, operating results or financial condition[160] Item 1A. Risk Factors This section outlines significant risks that could adversely affect the company's business, including financial position, product development, regulatory compliance, and intellectual property challenges - The company has incurred net losses and anticipates continued losses, requiring substantial additional funding to finance operations[162][164][170] - Future success is highly dependent on the successful clinical development, regulatory approval, and commercialization of product candidates, which is a lengthy, expensive, and uncertain process[162][179][193] - The company faces substantial competition and relies heavily on third parties for manufacturing and clinical studies, exposing it to risks of delays, supply shortages, and unsatisfactory performance[162][209][240][250] Risks Related to Our Financial Position and Capital Needs The company faces significant financial risks, including a history of net losses and the expectation of continued losses, a limited commercialization track record, and a substantial need for additional funding, which could lead to stockholder dilution or operational restrictions. Furthermore, no meaningful future revenue is expected from sotrovimab - The company incurred net losses of $231.9 million for the six months ended June 30, 2025, and had an accumulated deficit of $991.7 million, with expectations of continued significant expenses and net losses[164][165] - Existing cash, cash equivalents, and investments of $892.1 million are expected to fund operations for at least the next 12 months, but substantial additional financing will be required for long-term operations and product commercialization[170] - The FDA revoked the emergency use authorization (EUA) for sotrovimab in December 2024, and the company does not expect meaningful future revenue from its sale for COVID-19[176][178] Risks Related to Development and Commercialization Development and commercialization efforts are highly uncertain, with risks including the failure of clinical studies, potential for undesirable side effects, challenges in patient enrollment, and the possibility that regulatory designations (e.g., Fast Track) do not guarantee approval. The company also faces risks from developing combination therapies, relying on interim data, and negative public perception of new technologies - The company's future success is substantially dependent on the successful clinical development, regulatory approval, and commercialization of its product candidates, which is a lengthy, expensive, and uncertain process[179][193] - Success in preclinical or early-stage clinical studies may not be indicative of results in future clinical studies, and product candidates may cause undesirable side effects, delaying or preventing regulatory approval[189][200][201] - Even if product candidates receive marketing approval, they may fail to achieve adoption by physicians, patients, or third-party payors, limiting commercial success[213][214] Risks Related to Regulatory Compliance The company is subject to extensive regulatory compliance risks, including competition from biosimilar/generic products, strict healthcare fraud and abuse laws, challenges in obtaining adequate reimbursement, and the impact of evolving healthcare legislative reforms. Non-compliance with anti-corruption and anti-bribery laws also poses significant risks - Approved product candidates may face competition from biosimilar or generic products after regulatory exclusivity periods, impacting market share and sales[225][228] - Relationships with healthcare professionals and third-party payors are subject to federal and state healthcare fraud and abuse laws, with non-compliance potentially leading to substantial penalties[229][230] - Market acceptance and sales of approved products depend on adequate coverage and reimbursement from third-party payors, which is uncertain and can be negatively impacted by healthcare legislative reforms[232][233][234][236] Risks Related to Our Dependence on Third Parties The company's operations heavily rely on third parties for clinical supplies and the conduct of preclinical and clinical studies, which introduces risks such as manufacturing delays, supply shortages, non-compliance with regulatory standards, and limited control over third-party performance. Additionally, changes in trade policies and compliance with environmental laws for hazardous materials pose further risks - The company relies on third-party contract development and manufacturing organizations (CDMOs) to produce clinical supplies of its product candidates, exposing it to risks of delays, supply shortages, and non-compliance with cGMP requirements[240][241][242] - Reliance on contract research organizations (CROs) and clinical trial sites for preclinical and clinical studies results in less direct control over data management and potential delays if third parties perform unsatisfactorily[250][251][252] - The company's business is subject to risks from changes in U.S. and international trade policies, such as tariffs, and compliance with environmental, health, and safety laws related to hazardous materials[247][249] Risks Related to Our Intellectual Property The company's success is highly dependent on its ability to obtain, maintain, and