Vir Biotechnology, Inc 10-Q for FY2020 Q1

About this 10-Q

Headline figures

Vir Biotechnology, Inc. (VIR)

10-Q 2020-05-12 For: 2020-03-31

Added on April 09, 2026

Vir Biotechnology, Inc filed this 10-Q on May 12, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $5.72M; up 56.2% from $3.66M a year earlier
Net loss: $77.24M; compared with a net loss of $28.67M a year earlier

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Delaware	81-2730369
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
499 Illinois Street, Suite 500, San Francisco, California	94158
(Address of principal executive offices)	(Zip Code)

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2020 and 2019 (unaudited)	5
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2020 and 2019 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 (unaudited)	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	85
Item 3.	Defaults Upon Senior Securities	85
Item 4.	Mine Safety Disclosures	85
Item 5.	Other Information	85
Item 6.	Exhibits	86
Signatures		87

	March 31, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	168,418		$	109,335
Short-term investments		187,193			274,101
Restricted cash and cash equivalents, current		9,101			6,181
Prepaid expenses and other current assets		12,829			13,378
Total current assets		377,541			402,995
Intangible assets, net		35,388			35,694
Goodwill		16,937			16,937
Property and equipment, net		16,238			16,308
Operating right-of-use assets		16,007			—
Restricted cash and cash equivalents, noncurrent		1,192			7,300
Long-term investments		6,139			24,290
Other assets		7,672			8,547
TOTAL ASSETS	$	477,114		$	512,071
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	18,768		$	5,881
Accrued and other liabilities		21,918			26,495
Deferred revenue, current portion		5,010			6,181
Contingent consideration, current portion		10,700			8,200
Derivative liability		—			12,449
Total current liabilities		56,396			59,206
Deferred revenue, noncurrent		6,562			12,670
Operating lease liabilities, noncurrent		13,531			—
Contingent consideration, noncurrent		14,045			9,380
Deferred tax liability		3,305			3,305
Other long-term liabilities		2,942			3,568
TOTAL LIABILITIES		96,781			88,129
Commitments and contingencies (Note 7)
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of March 31, 2020 and December 31, 2019; no shares issued and outstanding as of March 31, 2020 and December 31, 2019		—			—
Common stock, $0.0001 par value; 300,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 108,350,368 and 107,648,925 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively		11			11
Additional paid-in capital		825,833			793,051
Accumulated other comprehensive income (loss)		248			(601	)
Accumulated deficit		(445,759	)		(368,519	)
TOTAL STOCKHOLDERS’ EQUITY		380,333			423,942
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	477,114		$	512,071

	Three Months Ended March 31,
	2020			2019
Revenues:
Grant revenue	$	5,231		$	3,644
Contract revenue		487			17
Total revenue		5,718			3,661
Operating expenses:
Research and development		64,979			25,872
General and administrative		12,649			8,559
Total operating expenses		77,628			34,431
Loss from operations		(71,910	)		(30,770	)
Other income (expense):
Interest income		1,755			2,245
Other income (expense), net		(7,069	)		(145	)
Total other income (expense)		(5,314	)		2,100
Loss before provision for income taxes		(77,224	)		(28,670	)
Provision for income taxes		(16	)		—
Net loss	$	(77,240	)	$	(28,670	)
Net loss per share, basic and diluted	$	(0.71	)	$	(3.19	)
Weighted-average shares outstanding, basic and diluted		108,387,913			9,001,158

											Accumulated
									Additional		Other						Total
	Convertible Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Share		Amount		Share		Amount		Capital		Income (Loss)			Deficit			Equity (Deficit)
Balance at December 31, 2019		—	$	—		107,648,925	$	11	$	793,051	$	(601	)	$	(368,519	)	$	423,942
Reclassification of derivative liability to additional paid-in capital		—		—		—		—		29,245		—			—			29,245
Vesting of restricted common stock		—		—		618,079		—		427		—			—			427
Exercise of stock options		—		—		83,364		—		143		—			—			143
Stock-based compensation		—		—		—		—		2,967		—			—			2,967
Other comprehensive income		—		—		—		—		—		849			—			849
Net loss		—		—		—		—		—		—			(77,240	)		(77,240	)
Balance at March 31, 2020		—	$	—		108,350,368	$	11	$	825,833	$	248		$	(445,759	)	$	380,333

