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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________________________________
FORM 10-Q
__________________________________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from___________to
Commission File Number: 001-39083
__________________________________________________
Vir Biotechnology, Inc.
(Exact Name of Registrant as Specified in Its Charter)
__________________________________________________
Delaware81-2730369
(State or Other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer
Identification No.)
1800 Owens Street, Suite 900, San Francisco, California
94158
(Address of Principal Executive Offices)(Zip Code)
Registrant’s Telephone Number, Including Area Code: (415) 906-4324
__________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.0001 per shareVIR
Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of October 25, 2024, the registrant had 137,720,120 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents
Page
Item 1A.

1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, research and development, potential of, and expectations for, our pipeline and technology platforms, the timing, potential of and expectations for planned preclinical and clinical studies, the timing and likelihood of regulatory filings and approvals for our product candidates, our ability to commercialize our product candidates, the potential benefits of collaborations and in-licenses, projected costs, prospects, plans, objectives of management, expected market size and growth for our potential products, the timing of availability of clinical data, program updates and data disclosures, and our plans for our hepatitis B virus, hepatitis delta virus, influenza, COVID-19 and human immunodeficiency virus and masked T-cell engagers portfolios, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “might”, “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions described in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report. Other sections of this report may include additional factors that could harm our business and financial performance. Drug development and commercialization involve a high degree of risk, and only a small number of research and development programs result in commercialization of a product. Results in early-stage clinical studies may not be indicative of full results or results from later stage or larger scale clinical studies and do not ensure regulatory approval. You should not place undue reliance on these statements, or the scientific data presented. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements.
In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section titled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
VIR BIOTECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
September 30,
2024		December 31,
2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$168,350 $241,576 
Short-term investments740,607 1,270,980 
Restricted cash and cash equivalents, current89,598 13,268 
Equity investments5,517 9,853 
Prepaid expenses and other current assets43,085 52,549 
Total current assets1,047,157 1,588,226 
Intangible assets, net19,258 22,565 
Goodwill16,938 16,937 
Property and equipment, net64,791 96,018 
Operating lease right-of-use assets60,779 71,182 
Restricted cash and cash equivalents, noncurrent6,382 6,448 
Long-term investments271,495 105,275 
Other assets11,556 12,409 
TOTAL ASSETS$1,498,356 $1,919,060 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$7,305 $6,334 
Accrued and other liabilities94,658 104,220 
Deferred revenue, current15,198 64,853 
Total current liabilities117,161 175,407 
Operating lease liabilities, noncurrent93,405 111,673 
Contingent consideration, noncurrent33,170 25,960 
Other long-term liabilities13,893 15,784 
TOTAL LIABILITIES257,629 328,824 
Commitments and contingencies (Note 8)
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of September 30, 2024 and December 31, 2023; no shares issued and outstanding as of September 30, 2024 and December 31, 2023
— — 
Common stock, $0.0001 par value; 300,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 136,706,350 and 134,781,286 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
14 13 
Additional paid-in capital1,894,781 1,828,862 
Accumulated other comprehensive gain (loss)1,127 (815)
Accumulated deficit(655,195)(237,824)
TOTAL STOCKHOLDERS’ EQUITY1,240,727 1,590,236 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$1,498,356 $1,919,060 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
VIR BIOTECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Revenues:
Collaboration revenue$(1,102)$(4,387)$(2,034)$28,408 
Contract revenue1,391 289 54,468 1,484 
Grant revenue2,091 6,737 9,397 39,501 
Total revenues2,380 2,639 61,831 69,393 
Operating expenses:
Cost of revenue50 38 161 1,967 
Research and development195,178 145,028 400,416 470,754 
Selling, general and administrative25,744 40,933 92,330 133,223 
Restructuring, long-lived assets impairment and related charges12,712 3,372 38,939 8,738 
Total operating expenses233,684 189,371 531,846 614,682 
Loss from operations(231,304)(186,732)(470,015)(545,289)
Other income:
Change in fair value of equity investments1,130 (2,707)(4,356)(20,896)
Interest income17,527 21,931 57,656 66,254 
Other (expense) income, net(893)882 (1,715)(7,506)
Total other income17,764 20,106 51,585 37,852 
Loss before (provision for) benefit from income taxes(213,540)(166,626)(418,430)(507,437)
(Provision for) benefit from income taxes(177)3,213 1,059 8,293 
Net loss(213,717)(163,413)(417,371)(499,144)
Net loss attributable to noncontrolling interest— — — (56)
Net loss attributable to Vir$(213,717)$(163,413)$(417,371)$(499,088)
Net loss per share attributable to Vir, basic and diluted$(1.56)$(1.22)$(3.07)$(3.73)
Weighted-average shares outstanding, basic and diluted136,653,753134,289,620136,058,223133,969,878
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
VIR BIOTECHNOLOGY, INC.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Net loss$(213,717)$(163,413)$(417,371)$(499,144)
Other comprehensive income:
Unrealized gain on investments3,996 994 2,094 7,194 
Amortization of actuarial gain (loss)10 9 (152)28 
Total other comprehensive income4,006 1,003 1,942 7,222 
Comprehensive loss(209,711)(162,410)(415,429)(491,922)
Comprehensive loss attributable to noncontrolling interest— — — (56)
Comprehensive loss attributable to Vir$(209,711)$(162,410)$(415,429)$(491,866)
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
VIR BIOTECHNOLOGY, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except share amounts)
(unaudited)
Vir Stockholders’ Equity
Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
(Loss) Gain		Accumulated
Deficit		Noncontrolling
Interest
Total
Stockholders’
Equity
SharesAmount
Balance at June 30, 2024136,590,097$14 $1,878,013 $(2,879)$(441,478)$— $1,433,670 
Vesting of restricted common stock81,415— — — — — — 
Exercise of stock options34,838— 71 — — — 71 
Stock-based compensation—— 16,697 — — — 16,697 
Other comprehensive income—— — 4,006 — — 4,006 
Net loss—— — — (213,717)— (213,717)
Balance at September 30, 2024136,706,350$14 $1,894,781 $1,127 $(655,195)$— $1,240,727 
Vir Stockholders’ Equity
Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Retained
Earnings
(Accumulated
Deficit)		Noncontrolling
Interest
Total
Stockholders’
Equity
SharesAmount
Balance at June 30, 2023134,230,494$13 $1,771,536 $(2,903)$41,562 $— $1,810,208 
Vesting of restricted common stock73,351— — — — — — 
Exercise of stock options194,041— 343 — — — 343
Stock-based compensation—— 26,944 — — — 26,944
Other comprehensive income—— — 1,003 — — 1,003
Net loss—— — — (163,413)— (163,413)
Balance at September 30, 2023134,497,886$13 $1,798,823 $(1,900)$(121,851)$— $1,675,085 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
VIR BIOTECHNOLOGY, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except shares amounts)
(unaudited)
Vir Stockholders’ Equity
Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
(Loss) Gain		Accumulated DeficitNoncontrolling
Interest
Total
Stockholders’
Equity
SharesAmount
Balance at December 31, 2023134,781,286$13 $1,828,862 $(815)$(237,824)$— $1,590,236 
Vesting of restricted common stock1,321,1201 — — — — 1 
Exercise of stock options288,113— 701 — — — 701 
Issuance of common stock under employee stock purchase plan315,831— 2,602 — — — 2,602 
Stock-based compensation—— 62,616 — — — 62,616 
Other comprehensive income—— — 1,942 — — 1,942 
Net loss—— — — (417,371)— (417,371)
Balance at September 30, 2024136,706,350$14 $1,894,781 $1,127 $(655,195)$— $1,240,727 
Vir Stockholders’ Equity
Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Retained
Earnings
(Accumulated
Deficit)		Noncontrolling
Interest
Total
Stockholders’
Equity
SharesAmount
Balance at December 31, 2022133,236,687$13 $1,709,835 $(9,122)$377,237 $— $2,077,963 
Vesting of restricted common stock690,811— — — — — — 
Exercise of stock options455,485— 3,395 — — — 3,395 
Issuance of common stock under employee stock purchase plan114,903— 2,605 — — — 2,605 
Stock-based compensation—— 83,044 — — — 83,044 
Other comprehensive income—— — 7,222 — — 7,222 
Contributions from noncontrolling interest owners—— — — — 100 100 
Increase in ownership interest in a subsidiary—— (56)(44)(100)
Net loss—— — — (499,088)(56)(499,144)
Balance at September 30, 2023134,497,886$13 $1,798,823 $(1,900)$(121,851)$— $1,675,085 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
VIR BIOTECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended September 30,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(417,371)$(499,144)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in estimated constraint on profit-sharing amount685 (28,101)
Depreciation and amortization11,673 14,972 
Amortization of premiums (accretion of discounts) on investments, net3,229 (10,057)
Noncash lease expense4,149 6,218 
Change in fair value of equity investments4,356 20,895 
Change in estimated fair value of contingent consideration7,209 (637)
Stock-based compensation62,616 83,044 
In-process research and development impairment3,512 6,899 
Long-lived assets impairment and disposal loss28,557 7,474 
Change in deferred income taxes (306)— 
Other non-cash items, net(20)(578)
Changes in operating assets and liabilities:
Receivable from collaboration2,234 3,041 
Prepaid expenses and other current assets6,077 54,194 
Other assets854 (150)
Accounts payable948 (1,895)
Accrued liabilities and other long-term liabilities(15,505)(316,918)
Operating lease liabilities(10,432)(9,910)
Deferred revenue(51,182)(205)
Net cash used in operating activities(358,717)(670,858)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment917 — 
Purchases of property and equipment(4,894)(20,038)
Purchases of investments(1,074,480)(1,197,199)
Maturities and sales of investments 1,437,499 1,486,677 
Other(412)— 
Net cash provided by investing activities358,630 269,440 
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of principal on financing lease obligation(178)(200)
Proceeds from exercise of stock options701 3,395 
Issuance of common stock under ESPP2,602 2,605 
Contributions from noncontrolling interest owners— 100 
Increase in ownership interest in a subsidiary— (100)
Net cash provided by financing activities3,125 5,800 
Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents3,038 (395,618)
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period261,292 867,968 
Cash, cash equivalents and restricted cash and cash equivalents at end of period$264,330 $472,350 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS TO THE CONDENSED CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents$168,350 $452,100 
Restricted cash and cash equivalents, current89,598 13,193 
Restricted cash and cash equivalents, noncurrent6,382 7,057 
Total cash, cash equivalents and restricted cash and cash equivalents$264,330 $472,350 
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization
Business Overview
Vir Biotechnology, Inc. (“Vir” or 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. Its current clinical development pipeline consists of product candidates targeting hepatitis delta virus (“HDV”) and hepatitis B virus (“HBV”), in addition to multiple oncology programs. Vir also has a preclinical portfolio of programs across a range of other infectious diseases, including respiratory syncytial virus and human metapneumovirus (“RSV” and “MPV”, respectively).
