Adagio(IVVD) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Invivyd, Inc.'s unaudited condensed consolidated financial statements for Q1 2023, including balance sheets, statements of operations, equity, and cash flows, with detailed notes Condensed Consolidated Balance Sheets Total assets decreased from $383.2 million to $350.6 million, driven by reduced marketable securities, while total liabilities and stockholders' equity also decreased | Metric (in thousands) | March 31, 2023 | December 31, 2022 | Change | | :-------------------- | :------------- | :---------------- | :----- | | Cash and cash equivalents | $126,473 | $92,076 | +$34,397 | | Marketable securities | $206,955 | $279,915 | -$72,960 | | Total current assets | $344,623 | $376,917 | -$32,294 | | Total assets | $350,564 | $383,167 | -$32,603 | | Total current liabilities | $22,057 | $25,031 | -$2,974 | | Total liabilities | $23,815 | $27,197 | -$3,382 | | Total stockholders' equity | $326,749 | $355,970 | -$29,221 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a net loss of $35.3 million for Q1 2023, a significant improvement from $100.7 million in Q1 2022, primarily due to reduced R&D expenses | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | | Research and development | $27,201 | $92,035 | -$64,834 | | Acquired in-process R&D | $825 | $0 | +$825 | | Selling, general and administrative | $11,045 | $8,704 | +$2,341 | | Total operating expenses | $39,071 | $100,739 | -$61,668 | | Loss from operations | $(39,071) | $(100,739) | +$61,668 | | Other income | $3,750 | $73 | +$3,677 | | Net loss | $(35,321) | $(100,666) | +$65,345 | | Net loss per share (basic & diluted) | $(0.32) | $(0.93) | +$0.61 | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Total stockholders' equity decreased from $356.0 million to $326.7 million, mainly due to the net loss, partially offset by stock-based compensation and option exercises | Metric (in thousands) | December 31, 2022 | March 31, 2023 | Change | | :-------------------- | :---------------- | :------------- | :----- | | Common stock | $11 | $11 | $0 | | Additional paid-in capital | $889,657 | $895,600 | +$5,943 | | Accumulated other comprehensive loss | $(272) | $(115) | +$157 | | Accumulated deficit | $(533,426) | $(568,747) | -$35,321 | | Total stockholders' equity | $355,970 | $326,749 | -$29,221 | - Key activities impacting equity included $5.4 million in stock-based compensation expense, $459 thousand from stock option exercises, and a net loss of $35.3 million[18] Condensed Consolidated Statements of Cash Flows Net cash increased by $34.4 million in Q1 2023, a significant improvement from a $10.0 million decrease in Q1 2022, driven by reduced operating cash use and increased investing cash | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net cash used in operating activities | $(41,181) | $(59,049) | +$17,868 | | Net cash provided by investing activities | $75,036 | $49,000 | +$26,036 | | Net cash provided by financing activities | $542 | $45 | +$497 | | Net increase (decrease) in cash and cash equivalents | $34,397 | $(10,004) | +$44,401 | | Cash and cash equivalents at end of period | $126,473 | $532,220 | -$405,747 | - The decrease in cash used in operating activities was primarily due to a lower net loss and changes in operating assets and liabilities, including an increase in prepaid expenses and a decrease in accrued expenses[21] Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed explanations and disclosures for the unaudited condensed consolidated financial statements, covering business, accounting policies, and various agreements Note 1. Nature of the Business and Basis of Presentation Invivyd is a biopharmaceutical company developing antibody-based therapies for viral threats, with a Phase 1 clinical trial for VYD222 initiated in March 2023 - Invivyd is a biopharmaceutical company developing antibody-based therapies for viral threats, initially SARS-CoV-2, with plans to expand into influenza and other high-need indications[25] - In March 2023, the company began a Phase 1 clinical trial for VYD222, a monoclonal antibody candidate for COVID-19 prevention, and received FDA IND clearance in April 2023[26] - The company has not generated revenue since inception, incurred a net loss of $35.3 million for Q1 2023, and has an accumulated deficit of $568.7 million as of March 31, 2023[32] Note 2. Summary of Significant Accounting Policies The company's financial statements are prepared in accordance with U.S. GAAP, with ASU 2016-13 adopted in January 2023, having an immaterial impact - The company adopted ASU 2016-13, "Financial Instruments-Credit Losses," on January 1, 2023, with an immaterial impact on its financial statements[40] - The condensed consolidated financial statements are unaudited and prepared in conformity with U.S. GAAP, with certain disclosures condensed or omitted per SEC rules for interim reporting[41][42] Note 