UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
As of August 1, 2024, the registrant had
Table of Contents
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Page |
PART I. |
1 |
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Item 1. |
1 |
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1 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
2 |
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Condensed Consolidated Statements of Stockholders’ Equity (Deficit) |
3 |
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5 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
6 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
25 |
Item 3. |
38 |
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Item 4. |
38 |
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PART II. |
39 |
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Item 1. |
39 |
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Item 1A. |
39 |
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Item 2. |
40 |
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Item 5. |
40 |
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Item 6. |
41 |
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42 |
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i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
INVIVYD, INC.
Condensed Consolidated Balance Sheets
(UNaudited)
(In thousands, except share and per share amounts)
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June 30, |
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December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventory, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities, Preferred Stock and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Deferred revenue |
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Operating lease liabilities, current |
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Other current liability |
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Total current liabilities |
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Operating lease liabilities, non-current |
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Other non-current liability |
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Total liabilities |
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Stockholders’ equity (deficit): |
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Preferred stock (undesignated), $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities, preferred stock and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
INVIVYD, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(UNaudited)
(In thousands, except share and per share amounts)
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Three Months Ended June 30, |
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue: |
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Product revenue, net |
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$ |
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$ |
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$ |
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$ |
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Total revenue |
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Operating costs and expenses: |
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Cost of product revenue |
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Research and development(1) |
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Acquired in-process research and development(2) |
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Selling, general and administrative |
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Total operating costs and expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income: |
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Other income, net |
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Total other income, net |
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Net loss |
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( |
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( |
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( |
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( |
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Other comprehensive income (loss) |
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Unrealized gain on available-for-sale securities, net of tax |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per share attributable to common stockholders, basic and diluted |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted-average common shares outstanding, basic and diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
INVIVYD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
(In thousands, except share amounts)
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Common Stock |
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Treasury Stock |
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Additional |
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Accumulated Other Comprehensive |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity (Deficit) |
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Balances at December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Vesting of restricted common stock |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Repurchase of unvested restricted |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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— |
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Retirement of treasury stock |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under the |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain on available-for-sale |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balances at March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Vesting of restricted common stock |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Repurchase of unvested restricted |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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— |
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Retirement of treasury stock |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under the |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain on available-for-sale |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balances at June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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3
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Common Stock |
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Treasury Stock |
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Additional |
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Accumulated Other Comprehensive |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity (Deficit) |
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Balances at December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock, net of |
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— |
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— |
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— |
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— |
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Issuance of common stock under the |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain on available-for-sale |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balances at March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under the |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balances at June 30, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
INVIVYD, INC.
Condensed Consolidated Statements of Cash Flows
(UNAUDITED)
(In thousands)
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Six Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation expense |
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Net amortization of premiums and accretion of discounts on marketable securities |
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( |
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Amortization of operating lease right-of-use assets |
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Depreciation expense |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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Inventory |
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( |
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Prepaid expenses and other current assets |
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( |
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Other non-current assets |
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( |
) |
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( |
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Accounts payable |
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( |
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Accrued expenses |
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( |
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Deferred revenue |
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Operating lease liabilities |
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( |
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( |
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Other current liabilities |
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( |
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( |
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Other non-current liabilities |
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( |
) |
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Net cash used in operating activities |
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( |
) |
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( |
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Cash flows from investing activities: |
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Purchases of marketable securities |
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( |
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Maturities of marketable securities |
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Purchases of property and equipment |
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( |
) |
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( |
) |
Net cash (used in) provided by investing activities |
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( |
) |
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Cash flows from financing activities: |
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Proceeds from exercises of stock options |
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Proceeds from issuance of common stock under the employee stock purchase plan |
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Proceeds from issuance of common stock, net of issuance costs |
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Payments for offering costs |
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( |
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Payments for repurchases of unvested restricted common stock |
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( |
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Net cash provided by financing activities |
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Net (decrease) increase in cash and cash equivalents |
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( |
) |
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Cash and cash equivalents at beginning of period |
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|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
INVIVYD, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Nature of the Business and Basis of Presentation
Invivyd, Inc. (together with its consolidated subsidiaries, the “Company”), is a biopharmaceutical company devoted to delivering protection from serious viral infectious diseases, beginning with SARS-CoV-2. The Company’s proprietary INVYMAB™ platform approach combines state-of-the-art viral surveillance and predictive modeling with advanced antibody engineering. INVYMAB is designed to facilitate the rapid, serial generation of new monoclonal antibodies (“mAbs”) to keep pace with evolving viral threats.