In January 2023, a majority-owned subsidiary, Encentrio Therapeutics, Inc. (“Encentrio”), was incorporated in the State of Delaware. The Company initially owned 80% of Encentrio’s outstanding voting shares. During the three months ended June 30, 2023, the Company increased its ownership of Encentrio’s outstanding voting shares to 100%. The primary purpose of Encentrio is to conduct research and development of oncology therapeutics.
Liquidity and Capital Resources
In November 2023, the Company entered into a sales agreement (“Sales Agreement”) with Cowen and Company, LLC, as sales agent (“TD Cowen”), pursuant to which the Company may from time to time offer and sell shares of its common stock for an aggregate offering price of up to $300.0 million, through or to TD Cowen, acting as sales agent or principal. The shares will be offered and sold under the Company’s shelf registration statement on Form S-3 and a related prospectus filed with the Securities and Exchange Commission (“SEC”) on November 3, 2023. The Company will pay TD Cowen a commission of up to 3.0% of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide TD Cowen with customary indemnification and contribution rights. As of September 30, 2024, no shares have been sold under the Sales Agreement.
As of September 30, 2024, the Company had $1.19 billion in cash, cash equivalents, and investments, which the Company believes will be sufficient to fund its operations for a period through at least twelve months from the issuance date of these unaudited condensed consolidated financial statements.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. The unaudited condensed consolidated financial statements include the accounts of Vir and its majority-owned subsidiaries. For consolidated entities where Vir owns or is exposed to less than 100.0% of the economics, the Company records net income (loss) attributable to noncontrolling interests, net of tax in its unaudited condensed consolidated statements of operations equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. All intercompany balances and transactions have been eliminated upon consolidation.
The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s financial information. The unaudited condensed consolidated results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any other future annual or interim period.
Certain information and footnote disclosures typically included in the Company’s annual consolidated financial statements have been condensed or omitted. As such, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 26, 2024.
9
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents, which consist of amounts invested primarily in money market funds and are stated at fair value.
Investments
Investments include available-for-sale debt securities and equity investments carried at estimated fair value.
Available-for-Sale Debt Securities
The Company’s valuations of marketable securities are generally derived from independent pricing services based on quoted prices in active markets for similar securities at period end. Generally, investments with original maturities beyond three months at the date of purchase and that mature at, or less than 12 months from, the unaudited condensed consolidated balance sheet date are considered short-term investments, with all others considered to be long-term investments. Unrealized gains and losses deemed temporary in nature are reported as a component of accumulated other comprehensive gain (loss). The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the unaudited condensed consolidated statements of operations. The cost of securities sold is based on the specific identification method.
Equity Investments
The Company measures its investment in equity securities at fair value at each reporting date based on the market price at period end if it has a readily determinable fair value. Otherwise, the investments in equity securities are measured at cost less impairment, adjusted for observable price changes for identical or similar investments of the same issuer unless the Company has significant influence or control over the investee. Changes in fair value resulting from observable price changes are presented as change in fair value of equity investments, and changes in fair value resulting from foreign currency translation are included in other (expense) income, net on the unaudited condensed consolidated statements of operations.
Restricted Cash and Cash Equivalents
Restricted cash and cash equivalents, current and noncurrent, primarily consist of funds placed in an escrow account under the Company's license agreement with Amunix Pharmaceuticals, Inc., funds received from certain grants that are restricted as to their use, and money market funds to secure standby letters of credit and security deposits with financial institutions under office and laboratory space lease agreements.
Property and Equipment, Net
Property and equipment are stated at cost, net of accumulated depreciation and amortization and, if applicable, impairment charges. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized over the lesser of their useful lives or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet, and the resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred.
The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (group) may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows that the asset (group) is expected to generate. If such asset (group) is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset (group) exceeds its fair value.
10
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Revenue Recognition
Collaboration, License and Contract Revenue
Under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when the Company’s customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods and services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as the Company satisfies a performance obligation.
For collaborative arrangements that fall within the scope of ASC 808, Collaborative Arrangements (“ASC 808”), the Company first determines which elements of the collaboration are deemed to be a performance obligation with a customer within the scope of ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808 and are not subject to the guidance in ASC 606, the Company applies the revenue recognition model under ASC 606, including the royalty exception guidance and variable consideration guidance under ASC 606 as described below, or other guidance, as deemed appropriate. When the Company is considered an agent in elements of collaboration arrangements within the scope of ASC 808, it records its share of collaboration revenue in the period in which such sales occur. The Company is considered an agent when the collaboration partner controls the product before transfer to the customers and has the ability to direct the use of and obtain substantially all of the remaining benefits from the product. In these instances, collaboration revenue is based upon the net sales reported by the Company’s collaboration partners, net of cost of goods sold and allowable expenses (e.g., manufacturing, distribution, medical affairs, selling, and marketing expenses) in the period. In order to record collaboration revenue, the Company utilizes certain information from its collaboration partner, including actual net product sales and costs incurred for sales activities, and makes key judgments based on business updates related to commercial and clinical activities such as expected commercial demand, commercial supply plan, manufacturing commitments, risks related to expired or obsolete inventories, and risks related to potential product returns or contract terminations. The Company uses these estimates to determine whether payments due to it under its collaboration arrangements, such as profit-share payments, should be recognized as revenue in the period that they become due or whether any portion of the payments due should be constrained from revenue recognition because it is not probable that recognizing such amounts will not result in a significant reversal of cumulative revenues recognized in future reporting periods.
The Company has entered into a number of license and collaboration agreements that fall within the scope of ASC 606. The Company evaluates the promised goods or services in these agreements to determine which ones represent distinct performance obligations. Prior to recognizing revenue, the Company estimates the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are re-assessed each reporting period as required. These agreements may include the following types of consideration: non-refundable upfront payments, reimbursement for research and development services, research, development or regulatory milestone payments, profit-sharing arrangements, and royalty and commercial sales milestone payments.
If there are multiple distinct performance obligations, the Company allocates the transaction price to each distinct performance obligation based on their estimated standalone selling prices (“SSP”). The Company estimates the SSP for each distinct performance obligation by considering information such as market conditions, entity-specific factors, and information about its customer that is reasonably available. The Company considers estimation approaches that allow it to maximize the use of observable inputs. These estimation approaches may include the adjusted market assessment approach, the expected cost plus a margin approach or the residual approach. The Company also considers whether to use a different estimation approach or a combination of approaches to estimate the SSP for each distinct performance obligation. Developing certain assumptions (e.g., treatable patient population, expected market share, probability of success and product profitability, and discount rate based on weighted-average cost of capital) to estimate the SSP of a distinct performance obligation requires significant judgment.
For performance obligations satisfied over time, the Company estimates the efforts needed to complete the performance obligation and recognizes revenue by measuring the progress towards complete satisfaction of the performance obligation using an input measure.
11
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
For arrangements that include sales-based royalties, including commercial milestone payments based on pre-specified levels of sales, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Achievement of these royalties and commercial milestones may solely depend upon the performance of the licensee.
Grant Revenue
Grants received, including cost reimbursement agreements, are assessed to determine if the agreement should be accounted for as an exchange transaction or a contribution. An agreement is accounted for as a contribution if the resource provider does not receive commensurate value in return for the assets transferred. Contributions are recognized as grant revenue when all donor-imposed conditions have been met.
Asset Acquisitions

The Company evaluates acquisitions and other similar transactions using the guidance in ASC Topic 805, Business Combinations (“ASC 805”), to determine whether the transaction should be accounted for as a business combination or an acquisition of asset(s) by first applying a screen test to assess if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an acquisition of asset(s). If the screen test is not met, further assessment is required to determine whether the Company has acquired inputs and a substantive processes that together significantly contribute to the ability to create outputs, which would meet the definition of a business.

If determined to be an acquisition of asset(s), the Company accounts the transaction using the cost accumulation and allocation method under ASC 805-50. Under this method, the cost of the acquisition, including direct acquisition-related costs, is allocated to the assets acquired or liabilities assumed on a relative fair value basis. Goodwill is not recognized in an asset acquisition and any difference between consideration transferred and the fair value of the net assets acquired is allocated to the identifiable assets acquired based on their relative fair values.

Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the consideration is paid or becomes payable (unless the contingent consideration payments are subject to guidance in ASC 480, Distinguishing Liabilities from Equity, or ASC 815, Derivatives and Hedging). Upon recognition of the contingent consideration payments, the amount is included in the cost of the acquired asset or group of assets.

Research and Development Expenses
To date, research and development expenses have related primarily to discovery efforts and preclinical and clinical development of product candidates. Research and development expenses are recognized as incurred, and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Research and development expenses include expenses related to license and collaboration agreements; contingent consideration from business acquisitions; personnel-related expenses, including salaries, benefits, and stock-based compensation for personnel contributing to research and development activities; expenses incurred under agreements with third-party contract manufacturing organizations, contract research organizations, and consultants; clinical costs, including laboratory supplies and costs related to compliance with regulatory requirements; and other allocated expenses, including expenses for rent, facilities maintenance, and depreciation and amortization.
The Company has acquired and may continue to acquire the rights to develop and commercialize new product candidates from third parties. Upfront payments and research and development milestone payments made in connection with acquired licenses or product rights are expensed as incurred, provided that they do not relate to a regulatory approval milestone or assets acquired in a business combination.
12
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company’s expense accruals for clinical trials and manufacturing are based on estimates of contracted services provided by third-party vendors not yet billed. When billing terms under these contracts do not coincide with the timing of when the work is performed, the Company is required to make estimates of its outstanding obligations to those third parties as of the period end. The accrual estimates are based on a number of factors, including the Company’s knowledge of the research and development programs and clinical manufacturing activities, the status of the programs and activities, invoicing to date, and the provisions in the contracts. The Company obtains information regarding unbilled services directly from these service providers and performs procedures to support its estimates based on its internal understanding of the services provided to date. However, the Company may also be required to estimate these services based on information available to its internal clinical and manufacturing administrative staff if such information is not able to be obtained timely from its service providers.
Contingent Consideration Obligations in connection with Business Combinations
Contingent consideration obligations incurred in connection with a business combination are recorded at their fair values on the acquisition date, are remeasured each subsequent reporting period until the related contingencies are resolved, and are classified as contingent consideration on the unaudited condensed consolidated balance sheets. The changes in fair values of contingent consideration related to the achievement of various milestones are recorded within research and development expenses or selling, general and administrative expenses based on the nature of the relevant underlying activities.
Leases
In accordance with ASC 842, Leases, the Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability, include any lease payments made prior to or on lease commencement, and exclude lease incentives and initial direct costs incurred, as applicable. On the lease commencement date, the Company estimates and includes in its lease payments any lease incentive amounts based on future events when (1) the events are within the Company’s control and (2) the event triggering the right to receive the incentive is deemed reasonably certain to occur. If the lease incentive received is greater or less than the amount recognized at lease commencement, the Company recognizes the difference as an adjustment to ROU asset and/or lease liability, as applicable.
As the implicit rate in the Company’s leases is generally unknown, the Company uses an incremental borrowing rate estimated based on the information available at the lease commencement date in determining the present value of future lease payments. When calculating its estimated incremental borrowing rates, the Company considers its credit risk, the lease term, the total lease payments and the impact of collateral, as necessary. The lease terms may include options to extend or terminate the lease when the Company is reasonably certain it will exercise such options. ROU assets and lease liabilities are remeasured upon certain modifications to leases using the present value of remaining lease payments and estimated incremental borrowing rate upon lease modification. Rent expense for the Company’s operating leases is recognized on a straight-line basis within operating expenses over the reasonably assured lease term.
The Company elected to not separate lease and non-lease components for any leases within its existing classes of assets and, as a result, accounts for the lease and non-lease components as a single lease component. The Company also elected to not apply the recognition requirement to any leases within its existing classes of assets with a term of 12 months or less.
ROU assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (group) may not be recoverable, like that of property and equipment.
13
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
New Accounting Pronouncement Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires, among other things, the following: (i) enhanced disclosures about significant segment expenses that are regularly provided to the Chief Operating Decision Maker and included within a segment’s reported measure of profit or loss; (ii) disclosure of the amount and description of the composition of other segment items, as defined in ASU 2023-07, by reportable segment; and (iii) reporting the disclosures about each reportable segment’s profit or loss and assets on an annual and interim basis. ASU 2023-07 clarifies that public entities with a single reportable segment are also required to provide the new disclosures and all existing disclosures required by ASC 280 Segment Reporting. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. ASU 2023-07 is required to be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact the adoption of ASU 2023-07 may have on its consolidated financial statements and related disclosures.
In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the impact the adoption of ASU 2023-09 may have on its consolidated financial statements and related disclosures.
Reclassification
Certain reclassifications have been made to prior period amounts on the Company’s condensed consolidated balance sheets to conform to the current period presentation and enhance comparability. As a result, the prior period amounts from deferred revenue, noncurrent were reclassified to other long-term liabilities. These reclassifications had no impact on previously reported total assets, total liabilities, or total stockholders' equity.
Certain reclassifications have been made to prior period amounts on the Company’s condensed consolidated statements of operations to conform to the current period presentation and enhance comparability. As a result, certain amounts related to long-lived assets impairment, previously reflected in research and development and selling, general and administrative, were reclassified to restructuring, long-lived assets impairment and related charges. These reclassifications had no impact on previously reported total revenues, total operating expenses, or net loss.
There were no reclassifications made to the condensed consolidated statements of comprehensive loss, condensed consolidated statements of stockholders’ equity or condensed consolidated statements of cash flows.
3. Fair Value Measurements
The Company determines the fair value of financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows:
•Level 1: Inputs that include quoted prices in active markets for identical assets and liabilities.
•Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of the Company’s financial instruments, including accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities.
14
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Cash Equivalents and Available-for-Sale Securities
The following tables summarize the Company’s Level 1 and Level 2 financial assets measured at fair value on a recurring basis within the fair value hierarchy as of September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
Valuation
Hierarchy		Amortized
Cost		Gross
Unrealized
Holding
Gains		Gross
Unrealized
Holding
Losses 		Aggregate
Fair Value
Assets:
Money market funds(1)
Level 1$118,278 $— $— $118,278 
U.S. government treasuriesLevel 2691,089 1,469 (25)692,533 
U.S. government agency bonds and discount notesLevel 253,529 53 (1)53,581 
Asset-backed securities Level 237,083 278 — 37,361 
Corporate bondsLevel 2277,938 1,235 (1)279,172 
Equity securitiesLevel 1N/AN/AN/A5,517 
Total financial assets$1,177,917 $3,035 $(27)$1,186,442 
___________________________________________________
(1)Includes $21.0 million of restricted cash equivalents.

December 31, 2023
Valuation
Hierarchy		Amortized
Cost		Gross
Unrealized
Holding
Gains		Gross
Unrealized
Holding
Losses 		Aggregate
Fair Value
Assets:
Money market funds(1)
Level 1$278,187 $— $— $278,187 
U.S. government treasuriesLevel 21,162,124 1,017 (80)1,163,061 
U.S. government agency bonds and discount notesLevel 2181,189 27 (50)181,166 
Equity securitiesLevel 1N/AN/AN/A 9,853 
Total financial assets$1,621,500 $1,044 $(130)$1,632,267 
___________________________________________________
(1)Includes $19.7 million of restricted cash equivalents.
Accrued interest receivable excluded from both the fair value and amortized cost basis of the available-for-sale debt securities are presented within prepaid expenses and other current assets in the unaudited condensed consolidated balance sheets. Accrued interest receivable amounted to $5.3 million and $4.0 million as of September 30, 2024 and December 31, 2023, respectively. The Company did not write off any accrued interest receivable during the nine months ended September 30, 2024 and 2023.
The Company recognized total net unrealized gains of $3.0 million and $0.9 million in accumulated other comprehensive gain (loss) as of September 30, 2024 and December 31, 2023, respectively. The gross unrealized losses related to U.S. government treasuries, U.S. government agency bonds and discount notes, and securities issued by institutions with investment-grade credit ratings as of September 30, 2024 and December 31, 2023 were nominal. The Company determined that the gross unrealized losses on the investments as of September 30, 2024 were temporary in nature. The Company currently does not intend, and it is highly unlikely that it will be required, to sell these securities before recovery of their amortized cost basis. As of September 30, 2024, no securities have contractual maturities (or weighted average life for asset-backed securities) of longer than two years.
15
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
As of September 30, 2024, the Company’s equity investment consisted solely of ordinary shares of Brii Biosciences Limited (“Brii Bio Parent”). The equity securities of Brii Bio Parent are listed on the The Stock Exchange of Hong Kong Limited, are considered to be marketable equity securities, and measured at fair value at each reporting date. As of September 30, 2024, the Company remeasured the equity investment at a fair value of $5.5 million. The Company recognized an unrealized gain of $1.1 million for the three months ended September 30, 2024, and an unrealized loss of $4.4 million for the nine months ended September 30, 2024, respectively, and unrealized losses of $2.7 million and $20.9 million for the three and nine months ended September 30, 2023, respectively, as other income in the unaudited condensed consolidated statement of operations. For the three and nine months ended September 30, 2024 and 2023, the unrealized gains or losses related to foreign currency translation were not material.
Contingent Consideration Obligations in connection with Business Combinations
Contingent consideration obligations in connection with business combinations include potential milestone payments in connection with the acquisition of Humabs Biomed SA (“Humabs”). The Company classifies the contingent consideration as Level 3 financial liabilities within the fair value hierarchy as of September 30, 2024 and December 31, 2023.