3. Marketable Securities Marketable securities, classified as available-for-sale debt securities, decreased to $207.0 million at March 31, 2023, from $279.9 million at December 31, 2022 | Marketable Securities (in thousands) | March 31, 2023 Fair Value | December 31, 2022 Fair Value | Change | | :--------------------------------- | :------------------------ | :--------------------------- | :----- | | U.S. Treasury securities | $90,935 | $107,871 | -$16,936 | | Federal agency securities | $116,020 | $172,044 | -$56,024 | | Total financial assets | $206,955 | $279,915 | -$72,960 | - No available-for-sale marketable securities held as of March 31, 2023, or December 31, 2022, had remaining maturities greater than twelve months[50] Note 4. Fair Value Measurements Financial assets and liabilities are classified into a three-level hierarchy, with cash equivalents and U.S. Treasury securities as Level 1, and federal agency securities as Level 2 | Fair Value Measurements (in thousands) | Level 1 (March 31, 2023) | Level 2 (March 31, 2023) | Total (March 31, 2023) | Level 1 (December 31, 2022) | Level 2 (December 31, 2022) | Total (December 31, 2022) | | :----------------------------------- | :----------------------- | :----------------------- | :--------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Money market funds | $124,198 | $0 | $124,198 | $91,050 | $0 | $91,050 | | U.S. Treasury securities | $90,935 | $0 | $90,935 | $107,871 | $0 | $107,871 | | Federal agency securities | $0 | $116,020 | $116,020 | $0 | $172,044 | $172,044 | | Total | $215,133 | $116,020 | $331,153 | $198,921 | $172,044 | $370,965 | - Money market funds and U.S. Treasury securities are valued using Level 1 inputs (quoted market prices), while federal agency securities are valued using Level 2 inputs (quoted prices for similar securities or observable market data)[52][53] Note 5. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets increased significantly to $11.2 million at March 31, 2023, from $4.9 million at December 31, 2022, primarily due to higher prepaid R&D and manufacturing costs | Prepaid Expenses (in thousands) | March 31, 2023 | December 31, 2022 | Change | | :------------------------------ | :------------- | :---------------- | :----- | | Prepaid external R&D and manufacturing costs | $7,145 | $843 | +$6,302 | | Prepaid insurance | $1,968 | $2,392 | -$424 | | Prepaid compensation and other | $1,549 | $1,314 | +$235 | | Interest receivable | $533 | $377 | +$156 | | Total | $11,195 | $4,926 | +$6,269 | Note 6. Accrued Expenses Accrued expenses decreased to $14.5 million at March 31, 2023, from $21.9 million at December 31, 2022, mainly due to reductions in accrued external R&D, manufacturing, and employee compensation costs | Accrued Expenses (in thousands) | March 31, 2023 | December 31, 2022 | Change | | :------------------------------ | :------------- | :---------------- | :----- | | Accrued external R&D and manufacturing costs | $10,992 | $13,955 | -$2,963 | | Accrued professional and consultant fees | $1,940 | $1,153 | +$787 | | Accrued employee compensation | $1,428 | $5,985 | -$4,557 | | Other | $141 | $818 | -$677 | | Total | $14,501 | $21,911 | -$7,410 | Note 7. License and Collaboration Agreements Invivyd has key agreements with Adimab and WuXi Biologics for antibody discovery, development, and manufacturing, involving milestone payments, royalties, and service fees Adimab Assignment Agreement Invivyd is obligated to pay Adimab up to $24.6 million in development and regulatory milestones, with $0.4 million incurred in Q1 2023 for VYD222's Phase 1 trial - Invivyd is obligated to pay Adimab up to $24.6 million in development and regulatory milestones for products, with $7.5 million paid by December 31, 2022[61] - In March 2023, a $0.4 million milestone payment was incurred and recognized as acquired IPR&D expense upon dosing the first subject in the VYD222 Phase 1 clinical trial[62] - The company recognized no R&D expense for Adimab services under this agreement in Q1 2023, compared to $0.3 million in Q1 2022[60] Adimab Collaboration Agreement Invivyd pays Adimab a quarterly fee of $1.3 million for exclusivity and services, with R&D expenses of $0.2 million in Q1 2023, and potential milestones up to $18.0 million per product - Invivyd pays Adimab a quarterly fee of $1.3 million for exclusivity and services, recognized as R&D expense in both Q1 2023 and Q1 2022[67] - R&D expense for Adimab services under this agreement was $0.2 million in Q1 2023, a decrease from $0.4 million in Q1 2022[68] - The company is obligated to pay up to $18.0 million in development and regulatory milestones for each product and mid-single-digit royalties on net sales[69] Adimab Platform Transfer Agreement This agreement grants Invivyd rights to Adimab's platform technology, with an upfront fee of $3.0 million recognized in September 2022, and no expense recognized in Q1 2023 - The