On March 22, 2024, the Company received emergency use authorization (“EUA”) from the U.S. Food and Drug Administration (“FDA”) for PEMGARDA™ (pemivibart) injection, for intravenous use, a half-life extended investigational mAb, for the pre-exposure prophylaxis (prevention) of COVID-19 in adults and adolescents (12 years of age and older weighing at least 40 kg) who have moderate-to-severe immune compromise due to certain medical conditions or receipt of certain immunosuppressive medications or treatments and are unlikely to mount an adequate immune response to COVID-19 vaccination. Recipients should not be currently infected with or have had a known recent exposure to an individual infected with SARS-CoV-2.
In July 2024, the Company submitted a request to the FDA to amend the EUA for PEMGARDA, for the treatment of mild-to-moderate symptomatic COVID-19 in certain immunocompromised patients. The submission utilizes a rapid immunobridging pathway previously aligned in principle with the FDA. The EUA amendment request is based on positive immunobridging analyses of pemivibart versus comparator mAbs and data from the Company’s ongoing CANOPY Phase 3 clinical trial in participants with moderate-to-severe immune compromise. The COVID-19 treatment EUA request focuses on the critical treatment needs of people in the U.S. who have moderate-to-severe immune compromise and for whom alternative COVID-19 treatment options are not clinically appropriate or accessible.
PEMGARDA is the Company’s first mAb in a planned series of innovative mAb candidates designed to keep pace with SARS-CoV-2 viral evolution. As the SARS-CoV-2 virus evolves over time, the Company anticipates leveraging its INVYMAB platform approach to periodically introduce new or engineered mAb candidates, an approach that would be analogous to the periodic updates made to influenza and COVID-19 vaccines. In January 2024, the Company nominated VYD2311, a mAb optimized for neutralization potency against prominent SARS-CoV-2 variants, as a drug candidate, and the Company expects it will be the next pipeline program to advance into clinical development. In May 2024, the Company announced general alignment with the FDA on an expedient, repeatable immunobridging pathway to future potential EUAs for serial, novel mAbs for the prevention and treatment of symptomatic COVID-19. This pathway provides the company with the opportunity to rapidly, efficiently, and durably deliver high value medicines that prevent and treat symptomatic COVID-19 in vulnerable populations. In addition to developing candidates for COVID-19, the Company expects to apply its INVYMAB platform approach to produce lead molecules for other viral diseases, such as influenza.
The Company was incorporated in the State of Delaware in June 2020. The Company operates as a hybrid company with employees working at its corporate headquarters in Waltham, Massachusetts and remotely. In June 2022, and subsequently amended in September 2022, the Company entered into a lease for dedicated laboratory and office space in Newton, Massachusetts for research and development purposes. In 2022, the Company expanded its research team in order to enable internal discovery and development of its mAb candidates, while continuing to leverage the Company’s existing partnership with Adimab, LLC (“Adimab”). The Company is focused on antibody discovery and use of Adimab’s platform technology while building its own internal capabilities. In addition, the Company performs research and development activities internally and engages third parties, including Adimab, to perform ongoing research and development and other services on its behalf.
The Company is subject to a number of risks and uncertainties common to companies in the biopharmaceutical industry, including, but not limited to, completing clinical trials, the ability to raise additional capital to fund operations, obtaining regulatory authorization or approval for product candidates, risks associated with market acceptance and commercialization of products, competition from other products, protection of proprietary intellectual property, compliance with government regulations, dependence on key personnel, the ability to attract and retain qualified employees, and reliance on third-party organizations for the discovery, manufacturing, clinical and commercial success of its product candidates.
To date, the Company has received regulatory authorization for only one product candidate, PEMGARDA, which has not been approved, but has been authorized for emergency use by the FDA under an EUA, for pre-exposure prophylaxis of COVID-19 in certain adults and adolescent individuals (12 years of age and older weighing at least 40 kg). Beyond VYD222 (pemivibart) and VYD2311, all of the Company’s other product candidates, other than adintrevimab, are currently in preclinical development. The Company’s additional product candidates require significant additional research and development efforts, including extensive clinical testing, and regulatory authorization or approval prior to potential commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and compliance-reporting capabilities. It is uncertain when, if ever, the Company will generate substantial revenue from product sales to be able to fund its operating expenses and capital requirements.
6
Substantial Doubt about Ability to Continue as a Going Concern
The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has primarily funded its operations with proceeds from sales of convertible preferred stock, proceeds from the Company’s initial public offering (“IPO”) and net proceeds received from shares of common stock sold under the Sales Agreement (as defined below). In February 2024, the Company sold
The Company has incurred losses and negative cash flows from operations since its inception, including a net loss of $
Based on current operating plans and excluding any contribution from future revenues or external financing, the Company will not have sufficient cash and cash equivalents to fund its operating expenses and capital requirements beyond one year from the issuance of these condensed consolidated financial statements, and therefore, the Company has concluded that there is substantial doubt about its ability to continue as a going concern.