											Accumulated
									Additional		Other						Total
	Convertible Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Share		Amount		Share		Amount		Capital		Income (Loss)			Deficit			Equity (Deficit)
Balance at December 31, 2018		69,910,520	$	309,137		8,858,799	$	1	$	14,672	$	(14	)	$	(193,836	)	$	(179,177	)
Issuance of Series B convertible preferred stock, net of issuance cost of $165		18,202,213		327,475		—		—		—		—			—			—
Vesting of restricted common stock		—		—		197,983		—		—		—			—			—
Exercise of stock options		—		—		44,372		—		67		—			—			67
Stock-based compensation		—		—		—		—		2,453		—			—			2,453
Other comprehensive income		—		—		—		—		—		109			—			109
Net loss		—		—		—		—		—		—			(28,670	)		(28,670	)
Balance at March 31, 2019		88,112,733	$	636,612		9,101,154	$	1	$	17,192	$	95		$	(222,506	)	$	(205,218	)

	Three Months Ended March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(77,240	)	$	(28,670	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,000			706
Amortization of intangible assets		306			306
Amortization of premiums (accretion of discounts) on investments, net		562			(662	)
Noncash lease expense		816			—
Change in estimated fair value of contingent consideration		7,165			740
Change in estimated fair value of derivative liability		16,796			—
Change in estimated fair value of convertible preferred stock warrant liability		—			357
Stock-based compensation		2,967			2,453
Other		5			—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		549			(367	)
Other assets		(125	)		(188	)
Accounts payable		12,944			1,163
Accrued liabilities and other long-term liabilities		(10,204	)		(1,957	)
Operating lease liabilities		(761	)		—
Deferred revenue		(3,189	)		(3,370	)
Net cash used in operating activities		(48,409	)		(29,489	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(1,302	)		(3,476	)
Purchases of investments		(40,472	)		(322,831	)
Maturities of investments		145,813			52,143
Proceeds from disposal of an asset held sale		180			—
Net cash provided by (used in) investing activities		104,219			(274,164	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible preferred stock, net of issuance costs		—			317,342
Payment of principal on financing lease obligations		(58	)		—
Proceeds from exercise of stock options		143			67
Net cash provided by financing activities		85			317,409
Net increase in cash, cash equivalents and restricted cash and cash equivalents		55,895			13,756
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period		122,816			59,362
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	178,711		$	73,118
NONCASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment purchases included in accounts payable and accrued liabilities	$	521		$	1,373
Reclassification of derivative liability to additional paid-in capital	$	29,245		$	—
Advanced proceeds applied to convertible preferred stock issuance	$	—		$	10,140
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONDENSED CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents	$	168,418		$	64,724
Restricted cash and cash equivalents, current		9,101			7,391
Restricted cash and cash equivalents, noncurrent		1,192			1,003
Total cash, cash equivalents and restricted cash	$	178,711		$	73,118

		March 31, 2020
	Valuation Hierarchy	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Aggregate Fair Value
		(in thousands)
Assets:
Money market funds⁽¹⁾	Level 1	$	173,297	$	—	$	—	$	173,297
U.S. government treasuries ⁽²⁾	Level 2		192,353		979		—		193,332
Total financial assets		$	365,650	$	979	$	—	$	366,629

		December 31, 2019
	Valuation Hierarchy	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Aggregate Fair Value
		(in thousands)
Assets:
Money market funds⁽¹⁾	Level 1	$	106,127	$	—	$	—		$	106,127
U.S. government treasuries ⁽²⁾	Level 2		298,256		140		(5	)		298,391
Bank time deposits	Level 2		2,500		—		—			2,500
Total financial assets		$	406,883	$	140	$	(5	)	$	407,018

	Contingent Consideration		Derivative Liability			Total
Balance at December 31, 2019	$	17,580	$	12,449		$	30,029
Changes in fair value		7,165		16,796			23,961
Reclassification of derivative liability to additional paid-in capital upon achievement of development milestone		—		(29,245	)		(29,245	)
Balance at March 31, 2020	$	24,745	$	—		$	24,745

