Adagio(US:IVVD)2024-05-09 20:20PART I. FINANCIAL INFORMATION This section presents Invivyd, Inc.'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 unaudited condensed consolidated financial statements for Invivyd, Inc., including the balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity (deficit), and statements of cash flows, along with detailed notes explaining the company's business, accounting policies, and financial activities Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's financial position at specific points in time, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | Cash and cash equivalents | $189,388 | $200,641 | | Total current assets | $209,883 | $224,881 | | Total assets | $215,468 | $229,181 | | Total current liabilities | $36,345 | $50,291 | | Total liabilities | $36,970 | $51,713 | | Total stockholders' equity | $178,498 | $177,468 | Condensed Consolidated Statements of Operations and Comprehensive Loss This statement outlines the company's financial performance over specific periods, reporting revenues, expenses, and net loss Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $31,160 | $27,201 | | Acquired in-process research and development | $0 | $825 | | Selling, general and administrative | $14,929 | $11,045 | | Total operating expenses | $46,089 | $39,071 | | Loss from operations | $(46,089) | $(39,071) | | Other income, net | $2,593 | $3,750 | | Net loss | $(43,496) | $(35,321) | | Net loss per share (basic and diluted) | $(0.38) | $(0.32) | Condensed Consolidated Statements of Stockholders' Equity (Deficit) This statement details changes in the company's equity accounts over time, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity (Deficit) (in thousands) | Metric (in thousands) | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | Common stock | $12 | $11 | | Additional paid-in capital | $954,063 | $909,539 | | Accumulated deficit | $(775,565) | $(732,069) | | Total stockholders' equity | $178,498 | $177,468 | - Issuance of 9,000,000 shares of common stock, net of issuance costs, contributed $39,057 thousand to additional paid-in capital during the three months ended March 31, 202418 Condensed Consolidated Statements of Cash Flows This statement reports the cash generated and used by the company during specific periods, categorized into operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(50,214) | $(41,181) | | Net cash (used in) provided by investing activities | $(140) | $75,036 | | Net cash provided by financing activities | $39,101 | $542 | | Net (decrease) increase in cash and cash equivalents | $(11,253) | $34,397 | | Cash and cash equivalents at end of period | $189,388 | $126,473 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide additional information and explanations to the financial statements, detailing accounting policies, business activities, and financial disclosures Note 1. Nature of the Business and Basis of Presentation This note describes the company's core business, recent developments, and the foundational principles used in preparing the financial statements - Received Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA) for PEMGARDA™ (pemivibart) for pre-exposure prophylaxis of COVID-19 in immunocompromised adults and adolescents on March 22, 202425155 - Intends to submit an EUA application for pemivibart for the treatment of mild to moderate symptomatic COVID-19 in certain immunocompromised people in May 202426156 - Nominated VYD2311, a mAb optimized for neutralization potency against recent SARS-CoV-2 lineages (BA.2.86 and JN.1), as a drug candidate in January 2024, expected to be the next pipeline program27157 - Incurred a net loss of $43.5 million for the three months ended March 31, 2024, with an accumulated deficit of $775.6 million32164 - Concluded there is substantial doubt about its ability to continue as a going concern beyond one year from the issuance of these financial statements without additional funding33168198 Note 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and methods applied in the preparation of the financial statements, including inventory valuation - Changed inventory accounting policy: PEMGARDA™ inventory costs are now capitalized after receiving EUA in March 2024, as probable future economic benefit was determined; previously, manufacturing costs were expensed as R&D39 - Inventory is stated at the lower of cost or estimated net realizable value with cost determined on a first-in, first-out basis40 Note 3. Fair Value Measurements This note provides information on how the company measures the fair value of its financial assets and liabilities, categorized by valuation inputs Fair Value Measurements (in thousands) | Asset (in thousands) | March 31, 2024 (Level 1) | December 31, 2023 (Level 1) | | :------------------- | :----------------------- | :-------------------------- | | Money market funds | $187,690 | $198,193 | Note 4. Prepaid Expenses and Other Current Assets This note details the composition of the company's prepaid expenses and other current assets, including external research and development costs Prepaid Expenses and Other Current Assets (in thousands) | Category (in thousands) | March 31, 2024 | December 