The Company will require additional funding through a combination of contribution from revenues, equity offerings, government or private-party grants, debt financings or other capital sources, such as collaborations with other companies, strategic alliances or licensing arrangements to finance its future operations. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborations or other arrangements. The terms of any financing may adversely affect the holdings or rights of the Company’s stockholders.
If the Company is unable to obtain sufficient capital, the Company will be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.
Basis of Presentation
The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
The accompanying condensed consolidated financial statements include the accounts of Invivyd, Inc. and its wholly owned subsidiaries, Invivyd Security Corporation, Invivyd Switzerland GmbH, and Invivyd Netherlands B.V. All intercompany accounts and transactions have been eliminated in consolidation. The Company views its operations and manages its business in one operating segment, which is the business of discovering, developing and commercializing differentiated products for the prevention and treatment of infectious diseases.
2. Summary of Significant Accounting Policies
As of June 30, 2024, the Company’s significant accounting policies and estimates, which are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission (“SEC”) on March 28, 2024 (the “2023 Form 10-K”) have not changed, except as discussed below.
Inventory
Prior to receiving regulatory approval or authorization, costs related to the manufacturing of inventory are recorded as research and development expense on the Company’s consolidated statements of operations and comprehensive loss in the period incurred. In connection with the EUA for PEMGARDA in March 2024, the Company subsequently began capitalizing PEMGARDA inventory costs as it was determined that inventory costs incurred subsequent to the EUA had a probable future economic benefit.
Concentrations of Credit Risk, Significant Suppliers and License Rights
7
Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash, cash equivalents and accounts receivable.
As of June 30, 2024, the Company invested its excess cash in money market funds that are subject to minimal credit and market risks. The Company maintains its existing cash and cash equivalents at three accredited financial institutions that it believes are creditworthy. From time to time, these deposits may exceed federally insured limits. The Company has not experienced any losses historically in these accounts. Accordingly, the Company does not believe it is exposed to unusual credit risk related to its existing cash and cash equivalents beyond the normal credit risk associated with commercial banking relationships.
As of June 30, 2024, the Company had one third-party logistics distribution agent under the temporary title model which accounted for all of the Company’s net product revenue (see “Revenue Recognition” for additional information).
The Company is dependent on third-party organizations to manufacture and process its product candidates for its research and development programs. In particular, the Company relies on a single third-party contract manufacturer to produce and process its product candidates and to manufacture supply of its product candidates for preclinical and clinical activities. The Company also currently relies on this same third-party contract manufacturer for any anticipated requirements of commercial supply, including both drug substance and drug product (see Note 9). The Company expects to continue to be dependent on a small number of third-party organizations to supply it with its requirements for all product candidates. The Company’s research and development programs, including any associated commercialization efforts, could be adversely affected by a significant interruption in the supply of the necessary materials.
The Company is dependent on a limited number of third parties that provide license rights used by the Company in the development and commercialization of its product candidates and programs. Through June 30, 2024, the Company’s research and development programs primarily relate to rights conveyed by Adimab (see Note 7). The Company could experience delays in the development and commercialization of its product candidates and programs if the Adimab agreements or any other license agreement utilized in the Company’s research and development activities is terminated, if the Company fails to meet the obligations required under its arrangements, or if the Company is unable to successfully secure new strategic alliances or licensing agreements.
Accounts Receivable
Accounts receivable as of June 30, 2024 is comprised of $
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606 - Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, an entity recognizes revenue when or as performance obligations are satisfied by transferring control of promised goods or services to the customer, in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services.
To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Product Revenue, Net
Following EUA from the FDA in March 2024, the Company began generating product revenue from sales of PEMGARDA in April 2024.
The Company entered into a third-party logistics distribution agreement (the “3PL Agreement”) to engage a logistics distribution agent (the “3PL Agent”) to distribute the Company’s products to its customers. The 3PL Agent provides services to the Company that include storage, distribution, processing product returns, customer service support, logistics support, electronic data interface and system access support. Revenue is recognized when or as performance obligations are satisfied by transferring control of promised goods to a customer.
To date, the Company applied for mandatory distribution licenses that some states require in order for the Company to sell its product throughout the U.S. In order for the Company to execute sales in the U.S. prior to obtaining such licenses, the Company and an affiliate of the 3PL Agent (the “Title Company”) entered into a Temporary Title Model Agreement (the “Temporary Title Model Agreement”), which was an amendment to the 3PL Agreement, so that the Title Company may purchase and take title to the product and sell the product to the specialty distributors who have contracted to purchase the product from the Company. Although under the Temporary Title Model Agreement, the Title Company takes title to the product, the economic substance of the transaction provides that the Title Company does not possess the risk of loss or participate in the significant risks and rewards of ownership of the product
8
or have the ability to control, direct the use of, and obtain substantially all of the remaining benefits from the product. Accordingly, the Company does not recognize revenue upon the transfer of the goods at the time of sale to the Title Company and recognizes revenue when the goods are sold from the Title Company to the specialty distributors.