company recognized $3.0 million as IPR&D expense in September 2022 for upfront consideration under this agreement[73] - Invivyd is obligated to pay annual fees for platform improvements and up to $9.5 million in development and regulatory milestones per product, plus low single-digit royalties on net sales[74][75][76] - No expense was recognized in Q1 2023 under this agreement, as it was not effective in Q1 2022[149] WuXi Biologics Cell Line License Agreement Invivyd recognized $0.4 million in license fees as IPR&D expense in February 2023 for additional Licensed Cell Lines, with royalties of less than 1.0% due on net sales - In February 2023, Invivyd recognized $0.4 million in license fees as IPR&D expense for additional Licensed Cell Lines[80][83] - Royalties of less than 1.0% are payable on net sales of Licensed Products, unless WuXi Biologics manufactures all commercial supplies[81] Research Collaboration and License Agreement with The Scripps Research Institute This agreement for influenza and beta coronavirus vaccine candidates was terminated in April 2022, resulting in no R&D expense recognized in Q1 2023 - The Research Agreement with TSRI was terminated in April 2022[85] - No R&D expense was recognized in Q1 2023, compared to $0.9 million in Q1 2022, due to the termination of the agreement[86] Note 8. Population Health Partners, L.P. Invivyd recognized $1.5 million in R&D expense for advisory services from PHP in Q1 2023 and issued a warrant for 6,824,712 common shares to PHP - Invivyd recognized $1.5 million in R&D expense for Q1 2023 related to advisory services from PHP, with a monthly cash fee of $0.5 million[89][154] - A warrant to purchase 6,824,712 shares of common stock was issued to PHP in November 2022, vesting upon achievement of market capitalization targets or a change of control[90][92][93] Note 9. Commitments and Contingencies Invivyd has operating lease commitments totaling $3.6 million, $15.1 million in contractual obligations for VYD222 drug substance, and is involved in a securities class action lawsuit and SEC inquiry Operating Lease Commitments Invivyd has noncancelable operating leases for office and laboratory space, with total lease cost of $0.442 million for Q1 2023 and future minimum payments of $3.578 million | Lease Cost (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Operating lease cost | $430 | $105 | | Variable lease cost | $12 | $8 | | Total lease cost | $442 | $113 | | Year Ending December 31, | Operating Lease Payments (in thousands) | | :----------------------- | :-------------------------------------- | | 2023 (remaining) | $1,299 | | 2024 | $1,521 | | 2025 | $430 | | 2026 | $328 | | Total lease payments | $3,578 | | Present value adjustment | $(235) | | Present value of operating lease liability | $3,343 | Clinical and Manufacturing Agreements Contractually binding VYD222 drug substance batches total $15.1 million, expected to be incurred and paid in 2023, with a low eight-figure credit applied from WuXi Biologics - The total remaining cost of contractually binding VYD222 drug substance batches to be manufactured under the Clinical Master Services Agreement is $15.1 million, expected to be incurred and paid in 2023[108] - A low eight-figure credit from WuXi Biologics was applied as a reduction of R&D expenses and accounts payable during Q1 2023[108] Legal Proceedings Invivyd faces a securities class action lawsuit alleging misleading statements about ADG20's effectiveness and is cooperating with an SEC inquiry regarding ADG20's efficacy - A securities class action lawsuit was filed on January 31, 2023, alleging violations of securities laws due to purportedly false and misleading statements regarding ADG20's effectiveness against the Omicron variant[113] - The SEC requested documents and information concerning ADG20's efficacy testing and public statements, to which the company intends to cooperate fully[115] Note 10. Common Stock As of March 31, 2023, 43,892,474 shares of common stock were reserved for future issuance, and 206,802 unvested restricted shares were repurchased and retired in March 2023 - As of March 31, 2023, 43,892,474 shares of common stock were reserved for future issuance under equity incentive plans[117] - In March 2023, the company repurchased and retired 206,802 shares of unvested restricted common stock due to an employee's termination of service[121] Note 11. Stock-Based Compensation Stock-based compensation expense for Q1 2023 was $5.4 million, with $53.8 million in unrecognized expense remaining, and the PHP Warrant had a grant date fair value of $17.4 million Stock Option Activity As of March 31, 2023, 23,883,782 stock options were outstanding with a weighted-average exercise price of $6.28, and the grant date fair value of options granted in Q1 2023 was $1.34 | Stock Option Activity | Outstanding at Dec 31, 2022 | Granted (Q1 2023) | Exercised (Q1 2023) | Forfeited (Q1 2023) | Outstanding