31, 2023 | | :---------------------- | :------------- | :---------------- | | Prepaid external research, development and manufacturing costs | $15,582 | $19,962 | | Total prepaid expenses and other current assets | $20,386 | $24,240 | Note 5. Accrued Expenses This note provides a breakdown of the company's accrued liabilities, including external research, development, manufacturing costs, and employee compensation Accrued Expenses (in thousands) | Category (in thousands) | March 31, 2024 | December 31, 2023 | | :---------------------- | :------------- | :---------------- | | Accrued external research, development and manufacturing costs | $29,139 | $28,151 | | Accrued employee compensation | $1,689 | $10,752 | | Total accrued expenses | $34,003 | $40,860 | Note 6. License and Collaboration Agreements This note describes the company's various agreements with third parties for licensing and collaboration, including milestone payments and fees - Under the Adimab Assignment Agreement, total milestone payments achieved and paid as of March 31, 2024, are $11.1 million out of a maximum aggregate of $24.6 million59 - No IPR&D expense was recognized for the Adimab Assignment Agreement in Q1 2024, compared to $0.4 million in Q1 202361140 - The quarterly fee under the Adimab Collaboration Agreement decreased from $1.3 million to $0.6 million effective January 2024, due to a reduced scope of Adimab's exclusivity obligations67142 - A portion of the first annual fee under the Adimab Platform Transfer Agreement was recognized as research and development expense in Q1 202475144 - No IPR&D expense was recognized under the WuXi Biologics Cell Line License Agreement in Q1 2024, compared to $0.4 million in Q1 202386 Note 7. Population Health Partners, L.P. This note details the company's past advisory services agreement and warrant issuance with Population Health Partners, L.P. - The PHP Work Order for advisory services terminated in May 202387101 - Recognized $1.5 million in R&D expense in Q1 2023 related to cash compensation to PHP; no expense in Q1 202489148 - Issued a warrant to PHP in November 2022, exercisable for up to 6,824,712 shares of common stock at $3.48 per share, vesting upon market capitalization targets or fundamental transactions9096132 Note 8. Commitments and Contingencies This note outlines the company's contractual obligations, purchase commitments, and potential legal liabilities, including a securities class action lawsuit Operating Lease Commitments (in thousands) | Year Ending December 31, | Operating Lease (in thousands) | | :----------------------- | :----------------------------- | | 2024 (excluding Q1 2024) | $1,087 | | 2025 | $430 | | 2026 | $328 | | Total lease payments | $1,845 | - Total remaining contractually binding commercial drug substance and drug product purchase obligations due to WuXi Biologics: $69.3 million, expected to be paid in 2024 and 2025103 - Noncancelable purchase obligations for materials for future manufacturing: $24.7 million, expected to be paid in 2024105 - A securities class action lawsuit was filed on January 31, 2023, alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 concerning ADG20's effectiveness against the Omicron variant; the company intends to vigorously defend the action109212213 Note 9. Common Stock This note provides information on the company's common stock, including shares reserved for equity plans and recent stock issuances - Reserved 46,292,290 shares of common stock for equity incentive plans as of March 31, 2024113 - Sold 9,000,000 shares of common stock under the Sales Agreement (ATM facility) in February 2024 at an average price of $4.50 per share, generating $39.3 million in net proceeds116189 - $34.5 million remained available for sale under the Sales Agreement as of March 31, 2024116189 Note 10. Stock-Based Compensation This note details the company's stock-based compensation expense, unrecognized compensation, and stock option grants Stock-Based Compensation Expense (in thousands) | Category (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :---------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $1,677 | $2,263 | | Selling, general and administrative | $3,702 | $3,137 | | Total stock-based compensation expense | $5,379 | $5,400 | - Total unrecognized stock-based compensation expense was $40.2 million as of March 31, 2024, expected to be recognized over a weighted-average period of 2.4 years130 - Granted 3,647,000 stock options with a weighted-average grant date fair value of $2.53 per share during the three months ended March 31, 2024128 Note 11. Income Taxes This note discusses the company's income tax position, including the lack of recorded tax benefits and monitoring of global minimum tax frameworks - No income tax benefits were recorded for net operating losses or research and development tax credits due to uncertainty of realizing a benefit from those items134180 - Monitoring the impact of the Pillar Two global corporate minimum tax framework, not expecting a material impact on the effective tax rate181 Note 12. Defined Contribution Plan This note reports the company's contributions to its 401(k) defined contribution plan for employees - Contributed $0.2 million to the 401(k) Plan for both the three months ended March 31, 2024, and 2023135 Note 13. Net Loss per Share This note presents the calculation of basic and diluted net loss per share, including the impact of potential common shares Net Loss per Share | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----- | :-------------------------------- | :-------------------------------- | | Net loss attributable to common stockholders | $(43,496) | $(35,321) | | Weighted-average common shares outstanding | 115,618,209 | 108,785,519 | | Net loss per share, basic and diluted | $(0.38) | $(0.32) | - Excluded 33,188,745 potential common shares (stock options and warrants) from diluted EPS calculation in Q1 2024 due to anti-dilutive effect137 Note 14. Related Party Transactions This note discloses transactions and agreements with related parties, including Adimab and Population Health Partners - Adimab, a principal stockholder, is entitled to receive milestone and royalty payments and receives payments for ongoing services under various agreements139 - No IPR&D expense was recognized for the Adimab Assignment Agreement in Q1 2024, compared to $0.4 million in Q1 2023140 - Research and development expense related to the quarterly fee under the Adimab Collaboration Agreement was $0.6 million in Q1 2024, down from $1.3 million in Q1 2023142 - A portion of the first annual fee under the Adimab Platform Transfer Agreement was recognized as research and development expense in Q1 2024, with no expense in Q1 2023144 - Research and development expense for services performed by Population Health Partners (PHP) was $1.5 million in Q1 2023, with no expense in Q1 2024 as the work order terminated in May 2023148 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting the increased net loss, the receipt of EUA for PEMGARDA™, plans for future product candidates, and the ongoing need for additional funding due to substantial doubt about its ability to continue as a going concern Cautionary Note Regarding Forward-Looking Statements This note advises readers that the report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements regarding commercialization of PEMGARDA, leveraging the INVYMAB™ platform, clinical trial timing, regulatory submissions, market acceptance, manufacturing, funding needs, and competitive position151 - Actual results may differ materially from forward-looking statements due to known and unknown risks and uncertainties, as detailed in the "Risk Factors" section of the 2023 Form 10-K152153 Overview This section provides a high-level summary of the company's recent strategic developments, financial performance, and going concern considerations - Received Emergency Use Authorization (EUA) from the FDA for PEMGARDA™ (pemivibart) for COVID-19 pre-exposure prophylaxis on March 22, 2024155 - Plans to submit an EUA application for pemivibart for the treatment of mild to moderate symptomatic COVID-19 in certain immunocompromised people156 - VYD2311, a mAb optimized for recent SARS-CoV-2 lineages, is expected to be the next pipeline program to advance into clinical development157 - Incurred a net loss of $43.5 million for Q1 2024, with an accumulated deficit of $775.6 million as of March 31, 2024164 - Substantial doubt exists about the company's ability to continue as a going concern beyond one year without additional funding168 Components of Our Results of Operations This section explains the key elements contributing to the company's financial results, including revenue, research and development, and administrative expenses - No revenue generated through March 31, 2024; expects to generate revenue from sales of PEMGARDA starting with Q2 2024 financial results169163 - Research and development expenses are expensed as incurred, covering nonclinical/preclinical development, product candidate procurement, global clinical development, personnel, third-party agreements, and laboratory costs170 - Acquired in-process research and development (IPR&D) expenses consist of contingent milestone payments for acquiring rights to Adimab's antibodies and platform technology, expensed due to no alternative future use175 - Selling, general and administrative expenses include personnel, professional/consultant fees, and other administrative costs, expected to increase with business expansion and commercialization of PEMGARDA176177 - Other income, net, primarily consists of interest income earned from cash, cash equivalents, and marketable securities179 - No income tax expense or benefits recorded due to uncertainty of realizing benefits from net operating losses and R&D tax credits180 Results of Operations This section details the company's financial performance for the reported periods, analyzing changes in operating expenses, other income, and net loss Results of Operations (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Total operating expenses | $46,089 | $39,071 | | Other income, net | $2,593 | $3,750 | | Net loss | $(43,496) | $(35,321) | - Research and development expenses increased by $4.0 million to $31.2 million in Q1 2024, primarily due to a $6.9 million increase in contract manufacturing costs and a $3.1 million increase in contract