In July 2024, the Company obtained nearly all of the necessary state distribution licenses to sell its products throughout the U.S. and, after a customary period of notice to the Title Company, intends to cease using the Temporary Title Model Agreement process in the third quarter of 2024.
Product revenues are recorded net of applicable reserves for variable consideration, including discounts and allowances.
Discounts and Allowances
The Company records reserves, based on contractual terms, for the following components of variable consideration related to product sold during the reporting period, as well as its estimate of product that remains in the distribution channel inventory of its customers at the end of the reporting period, if applicable. On a quarterly basis, the Company updates its estimates, if necessary, and records any material adjustments in the period they are identified.
Trade Discounts and Distributor Fees
The Company provides customary discounts on PEMGARDA sales for prompt payment, the terms of which are explicitly stated in its contracts. The Company also pays fees to specialty distributors for sales order management, data, and distribution services, the terms of which are also explicitly stated in its contracts. Such fees are not for a distinct good or service and, accordingly, are recorded as a reduction of revenue, as well as a reduction to accounts receivable (trade discounts) or as a component of accrued expenses (distributor fees).
Government Chargebacks and Rebates
The Company is subject to discount obligations under its contract with the Department of Veterans Affairs. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included as a component of accrued expenses.
Product Returns
The Company offers a right of return for purchased units of PEMGARDA for damage, defect, recall, and/or product expiry, provided the product expiry is within a specified period as set forth in the Company’s return goods policy. The Company estimates the amount of product sales that will be returned using quantitative and qualitative considerations. Reserves for estimated returns are recorded as a reduction of product revenue in the period that the related revenue is recognized, as well as a component of accrued expenses.
Other Incentives
Other incentives include a co-pay assistance program for eligible patients with commercial insurance in the U.S. The co-pay assistance program assists certain commercially insured patients by reducing each participating patient’s financial responsibility for the purchase price, up to a specified dollar amount of assistance.
Unaudited Interim Financial Information
The accompanying condensed consolidated balance sheet as of June 30, 2024, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2024 and 2023, the condensed consolidated statements of cash flows for the three and six months ended June 30, 2024 and 2023 and the condensed consolidated statements of stockholders’ equity (deficit) for the three and six months ended June 30, 2024 and 2023 are unaudited.
The accompanying unaudited condensed consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023, have been prepared by the Company pursuant to the rules and regulations of the SEC for interim financial statements. The accompanying condensed consolidated balance sheet as of December 31, 2023 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited annual consolidated financial statements, and the notes thereto, as of and for the year ended December 31, 2023, which are included in the 2023 Form 10-K.
In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position as of June 30, 2024 and December 31, 2023, the condensed consolidated results of operations for the three and six months ended June 30, 2024 and 2023, the condensed consolidated cash flows for the three and six months ended June 30, 2024 and 2023 and changes in stockholders’ equity (deficit) for the three and six months ended June 30,
9
2024 and 2023 have been made. The Company’s condensed consolidated results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024.
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, research and development expenses and related prepaid or accrued costs and stock-based compensation expense. The Company bases its estimates on historical experience, known trends and other market-specific or relevant factors it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ materially from those estimates or assumptions.
Recently Issued and Adopted Accounting Pronouncements
The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and may remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the completion of its IPO. However, if certain events occur prior to the end of such five-year period, including if it becomes a “large accelerated filer,” its annual gross revenues exceeds $
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of incremental segment information on an annual and interim basis. The amendments also require companies with a single reportable segment to provide all disclosures required by this amendment and all existing segment disclosures in ASC 280, Segment Reporting. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company is currently evaluating the potential impacts of ASU 2023-07 on the consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 modifies the rules on income tax disclosures to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The amendments are intended to address investors’ requests for income tax disclosures that provide more information to help them better understand an entity’s exposure to potential changes in tax laws and the ensuing risks and opportunities and to assess income tax information that affects cash flow forecasts and capital allocation decisions. The guidance also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance is effective for all entities for annual periods beginning after December 15, 2025. All entities should apply the guidance prospectively but have the option to apply it retrospectively. Early adoption is permitted. The Company is continuing to assess the timing of adoption and the potential impacts of ASU 2023-09 on the consolidated financial statements and related disclosures.
3. Fair Value Measurements
Fair Value Measurements
Certain assets of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
|
• |
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Level 1 — Quoted prices in active markets for identical assets or liabilities. |
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• |
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Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. |
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• |
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Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. |
10
The Company’s cash equivalents are carried at fair value, determined according to the fair value hierarchy described above. The carrying values of the Company’s accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities.
The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands):
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Fair Value Measurements at |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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Cash equivalents: |
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Money market funds |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Fair Value Measurements at |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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Cash equivalents: |
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Money market funds |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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The money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy.