The estimated fair value of the contingent consideration related to the Humabs acquisition was determined by calculating the probability-weighted clinical, regulatory and commercial milestone payments based on the assessment of the likelihood and estimated timing that certain milestones would be achieved. As of September 30, 2024, the Company calculated the estimated fair value of the remaining clinical and regulatory milestones related to tobevibart (formerly as VIR-3434), an investigational subcutaneously administered HBV-neutralizing monoclonal antibody, or mAb, using the following significant unobservable inputs:
Unobservable input
Range
(Weighted-Average)1
Discount rates
10.6% - 11.8% (11.1%)
Probability of achievement
16.2% - 80.0% (58.2%)
______________________________________________
(1)Unobservable inputs were weighted based on the relative fair value of the clinical and regulatory milestone payments.
For the commercial milestones, the Company used a Monte Carlo simulation. As of September 30, 2024, the Monte Carlo simulation assumed a commercial product launch and associated discrete revenue forecasts, as well as the following significant unobservable inputs for the remaining commercial milestones related to tobevibart:
Unobservable inputValue
Volatility70.0%
Discount rate10.0%
Probability of achievement47.4%
The discount rate captures the credit risk associated with the payment of the contingent consideration when earned and due. As of September 30, 2024 and December 31, 2023, the estimated fair value of the contingent consideration related to the Humabs acquisition was $33.2 million and $26.0 million, respectively, with changes in the estimated fair value recorded in research and development expenses in the unaudited condensed consolidated statements of operations.
The estimated fair value of the contingent consideration related to the Humabs acquisition involves significant estimates and assumptions that give rise to measurement uncertainty.
The following table sets forth the changes in the estimated fair value of the Company’s contingent consideration obligations (in thousands):
Contingent
Consideration
Balance at December 31, 2023$25,961 
Changes in fair value7,209 
Balance at September 30, 2024$33,170 
16
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
4. Grant Agreements
Bill & Melinda Gates Foundation Grants
The Company has entered into various grant agreements with the Bill & Melinda Gates Foundation (“BMGF”), under which it is currently awarded grants totaling up to $49.9 million to support its HIV vaccine program, tuberculosis vaccine program, HIV vaccinal antibody program and malaria vaccinal antibody program. The term of the grant agreements will expire at various dates through June 2027, unless terminated earlier by the BMGF for the Company’s breach, failure to progress the funded project, in the event of the Company’s change of control, change in the Company’s tax status, or significant changes in the Company’s leadership that the BMGF reasonably believes may threaten the success of the projects.
Concurrently with the execution of the grant agreement for the vaccinal antibody program, the Company entered into a stock purchase agreement with the BMGF, under which the BMGF purchased 881,365 shares of the Company’s common stock on January 13, 2022, at a price per share of $45.38, for an aggregate purchase price of approximately $40.0 million. The fair market value of the common stock issued to the BMGF was $28.5 million, based on the closing stock price of $37.65 per share on the closing date and taking into account a discount for the lack of marketability due to the restrictions in place on the underlying shares, resulting in a $11.3 million premium received by the Company. The Company accounted for the common stock issued to the BMGF based on its fair market value on the closing date and determined that the premium paid by the BMGF should be included in the deferred revenue from the vaccinal antibody grant.
Payments received in advance that are related to future research activities along with the aforementioned premium received are deferred and recognized as revenue when the donor-imposed conditions are met, which is as the research and development activities are performed. The premium received by the Company is deferred and recognized over the same period as the grant proportionally. The Company recognized grant revenue of $1.6 million and $3.8 million for the three months ended September 30, 2024 and 2023, respectively, and $3.8 million and $10.5 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the Company had deferred revenue of $13.7 million and $13.1 million, respectively. As of September 30, 2024 and December 31, 2023, the Company had $9.7 million and $9.2 million, respectively, within accrued and other liabilities, which may need to be refunded to the BMGF.
Biomedical Advanced Research and Development Authority
In September 2022, the Company entered into a multi-year agreement (the “BARDA Agreement”) under Other Transaction Authority with the Biomedical Advanced Research and Development Authority (“BARDA”), part of the U.S. Department of Health and Human Services’ Administration for Strategic Preparedness and Response. Under the BARDA Agreement, the Company may receive up to an estimated $1.0 billion to advance the development of a full portfolio of innovative solutions to address influenza and potentially other infectious disease threats. The Base Period for the BARDA Agreement includes government funding of approximately $55.0 million to reimburse a portion of expenses incurred by the Company to support the development of VIR-2482, an investigational prophylactic monoclonal antibody designed with the aim to protect against seasonal and pandemic influenza, including expenses related to the Phase 2 pre-exposure prophylaxis trial of VIR-2482. The BARDA Agreement also provides for additional funding after the exercise by BARDA of up to twelve options to further support the development of pre-exposure prophylactic antibodies including and beyond VIR-2482 for the prevention of influenza illness and supporting medical countermeasures for other pathogens of pandemic potential.
In September 2023, the Company and BARDA entered into Amendment No. P00001 to the BARDA Agreement (the “Amended BARDA Agreement”), pursuant to which BARDA awarded the Company $50.1 million in new funding upon the exercise of an additional option. The Company will use $40.0 million to support the development of VIR-7229 through a Phase 1 clinical trial and $10.1 million to support the discovery of new monoclonal antibody against a second pathogen of pandemic potential. The Company may also receive up to $11.2 million additional funding for the Base Period under the Amended BARDA Agreement to wind down activities related to the Phase 2 pre-exposure prophylaxis trial of VIR-2482. The Amended BARDA Agreement will expire in July 2027 and may be extended by mutual written agreement of the Company and BARDA, if funding is available and research opportunities within scope reasonably warrant, or, if any of the options are exercised (as described above), to cover the period of such exercised option set forth in the Amended BARDA Agreement. The Amended BARDA Agreement is terminable by the Company and BARDA at any time under specified circumstances, including for convenience.
17
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
In September 2024, the Company and BARDA entered into Amendment No. P00003 to the BARDA Agreement (the “Third Amended BARDA Agreement”), pursuant to which the parties agree to partially de-obligate certain funds from two of the exercised options related to the development of VIR-7229. Under this Amendment the current BARDA commitment was decreased by $42.1 million.
The Company recognized grant revenue related to BARDA of $0.5 million and $2.9 million for the three months ended September 30, 2024 and 2023, respectively, and $5.6 million and $29.0 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, receivable from BARDA was not material. As of December 31, 2023, the Company had receivable from BARDA of $7.6 million, as part of prepaid expenses and other current assets. As of September 30, 2024, $8.9 million of potential future reimbursement remains available under the Amended BARDA Agreement.
5. Collaboration and License Agreements
License Agreement with Sanofi
On September 9, 2024, the Company closed the license agreement (the “Sanofi Agreement”) with Amunix Pharmaceuticals, Inc., a Sanofi company (“Sanofi”) previously announced on August 1, 2024. The Sanofi Agreement provides the Company with an exclusive worldwide license to use of the proprietary PRO-XTEN™ universal masking technology for oncology and infectious disease,excluding the ophthalmological field, and to three early clinical-stage dual-masked T-cell engagers (TCEs) that all leverage the PRO-XTENTM universal masking platform within a range of cancer indications.
Under the Sanofi Agreement the Company made an upfront payment to Sanofi in the amount of $100.0 million and placed into escrow a $75.0 million milestone payment that is subject to VIR-5525 achieving “first in human dosing” by 2026. The cash paid into escrow is under the control of the Company and is classified as restricted cash and cash equivalents, current in the unaudited condensed consolidated balance sheets. Sanofi will also be eligible to receive up to an additional $323.0 million in future development and regulatory milestone payments, up to an additional $1.49 billion in commercial net sales-based milestone payments, and low single-digit to low double-digit tiered royalties on worldwide net sales. Additionally, as part of the Sanofi Agreement, the Company paid $3.7 million to acquire certain lab equipment and cash deposits primarily related to contract manufacturing agreements. Shortly after the closing of the transactions, the Company hired certain former Sanofi personnel. The Company incurred approximately $4.6 million of transaction costs associated with the closing of Sanofi Agreement. The following table summarizes the aggregate amount paid for the assets acquired by the Company in connection with the Sanofi Agreement (in thousands):
Upfront $100,000 
Equipment 1,150 
Deposits 2,580 
Transaction costs 4,612 
Total purchase consideration$108,342 
The Company accounted for the transaction as an asset acquisition in accordance ASC 805-50 as substantially all of the fair value of the assets acquired is concentrated in a group of similar identifiable assets. The three early clinical stage oncology TCEs use the same universal PRO-XTENTM masking technology and have similar development timelines, probabilities of risk, and loss of patent exclusivity among other characteristics. ASC 805-50 requires the acquiring entity in an asset acquisition to recognize assets acquired and liabilities assumed based on the cost to the acquiring entity on a relative fair value basis, which includes consideration given. The total purchase price was allocated to the acquired assets based on their relative fair values, as follows (in thousands):
In-process research and development ("IPR&D")$102,836 
Property and Equipment 1,119 
Prepaid expenses and other current assets (1)
3,975 
Assembled workforce412 
Total purchase consideration$108,342 
__________________________________________________________
(1) Includes acquired cash deposits primarily related to contract manufacturing agreements.