research costs for the VYD222 program, and $1.9 million for the newly nominated VYD2311 program183184 - No acquired in-process research and development (IPR&D) expense was recognized in Q1 2024, compared to $0.8 million in Q1 2023185 - Selling, general and administrative expenses increased by $3.9 million to $14.9 million in Q1 2024, mainly due to a $1.1 million increase in headcount-related costs and a $2.9 million increase in professional and consultant fees for commercialization186191 - Other income decreased to $2.6 million in Q1 2024 from $3.8 million in Q1 2023, primarily due to lower interest earned on invested cash balances and the absence of net accretion of discounts on marketable securities187 Liquidity and Capital Resources This section discusses the company's cash position, sources and uses of cash, and its ability to meet short-term and long-term financial obligations - Cash and cash equivalents totaled $189.4 million as of March 31, 2024190 - Generated $39.3 million in net proceeds from selling 9 million common shares through an 'at the market' (ATM) facility in Q1 2024; $34.5 million remains available under the facility189 - Net cash used in operating activities was $(50.2) million in Q1 2024, compared to $(41.2) million in Q1 2023191 - Net cash used in investing activities was $(0.1) million in Q1 2024, a significant change from $75.0 million provided in Q1 2023 (primarily from marketable securities maturities)194 - Net cash provided by financing activities was $39.1 million in Q1 2024, primarily from common stock issuance, compared to $0.5 million in Q1 2023195 - Concluded there is substantial doubt about its ability to continue as a going concern beyond one year from the issuance date of the financial statements, based on current operating plans and excluding revenues or external financing198 - Remaining noncancelable purchase obligations for commercial drug substance and product manufacturing with WuXi Biologics total $69.3 million (due 2024-2025), plus $24.7 million for materials (due 2024)200 - As an "emerging growth company," the company intends to rely on exemptions from certain disclosure requirements and an extended transition period for new accounting standards204205 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 - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk207 Item 4. Controls and Procedures Management, including the Interim Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the company's disclosure controls and procedures as of March 31, 2024, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2024208 - No material changes in internal control over financial reporting occurred during the period covered by this Quarterly Report on Form 10-Q209 PART II. OTHER INFORMATION This section provides additional legal, equity, and administrative information not covered in the financial statements Item 1. Legal Proceedings A securities class action lawsuit was filed against the company on January 31, 2023, alleging misleading statements regarding ADG20's effectiveness against the Omicron variant of COVID-19. The company is vigorously defending the action, which is in its early stages, and the outcome's materiality cannot yet be assessed - A securities class action lawsuit, Brill v. Invivyd, Inc., et. al., was filed on January 31, 2023, alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5212 - The complaint alleges purportedly materially false and misleading statements and omissions concerning ADG20's effectiveness against the Omicron variant of COVID-19212 - The company believes it has strong defenses and intends to vigorously defend against this action; the lawsuit is in early stages, and its likely outcome or materiality cannot yet be assessed213 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2023 Form 10-K - There have been no material changes from the risk factors set forth in the 2023 Form 10-K214 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 March 31, 2024 - No unregistered equity securities were issued during the three months ended March 31, 2024215 - The company did not purchase any equity securities during the three months ended March 31, 2024216 Item 5. Other Information No director or officer of the company adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2024 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2024217 Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate organizational documents, amendments to agreements, and certifications required by the Sarbanes-Oxley Act - Includes Amended and Restated Certificate of Incorporation, Bylaws, and amendments219 - Lists Amendment No. 2 to the Cell Line License Agreement by and between the Registrant and WuXi Biologics (Hong Kong) Limited219 - Includes certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002219 Signatures The report is officially signed by Jeremy Gowler, Interim Chief Executive Officer, Chief Operating Officer and Chief Commercial Officer, and William Duke, Jr., Chief Financial Officer, on May 9, 2024 - The report was signed by Jeremy Gowler (Interim Chief Executive Officer, Chief Operating Officer and Chief Commercial Officer) and William Duke, Jr. (Chief Financial Officer) on May 9, 2024223