There were no changes to the valuation methods during the three and six months ended June 30, 2024 or 2023.
The Company evaluates transfers between levels at the end of each reporting period. There were
4. Inventory
The following table presents inventories (in thousands):
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June 30, |
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December 31, |
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Work in process |
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$ |
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$ |
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Finished goods |
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$ |
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$ |
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The Company did
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
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June 30, |
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December 31, |
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Prepaid external research, development and manufacturing costs |
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$ |
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$ |
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Prepaid insurance |
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Prepaid compensation and other |
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Prepaid inventory |
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Interest receivable |
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$ |
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$ |
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6. Accrued Expenses
Accrued expenses consisted of the following (in thousands):
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June 30, |
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December 31, |
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Accrued external research, development and manufacturing costs |
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$ |
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$ |
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Accrued professional and consultant fees |
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Accrued employee compensation |
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Accrued inventory |
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Other |
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$ |
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$ |
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11
7
Adimab Assignment Agreement
In July 2020, the Company entered into an Assignment and License Agreement with Adimab (the “Adimab Assignment Agreement”). Under the terms of the agreement, Adimab assigned to the Company all rights, title and interest in and to certain of its coronavirus-specific antibodies (each, a “CoV Antibody” and together, the “CoV Antibodies”), including modified or derivative forms thereof, and related intellectual property. In addition, Adimab granted to the Company a non-exclusive, worldwide, royalty-bearing, sublicensable license to certain of its platform patents and technology for the development, manufacture and commercialization of the CoV Antibodies and pharmaceutical products containing or comprising one or more CoV Antibodies (each, a “Product”) for all indications and uses, with the exception of certain diagnostic uses and use as a research reagent (the “Field”). The Company is entitled to sublicense the assigned rights and licensed intellectual property solely with respect to any CoV Antibody or Product, subject to specified conditions of the agreement. The Company is obligated to use commercially reasonable efforts to achieve specified development and regulatory milestones for Products in certain major markets and to commercialize a product in any country in which the Company obtains marketing approval.
Pursuant to the terms of the Adimab Assignment Agreement, the parties will establish one or more work plans that set forth the activities to be performed under the agreement (each, a “Work Plan”), and each party is responsible for performing the obligations to which it is assigned under such Work Plans. Upon execution of the Adimab Assignment Agreement, the Company and Adimab agreed on an initial Work Plan that outlined the services that will be performed commencing at inception of the arrangement. The Company is obligated to pay Adimab quarterly for its services performed under each Work Plan at a specified full-time equivalent rate. Otherwise, the Company is solely responsible for the development, manufacture and commercialization of the CoV Antibodies and associated Products at its own cost and expense. The Company is solely responsible for preparing and submitting all investigational new drug applications, new drug applications, biologics license applications and other regulatory filings for the CoV Antibodies and Products in the Field, and for obtaining and maintaining all marketing approvals for Products in the Field, at its sole expense. Additionally, the Company has the sole right to prosecute, maintain, enforce and defend patents covering the CoV Antibodies and Products, all at its own expense.
Amounts paid with respect to services performed by Adimab on the Company’s behalf under the Adimab Assignment Agreement are recognized as research and development expense as such amounts are incurred. During the three and six months ended June 30, 2024 and 2023, the Company did
The Company is obligated to pay Adimab up to $
In March 2023, the Company achieved the first specified milestone for the second product candidate under the Adimab Assignment Agreement upon dosing of the first subject in a Phase 1 clinical trial evaluating VYD222, which obligated the Company to make a $
During both the three and six months ended June 30, 2024, the Company did
The Company is obligated to pay Adimab royalties of a mid-single-digit percentage based on net sales of any Products, beginning upon the first commercial sale of a Product in accordance with the Adimab Assignment Agreement. The royalty rate is subject to reductions specified under the agreement. Royalties are due on a Product-by-Product and country-by-country basis beginning upon the first commercial sale of each Product and ending on the later of (i) 12 years after the first commercial sale of such Product in such country and (ii) the expiration of the last valid claim of a patent covering such Product in such country (the “Royalty Term”). In addition, the Company is obligated to pay Adimab royalties of a specified percentage in the range of
12
Unless earlier terminated, the Adimab Assignment Agreement remains in effect until the expiration of the last-to-expire Royalty Term for any and all Products. The Company may terminate the agreement at any time for any or no reason upon advance written notice to Adimab, or in the event of a material breach by Adimab that is not cured with specific periods. Adimab may only terminate the agreement for an uncured material breach by the Company for its due diligence obligation or a payment obligation. Upon any termination of the agreement prior to its expiration, all licenses and rights granted pursuant to the arrangement will automatically terminate and revert to the granting party and all other rights and obligations of the parties will terminate.
The Company concluded that the Adimab Assignment Agreement represented an asset acquisition of IPR&D assets with no alternative future use. The arrangement did not qualify as a business combination because substantially all of the fair value of the assets acquired was concentrated in a single asset.