18
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements

The fair value of the IPR&D was estimated using a multi-period excess earnings income approach that discounts expected cash flows to present value by applying a discount rate that represents the estimated rate that market participants would require for the intangible asset. In accordance with ASC 730, as the three early clinical stage oncology TCEs have not achieved regulatory approval when acquired, the portion of the purchase price allocated to the IPR&D was immediately expensed to research and development as they had no alternative future use. Contingent milestone payments were determined to be within the scope of ASC 450 and will be recognized when the contingency is resolved and the consideration is paid or becomes payable. Any milestone payments made in the future will either be expensed as research and development or capitalized as a developed asset based on when regulatory approval is obtained. The Company will recognize sales-based milestone and royalty payments in cost of sales as revenue from product sales is recognized. The fair value of the assembled workforce was estimated using a replacement cost method. The assembled workforce is classified as intangible assets, net and is amortized over an expected useful life of 5 years as research and development expense.
Collaboration Agreements with GSK
2020 GSK Agreement
In 2020, the Company, Glaxo Wellcome UK Limited and Beecham S.A. entered into a collaboration agreement (the “2020 GSK Agreement”). Subsequently, Beecham S.A. assigned and transferred all its rights, title, interest, and benefit in the 2020 GSK Agreement to GlaxoSmithKline Biologicals S.A. (Glaxo Wellcome UK Limited and GlaxoSmithKline Biologicals S.A., referred to, individually and together, as “GSK”). Under the terms of the 2020 GSK Agreement, the Company and GSK agreed to collaborate to research, develop and commercialize products for the prevention, treatment and prophylaxis of diseases caused by SARS-CoV-2, the virus that causes COVID-19, and potentially other coronaviruses. The collaboration initially focused on the development and commercialization of three programs: (1) antibodies targeting SARS-CoV-2 and potentially other coronaviruses (the “Antibody Program”); (2) vaccines targeting SARS-CoV-2 and potentially other coronaviruses (the “Vaccine Program”), and (3) products based on genome-wide CRISPR screening of host targets expressed in connection with exposure to SARS-CoV-2 and potentially other coronaviruses (the “Functional Genomics Program”).
On February 8, 2023, the Company and GSK entered into Amendment No. 2 and Amendment No. 3 to the 2020 GSK Agreement. Pursuant to Amendment No. 2, the Company and GSK agreed to remove the Vaccine Program from the 2020 GSK Agreement, and to wind down and terminate the cost-sharing arrangements and all ongoing activities in relation to the Vaccine Program. As of the effective date of Amendment No. 2, the Vaccine Program had not yet advanced to its predefined development candidate stage. The Company retains the right to progress development of vaccine products directed to SARS-CoV-2 and other coronaviruses independently (including with or for third parties) outside the scope of the 2020 GSK Agreement, subject to the payment of tiered royalties to GSK on net sales of any vaccine products covered by certain GSK intellectual property rights in the low single digits. Pursuant to Amendment No. 3, the Company and GSK agreed to modify the Antibody Program to remove from the collaboration all coronavirus antibodies other than sotrovimab and VIR-7832, and certain variants thereof. Sotrovimab and VIR-7832, and certain variants thereof, remain subject to the terms of the 2020 GSK Agreement, and the Company retains the sole right to progress the development and commercialization of the terminated antibody products independently (including with or for third parties), subject to the payment of tiered royalties to GSK on net sales of such terminated antibody products at percentages ranging from the very low single digits to the mid-single digits, depending on the nature of the antibody product being commercialized.
Subject to an opt-out mechanism, the parties share all development costs, manufacturing costs, and costs and expenses for the commercialization of the collaboration products, with the Company bearing 72.5% of such costs for the antibody products, except that GSK has the sole right to develop (including to seek, obtain or maintain regulatory approvals), manufacture and commercialize sotrovimab in and for mainland China, Hong Kong, Macau and Taiwan at GSK’s sole cost and expense, and equal sharing of such costs for the functional genomics products.
The 2020 GSK Agreement will remain in effect with respect to each collaboration program for as long as there is a collaboration product being developed or commercialized by the lead party, or the non-opt-out party, in such program. Either party has the right to terminate the 2020 GSK Agreement in the case of the insolvency of the other party, an uncured material breach of the other party with respect to a collaboration program or collaboration product, or as mutually agreed by the parties.
19
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
In May 2021, the U.S. Food and Drug Administration (“FDA”) granted an EUA in the United States for sotrovimab, the first collaboration product under the Antibody Program. In April 2022, the FDA excluded the use of sotrovimab in all U.S. regions due to the continued proportion of COVID-19 cases caused by certain variants. As the lead party for all manufacturing and commercialization activities, GSK incurs all of the manufacturing, sales and marketing expenses and is the principal on sales transactions with third parties. As described in Note 2—Summary of Significant Accounting Policies, the Company’s accounting policy related to the profit-share is to consider the agreed-upon share of the profit-sharing amounts each quarter and evaluate whether those amounts are subject to potential future adjustments based on the latest available facts and circumstances. As the Company is the agent, the Company recognizes its contractual share of the profit-sharing amounts or royalties (in case of an opt-out) as revenue, based on sales net of various estimated deductions such as rebates, discounts, chargebacks, credits and returns, less cost of sales and allowable expenses (including manufacturing, distribution, medical affairs, selling, and marketing expenses) in the period the sale occurs. Manufacturing costs include inventory revaluation adjustments, lower of cost or market inventory adjustments, inventory write-downs and write-offs, and binding purchase commitments with a third-party manufacturer among other manufacturing costs.
In periods when allowable expenses exceed amounts recognized for net product sales of sotrovimab, negative revenue will be reported in our consolidated statements of operations. The Company’s contractual share of the profit-sharing amounts is subject to potential future adjustments to allowable expenses, which represents a form of variable consideration. At each reporting period, the Company evaluates the latest available facts and circumstances to determine whether any portion of profit-sharing amounts should be constrained.
In 2023, GSK reported to the Company certain allowable manufacturing expenses related to excess sotrovimab supply and binding reserved manufacturing capacity not utilized, which the Company had previously reserved as constraint on its cumulative profit-sharing amounts. For the year ended December 31, 2023, the Company paid GSK $341.4 million relating to these manufacturing expenses. GSK may continue to adjust allowable manufacturing expenses for the Company’s share of the excess supply write-offs and unused binding manufacturing capacity and report to the Company as cost-sharing amounts in future periods. The Company evaluated the latest available facts and circumstances to update its evaluation of profit-sharing amounts to be constrained. As of September 30, 2024, the Company’s share of the remaining estimated manufacturing expenses related to excess sotrovimab supply and binding reserved manufacturing capacity not utilized is not material. The Company re-assesses these estimates each reporting period.
During the three and nine months ended September 30, 2024 and 2023, the Company recorded profit-sharing amount, profit-sharing amount constrained, and profit-sharing amount previously constrained, released as components of collaboration revenue in the unaudited condensed consolidated statements of operations, as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Profit-sharing amount$(1,102)$(6,038)$(1,334)$(7,198)
Profit-sharing amount constrained— — (700)— 
Profit-sharing amount previously constrained, released— 1,651 — 35,606 
Total collaboration revenue, net$(1,102)$(4,387)$(2,034)$28,408 
Costs associated with co-development activities performed under the 2020 GSK Agreement are included in research and development expenses on the unaudited condensed consolidated statements of operations, with any reimbursement of costs by GSK reflected as a reduction of such expenses. Under the 2020 GSK Agreement, the Company recognized additional net research and development expenses of $1.0 million and $6.1 million during the three months ended September 30, 2024 and 2023, respectively, and $6.5 million and $18.6 million during the nine months ended September 30, 2024 and 2023, respectively.
20
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
2021 Expanded GSK Collaboration
In 2021, the Company and GSK entered into a collaboration agreement (the “2021 GSK Agreement”) under which the parties agreed to expand the 2020 GSK Agreement to collaborate on three separate programs: (1) a program to research, develop and commercialize certain mAbs for the prevention, treatment or prophylaxis of the influenza virus (the “Influenza Program”), excluding VIR-2482 unless GSK exercises its exclusive option to co-develop and commercialize after the Company completes a Phase 2 clinical trial (“VIR-2482 Option”); (2) an expansion of the parties’ current Functional Genomics Program to focus on functional genomics screens directed to targets associated with respiratory viruses (the “Expanded Functional Genomics Program”); and (3) additional programs to develop neutralizing mAbs directed to up to three non-influenza target pathogens if selected by GSK prior to March 25, 2024 (the “Selected Pathogens” and such programs, the “Additional Programs”).
On February 21, 2024, the Company and GSK entered into a letter agreement (the “Letter Agreement”) pursuant to which the Company and GSK agreed to terminate the Influenza Program and GSK’s VIR-2482 Option from the 2021 GSK Agreement and to wind down and terminate the cost-sharing arrangements and all ongoing activities in relation to the Influenza Program.
The parties mutually agree upon the allocation of responsibility for the development of products under the Expanded Functional Genomics Program, and for the development and early-stage manufacturing of products under the Additional Programs if and when GSK decides which Selected Pathogens to pursue. GSK is primarily responsible for commercial manufacturing and commercialization activities for products under the Expanded Functional Genomics Program and Additional Programs, if and when selected by GSK. For each collaboration program, the Company granted or will grant GSK certain license rights related to the development, manufacturing and commercialization of products arising from the program. GSK selected RSV as its first pathogen under the Additional Programs in 2022. During the first quarter of 2024, the Company recognized contract revenue of $51.7 million as GSK’s rights to select the remaining two additional non-influenza target pathogens expired on March 25, 2024. The Company had no other remaining performance obligations under the 2021 GSK Agreement.