at Mar 31, 2023 | | :-------------------- | :-------------------------- | :---------------- | :------------------ | :------------------ | :-------------------------- | | Number of Shares | 23,239,391 | 3,064,800 | (423,203) | (1,997,206) | 23,883,782 | | Weighted Average Exercise Price | $7.01 | $2.11 | $0.78 | $9.49 | $6.28 | - The weighted-average grant date fair value of stock options granted was $1.34 per share for Q1 2023, compared to $4.23 per share for Q1 2022[129] Stock-Based Compensation Expense Total stock-based compensation expense for Q1 2023 was $5.4 million, an increase from $2.0 million in Q1 2022, with most allocated to SG&A expenses | Expense Category (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :------------------------------ | :-------------------------------- | :-------------------------------- | :----- | | Research and development | $2,263 | $3,153 | -$890 | | Selling, general and administrative | $3,137 | $(1,170) | +$4,307 | | Total | $5,400 | $1,983 | +$3,417 | - As of March 31, 2023, total unrecognized stock-based compensation expense was $53.8 million, expected to be recognized over a weighted-average period of 2.7 years[133] Warrant Expense The PHP Warrant, issued in November 2022, had an aggregate grant date fair value of $17.4 million, recognized as warrant expense on the grant date - The aggregate grant date fair value of the PHP Warrant was $17.4 million, recognized as warrant expense in November 2022[137] - As of March 31, 2023, 6,824,712 warrants were outstanding with a weighted-average exercise price of $3.48 and a remaining contractual term of 9.64 years[137] Note 12. Income Taxes The company recorded no income tax benefits for net operating losses or R&D tax credits in Q1 2023 and Q1 2022 due to uncertainty of realizing a benefit - No income tax benefits were recorded for net operating losses or R&D tax credits in Q1 2023 and Q1 2022 due to uncertainty of realization[138] Note 13. Defined Contribution Plan Invivyd contributed $0.2 million to its 401(k) Plan in both Q1 2023 and Q1 2022, representing 3% of eligible participants' compensation - The company contributed $0.2 million to its 401(k) Plan in both Q1 2023 and Q1 2022, representing 3% of eligible participants' compensation[139] Note 14. Net Loss per Share Basic and diluted net loss per share for Q1 2023 was $(0.32), a significant improvement from $(0.93) in Q1 2022, with potential dilutive securities excluded | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :----- | :-------------------------------- | :-------------------------------- | :----- | | Net loss attributable to common stockholders | $(35,321) | $(100,666) | +$65,345 | | Weighted-average common shares outstanding | 108,785,519 | 107,869,570 | +915,949 | | Net loss per share (basic and diluted) | $(0.32) | $(0.93) | +$0.61 | - Potential dilutive securities, including stock options and warrants, were excluded from diluted EPS calculation as their effect was anti-dilutive[141][142] Note 15. Related Party Transactions Invivyd has ongoing related party transactions primarily with Adimab and Population Health Partners, L.P., involving milestone payments, R&D service fees, and cash compensation Adimab Assignment Agreement In Q1 2023, Invivyd recognized $0.4 million as IPR&D expense for a milestone payment to Adimab, with no R&D expense for Adimab services - In Q1 2023, Invivyd recognized $0.4 million as IPR&D expense for a milestone payment to Adimab, compared to $0 in Q1 2022[145] - No R&D expense was recognized for Adimab services in Q1 2023, down from $0.3 million in Q1 2022[146] Adimab Collaboration Agreement Invivyd recognized $1.3 million in R&D expense for the quarterly fee to Adimab in both Q1 2023 and Q1 2022, with R&D expense for services at $0.2 million in Q1 2023 - Invivyd recognized $1.3 million in R&D expense for the quarterly fee to Adimab in both Q1 2023 and Q1 2022[147] - R&D expense for Adimab services was $0.2 million in Q1 2023, down from $0.4 million in Q1 2022[148] Adimab Platform Transfer Agreement No expense was recognized in Q1 2023 under this agreement, as it was not effective in Q1 2022 - No expense was recognized in Q1 2023 under this agreement, as it was not effective in Q1 2022[149] Population Health Partners, L.P. Invivyd recognized $1.5 million in R&D expense for services from PHP in Q1 2023, with $0.8 million due to PHP as of March 31, 2023 - Invivyd recognized $1.5 million in R&D expense for services from PHP in Q1 2023; these agreements were not effective in Q1 2022[154] - As of March 31, 2023, $0.8 million was due to PHP by the company[154] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Invivyd's financial condition and operational results for Q1 2023, highlighting R&D expenses, ongoing losses, and liquidity Cautionary Note Regarding Forward-Looking Statements This section advises readers that the report contains forward-looking statements regarding