Adimab Collaboration Agreement
In May 2021, the Company entered into a Collaboration Agreement with Adimab, as amended in November 2022 and September 2023 (the “Adimab Collaboration Agreement”), for the discovery and optimization of proprietary antibodies as potential therapeutic product candidates. Under the Adimab Collaboration Agreement, the Company and Adimab could collaborate on research programs for a specified number of targets selected by the Company within a specified time period. Under the Adimab Collaboration Agreement, Adimab granted the Company a worldwide, non-exclusive license to certain of its platform patents and technology and antibody patents to perform the Company’s responsibilities during the ongoing research period and for a specified evaluation period thereafter (the “Evaluation Term”). In addition, the Company granted Adimab a license to certain of the Company’s patents and intellectual property solely to perform Adimab’s responsibilities under the research plans. Under the Adimab Collaboration Agreement, the Company has an exclusive option, on a program-by-program basis, to obtain licenses and assignments to commercialize selected products containing or comprising antibodies directed against the applicable target, which option may be exercised upon the payment of a specified option fee for each program. Upon exercise of an option by the Company, Adimab will assign to the Company all right, title and interest in the antibodies of the optioned research program and will grant the Company a worldwide, royalty-free, fully paid-up, non-exclusive, sublicensable license under the Adimab platform technology for the development, manufacture and commercialization of the antibodies for which the Company has exercised its options and products containing or comprising those antibodies. The Company is obligated to use commercially reasonable efforts to develop, seek marketing approval for, and commercialize one product that contains an antibody discovered in each optioned research program.
The Company agreed to pay Adimab a quarterly fee of $
For each agreed upon research program that is commenced, the Company is obligated to pay Adimab quarterly for its services performed during a given research program at a specified full-time equivalent rate; a discovery delivery fee of $
The Company is obligated to pay Adimab up to $
13
of matter or method of making or using any antibody identified or optimized under the Adimab Collaboration Agreement in such country.
In addition, the Company is obligated to pay Adimab for Adimab’s performance of certain validation work with respect to certain antigens acquired from a third party. In consideration for this work, the Company is obligated to pay Adimab royalties of a low single-digit percentage based on net sales of products that contain such antigens for the same royalty term as antibody-based products, but the Company is not obligated to make any milestone payments for such antigen products. Through June 30, 2024, no royalty payments have been paid to or have been earned by Adimab under the Adimab Collaboration Agreement.
The Adimab Collaboration Agreement will expire (i) if the Company does not exercise any option, upon the conclusion of the last Evaluation Term for the research programs, or (ii) if the Company exercises an option, on the expiration of the last royalty term for a product in a particular country, unless the agreement is earlier terminated. The Company may terminate the Adimab Collaboration Agreement at any time upon advance written notice to Adimab. In addition, subject to certain conditions, either party may terminate the Adimab Collaboration Agreement in the event of a material breach by the other party that is not cured within specified periods.
The Company concluded that the Adimab Collaboration Agreement represented an asset acquisition of IPR&D with no alternative future use. Therefore, payments made by the Company to Adimab for milestones achieved will be recognized as IPR&D expense in the related period in which the services are performed or the related milestone is considered probable of achievement. Amounts paid with respect to services performed by Adimab on the Company’s behalf under the Adimab Collaboration Agreement are recognized as research and development expense as such amounts are incurred and services are rendered. Please refer to Note 15 for additional information.
Adimab Platform Transfer Agreement
In September 2022 (the “Adimab Platform Transfer Agreement Effective Date”), the Company entered into a Platform Transfer Agreement with Adimab (the “Adimab Platform Transfer Agreement”) under which the Company was granted the right under certain intellectual property of Adimab to practice certain elements of Adimab’s platform technology, including B-cell cloning using Adimab’s proprietary yeast cell lines and other antibody optimization libraries, trade secrets, protocols and software of Adimab, to discover, engineer and optimize antibodies. The Company does not have access to Adimab’s proprietary discovery libraries. The Company was also granted the right under certain intellectual property of Adimab to research, develop, make, sell and exploit such antibodies and products containing such antibodies. The Adimab platform has been transferred to the Company in accordance with the terms of the Adimab Platform Transfer Agreement. In September 2022, the Company recognized $
The Company is obligated to pay Adimab an annual fee of single digit millions on each of the first four anniversaries of the Adimab Platform Transfer Agreement Effective Date, which allows the Company to receive material improvements to the platform technology, including materially improved antibody optimization libraries, updates that provide new functionality to the platform, and software upgrades, from Adimab through June 2027. The first annual fee became due in September 2023 and was paid in October 2023. During the three and six months ended June 30, 2024, the Company recognized a portion of the first annual fee as research and development expense. Beginning in July 2027 and ending in June 2042, unless terminated earlier, the Company has the option to receive additional material improvements to the platform technology from Adimab, subject to a commercially reasonable fee to be negotiated by the parties.