The parties share 50% of all development costs in accordance with the budget for each of the collaboration programs. The parties also share 50% of all profits and losses arising from any collaboration product. Costs associated with co-development activities performed under the 2021 GSK Agreement are included in research and development expenses in the unaudited condensed consolidated statements of operations, with any reimbursement of costs by GSK reflected as a reduction of such expenses. Under the 2021 GSK Agreement, the Company recognized net reimbursement of research and development expenses of $0.2 million and $0.7 million, respectively, during the three and nine months ended September 30, 2024 and additional net research and development expenses of $0.6 million and $1.9 million, respectively, during the three and nine months ended September 30, 2023.
6. Balance Sheet Components
Property and Equipment, net
Property and equipment, net consists of the following (in thousands):
Useful life
(in years)		September 30,
2024		December 31,
2023
Laboratory equipment5$40,963 $43,728 
Computer equipment32,615 2,783 
Furniture and fixtures52,553 2,887 
Leasehold improvements
8 - 12
53,140 80,290 
Construction in progressN/A713 226 
Property and equipment, gross99,984 129,914 
Less accumulated depreciation(35,193)(33,896)
Total property and equipment, net$64,791 $96,018 
Depreciation expenses were $2.9 million and $4.5 million for the three months ended September 30, 2024 and 2023, respectively, and $11.5 million and $14.6 million for the nine months ended September 30, 2024 and 2023, respectively.
21
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Accrued and Other Liabilities
Accrued and other liabilities consist of the following (in thousands):
September 30,
2024		December 31,
2023
Payroll and related expenses31,369 41,322 
Research and development expenses$26,330 $33,129 
Operating lease liabilities, current19,408 12,867 
Excess funds payable under grant agreements9,720 9,202 
Other professional and consulting expenses2,656 3,418 
Net profit-sharing amount1,100 — 
Other accrued expenses4,075 4,282 
Total accrued and other liabilities$94,658 $104,220 
7. Restructuring, Asset Impairment and Related Charges
2024 Restructuring Plan
In August 2024, the Company initiated a strategic restructuring to advance the development of its hepatitis programs and focus on the highest near-term value opportunities (“2024 Restructuring Plan”). The organizational realignment and optimization included phasing out programs in influenza, COVID-19, and the Company's T cell-based viral vector platform, as well as a workforce reduction of approximately 25% or approximately 140 employees. The Company expects to recognize restructuring expenses of approximately $11 million to $13 million, primarily related to employee severance cash payouts, mostly in the second half of 2024.
During the three months ended September 30, 2024, the Company incurred severance and other employee-related expenses of $10.4 million, of which $8.2 million and $2.2 million is classified as research and development and selling, general and administrative expenses, respectively.
2023 Restructuring Plan
In December 2023, the Company initiated strategic steps to reduce operating expenses and focus its capital allocation on programs with the highest potential for patient impact and value creation (“2023 Restructuring Plan”). As part of the steps, the R&D facilities in St. Louis, Missouri and Portland, Oregon were closed in 2024. In addition, approximately 75 net positions, or 12% of the workforce, were eliminated, which included reductions from the Company’s discontinuation of its innate immunity small molecule group that was initiated in the third quarter of 2023.
In the second quarter of 2024, due to the completion of R&D activities at the St. Louis, Missouri site, the Company recorded non-cash impairment charges of $24.2 million primarily related to the write-off of the remaining balance of the ROU asset and related leasehold improvements along with non-cash disposal losses of $2.3 million related to certain lab equipment held for sale. In the third quarter 2024, the Company recognized restructuring charges of $2.3 million for long-lived assets primarily driven by a write-off of $1.4 million representing the remaining balance of ROU asset for Portland, Oregon site due to the cessation of R&D activities. For the nine months ended September 30, 2024, total restructuring charges for long-lived assets amounted to $28.8 million. All actions related to the 2023 Restructuring Plan have been substantially completed by the third quarter of 2024.
22
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The following table is a summary of restructuring charges incurred under both the 2023 and 2024 Restructuring Plans during the three and nine months ended September 30, 2024 and a roll forward of accrued restructuring costs from December 31, 2023 to September 30, 2024 (in thousands).
Severance and other employee-related expensesLong-lived assets impairment charges and disposal lossesTotal
Accrued restructuring charges at December 31, 2023$4,454 $— $4,454 
Restructuring charges, net(48)— (48)
Cash payment(2,592)— (2,592)
Accrued restructuring charges at March 31, 2024$1,814 $— $1,814 
Restructuring charges, net(200)26,475 26,275 
Cash payment(710)— (710)
Non-cash activity— (26,475)(26,475)
Accrued restructuring charges at June 30, 2024$904 $— $904 
Restructuring charges, net10,379 2,333 12,712 
Cash payment(301)— (301)
Non-cash activity— (2,333)(2,333)
Accrued restructuring charges at September 30, 2024$10,982 $— $10,982 
Reconciliation of accrued restructuring charges to the condensed consolidated balance sheets
Accrued and other liabilities$10,982 $— $10,982 
During the three months ended June 30, 2023, the Company ceased to use the leased space at 499 Illinois Street, San Francisco, California, former corporate headquarter. As a result, the Company assessed the related long-lived assets at the site for impairment and recognized $5.4 million impairment charges, primarily related to the write-off of the remaining balance of ROU asset and leasehold improvements.
8. Commitments and Contingencies
Manufacturing and Supply Agreements
In the first quarter of 2024, the Company and a third-party contract development manufacturing organization entered into various scopes of work with respect to the manufacturing of tobevibart (the “Tobevibart Agreements”). As of September 30, 2024, the Company had unaccrued unpaid commitments of approximately $15 million under the Tobevibart Agreements. In the third quarter of 2024, the Company and a third-party contract development manufacturing organization entered into various scopes of work with respect to the manufacturing of elebsiran (the “Elebsiran Agreements”). As of September 30, 2024, the Company had unaccrued unpaid commitments of approximately $7 million under the Elebsiran Agreements.
Legal Proceedings
The Company may from time to time be party to claims and legal proceedings that arise in the normal course of its business and that may or may not have, individually or in the aggregate, a material adverse effect on its results of operations, financial condition or liquidity.
23
VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Indemnification
In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Under such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. In addition, the Company has entered into indemnification agreements with its directors and certain officers that may require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. To date, no demands have been made upon the Company to provide indemnification under these agreements, and thus, there are no indemnification claims that the Company is aware of that could have a material effect on the unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of operations, or unaudited condensed consolidated statements of cash flows.
9. Stock-Based Awards
The Company has maintained a stock incentive plan for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, other stock awards and performance cash awards, to employees, non-employee directors, and consultants. The Company also has an employee stock purchase plan (“ESPP”) for its employees.
Stock Options Granted to Employees
The fair value of stock options granted to employees was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Expected term of options (in years)6.16.1
5.5 - 6.1
5.5 - 6.1
Expected stock price volatility
89.9% - 90.4%
99.9% - 100.9%
89.2% - 91.8%
99.6% - 101.5%
Risk-free interest rate
 3.5% - 4.1%
4.0% - 4.4%
3.5% - 4.6%
3.4% - 4.4%
Expected dividend yield————
The valuation assumptions for stock options were determined as follows:
•Expected Term — The expected term represents the period that the stock options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).
•Expected Volatility — Expected volatility is determined by using a blended approach of the Company and certain industry peers’ historical volatilities.
•Risk-Free Interest Rate — The Company based the risk-free interest rate over the expected term of the stock options based on the constant maturity rate of U.S. Treasury securities with similar maturities as of the date of the grant.
•Expected Dividend Rate — The expected dividend is zero as the Company has not paid nor does it anticipate paying any dividends on its profit interest units in the foreseeable future.
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VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Stock-Based Compensation Expense
Stock-based compensation is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. The following table sets forth the total stock-based compensation expense for all awards granted to employees and non-employees and the ESPP in the unaudited condensed consolidated statements of operations (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Research and development$8,931 $15,819 $35,610 $46,284 
Selling, general and administrative7,766 11,125 27,006 36,760 
Total stock-based compensation$16,697 $26,944 $62,616 $83,044 
10. Net Loss Per Share
Basic net loss per common share is computed by dividing the net loss attributable to Vir by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per common share is computed by dividing the net loss attributable to Vir by the sum of the weighted-average number of common shares outstanding during the period plus any potential dilutive effects of common stock equivalents outstanding during the period calculated in accordance with the treasury stock method. For periods that the Company was in a net loss position, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common securities outstanding would have been anti-dilutive.
The following is a calculation of the basic and diluted net loss per share (in thousands, except share and per share data):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Net loss attributable to Vir$(213,717)$(163,413)$(417,371)$(499,088)
Weighted-average shares outstanding, basic and diluted136,653,753134,289,620136,058,223133,969,878
Net loss attributable to Vir per share, basic and diluted$(1.56)$(1.22)$(3.07)$(3.73)
Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Options issued and outstanding10,851,99710,601,05412,494,822 10,990,201
Restricted shares subject to future vesting5,671,0955,130,3004,936,270 4,112,315
Total16,523,09215,731,35417,431,092 15,102,516
11. Income Taxes
The table below presents our loss before (provision for) benefit from income taxes, (provision for) benefit from income taxes and effective tax rate for the three and nine months ended September 30, 2024 and 2023 (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Loss before (provision for) benefit from income taxes$(213,540)$(166,626)$(418,430)$(507,437)
(Provision for) benefit from income taxes$(177)$3,213 $1,059 $8,293 
Effective tax rate(0.1 %)1.9 %0.3 %1.6 %
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VIR BIOTECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company is subject to income taxes in the United States and foreign jurisdictions. These foreign jurisdictions have statutory tax rates different from those in the United States. Accordingly, the Company’s effective tax rates will vary depending on the relative proportion of foreign to United States income/loss, the utilization of net operating loss and tax credit carry forwards and carrybacks, changes in jurisdictional mix of income and expense, changes in management’s assessment of matters such as the ability to realize deferred tax assets, and changes in tax laws.