future events, financial trends, and business prospects, subject to risks and uncertainties Overview Invivyd is a biopharmaceutical company focused on developing antibody therapies for viral threats, particularly VYD222 for COVID-19, and discusses significant R&D expenses, ongoing losses, and liquidity - Invivyd is a biopharmaceutical company developing antibody-based therapies for viral threats, starting with SARS-CoV-2, and is generating a pipeline for COVID-19, influenza, and other high-need indications[161] - In March 2023, the company initiated a Phase 1 clinical trial for VYD222, a COVID-19 prevention mAb candidate, with initial data anticipated in Q2 2023, and received FDA IND clearance in April 2023[162] - The company incurred a net loss of $35.3 million for Q1 2023 and has an accumulated deficit of $568.7 million as of March 31, 2023, expecting continued significant expenses and losses[169] Impact of COVID-19 on Our Operations The COVID-19 pandemic continues to impact Invivyd's operations, affecting VYD222's commercial prospects, clinical trial design, and supply chains, with the ultimate extent remaining uncertain - The COVID-19 pandemic continues to impact the potential commercial prospects of VYD222 and other product candidates, affecting clinical trial design, enrollment, and regulatory approval[174] - The company has experienced delays and disruptions in development activities due to the pandemic, with ongoing uncertainty regarding its ultimate impact on business, financial condition, and product development timelines[175] Components of Our Results of Operations This section details Invivyd's revenue, R&D, IPR&D, SG&A expenses, other income, and income tax components, noting no revenue to date and expensing R&D as incurred Revenue The company has not generated any revenue from product sales or other sources since its inception - The company has not generated any revenue from product sales or other sources since its inception[176] Research and Development Expenses R&D expenses include costs for non-clinical and preclinical development, product candidate procurement, global clinical development, personnel, third-party services, laboratory expenses, and licensing payments, expected to increase substantially - R&D expenses include costs for non-clinical and preclinical development, product candidate procurement, global clinical development, personnel, third-party services (CROs, CDMOs, consultants), laboratory expenses, and licensing payments[177][178][181] - R&D costs are expensed as incurred, and non-refundable advance payments are recorded as prepaid expenses and expensed as goods are delivered or services performed[178] - The company expects R&D expenses to increase substantially as VYD222 advances through clinical development, new product candidates are pursued, and additional personnel are hired[180] Acquired In-Process Research and Development ("IPR&D") Expenses IPR&D expenses primarily consist of costs for contingent milestone payments to acquire rights to Adimab's antibodies and platform technology, expensed due to no alternative future use - IPR&D expenses primarily consist of costs for contingent milestone payments to acquire rights to Adimab's antibodies and platform technology, expensed because they had no alternative future use[185] Selling, General and Administrative Expenses SG&A expenses include personnel-related costs, professional and consultant fees, insurance, and market research, expected to increase with business expansion and public company operations - SG&A expenses include personnel-related costs (salaries, bonuses, benefits, stock-based compensation), professional and consultant fees (legal, accounting, administrative), insurance, and market research[186] - SG&A expenses are expected to increase with business expansion, headcount growth, and costs associated with operating as a public company and potential commercialization efforts[187] Other Income (Expense), Net Other income primarily consists of interest earned from cash, cash equivalents, and marketable securities, and net amortization or accretion of premiums and discounts - Other income primarily consists of interest earned from cash, cash equivalents, and marketable securities, and net amortization/accretion of premiums/discounts on marketable securities[189] Income Taxes The company has not recorded any income tax expense or benefits for net operating losses or R&D tax credits due to the uncertainty of realizing a benefit - The company has not recorded income tax expense or benefits for net losses or R&D tax credits due to uncertainty of realizing a benefit[190] Results of Operations This section compares Invivyd's financial performance for Q1 2023 versus Q1 2022, detailing changes in R&D, IPR&D, SG&A, and other income Comparison of the three months ended March 31, 2023 and 2022 Invivyd's net loss significantly decreased to $35.3 million in Q1 2023 from $100.7 