Vir Biotechnology, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Financial statements are unaudited; amounts below are in millions of U.S. dollars unless stated otherwise.
Business context
Vir is a commercial-stage immunology company developing treatments and preventive therapies for infectious diseases, including COVID-19, hepatitis B, influenza A and HIV. Sotrovimab, developed with GSK, had U.S. emergency use authorization and authorizations in several other countries. The company’s other programs remained in clinical development.
Financial results and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Total revenue | $103.6 | $1.9 | $282.7 | $74.6 |
| Operating expenses | $157.0 | $89.5 | $433.7 | $263.2 |
| Operating loss | $(53.4) | $(87.6) | $(151.0) | $(188.6) |
| Net income (loss) | $110.4 | $(84.6) | $3.3 | $(193.0) |
| Research and development expense | $98.7 | $70.7 | $319.7 | $215.3 |
| Selling, general and administrative expense | $50.5 | $18.9 | $105.0 | $47.9 |
- Q3 collaboration revenue was $102.4 million, primarily Vir’s share of sotrovimab profits under its GSK agreement. Nine-month collaboration revenue was $107.7 million. Nine-month contract revenue of $169.6 million included $168.3 million recognized for a license granted to GSK.
- Q3 net income included a $164.1 million unrealized gain from revaluing Vir’s Brii Bio Parent equity investment after its IPO. The gain was noncash and accounted for most of the difference between operating loss and net income; it should not be viewed as operating profitability.
- Revenue increased substantially versus 2020, while R&D and SG&A costs also rose. R&D growth reflected increased clinical activity and headcount; SG&A growth included a $20.2 million increase in the fair value of Humabs contingent consideration.
- At September 30, cash and cash equivalents were $714.5 million, short-term investments were $55.6 million, and the Brii Bio Parent equity investment was $169.4 million. Excluding restricted cash, total cash, cash equivalents and investments were $939.5 million; excluding the Brii investment as well, available resources were $770.1 million.
- Management said the $770.1 million, based on current plans, should fund operations for at least 12 months from the financial statements’ issuance date. Vir expects losses to continue and says additional capital will be needed to complete development and commercialization plans.
- Operating cash use for the first nine months was $55.3 million, compared with $108.9 million in 2020. Investing activities provided $236.8 million, mainly from investment maturities; financing provided $94.7 million, primarily from GSK’s stock purchase and stock-option exercises. Cash, cash equivalents and restricted cash increased $276.1 million.
- Vir reported no debt outstanding. Current liabilities were $233.7 million and total liabilities were $333.9 million at September 30. The filing also disclosed $89.2 million of contingent consideration and operating lease liabilities of $72.2 million.
Outlook, commentary and risks
- Vir and GSK planned to submit a U.S. biologics license application for sotrovimab in the first half of 2022. Initial data from intramuscular sotrovimab studies were expected in Q4 2021; initial VIR-2218 plus VIR-3434 HBV combination data were expected in the first half of 2022. These are forward-looking expectations, not reported results.
- Management reported binding agreements for more than 420,000 sotrovimab doses worldwide and more than 220,000 additional doses reserved. The company and GSK were working to expand supply; the filing described capacity for approximately two million doses in the first year after U.S. authorization.
- Management deferred starting the VIR-2482 Phase 2 trial because of an anticipated low influenza incidence in the Northern Hemisphere winter. It expected R&D and SG&A expenses to increase as programs advanced and commercialization activities expanded. No specific revenue or earnings guidance was provided.
- Key uncertainties include the durability of sotrovimab demand, competition from other COVID-19 treatments and vaccines, potential loss or change of emergency authorization, clinical and regulatory outcomes, third-party manufacturing capacity and supply, and the need for additional financing. COVID-19 disruptions could also delay trials or manufacturing.
- Vir disclosed approximate aggregate commitments of $371 million under two manufacturing services agreements associated with GSK, excluding a potential Biogen access fee payable only if its technology is used. Potential milestone and royalty obligations under licenses and collaborations may add future costs.
Important facts for investors to verify
- Whether sotrovimab orders, reserved doses, actual shipments and GSK-reported profit shares support sustained collaboration revenue and cash collection.
- Progress and timing of the planned U.S. BLA, international authorizations, and the intramuscular sotrovimab studies.
- How much of reported earnings reflects operating performance versus noncash fair-value movements, especially the Brii investment gain and contingent-consideration remeasurement.
- Cash burn, the $93.0 million collaboration receivable, deferred revenue, and the adequacy of the $770.1 million liquidity figure given manufacturing commitments and expected operating losses.
- Clinical results and timelines for the HBV, influenza and HIV programs, and whether collaboration partners continue funding and development as planned.