Vir Biotechnology, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; comparisons are primarily with FY2022. Vir is a clinical-stage immunology and infectious-disease company. Its clinical pipeline targets hepatitis delta (HDV), hepatitis B (HBV) and HIV; other programs are preclinical. The filing was signed February 26, 2024.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Total revenue | $86.2 million | $1,615.8 million |
| Research and development expense | $589.7 million | $474.6 million |
| Selling, general and administrative expense | $178.0 million | $161.8 million |
| Operating income (loss) | $(684.3) million | $833.1 million |
| Net income (loss) | $(615.1) million | $515.8 million |
| Net income (loss) per diluted share | $(4.59) | $3.83 |
| Operating cash flow | $(778.8) million | $1,663.3 million |
- Revenue consisted of $37.3 million collaboration revenue, $46.7 million grant revenue and $2.2 million contract revenue. FY2023 collaboration revenue included $1.5 million from sotrovimab sales and a $35.7 million release of previously constrained profit share.
- Cash, cash equivalents and investments totaled approximately $1.63 billion at year-end, including $241.6 million cash and equivalents, $1.27 billion short-term investments and $105.3 million long-term investments. Total assets were $1.92 billion; total liabilities were $328.8 million. The company reported no debt outstanding.
- Management believes year-end liquidity will fund current operating plans for at least 12 months from the filing date, but says plans may change and additional capital may be needed. An at-the-market facility permits up to $300 million of stock sales; no shares had been sold under it by year-end.
Changes from FY2022 and unusual items
- Total revenue fell by $1.53 billion, chiefly reflecting sharply lower sotrovimab profit share after U.S. use was excluded in 2022. FY2022 also included substantial sotrovimab revenue and a $22.3 million related-party license fee from Brii Bio’s tobevibart option exercise.
- Operating cash flow swung from $1.66 billion provided to $778.8 million used. Vir paid GSK $341.4 million in 2023 for its share of excess sotrovimab supply and unused reserved manufacturing capacity. The year-end accrued liability for remaining estimated related costs was immaterial, but GSK may report further adjustments.
- R&D expense increased $115.0 million, including higher contract manufacturing and personnel costs. FY2023 also included $9.7 million of impairment charges for abandoned, non-prioritized in-process R&D assets and $7.7 million of long-lived asset impairment and disposal losses.
- Vir recorded a $21.9 million unrealized loss on its Brii Bio equity investment, versus a $111.1 million loss in FY2022, and $87.0 million interest income. The income tax benefit was $13.1 million, compared with a $238.4 million provision in FY2022.
- Year-end accumulated deficit was $237.8 million. FY2022 and FY2021 were profitable, largely in the context of prior sotrovimab-related revenue; Vir cautions it expects significant expenses and losses in the foreseeable future.
Outlook, pipeline and principal risks
- HDV: In the small SOLSTICE combination cohort, all 6 participants were below the lower limit of quantitation for HDV RNA at week 12; 5 of 6 were below the detection limit. Two achieved the combined virologic/ALT endpoint, maintained through week 20. No serious adverse events were reported in this cohort. Larger cohorts and further data were ongoing; these early results are not proof of efficacy or approval.
- HBV: Phase 2 studies of elebsiran and tobevibart, with or without peginterferon, continue. In MARCH Part B, 24-week HBsAg seroclearance was 15.0% with tobevibart plus elebsiran and 14.3% with the triple combination; some responses rebounded after treatment. Forty-eight-week data were expected in Q4 2024. PREVAIL initial data were expected in the first half of 2025.
- HIV: The Phase 1 VIR-1388 trial began in September 2023; initial data were expected in the second half of 2024. The earlier VIR-1111 study showed no sustained HIV-insert-specific T-cell responses.
- Influenza: VIR-2482’s Phase 2 PENINSULA trial did not meet its primary or secondary efficacy endpoints. Post-hoc analyses suggested reductions under alternative case definitions, but were not the prespecified positive result. In February 2024, after year-end, Vir and GSK ended their influenza collaboration; Vir retained rights to pursue the program independently or with another partner.
- Portfolio and costs: Vir said it would focus resources on programs with the highest potential patient impact and value creation, discontinue its small-molecule innate-immunity platform, close St. Louis and Portland facilities, and eliminate approximately 75 positions (about 12% of staff). It recorded $5.9 million in severance and related costs in 2023 and expected another $25–$35 million of charges, primarily for facility closures. Actions were expected to be substantially complete in Q3 2024.
- Funding and execution: BARDA awarded $50.1 million of new funding in 2023, including $40 million to support VIR-7229 through Phase 1 and $10.1 million for antibody discovery. Vir also expects only nominal collaboration revenue, if any, from GSK in 2024 and says negative collaboration revenue is possible from ongoing support costs.
- Key risks include clinical and regulatory failure, trial delays, competition, dependence on collaborators and contract manufacturers, supply-chain and geopolitical exposures, and the need for future financing. Sotrovimab is not authorized in any U.S. region; Vir and GSK do not currently plan to file a U.S. BLA, and Vir does not expect meaningful future sotrovimab revenue.
Most important facts for investors to verify
- Whether cash burn and restructuring costs align with management’s stated runway, and how much of the $1.63 billion is available for operations.
- Whether further GSK sotrovimab cost adjustments or negative collaboration revenue arise after the $341.4 million 2023 payment.
- Whether larger HDV and HBV trials confirm early responses, including durability after treatment ends and safety in broader patient populations.
- Whether Vir secures a partner and a credible path forward for influenza after the failed primary endpoint and GSK collaboration termination.
- Whether BARDA and grant funding are received as expected, and whether the unused $300 million equity facility or other financing is needed.
- Whether development timelines, manufacturing capacity, and planned IND filings are maintained. The filing reports no material legal proceedings; the auditor issued unqualified opinions on the financial statements and internal controls.