Business context and reporting period
This is Adagio Therapeutics, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2021; the filing does not identify the registrant as Invivyd. Adagio was a clinical-stage biopharmaceutical company developing antibody-based treatments and prevention for infectious diseases, principally COVID-19. Its lead candidate, ADG20, was in Phase 2/3 trials for prevention and treatment. The company had no product revenue.
Key financial metrics
Amounts below are in U.S. dollars. Income-statement and cash-flow figures are for the periods indicated; balance-sheet figures are as of September 30, 2021.
| Metric | Reported amount |
|---|---|
| Q3 2021 operating expenses | $60.4 million |
| Q3 2021 net loss | $60.4 million, or $0.98 per share |
| Nine-month 2021 operating expenses | $143.8 million |
| Nine-month 2021 net loss | $143.7 million, or $7.06 per share |
| Revenue and margins | No revenue; profit margins are not meaningful for this pre-revenue company. |
| Cash and cash equivalents | $478.3 million |
| Marketable securities | $188.1 million; total cash, cash equivalents and marketable securities were $666.3 million. |
| Nine-month operating cash flow | $(111.5) million |
| Nine-month investing cash flow | $(188.6) million, primarily purchases of marketable securities |
| Nine-month financing cash flow | $663.4 million |
| Total liabilities and debt | $53.1 million of liabilities; no debt outstanding. |
| Liquidity | $680.2 million of current assets versus $53.0 million of current liabilities. |
Material changes versus the prior comparable period
- Q3 operating expenses rose to $60.4 million from $48.0 million in Q3 2020, while net loss increased to $60.4 million from $48.0 million. The prior-year quarter included a $39.9 million acquired in-process R&D charge, compared with $4.0 million in Q3 2021.
- Q3 2021 R&D expense increased to $45.4 million from $7.3 million, mainly due to higher ADG20 clinical-trial and manufacturing costs, ADG10 manufacturing costs, and increased staffing.
- Q3 selling, general and administrative expense rose to $11.1 million from $0.8 million, reflecting hiring, stock-based compensation and public-company costs.
- For the nine months, R&D expense was $114.5 million and SG&A was $21.9 million. Comparisons with 2020 are affected by the company’s June 2020 inception.
- The August 2021 IPO generated approximately $330.9 million in net proceeds before $3.4 million of offering expenses. All outstanding preferred stock converted into common stock upon the IPO.
Outlook, management commentary, risks and unusual items
- Management estimated that available cash, cash equivalents and marketable securities would fund operating and capital expenditure requirements into the first quarter of 2023. The filing cautions that this estimate depends on assumptions and that additional financing may be required.
- The company expected expenses and operating losses to increase as it advanced ADG20 trials, developed manufacturing capacity and pipeline programs, and built commercial and public-company infrastructure. It gave no revenue or earnings guidance.
- Management reported ADG20 Phase 1 findings, including an extended half-life and no study-drug-related adverse events reported through at least three months of follow-up across cohorts as of September 4, 2021. These are company-reported early-stage findings, not proof of efficacy or regulatory approval.
- Key risks include clinical-trial enrollment and outcome uncertainty, competing COVID-19 vaccines and therapies, changing variants and market demand, the possibility that emergency-use authorization may not be available or may end, and reliance on third parties—particularly WuXi—for manufacturing. The company reported some development delays and disruptions from the pandemic.
- Adagio recorded $7.5 million of 2021 acquired IPR&D expense for ADG20 milestones paid to Adimab, including $4.0 million upon dosing the first patient in a Phase 3 prevention trial. Adimab is a related party and principal stockholder.
- Disclosure controls were deemed ineffective as of September 30, 2021 because of a continuing material weakness in controls over R&D costs, prepaids, accounts payable and accruals related to contract manufacturing. Remediation steps had been implemented, but additional time was needed to demonstrate their effectiveness.
- No material legal proceedings or off-balance-sheet arrangements were reported. The company entered a five-year Waltham office lease and had manufacturing commitments for ADG20; management said contractual obligations had not materially changed from the IPO prospectus.
Important facts for investors to verify
- Confirm the issuer’s identity: this filing is for Adagio Therapeutics, Inc., despite the request metadata naming Invivyd.
- Review subsequent clinical, regulatory and safety data for ADG20, including trial status, variant activity and any change in the company’s development plans.
- Assess cash burn, committed manufacturing and collaboration costs, and whether the stated runway into Q1 2023 remained achievable.
- Track remediation and testing of the disclosed material weakness, and check for any subsequent restatement or control-related disclosures.
- Review the terms and related-party nature of Adimab agreements, contingent milestones, royalties and ownership influence.