The provision for income taxes for the three months ended September 30, 2024 was not material. The benefit from income taxes for the nine months ended September 30, 2024 was primarily due to a favorable adjustment to estimated tax payable. The benefit from income taxes for the three and nine months ended September 30, 2023 was primarily due to a pre-tax loss and the Company’s ability to carry back the research and development credit to 2022.
Unrecognized tax benefits were $14.8 million and $13.6 million as of September 30, 2024 and December 31, 2023, respectively, and if recognized, would favorably affect the effective tax rate in future periods.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included as part of our Annual Report on Form 10-K for the year ended December 31, 2023. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to the “Company”, “Vir,” “we,” “us” and “our” refer to Vir Biotechnology, Inc. and its consolidated subsidiaries.
Overview
We are 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. At Vir, we have a bold vision – powering the immune system to transform lives. Our growth and pursuit of scientific innovation is fueled by our world-class leading monoclonal antibody (mAb) platform that has a proven track record and is further strengthened by our artificial intelligence-led mAb optimization and engineering capabilities.
Our current clinical development pipeline consists of product candidates targeting hepatitis delta virus (HDV), hepatitis B virus (HBV), in addition to multiple oncology programs. The most advanced preclinical candidate in our pipeline includes respiratory syncytial virus (RSV) and human metapneumovirus (MPV). We have established our own internal process development, analytical development, manufacturing, supply chain and quality capabilities and worked with contract development and manufacturing organizations (CDMOs) to develop, manufacture, test and supply our early- and late-stage product candidates.
We have an industry-leading management team and board of directors with significant immunology and infectious diseases experience, including a proven track record of progressing product candidates from early-stage research through clinical development, and worldwide regulatory approval and commercialization experience. Given the global impact of infectious diseases and other serious conditions, we are committed to providing broad access to our therapeutics.
Significant Developments
Following is a summary of selected significant developments affecting our business that occurred since the filing of our Quarterly Report on Form 10-Q for the period ended June 30, 2024. For additional developments or for a more comprehensive discussion of certain developments below, see our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Report on Form 10-Q for the period June 30, 2024.
Pipeline Programs
Chronic Hepatitis Delta (CHD)
•We plan to present additional data from the Phase 2 chronic hepatitis delta SOLSTICE trial, including 24-week clinical data for both study cohorts in approximately 60 patients and further data data for those patients who were on study beyond 24 weeks at the time of data cut-off at the American Association for the Study of Liver Diseases (AASLD), "The Liver Meeting", in November 2024.
◦One cohort assesses the combination of tobevibart and elebsiran administered every four weeks, while a second cohort evaluates tobevibart monotherapy administered every two weeks.
◦The SOLSTICE trial is evaluating the safety, tolerability and efficacy of tobevibart and elebsiran for the treatment of chronic hepatitis delta.
Chronic Hepatitis B (CHB)
•We plan to share end-of-treatment data from the Phase 2 MARCH Part B trial as a Late Breaking presentation at the AASLD in November 2024.
◦The MARCH-B trial is evaluating the safety, tolerability and antiviral activity of the triplet combination of tobevibart and elebsiran plus peginterferon alfa-2a in approximately 30 participants, and approximately 50 participants treated with the doublet combination of tobevibart and elebsiran.
◦We also plan to share further data assessing a potential functional cure in the second quarter of 2025.
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Solid Tumors
•VIR-5818 is a dual-masked HER2-targeted T-cell engager in clinical development and is designed to minimize off-tumor toxicity, potentially allowing for higher doses and increased efficacy to address the significant unmet needs of patients with HER2 expressing cancers.
◦A Phase 1 basket study of VIR-5818 as a monotherapy, and in combination with pembrolizumab, is on-going in multiple tumor types, including metastatic breast cancer and metastatic colorectal cancer.
◦We plan to share initial clinical data for VIR-5818 in the first quarter of 2025.
•VIR-5500 is a dual-masked PSMA directed T-cell engager in clinical development and is designed to minimize off-tumor toxicity and potentially improve efficacy relative to existing approved PSMA-targeted therapies.
◦A Phase 1 dose escalation study of VIR-5500 is ongoing to assess its safety profile and optimal doses for future development in metastatic-castration resistant prostate cancer.
◦We plan to share initial clinical data for VIR-5500 in the first quarter of 2025.
•VIR-5525 is a dual-masked EGFR targeted T-cell engager with a cleared Investigational New Drug Application (IND) from the U.S. FDA.
◦We plan to initiate a Phase 1 basket study of VIR-5525 in the first quarter of 2025 in patients across a number of solid tumor indications of high unmet need, which may include metastatic head and neck squamous cell carcinoma, metastatic adenocarcinoma, squamous non-small cell lung cancer, and metastatic colorectal cancer.
Preclinical Pipeline Candidates
•We continue to advance pre-clinical assets in respiratory syncytial virus in partnership with GSK, and pursue HIV cure in collaboration with the Bill & Melinda Gates Foundation.
Corporate Update
•On August 1, 2024 we announced an exclusive worldwide license to use of the proprietary PRO-XTEN™ universal masking technology for oncology and infectious disease and to three clinical-stage masked TCEs with potential applications in a range of cancers. The agreement became effective on September 9, 2024.
◦Certain former employees of Sanofi joined us following the closing of the agreement.
•On August 1, 2024 we announced the phase-out of clinical programs in influenza, COVID-19, and its T-cell based viral vector platform. The Company is seeking partners to advance these clinical programs through further development. Additionally, the Company announced a workforce reduction of approximately 25%, or approximately 140 employees.
•On September 10, 2024, we announced the appointment of Jason O’Byrne as Executive Vice President and Chief Financial Officer, effective October 2, 2024. Mr. O’Byrne is an accomplished executive with more than 20 years of experience in finance and operations and brings leadership in capital allocation and formation, corporate strategy and operational excellence.
Our Collaboration, License and Grant Agreements
We have entered into collaboration, license and grant arrangements with various third parties. For details regarding these and other agreements, see Note 4—Grant Agreements and Note 5—Collaboration and License Agreements to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, and Note 7—Collaboration and License Agreements to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission, or SEC, on February 26, 2024.
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Components of Operating Results
Revenues
Other than sotrovimab, we have not obtained regulatory approval for our product candidates, and we do not expect to generate any significant revenue from the sale of our other product candidates until we complete clinical development, submit regulatory filings and receive approvals from the applicable regulatory bodies for such product candidates, if ever. Although we have previously recognized revenue from our profit-share related to sotrovimab under our definitive collaboration agreement with GSK executed in June 2020, or the 2020 GSK Agreement, we may continue to incur net operating losses for at least the next several years as the extent of future revenue from the sale of sotrovimab remains uncertain. While we have an EUA from the FDA for sotrovimab, the FDA has excluded the use of sotrovimab in all U.S. regions due to the continued proportion of COVID-19 cases caused by certain variants. With this EUA revision, sotrovimab is not currently authorized for use in any U.S. region. Although certain countries outside the U.S. continue to maintain access to 500 mg IV while noting that the clinical efficacy is unknown or uncertain against existing and emerging variants, we cannot predict whether other countries will further limit the use of sotrovimab. Due to the evolving COVID-19 landscape and based on discussions with the FDA, we and GSK do not plan to file a Biologics License Application, or BLA, for sotrovimab at this time. In light of these developments, we cannot predict whether (if at all) or to what extent sotrovimab may be reauthorized for use by the FDA in any U.S. region in the future, and we do not expect meaningful collaboration revenue in the future from the sale of sotrovimab for the treatment of COVID-19 even if it were reauthorized by the FDA.
Collaboration revenue
Collaboration revenue includes recognition of our profit-share from the sales of sotrovimab pursuant to the 2020 GSK Agreement. Our contractual share of 72.5% from the sales of sotrovimab is applied to the net sales reported in the period by GSK, net of cost of goods sold and allowable expenses from both GSK and us (e.g., manufacturing, distribution, medical affairs, selling, and marketing expenses). In order to record collaboration revenue, we utilize certain information from our collaboration partner, including actual net product sales and costs incurred for sales activities, and make key judgments based on business updates related to commercial and clinical activities, such as expected commercial demand, commercial supply plan, manufacturing commitments, risks related to expired or obsolete inventories, and risks related to potential product returns or contract terminations. In 2024, we expect a nominal amount of collaboration revenue, if any, from our 2020 GSK Agreement, and we may incur negative collaboration revenue related to costs for ongoing required support efforts that our partner GSK leads.
Constraint on variable consideration
In May 2021, the FDA granted an EUA in the U.S. for sotrovimab. In April 2022, the FDA excluded the use of sotrovimab in all U.S. regions due to the continued proportion of COVID-19 cases caused by certain variants. As the lead party for all manufacturing and commercialization activities, GSK incurs all of the manufacturing, sales and marketing expenses and is the principal on sales transactions with third parties. Our accounting policy related to the profit-share is to consider the agreed-upon share of the profit-sharing amounts each quarter and evaluate whether those amounts are subject to potential future adjustments based on the latest available facts and circumstances, subject to the terms of the 2020 GSK Agreement.
