10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number: 001-40703

 

Adagio Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-1403134

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

1601 Trapelo Road, Suite 178
Waltham, MA

02451

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (781) 819-0080

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

ADGI

 

The Nasdaq Global 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 ☒ No ☐

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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No ☐

As of November 8, 2021, the registrant had 111,251,660 shares of common stock, $0.0001 par value per share, outstanding.

 

 


 

Table of Contents

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statement of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

PART II.

OTHER INFORMATION

34

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

90

Item 3.

Defaults Upon Senior Securities

90

Item 4.

Mine Safety Disclosures

90

Item 5.

Other Information

90

Item 6.

Exhibits

91

Signatures

92

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ADAGIO THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(UNaudited)

(In thousands, except share and per share amounts)

 

 

September 30,
2021

 

 

December 31,
2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

478,269

 

 

$

114,988

 

Marketable securities

 

 

188,053

 

 

 

 

Prepaid expenses and other current assets

 

 

13,833

 

 

 

2,394

 

Total current assets

 

 

680,155

 

 

 

117,382

 

Other non-current assets

 

 

6,115

 

 

 

 

Total assets

 

$

686,270

 

 

$

117,382

 

Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

17,564

 

 

$

8,153

 

Accrued expenses

 

 

35,485

 

 

 

4,919

 

Total current liabilities

 

 

53,049

 

 

 

13,072

 

Early-exercise liability

 

 

8

 

 

 

11

 

Total liabilities

 

 

53,057

 

 

 

13,083

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Convertible preferred stock (Series A, B and C) $0.0001 par value; no shares authorized, issued and outstanding at September 30, 2021; 12,647,934 shares authorized, issued and outstanding at December 31, 2020; aggregate liquidation preference of $0 and $169,900 at September 30, 2021 and December 31, 2020, respectively

 

 

 

 

 

169,548

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

Preferred stock:

 

 

 

 

 

 

Undesignated preferred stock, $0.0001 par value; 10,000,000 shares authorized at September 30, 2021; no shares authorized at December 31, 2020; no shares issued and outstanding at September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.0001 par value; 1,000,000,000 shares authorized at September 30, 2021; 150,000,000 shares authorized at December 31, 2020; 111,251,660 shares issued and outstanding at September 30, 2021; 28,193,240 shares issued and 5,593,240 shares outstanding at December 31, 2020

 

 

5

 

 

 

1

 

Treasury stock, at cost; no shares and 22,600,000 shares at September 30, 2021 and December 31, 2020, respectively

 

 

 

 

 

(85

)

Additional paid-in capital

 

 

842,272

 

 

 

154

 

Accumulated other comprehensive income

 

 

3

 

 

 

 

Accumulated deficit

 

 

(209,067

)

 

 

(65,319

)

Total stockholders’ equity (deficit)

 

 

633,213

 

 

 

(65,249

)

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

 

$

686,270

 

 

$

117,382

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


 

ADAGIO THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(UNaudited)

(In thousands, except share and per share amounts)

 

 

Three Months
Ended
September 30,

 

 

Three Months
Ended
September 30,

 

 

Nine Months
Ended
September 30,

 

 

Period from
June 3, 2020
(Inception) to
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development(1)

 

$

45,366

 

 

$

7,251

 

 

$

114,465

 

 

$

7,299

 

Acquired in-process research and development(2)

 

 

4,000

 

 

 

39,915

 

 

 

7,500

 

 

 

39,915

 

Selling, general and administrative

 

 

11,052

 

 

 

842

 

 

 

21,853

 

 

 

892

 

Total operating expenses

 

 

60,418

 

 

 

48,008

 

 

 

143,818

 

 

 

48,106

 

Loss from operations

 

 

(60,418

)

 

 

(48,008

)

 

 

(143,818

)

 

 

(48,106

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

48

 

 

 

 

 

 

80

 

 

 

 

Other expense

 

 

(5

)

 

 

 

 

 

(10

)

 

 

 

Total other income (expense), net

 

 

43

 

 

 

 

 

 

70

 

 

 

 

Net loss

 

 

(60,375

)

 

 

(48,008

)

 

 

(143,748

)

 

 

(48,106

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on available-for-sale securities, net of tax

 

 

3

 

 

 

 

 

 

3

 

 

 

 

Comprehensive loss

 

$

(60,372

)

 

$

(48,008

)

 

$

(143,745

)

 

$

(48,106

)

Net loss per share attributable to common stockholders, basic and diluted

 

$

(0.98

)

 

$

(25.98

)

 

$

(7.06

)

 

$

(7.55

)

Weighted-average common shares outstanding, basic and diluted

 

 

61,297,086

 

 

 

1,847,826

 

 

 

20,346,771

 

 

 

6,375,000

 

(1)
Includes related-party amounts of $1,826 and $2,261 for the three and nine months ended September 30, 2021, respectively, and $291 for both the three months ended September 30, 2020 and for the period from June 3, 2020 (inception) to September 30, 2020 (see Note 15).
(2)
Includes related-party amounts of $4,000 and $7,500 for the three and nine months ended September 30, 2021, respectively, and $39,915 for both the three months ended September 30, 2020 and for the period from June 3, 2020 (inception) to September 30, 2020 (see Note 15).