The Company is obligated to pay Adimab up to $
In addition, the Company is obligated to pay Adimab royalties of a low single-digit percentage based on net sales of products containing an antibody discovered, engineered or optimized using Adimab’s platform technology, subject to reductions specified under the Adimab Platform Transfer Agreement. Royalties are due on a product-by-product and country-by-country basis. The royalty term will expire for each product on a country-by-country basis upon the later of (i) 12 years after the first commercial sale of such product in such country and (ii) the expiration of the last valid claim of a program antibody patent for covering the program antibody contained in such product in such country. Through June 30, 2024, no royalty payments have been paid to or have been earned by Adimab under the Adimab Platform Transfer Agreement.
The Company may terminate the Adimab Platform Transfer Agreement at any time upon advance written notice to Adimab. In addition, subject to certain conditions, either party may terminate the Adimab Platform Transfer Agreement in the event of a material breach by the other party that is not cured within specified periods or in connection with the other party’s insolvency.
14
The Company concluded that the Adimab Platform Transfer Agreement represented an asset acquisition of IPR&D with no alternative future use. Therefore, payments made by the Company to Adimab for milestones achieved will be recognized as IPR&D expense in the related period in which the services are performed or the related milestone is considered probable of achievement. Amounts paid with respect to the annual material improvement fees are recognized as research and development expense as such amounts are incurred. Please refer to Note 15 for additional information.
WuXi Biologics Cell Line License Agreement
In December 2020, as amended in February 2023 and March 2024, the Company entered into a Cell Line License Agreement with WuXi Biologics (Hong Kong) Limited (“WuXi Biologics”) (the “Cell Line License Agreement”), under which WuXi Biologics granted to the Company a non-exclusive, non-transferable, worldwide, royalty-bearing, sublicensable license to certain of its intellectual property, including certain patent rights associated with a proprietary cell line developed by WuXi Biologics for the exploitation of certain recombinant antibodies developed using such proprietary cell line (each, a “Licensed Product”). Each Licensed Product generated under the arrangement will be produced from a transformed or transfected version of the proprietary cell line derived by WuXi Biologics (each of such transformed or transfected cell lines, a “Licensed Cell Line”).
In December 2020, the Company recognized an upfront fee of $
The Company is also obligated to pay royalties in the range of less than
The Cell Line License Agreement remains in effect until it is terminated. The Company may terminate the Cell Line License Agreement at any time with notice to WuXi Biologics. WuXi Biologics may terminate the Cell Line License Agreement in the event the Company fails to make a payment when due under the Cell Line License Agreement and such non-payment is not cured within a specified period after notice. Either party may terminate the Cell Line License Agreement in the event of a material breach by the other party that is not cured within a specified period after notice. Upon termination of the Cell Line License Agreement, the license conveyed by WuXi Biologics to the Company will continue in full force and effect with respect to all Licensed Products manufactured using the Licensed Cell Line already generated under the Cell Line License Agreement, provided that the Company continues to pay its royalty obligations, if any.
The Company concluded that the Cell Line License Agreement represented an asset acquisition of IPR&D with no alternative future use. The Cell Line License Agreement did not qualify as a business combination because substantially all of the fair value of the assets acquired was concentrated in a single asset. The Company did
8. Population Health Partners, L.P.
In November 2022 (the “PHP Effective Date”), the Company entered into a Master Services Agreement with Population Health Partners, L.P. (“PHP”), pursuant to which PHP agreed to provide services and create deliverables for the Company as agreed between the Company and PHP and set forth in one or more work orders under such agreement (the “PHP MSA”). The term of the PHP MSA commenced on the PHP Effective Date for an initial term of one year. The PHP MSA renewed for subsequent periods, until terminated in accordance with its terms. The PHP MSA was terminated effective in July 2024. On the PHP Effective Date, the Company and PHP entered into the first work order under the PHP MSA (the “PHP Work Order”), pursuant to which PHP agreed to advise and counsel the Company regarding clinical development and regulatory matters with respect to the Company’s product candidates. The PHP Work Order was effective for six months from the PHP Effective Date and terminated in accordance with its terms in May 2023. The PHP MSA contained customary confidentiality provisions and representations and warranties of the parties, as well as mutual non-solicitation of certain employees during the term of the PHP MSA and for a period of one year thereafter.
