Vir Biotechnology: Corporate update and annual results 2019

Vir Biotechnology, Inc. (Nasdaq: VIR), a clinical-stage immunology company focused on treating and preventing serious infectious diseases, today provided a corporate update and reported financial results for the fourth quarter and full year ended December 31, 2019.

“2019 was a very successful year of growth and progress for Vir, as we expanded our clinical and preclinical pipeline, built a robust research engine around our multiple platforms for fighting infectious disease, and completed an initial public offering,” said George Scangos, Ph.D., Chief Executive Officer of Vir. “In 2020, the value of our multi-platform approach has become evident as we rapidly execute our scientific strategy in pursuit of therapies for the COVID-19 pandemic, while simultaneously maintaining sharp focus on our ongoing programs in hepatitis B, influenza A, and HIV.”

Corporate Updates
Yesterday, the company announced that it has identified multiple human monoclonal antibody development candidates that neutralize SARS-CoV-2, the virus responsible for COVID-19. Its lead development candidate was transferred at-risk to WuXi Biologics (stock code: 2269.HK) and Biogen Inc. (Nasdaq: BIIB) for manufacturing several weeks ago, and is anticipated to start human trials within 3-5 months. The ability of this antibody to neutralize the SARS-CoV-2 live virus has been confirmed in two separate laboratories. The antibody binds to an epitope on SARS-CoV-2 that is shared with SARS-CoV-1 (also known as ‘SARS’), indicating that the epitope is highly conserved. The company believes that the conservation of this epitope will make it more difficult for escape mutants to develop. Vir is advancing two versions of its lead development candidate into clinical testing. Both versions will be half-life engineered in order to potentially extend the time they remain in the body. One will also be modified to potentially immunize against the virus at the same time it treats or prevents infection. This property is known as a vaccinal effect, meaning the antibody may elicit continued immune protection against the virus even after it is no longer present in the body.

In February, the company announced a development and manufacturing collaboration with WuXi Biologics to advance and produce human monoclonal antibodies for the potential treatment of COVID-19. Under the terms of the agreement, the companies will work together on the clinical development, manufacturing, and commercialization of Vir’s proprietary antibodies. WuXi Biologics will conduct cell-line development, process and formulation development, and initial manufacturing for clinical development. If the antibodies receive regulatory approvals, WuXi Biologics has the right to commercialize therapies in Greater China and Vir has the right to commercialize therapies in all other markets worldwide.

In March, the company announced that it signed a letter of intent with Biogen for the development and clinical manufacturing of human monoclonal antibodies for the potential treatment of COVID-19. Because of the urgency of the situation, the companies have begun work while a Clinical Development and Manufacturing Agreement is being negotiated. Subject to the completion of a definitive agreement, Biogen would continue cell line development, process development, and clinical manufacturing activities in order to advance the development of Vir’s proprietary antibodies.

In March, the company and Alnylam Pharmaceuticals (Nasdaq: ALNY) announced an expansion of their existing collaboration to include the development and commercialization of RNA interference therapeutics targeting SARS-CoV-2. Under the agreement, the companies will bring forward one or more siRNAs to treat SARS-CoV-2 and potentially other coronaviruses. The collaboration will focus on development of siRNAs that Alnylam recently identified that target highly conserved regions of coronavirus RNAs. Alnylam has designed and synthesized over 350 siRNAs targeting all available SARS-CoV and SARS-CoV-2 genomes. Potent siRNA lead candidates will be further evaluated by scientists at Vir for in vitro and in vivo anti-viral activity, leading to the selection of a development candidate (DC). Vir will lead all development and commercialization of any selected DCs. At clinical proof of concept, Alnylam will have an option to share equally in the profits and losses associated with the development and commercialization of the coronavirus program. Alternatively, Alnylam may elect to earn development and commercialization milestones and royalties on net sales of products resulting from the collaboration in amounts agreed upon for the coronavirus program. This new program expands the companies’ existing licensing agreement announced in 2017 to now develop up to six novel siRNAs to treat infectious diseases.

In March, the company announced a research collaboration agreement with the National Institutes of Health (NIH) and the National Institute of Allergy and Infectious Diseases (NIAID), Vaccine Research Center (VRC) to advance characterization and development of antibodies against coronaviruses, including SARS-CoV-2. The joint project will augment ongoing efforts by both parties to identify antibodies that can be used to prevent or treat infection with existing and emerging viruses and help inform the development of vaccines. Under the terms of the agreement, Vir and NIAID will work together to identify and optimize combinations of antibodies against coronaviruses, including SARS-CoV-2, SARS and MERS, as well as antibodies that may be effective across additional types of coronaviruses. The two parties will exchange antibodies and other materials for testing in combination and individually and, by mutual agreement, will perform in vivo animal studies to analyze immune responses.