	Three Months Ended
(in thousands)	March 31, 2020
Operating lease cost	$	1,140
Short-term lease cost		155
Variable lease cost		594
Total least cost	$	1,889

Other Information
Weighted average remaining lease term (in years)	4.8 years
Weighted average incremental borrowing rate		7.7	%

	Amounts
2020 (excluding the three months ended March 31, 2020)	$	3,285
2021		4,139
2022		4,207
2023		4,259
2024		2,996
Thereafter		1,047
Total lease payments		19,933
Less: imputed interest		(3,237	)
Present value of operating lease liabilities	$	16,696

Operating Leases
Operating right-of-use assets	$	16,007

Accrued and other liabilities	$	3,165
Operating lease liabilities, noncurrent		13,531
Total operating lease liabilities	$	16,696

Year Ending December 31:	Amounts
2020	$	4,525
2021		4,145
2022		4,206
2023		4,250
2024 and thereafter		4,005
Total	$	21,131

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
						(Years)		(in thousands)
Outstanding at December 31, 2019		7,186,298		$	5.25		8.5
Granted		923,104		$	22.38
Exercised		(83,364	)	$	1.72
Forfeited		(66,622	)	$	2.33
Outstanding at March 31, 2020		7,959,416		$	7.30		8.3	$	214,883
Vested and expected to vest at March 31, 2020		7,959,416		$	7.30		8.3	$	214,883
Vested and exercisable at March 31, 2020		2,278,252		$	2.45		7.5	$	72,498

	March 31, 2020			December 31, 2019
	(in thousands)
Laboratory equipment	$	12,703		$	11,986
Computer equipment		540			540
Furniture and fixtures		1,404			1,351
Leasehold improvements		7,274			7,121
Construction in progress		149			142
Property and equipment, gross		22,070			21,140
Less accumulated depreciation and amortization		(5,832	)		(4,832	)
Total property and equipment, net	$	16,238		$	16,308

	Three Months Ended March 31,
	2020		2019
Expected term of options (in years)		6.1		5.9
Expected stock price volatility	88.8% - 95.2%		89.4%
Risk-free interest rate	0.7% - 1.2%		2.5%
Expected dividend yield		—		—

	Number of Shares			Weighted Average Fair Value at Date of Grant per Share
Unvested as of December 31, 2019		2,075,511		$	0.95
Vested		(618,079	)		0.93
Unvested as of March 31, 2020		1,457,432		$	0.95

	As of March 31,
	2020		2019
Convertible preferred stock		—		88,112,773
Options issued and outstanding		7,959,416		6,008,936
Restricted shares subject to future vesting		1,457,432		3,921,293
Warrants to purchase convertible preferred stock		—		244,444
Warrants to purchase common stock		244,444		—
Total		9,661,292		98,287,446

Exhibit Number		Description

3.1		Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-39083), filed with the SEC on October 16, 2019).

3.2		Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-39083), filed with the SEC on October 16, 2019).

10.1+		First Amendment to Amended and Restated Employment Letter Agreement between the Company and Michael Kamarck, dated March 13, 2020 (incorporated herein by reference to Exhibit 10.12 to the Company’s Form 10-K (File No. 001-39083), filed with the SEC on March 26, 2020).

10.2†		Amendment No. 2 to the Collaboration and License Agreement between the Company and Alnylam Pharmaceuticals, Inc., dated March 3, 2020 (incorporated herein by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K (File No. 001-39083), filed with the SEC on March 26, 2020).

10.3†		Amendment No. 2 to the Grant Agreement between the Company and the Bill & Melinda Gates Foundation, dated February 24, 2020 (incorporated herein by reference to Exhibit 10.32 to the Company’s Form 10-K (File No. 001-39083), filed with the SEC on March 26, 2020).

31.1		Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

	VIR BIOTECHNOLOGY, INC.

Date: May 12, 2020	By:	/s/ George Scangos
		George Scangos, Ph.D.
		President, Chief Executive Officer and Director (Principal Executive Officer)

Date: May 12, 2020	By:	/s/ Howard Horn
		Howard Horn
		Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)