enforce patent protection and protect trade secrets globally. Risks include potential breaches of license agreements, challenges to patent validity, inadequate patent terms, third-party infringement claims, and the difficulty of protecting intellectual property in foreign jurisdictions. The potential exercise of licenses by the Gates Foundation also poses a risk to market position - Failure to obtain and maintain broad and robust patent protection for product candidates and technology, or challenges to existing patents, could allow competitors to commercialize similar products[255][257][259] - The company relies on trade secrets, but sharing confidential information with third parties increases the risk of disclosure or misappropriation, which could harm its competitive position[278][279][280] - The Gates Foundation has the right to exercise non-exclusive, fully-paid licenses to certain intellectual property if specified defaults occur, which could adversely impact the company's market position[284][285] Risks Related to Our Business Operations, Employee Matters and Managing Growth Operational risks include high dependence on key personnel, challenges in managing growth, and potential disruptions from natural disasters or geopolitical events. The company also faces significant risks from information system failures, security breaches, stringent privacy laws, and potential employee misconduct. Limitations on net operating losses (NOLs) could also impact financial results - The company is highly dependent on its key management, clinical, and scientific personnel, and the loss or inability to recruit and retain such individuals could harm its business[286][287] - Information systems are vulnerable to cyber-attacks, malware, and other failures, which could disrupt product development, operations, and lead to unauthorized data access or disclosure[294][295] - The company is subject to stringent global privacy laws (e.g., GDPR, HIPAA) and evolving AI regulations; non-compliance could result in significant fines, investigations, and reputational harm[297][298][301] Risks Related to Ownership of Our Common Stock Ownership of the company's common stock carries risks due to potential fluctuations in financial results and stock price volatility. Investors should not expect cash dividends, and the company incurs significant costs as a public entity. Challenges in internal control over financial reporting, changes in accounting principles, and provisions in corporate charter documents could also adversely affect stockholders - The company's financial condition and results of operations are expected to fluctuate, and its stock price has been, and may continue to be, volatile, potentially resulting in substantial losses for investors[308][310] - The company does not anticipate paying cash dividends in the foreseeable future, making capital appreciation the sole source of gain for stockholders[314] - Operating as a public company incurs significant costs and management time for compliance, and failure to maintain effective internal control over financial reporting could impair accurate financial statements and investor confidence[315][317] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This item is marked as 'Not applicable,' indicating no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities occurred during the reporting period Item 3. Defaults Upon Senior Securities This item is marked as 'Not applicable,' indicating no defaults upon senior securities during the reporting period Item 4. Mine Safety Disclosures This item is marked as 'Not applicable,' indicating no mine safety disclosures are required for the company Item 5. Other Information This section discloses Rule 10b5-1 trading plans adopted by an executive and a director for the sale of common stock, primarily to cover tax obligations related to restricted stock unit (RSU) vesting - Mark Eisner, M.D., M.P.H., Executive Vice President and Chief Medical Officer, adopted a Rule 10b5-1 trading plan on May 19, 2025, for the sale of up to 100,463 stock option shares and RSU shares to satisfy tax obligations[328] - Vanina de Verneuil, J.D., Executive Vice President, General Counsel and Corporate Secretary, adopted a Rule 10b5-1 trading plan on June 2, 2025, for the sale of RSU shares to cover tax obligations[329] - Director Janet Napolitano, J.D., adopted a Rule 10b5-1 trading plan on June 27, 2025, for the sale of RSU shares to satisfy tax obligations related to vested and future RSU awards[330] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, certifications, and XBRL-related files - Exhibits include the Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Certifications of Principal Executive and Financial Officers (pursuant to Rules 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL documents[332] Signatures The report is signed by Marianne De Backer, Chief Executive Officer and Director, and Jason O'Byrne, Executive Vice President and Chief Financial Officer, on August 6, 2025, certifying its submission - The report is signed by Marianne De Backer, M.Sc., Ph.D., MBA, Chief Executive Officer and Director (Principal Executive Officer), and Jason O'Byrne, MBA, Executive Vice President and Chief Financial Officer (Principal Financial Officer)[336] - The signing date for the report is August 6, 2025[336]