VIR-2218, a hepatitis B virus (HBV)-targeting small interfering ribonucleic acid (siRNA) being developed for the functional cure of HBV, has completed Phase 1/2 dosing of all patient cohorts receiving 50 – 200 mg. To date, VIR-2218 has been generally well-tolerated in healthy volunteers given as a single dose up to 900 mg and in patients given as two doses of 20 mg, 50 mg, 100 mg or 200 mg each dose. The data also demonstrate substantial, dose dependent reductions in hepatitis B surface antigen (HBsAg) in patients at doses ranging from 20 mg to 200 mg, which are durable at the higher doses for at least 6 months. The company anticipates announcing additional details on this trial in the second quarter of 2020. In addition, the company anticipates starting a Phase 2 combination trial of VIR-2218 and pegylated interferon-alpha, or PEG-IFN-a, in the second half of 2020.

VIR-2482, a monoclonal antibody being developed as universal prophylaxis for influenza A, is in an ongoing Phase 1/2 clinical trial. All four dose cohorts (60 mg, 300 mg, 1200 mg, and 1800 mg) in healthy volunteers have completed enrollment. Due to the COVID-19 pandemic, the company now anticipates starting the Phase 2 clinical trial in the northern hemisphere in the fourth quarter of 2020, rather than in the southern hemisphere in the second quarter of 2020, as previously planned. Data from the first flu season (now in the northern hemisphere) of the Phase 1/2 clinical trial are anticipated to be available in the first half of 2021, and from the second flu season (now in the southern hemisphere) are anticipated to be available in the second half of 2021.

VIR-3434, an HBV-neutralizing monoclonal antibody with the potential to also be a therapeutic vaccine, was planned to start a Phase 1 clinical trial in the first half of 2020. Due to the COVID-19 pandemic, however, the company now anticipates this trial to start in the second half of 2020.

VIR-1111, a human immunodeficiency virus (HIV) T cell vaccine based on human cytomegalovirus (HCMV), was planned to start a Phase 1 clinical trial in the first half of 2020. Due to the COVID-19 pandemic, however, the company now anticipates this trial to start in the second half of 2020.

Fourth Quarter & Full Year 2019 Financial Results
Revenues: Total revenues for the quarter ended December 31, 2019 were $1.0 million, compared to $3.1 million for same period in 2018. Total revenues for the year ended December 31, 2019 were $8.1 million, compared to $10.7 million for the same period in 2018. The decreases for the quarter and full year were primarily due to a decline in grant revenue.

Research and Development Expenses: Research and development expenses were $52.9 million for the quarter ended December 31, 2019, which includes $1.1 million of non-cash stock-based compensation expense, compared to $22.0 million for the same period in 2018, which includes $0.3 million of non-cash stock-based compensation expense. For the year ended December 31, 2019, research and development expenses were $148.5 million, which includes $3.0 million of non-cash stock-based compensation expense, compared to $100.2 million for the same period in 2018, which includes $1.1 million of non-cash stock-based compensation expense. The increases for the quarter and full year were primarily due to an increase in personnel, ongoing clinical expenses relating to VIR-2218 and VIR-2482, and collaboration expenses.

General and Administrative Expenses: General and administrative expenses were $11.8 million for the quarter ended December 31, 2019, which includes $1.6 million of non-cash stock-based compensation expense, compared to $7.9 million for the same period in 2018, which includes $0.6 million of non-cash stock-based compensation expense. For the year ended December 31, 2019, general and administrative expenses were $37.6 million, which includes $5.7 million of non-cash stock-based compensation expense, compared to $29.1 million for the same period in 2018, which includes $4.0 million of non-cash stock-based compensation expense. The increases for the quarter and full year were primarily due to an increase in personnel-related expenses related to additional headcount, as well as an increase in professional fees.

Net Loss: Net loss for the quarter ended December 31, 2019 was $63.8 million, or $0.69 per share, basic, and $0.71 per share, diluted, compared to a net loss of $26.4 million, or $3.05 per share, basic and diluted, for the same period in 2018. For the year ended December 31, 2019, net loss was $174.7 million, or $5.76 per share, basic and diluted, compared to a net loss of $115.9 million, or $15.12 per share, basic and diluted, for the same period in 2018.

Cash and Cash Equivalents: As of December 31, 2019, excluding restricted cash, Vir had approximately $407.7 million in cash, cash equivalents, and investments. For the year ended December 31, 2019, net cash used in operating activities and property and equipment purchases was $138.6 million. Based on current assumptions, the company expects to be able to fund its operating plan through at least the end of 2021.