million in Q1 2022, driven by reduced R&D expenses and increased other income | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | | Research and development | $27,201 | $92,035 | -$64,834 | | Acquired in-process research and development | $825 | $0 | +$825 | | Selling, general and administrative | $11,045 | $8,704 | +$2,341 | | Total operating expenses | $39,071 | $100,739 | -$61,668 | | Loss from operations | $(39,071) | $(100,739) | +$61,668 | | Other income | $3,750 | $73 | +$3,677 | | Net loss | $(35,321) | $(100,666) | +$65,345 | Research and Development Expenses R&D expenses decreased by $64.8 million to $27.2 million in Q1 2023, primarily due to reduced adintrevimab program costs, partially offset by increased VYD222 and external discovery costs | R&D Expense (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Adintrevimab | $2,537 | $77,583 | -$75,046 | | VYD222 | $8,915 | $0 | +$8,915 | | Personnel-related costs | $7,296 | $9,512 | -$2,216 | | External discovery-related and other costs | $8,453 | $4,940 | +$3,513 | | Total R&D expenses | $27,201 | $92,035 | -$64,834 | - The $75.0 million decrease in adintrevimab program costs was due to reduced contract manufacturing ($53.1 million) and contract research expenses ($19.7 million) following clinical trial pauses and closures[192] - VYD222 program costs increased by $8.9 million due to IND-enabling activities and contract manufacturing for clinical trials[197] Acquired In-Process Research and Development ("IPR&D") Expenses IPR&D expenses were $0.8 million in Q1 2023, including milestone payments to Adimab and license fees to WuXi Biologics, with no IPR&D expense in Q1 2022 - IPR&D expenses were $0.8 million in Q1 2023, comprising a $0.4 million milestone payment to Adimab for VYD222 and $0.4 million in license fees to WuXi Biologics[193] - No IPR&D expense was recognized during Q1 2022[194] Selling, General and Administrative Expenses SG&A expenses increased by $2.3 million to $11.0 million in Q1 2023, mainly due to higher personnel-related costs, partially offset by lower professional and consultant fees | SG&A Expense (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Personnel-related costs | $6,267 | $1,643 | +$4,624 | | Professional and consultant fees | $4,103 | $6,661 | -$2,558 | | Other | $675 | $400 | +$275 | | Total SG&A expenses | $11,045 | $8,704 | +$2,341 | - The $4.6 million increase in personnel-related costs was primarily due to the non-recurring reversal of stock-based compensation expense in Q1 2022 related to a former CEO's resignation[198] Other Income Other income significantly increased to $3.8 million in Q1 2023, primarily from interest income and net accretion of discounts on marketable securities, up from less than $0.1 million in Q1 2022 - Other income increased to $3.8 million in Q1 2023, primarily from $1.1 million in interest income and $2.7 million in net accretion of discounts on marketable securities[196] - Other income was less than $0.1 million in Q1 2022[196] Liquidity and Capital Resources Invivyd has incurred significant operating losses and expects its $333.4 million in cash, equivalents, and marketable securities to fund operations into H2 2024, with future funding sought externally Sources of Liquidity Since inception, Invivyd has financed operations with $464.7 million from preferred stock sales and $327.5 million from its IPO, holding $333.4 million in cash, equivalents, and marketable securities - Since inception, Invivyd has financed operations with $464.7 million from preferred stock sales and $327.5 million from its IPO[199] - As of March 31, 2023, the company had $333.4 million in cash, cash equivalents, and marketable securities[199] Cash Flows In Q1 2023, net cash used in operating activities decreased to $41.2 million, while net cash provided by investing activities increased to $75.0 million, and financing activities provided $0.5 million | Cash Flow (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :----------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net cash used in operating activities | $(41,181) | $(59,049) | +$17,868 | | Net cash provided by investing activities | $75,036 | $49,000 | +$26,036 | | Net cash provided by financing activities | $542 | $45 | +$497 | | Net increase (decrease) in cash and cash equivalents | $34,397 | $(10,004) | +$44,401 | Funding Requirements The company expects its $333.4 million in cash, equivalents, and marketable securities to fund operations into H2 2024, with future funding through equity, debt, collaborations, or grants - The company expects its $333.4 million in cash, cash equivalents, and marketable securities to fund operating expenses and capital expenditures into the second half of 2024[206] - Future funding will be sought through equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements, which may dilute ownership or impose restrictions[207] Contractual Obligations and