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


 

ADAGIO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE

PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

(In thousands, except share amounts)

 

 

 

Convertible Preferred Stock

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional
Paid-in

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity (Deficit)

 

Balances at June 3, 2020 (Inception)

 

 

 

 

$

 

 

 

 

 

 

$

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Issuance of common stock at inception

 

 

 

 

 

 

 

 

 

21,250,000

 

 

 

2

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

Issuance of restricted common stock upon early exercise of stock options

 

 

 

 

 

 

 

 

 

6,943,240

 

 

 

1

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(98

)

 

 

(98

)

Balances at June 30, 2020

 

 

 

 

 

 

 

 

 

28,193,240

 

 

 

3

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

(98

)

 

 

(98

)

Issuance of Series A convertible preferred stock in exchange for license and common stock

 

 

5,000,000

 

 

 

40,000

 

 

 

 

(21,250,000

)

 

 

(2

)

 

 

21,250,000

 

 

 

(85

)

 

 

2

 

 

 

 

 

 

 

 

 

(85

)

Issuance of Series A convertible preferred stock, net of issuance costs of $194

 

 

6,237,500

 

 

 

49,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(48,008

)

 

 

(48,008

)

Balances at September 30, 2020

 

 

11,237,500

 

 

$

89,706

 

 

 

 

6,943,240

 

 

$

1

 

 

 

21,250,000

 

 

$

(85

)

 

$

6

 

 

$

 

 

$

(48,106

)

 

$

(48,184

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Stock

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional
Paid-in

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity (Deficit)

 

Balances at December 31, 2020

 

 

12,647,934

 

 

$

169,548

 

 

 

 

5,593,240

 

 

$

1

 

 

 

22,600,000

 

 

$

(85

)

 

$

154

 

 

$

 

 

$

(65,319

)

 

$

(65,249

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

587

 

 

 

 

 

 

 

 

 

587

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(38,700

)

 

 

(38,700

)

Balances at March 31, 2021

 

 

12,647,934

 

 

 

169,548

 

 

 

 

5,593,240

 

 

 

1

 

 

 

22,600,000

 

 

 

(85

)

 

 

741

 

 

 

 

 

 

(104,019

)

 

 

(103,362

)

Issuance of Series C convertible preferred stock, net of issuance costs of $337

 

 

4,296,550

 

 

 

335,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

6,000

 

 

 

 

 

 

 

 

 

 

 

 

66

 

 

 

 

 

 

 

 

 

66

 

Vesting of restricted common stock from early-exercised options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,342

 

 

 

 

 

 

 

 

 

3,342

 

Retirement of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,600,000

)

 

 

85

 

 

 

(85

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(44,673

)

 

 

(44,673

)

Balances at June 30, 2021

 

 

16,944,484

 

 

 

504,711

 

 

 

 

5,599,240

 

 

 

1

 

 

 

 

 

 

 

 

 

4,067

 

 

 

 

 

 

(148,692

)

 

 

(144,624

)

Issuance of common stock upon completion of initial public offering, net of commissions, underwriting discounts and offering costs

 

 

 

 

 

 

 

 

 

20,930,000

 

 

 

2

 

 

 

 

 

 

 

 

 

327,518

 

 

 

 

 

 

 

 

 

327,520

 

Conversion of convertible preferred stock to common stock

 

 

(16,944,484

)

 

 

(504,711

)

 

 

 

84,722,420

 

 

 

2

 

 

 

 

 

 

 

 

 

504,707

 

 

 

 

 

 

 

 

 

504,709

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,979

 

 

 

 

 

 

 

 

 

5,979

 

Vesting of restricted common stock from early-exercised options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Unrealized gain on available-for-sale securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(60,375

)

 

 

(60,375

)

Balances at September 30, 2021

 

 

 

 

$

 

 

 

 

111,251,660

 

 

$

5

 

 

 

 

 

$

 

 

$

842,272

 

 

$

3

 

 

$

(209,067

)

 

$

633,213

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

ADAGIO THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(UNAUDITED)

(In thousands)

 

 

Nine Months
Ended
September 30, 2021

 

 

Period from
June 3, 2020
(Inception) to
September 30, 2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(143,748

)

 

$

(48,106

)