Adagio(IVVD) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for Invivyd, Inc. as of June 30, 2023, show a net loss of $50.2 million for the second quarter and $85.5 million for the first six months of the year, with total assets of $315.4 million primarily in cash and marketable securities Condensed Consolidated Balance Sheets As of June 30, 2023, total assets decreased to $315.4 million from $383.2 million at year-end 2022, driven by a reduction in marketable securities, while liabilities increased and equity decreased reflecting the net loss Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $121,947 | $92,076 | | Marketable securities | $176,483 | $279,915 | | Total current assets | $309,986 | $376,917 | | Total assets | $315,414 | $383,167 | | Liabilities & Equity | | | | Total current liabilities | $32,505 | $25,031 | | Total liabilities | $33,851 | $27,197 | | Total stockholders' equity | $281,563 | $355,970 | | Total liabilities and stockholders' equity | $315,414 | $383,167 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q2 2023, the net loss was $50.2 million, comparable to Q2 2022, while the six-month net loss improved significantly to $85.5 million from $151.7 million due to decreased research and development expenses, with no revenue generated Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $43,618 | $37,129 | $70,819 | $129,164 | | Selling, general and administrative | $10,107 | $14,620 | $21,152 | $23,324 | | Total operating expenses | $53,875 | $51,749 | $92,946 | $152,488 | | Loss from operations | $(53,875) | $(51,749) | $(92,946) | $(152,488) | | Net loss | $(50,228) | $(50,990) | $(85,549) | $(151,656) | | Net loss per share, basic and diluted | $(0.46) | $(0.47) | $(0.78) | $(1.40) | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Total stockholders' equity decreased from $356.0 million at year-end 2022 to $281.6 million at June 30, 2023, primarily due to the $85.5 million net loss, partially offset by stock-based compensation and option exercises - The accumulated deficit grew from $533.4 million at the end of 2022 to $619.0 million as of June 30, 2023, reflecting the ongoing net losses[19] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2023, net cash used in operating activities was $78.6 million, offset by $107.6 million from investing activities and $0.8 million from financing activities, resulting in a net increase of $29.9 million in cash and cash equivalents Six-Month Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(78,572) | $(116,441) | | Net cash provided by investing activities | $107,631 | $48,983 | | Net cash provided by financing activities | $812 | $119 | | Net increase (decrease) in cash | $29,871 | $(67,339) | | Cash and cash equivalents at end of period | $121,947 | $474,885 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail the company's focus on antibody-based therapies for viral threats, particularly SARS-CoV-2 with lead candidate VYD222, and outline significant accounting policies, collaboration agreements, commitments, and the expectation that current cash will fund operations for at least the next 12 months despite ongoing losses - The company's mission is to deliver antibody-based therapies for viral threats, starting with SARS-CoV-2, with its lead candidate, VYD222, in development for preventing symptomatic COVID-19 in vulnerable populations[27][28] - The company has not generated any revenue since inception and has an accumulated deficit of $619.0 million as of June 30, 2023, but management expects existing cash, cash equivalents, and marketable securities to fund operations for at least 12 months from the report's issuance date[34][36] - The company has multiple agreements with Adimab for antibody discovery, development, and platform technology, involving potential milestone payments up to $24.6 million under the Assignment Agreement and up to $18.0 million per product under the Collaboration Agreement, plus royalties[62][65][73] - As of June 30, 2023, the company had noncancelable purchase obligations of $10.4 million for resin and less than $0.1 million for VYD222 drug substance batches with WuXi Biologics, with an additional $4.3 million commitment for materials made in July 2023[114][115][116] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on developing antibody therapies for viral threats, led by its COVID-19 candidate, VYD222, for which positive initial Phase 1 data were announced and a potential EUA pathway aligned with the FDA, with the financial analysis showing a reduced net loss of $85.5 million for the first six months of 2023 due to strategic shifts in R&D spending, and existing cash of $298.4 million expected to fund operations into Q4 2024 Overview The company focuses on developing antibody-based therapies for viral threats, with lead candidate VYD222 showing positive initial Phase 1 data against Omicron XBB.1.5, aligning with the FDA on a potential EUA pathway, and planning a pivotal CANOPY trial with initial data expected by year-end 2023, employing a "serial monotherapy" strategy - Positive initial data from the Phase 1 trial of VYD222 showed it was generally well-tolerated and demonstrated robust neutralization activity against Omicron