As we are the agent under the 2020 GSK Agreement, we recognize our contractual share of the profit-sharing amounts or royalties (in case of an opt-out) as revenue, based on sales net of various estimated deductions such as rebates, discounts, chargebacks, credits and returns, less cost of sales and allowable expenses (including manufacturing, distribution, medical affairs, selling, and marketing expenses) in the period the sale occurs. Manufacturing costs include inventory revaluation adjustments, lower of cost or market inventory adjustments, inventory write-downs and write-offs, and binding purchase commitments with a third-party manufacturer, among other manufacturing costs. Our contractual share of the profit-sharing amounts is subject to potential future adjustments to allowable expenses, which we account for as a form of variable consideration.
In 2023, GSK reported to us certain allowable manufacturing expenses related to excess sotrovimab supply and binding reserved manufacturing capacity not utilized, which we had previously reserved as a constraint on our cumulative profit-sharing amounts. GSK may continue to adjust allowable manufacturing expenses for our share of the excess supply write-offs and unused binding manufacturing capacity and report to us as cost-sharing amounts in future periods. We evaluate the latest available facts and circumstances to update our evaluation of whether any portion of profit-sharing amounts should continue to be constrained. We re-assess these estimates at each reporting period. Actual results could materially differ from estimates.
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Contract revenue
Contract revenue includes recognition of revenue generated from license rights issued to GSK, from research and development services under third-party contracts, and from a third-party clinical supply agreement.
Grant revenue
Grant revenue is comprised of revenue derived from grant agreements with government-sponsored and private organizations.
Operating Expenses
Cost of Revenue
Cost of revenue currently represents royalties earned by third-party licensors on net sales of sotrovimab. We recognize these royalties as cost of revenue when we recognize the corresponding revenue that gives rise to payments due to our licensors.
Research and Development
To date, our research and development expenses have related primarily to discovery efforts and preclinical and clinical development of our product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. We do not track all research and development expenses by product candidate.
Research and development expenses consist primarily of costs incurred for our product candidates in development and prior to regulatory approval, which include:
•expenses related to license and collaboration agreements, and change in fair value of certain contingent consideration obligations arising from business acquisitions;
•personnel-related expenses, including salaries, benefits and stock-based compensation for personnel contributing to research and development activities;
•expenses incurred under agreements with third-party contract manufacturing organizations, contract research organizations, and consultants;
•clinical costs, including laboratory supplies and costs related to compliance with regulatory requirements; and
•other allocated expenses, including expenses for rent and facilities maintenance, and depreciation and amortization.
We expect our research and development expenses to increase substantially in absolute dollars over time as we advance our product candidates into and through preclinical and clinical studies and pursue regulatory approval of our product candidates. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors including: the safety and efficacy of our product candidates, early clinical data, investment in our clinical programs, the ability of collaborators to successfully develop our licensed product candidates, competition, manufacturing capability and commercial viability.
In addition, under our license agreement with Sanofi, we may incur additional clinical, and regulatory milestone payments based on the development progress of certain oncology programs. We may also be required to pay commercial milestone payments and royalties in the event of a successful product launch and our receipt of commercial revenues. Therefore, we are unable to predict the timing or the final cost to complete our clinical programs or validation of our manufacturing and supply processes and delays may occur due to numerous factors. Factors that could cause or contribute to delays or additional costs include, but are not limited to, those discussed in the “Risk Factors” section of the Quarterly Report.
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As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate significant revenue from the commercialization and sale of any of our product candidates. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical and clinical studies, regulatory developments, our ongoing assessments as to each product candidate’s commercial potential and the impact of public health epidemics, such as the COVID-19 pandemic. In addition, our existing collaborators have significant discretion in determining the efforts and resources that they will apply to our collaborations and may not pursue further development and commercialization of products resulting from our collaboration arrangements or may elect to not to continue or renew research and development programs, which would delay the development and may increase the cost of developing our product candidates and may result in a need for additional capital or a suitable replacement collaborator. For those product candidates where there is not a current collaboration arrangement in place, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured (if at all) and to what degree such arrangements will affect our development plans and capital requirements.
Our clinical development costs may vary significantly based on factors such as:
•whether a collaborator is paying for some or all of the costs;
•per patient trial costs;
•the number of studies required for approval;
•the number of sites included in the studies;
•enrollment and retention of patients in studies in countries disrupted by geopolitical events, including civil or political unrest;
•the length of time required to enroll eligible patients;
•the number of patients that participate in the studies;
•the number of doses that patients receive;
•the drop-out or discontinuation rates of patients;
•potential additional safety monitoring requested by regulatory agencies;
•the duration of patient participation in the studies and follow-up;
•the cost and timing of manufacturing our product candidates;
•the phase of development of our product candidates; and
•the efficacy and safety profile of our product candidates.
Selling, General and Administrative
Our selling, general and administrative expenses consist primarily of personnel-related expenses for personnel in executive, finance and other administrative functions, facilities and other allocated expenses, other expenses for outside professional services, including legal, audit and accounting services, insurance costs and change in fair value of certain contingent consideration obligations arising from business acquisitions. Personnel-related expenses consist of salaries, benefits and stock-based compensation. In the long-term as we advance our research and development programs toward potential commercialization, we expect our selling, general, and administrative expenses to increase in absolute dollars to support commercialization activities and related expansion in research and development activities.
Restructuring, long-lived asset impairment and related charges
Restructuring, long-lives asset impairment and related charges consist primarily of charges incurred in connection with our cost saving initiatives implemented during the second half of 2024 and 2023, respectively, including severance and other employee-related expenses and long-lived assets impairment charges and disposal losses.
Change in Fair Value of Equity Investments
Change in fair value of equity investments consists of the remeasurement of our investment in Brii Biosciences Limited’s, or Brii Bio Parent, ordinary shares based on the quoted market price at each reporting date.
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Interest Income
Interest income consists of interest earned on our cash, cash equivalents and investments.
Other (Expense) Income, Net
Other (expense) income, net consists of gains and losses from foreign currency transactions and the remeasurement of our contingent consideration obligation.
(Provision for) Benefit from Income Taxes
(Provision for) benefit from income taxes consists primarily of income taxes on our domestic and foreign operations.
Net Loss Attributable to Noncontrolling Interest
Net loss attributable to noncontrolling interest consists of net loss attributable to the noncontrolling interest owners of Encentrio Therapeutics, Inc., our subsidiary, during the three months ended March 31, 2023.
Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
The following table summarizes our results of operations for the periods presented (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
20242023Change20242023Change
Revenues:
Collaboration revenue$(1,102)$(4,387)$3,285 $(2,034)$28,408 $(30,442)
Contract revenue1,391 289 1,102 54,468 1,484 52,984 
Grant revenue2,091 6,737 (4,646)9,397 39,501 (30,104)
Total revenues2,380 2,639 (259)61,831 69,393 (7,562)
Operating expenses:
Cost of revenue50 38 12 161 1,967 (1,806)
Research and development195,178 145,028 50,150 400,416 470,754 (70,338)
Selling, general and administrative25,744 40,933 (15,189)92,330 133,223 (40,893)
Restructuring, long-lived assets impairment and related charges12,712 3,372 9,340 38,939 8,738 30,201 
Total operating expenses233,684 189,371 44,313 531,846 614,682 (82,836)
Loss from operations(231,304)(186,732)(44,572)(470,015)(545,289)75,274 
Other income:
Change in fair value of equity investments1,130 (2,707)3,837 (4,356)(20,896)16,540 
Interest income17,527 21,931 (4,404)57,656 66,254 (8,598)
Other (expense) income, net(893)882 (1,775)(1,715)(7,506)5,791 
Total other income17,764 20,106 (2,342)51,585 37,852 13,733 
Loss before (provision for) benefit from income taxes(213,540)(166,626)(46,914)(418,430)(507,437)89,007 
(Provision for) benefit from income taxes(177)3,213 (3,390)1,059 8,293 (7,234)
Net loss(213,717)(163,413)(50,304)(417,371)(499,144)81,773 
Net loss attributable to noncontrolling interest— — — — (56)56 
Net loss attributable to Vir$(213,717)$(163,413)$(50,304)$(417,371)$(499,088)$81,717 
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Revenues
The lower negative collaboration revenue for the three months ended September 30, 2024 compared to the same period in 2023 was primarily due to reduced loss from the sales of sotrovimab. The decrease in collaboration revenue for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to lower revenues from the release of profit-sharing amount previously constrained.
The increase in contract revenue for the three months ended September 30, 2024 compared to the same period in 2023 was not material. The increase in contract revenue for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to $51.7 million of deferred revenue recognized during the first quarter of 2024 when GSK’s rights to select up to two additional non-influenza target pathogens under the 2021 GSK Agreement expired on March 25, 2024.
The decrease in grant revenue for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to lower revenue recognized in accordance with our agreement with BARDA and to a lesser extent, lower revenue recognized from the Bill and Melinda Gates Foundation.
Cost of Revenue
The increase in cost of revenue for the three months ended September 30, 2024 compared to the same period in 2023 was not material. The decrease in cost of revenue for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to lower third-party royalties owed based on the sales of sotrovimab under the 2020 GSK Agreement.
Research and Development Expenses
The following table shows the primary components of our research and development expenses for the periods presented (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
20242023Change20242023Change
Licenses, collaborations and contingent consideration$112,532 $8,223