Commitments No material changes to contractual obligations occurred during Q1 2023 from those described in the 2022 Form 10-K - No material changes to contractual obligations occurred during Q1 2023 from those described in the 2022 Form 10-K[208] Critical Accounting Policies and Significant Judgments and Estimates The company's financial statements are prepared under U.S. GAAP, requiring management estimates, with no significant changes to critical accounting policies reported from the 2022 Form 10-K - No significant changes to critical accounting policies and estimates were reported from those described in the 2022 Form 10-K[210] Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may impact the company's financial position, results, and cash flows is provided in Note 2 - A description of recently issued accounting pronouncements is provided in Note 2 of the condensed consolidated financial statements[211] Emerging Growth Company Status Invivyd is an "emerging growth company" under the JOBS Act, relying on exemptions from certain disclosure requirements and an extended transition period for new accounting standards - Invivyd is an "emerging growth company" and intends to rely on exemptions from certain disclosure requirements and an extended transition period for new accounting standards[212][213][214] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Invivyd is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Invivyd is exempt from providing quantitative and qualitative disclosures about market risk[215] Item 4. Controls and Procedures Management concluded that Invivyd's disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Management, with the CEO and Interim CFO, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2023 - Management, with the CEO and Interim CFO, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2023[216] Changes in Internal Control over Financial Reporting No changes in internal control over financial reporting occurred during the period that materially affected, or are reasonably likely to materially affect, internal control over financial reporting - No changes in internal control over financial reporting occurred during the period that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[217] PART II. OTHER INFORMATION Item 1. Legal Proceedings Invivyd is involved in a securities class action lawsuit alleging misleading statements about ADG20's effectiveness and is cooperating with an SEC inquiry regarding ADG20's efficacy - A securities class action lawsuit was filed on January 31, 2023, alleging violations of securities laws regarding ADG20's effectiveness against the Omicron variant[220] - The SEC requested documents concerning ADG20's efficacy and public statements, and the company intends to cooperate fully[222] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's 2022 Form 10-K have occurred - No material changes to the risk factors set forth in the 2022 Form 10-K have occurred[223] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Invivyd did not issue any unregistered equity securities during Q1 2023 but repurchased and retired 206,802 shares of unvested restricted common stock due to employee termination Recent Sales of Unregistered Securities; Use of Proceeds The company did not issue any unregistered equity securities during the three months ended March 31, 2023 - No unregistered equity securities were issued during the three months ended March 31, 2023[224] Purchases of Equity Securities by the Issuer In March 2023, Invivyd repurchased and retired 206,802 shares of common stock at an average price of $0.002 per share, which were unvested restricted stock from early-exercised options | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----- | :------------------------------- | :--------------------------- | | March 1, 2023 to March 31, 2023 | 206,802 | $0.002 | | Total | 206,802 | $0.002 | - The repurchased shares were unvested restricted common stock from early-exercised employee stock options, due to termination of service[225] Item 5. Other Information Frederick W. Driscoll, Interim Chief Financial Officer, provided notice of his planned retirement effective May 31, 2023 - Frederick W. Driscoll, Interim Chief Financial Officer, announced his planned retirement effective May 31, 2023[226] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including amendments to corporate documents, consulting agreements, compensation policies, and certifications - The exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, an amendment to the Cell Line License Agreement, a Consulting Services Agreement, and certifications from executive officers[227] Signatures The report is signed by David Hering, M.B.A., Chief Executive Officer and Director, and Frederick W. Driscoll, Interim Chief Financial Officer, on May 11, 2023 - The report was signed by David Hering, CEO, and Frederick W. Driscoll, Interim CFO, on May 11, 2023[231]