XBB.1.5[173] - The company has reached general alignment with the FDA on a pathway to a potential Emergency Use Authorization (EUA) for VYD222, utilizing an immunobridging approach based on serum neutralizing titers[174] - A pivotal clinical trial for VYD222, named CANOPY, is planned to initiate, with initial primary endpoint data expected by the end of 2023[175][176] Results of Operations For Q2 2023, the net loss was $50.2 million, with R&D expenses increasing to $43.6 million due to the VYD222 program, while the six-month net loss decreased to $85.5 million from $151.7 million year-over-year, primarily due to a $58.4 million reduction in R&D expenses as spending shifted from the adintrevimab to the VYD222 program Comparison of Results for the Three Months Ended June 30 (in thousands) | Item | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $43,618 | $37,129 | $6,489 | | Selling, general and administrative | $10,107 | $14,620 | $(4,513) | | Total operating expenses | $53,875 | $51,749 | $2,126 | | Net loss | $(50,228) | $(50,990) | $762 | Comparison of Results for the Six Months Ended June 30 (in thousands) | Item | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $70,819 | $129,164 | $(58,345) | | Selling, general and administrative | $21,152 | $23,324 | $(2,172) | | Total operating expenses | $92,946 | $152,488 | $(59,542) | | Net loss | $(85,549) | $(151,656) | $66,107 | - The primary driver for the change in R&D expenses was the shift in focus from the adintrevimab program, which saw expenses decrease by $97.6 million in the first half of 2023, to the VYD222 program, which incurred $40.4 million in costs during the same period[209] Liquidity and Capital Resources As of June 30, 2023, the company held $298.4 million in cash, cash equivalents, and marketable securities, with net cash used in operations of $78.6 million for the first six months, and believes its current capital is sufficient to fund operations into Q4 2024, though substantial additional funding will be required for long-term operations and commercialization - The company had cash, cash equivalents, and marketable securities totaling $298.4 million as of June 30, 2023[215] - Management believes that existing cash resources are sufficient to fund operating expenses and capital expenditure requirements into the fourth quarter of 2024[186][222] Six-Month Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(78,572) | $(116,441) | | Net cash provided by investing activities | $107,631 | $48,983 | | Net cash provided by financing activities | $812 | $119 | | Net increase (decrease) in cash | $29,871 | $(67,339) | Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is not required to provide the information for this item - As a smaller reporting company, Invivyd, Inc. is not required to provide quantitative and qualitative disclosures about market risk[231] Controls and Procedures Management, including the Chief Executive Officer, evaluated the company's disclosure controls and procedures as of June 30, 2023, concluding they were effective at a reasonable assurance level, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2023, the Chief Executive Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[232] - 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[233] PART II. OTHER INFORMATION Legal Proceedings The company is facing a securities class action lawsuit filed on January 31, 2023, alleging false and misleading statements about ADG20's effectiveness against the Omicron variant, which the company intends to defend vigorously, while an SEC investigation into similar matters concluded on August 9, 2023, with no recommended action - A securities class action lawsuit was filed against the company and former officers concerning statements about ADG20's effectiveness against the Omicron variant, and the company plans to defend itself vigorously[236][237] - On August 9, 2023, the SEC concluded its investigation regarding the company's statements on ADG20's efficacy against Omicron and notified the company that it does not intend to recommend any enforcement action[238] Risk Factors There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes have occurred to the risk factors disclosed in the company's 2022 Form 10-K[239] Unregistered Sales of Equity Securities and Use of Proceeds The company did not issue any unregistered equity securities during the three months ended June 30, 2023, but repurchased 46,600 shares of common stock in May 2023 at an average price of $0.002 per share related to employee cessation of service - No unregistered equity securities were issued during the second quarter of 2023[240] - In May 2023, the company repurchased 46,600 shares of common stock at an average price of $0.002 per share from former employees[241] Other Information On August 8, 2023, the Board of Directors designated David Hering, the company's Chief Executive Officer, to also serve as the company's principal financial officer, effective immediately, with no changes to his compensation arrangement - Effective August 8, 2023, CEO David Hering was also designated as the company's principal financial officer[242] Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and XBRL data files