As compensation for the services and deliverables under the PHP Work Order, the Company paid PHP a cash fee of $
During the three and six months ended June 30, 2024, the Company did
15
million and $
In addition to the cash compensation, on the PHP Effective Date, the Company issued a warrant to purchase shares of the Company’s common stock to PHP (the “PHP Warrant”). The exercise price of the PHP Warrant is $
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For purposes of the PHP Warrant, the term “Market Capitalization” means, with respect to a particular trading day, the total value of the outstanding shares of the Company’s common stock on such date, calculated by multiplying the Company’s volume weighted-average price for the ten (10) trading days immediately preceding such date by the Company’s total number of outstanding shares of the Company’s common stock as reflected in (i) the Company’s most recent periodic or annual report filed with the SEC (e.g., Annual Report on Form 10-K or Quarterly Report on Form 10-Q), as the case may be, (ii) a more recent public announcement by the Company or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of the Company's common stock outstanding.
The PHP Warrant is exercisable for ten years from the PHP Effective Date with respect to the vested portion(s) of the PHP Warrant. The PHP Warrant may be exercised by cash exercise or, at the election of PHP, by means of “cashless exercise” pursuant to a formula set forth in the PHP Warrant. The Company also granted PHP certain “piggyback” registration rights requiring the Company to register any shares of the Company’s common stock underlying the PHP Warrant for resale with the SEC, subject to the Company’s existing obligations under that certain Second Amended and Restated Investors’ Rights Agreement, dated April 16, 2021, by and among the Company and the investors party thereto, which registration rights PHP exercised in January 2024.
Upon the consummation of a fundamental transaction of the Company (as defined in the PHP Warrant) on or prior to November 15, 2028, all of the shares underlying the PHP Warrant would become immediately vested and exercisable; upon the consummation of a fundamental transaction of the Company after November 15, 2028 but on or prior to November 15, 2029, the shares underlying the second and third tranches of the PHP Warrant would become immediately vested and exercisable; and upon the consummation of a fundamental transaction of the Company after November 15, 2029 but on or prior to November 15, 2030, the shares underlying the third tranche of the PHP Warrant would become immediately vested and exercisable.
Refer to Note 11 for additional information on the PHP Warrant.
Tamsin Berry, a member of the Company’s board of directors, is a Limited Partner of PHP.
9
Operating Lease Commitments
In September 2021, the Company entered into a
In June 2022, the Company entered into a two-year noncancelable agreement for dedicated laboratory and office space in Newton, Massachusetts, which was amended in September 2022 (the “Newton, MA Lease”). Pursuant to the amended Newton, MA Lease, the Company entered into a two-year noncancelable agreement for new dedicated laboratory and office space in Newton, Massachusetts, on the same campus as, and in lieu of, the space leased under the original lease. The Company took occupancy of the new dedicated laboratory and office space in December 2022. The amended Newton, MA Lease provides for monthly rental payments, including base rent charges of $
The components of operating lease expense were as follows (in thousands):
16
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For the Three Months |
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For the Three Months |
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For the Six Months |
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For The Six Months |
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2024 |
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2023 |
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2024 |
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2023 |
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Lease cost: |
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Operating lease cost |
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$ |
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$ |
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$ |
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Variable lease cost |
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Total lease cost |
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$ |
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$ |
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$ |
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Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flows related to operating leases |
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$ |
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$ |
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$ |
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$ |
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Future minimum lease payments under the noncancelable leases as of June 30, 2024 was as follows (in thousands):
Year Ending December 31, |
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Operating Lease |
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2024 (excluding the six months ended June 30, 2024) |
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2025 |
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Total lease payments |
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Present value adjustment |
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( |
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Present value of operating lease liability |
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$ |
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As of June 30, 2024, the Company’s operating leases were measured using a weighted-average incremental borrowing rate of
As of June 30, 2023, the Company’s operating leases were measured using a weighted-average incremental borrowing rate of
The total operating liabilities are presented on the Company’s condensed consolidated balance sheet based on maturity dates. $
License Agreements
The Company has entered into license agreements with Adimab and WuXi Biologics (see Note 7).
Other Agreements
In November 2022, the Company entered into the PHP MSA (see Note 8). Concurrently with the PHP MSA, the Company entered into the PHP Work Order, pursuant to which PHP agreed to advise and counsel the Company regarding clinical development and regulatory matters with respect to its product candidates. The PHP Work Order was effective for six months from November 2022 and terminated in accordance with its terms in May 2023. As compensation for the services and deliverables under the PHP Work Order, the Company paid PHP a cash fee of $
Manufacturing Agreements
In December 2020, the Company entered into a Commercial Manufacturing Services Agreement with WuXi Biologics, which was amended and restated in August 2021 and further amended and restated in September 2023 (as amended and restated, the “Commercial Manufacturing Agreement”). The Commercial Manufacturing Agreement outlines the terms and conditions under which WuXi Biologics manufactures drug substance and drug product for commercial use.
Through June 30, 2024, the Company committed to noncancelable purchase obligations related to commercial drug substance and drug product manufacturing under the Commercial Manufacturing Agreement. As of June 30, 2024, the total remaining contractually binding commercial drug substance and drug product purchase obligations due to WuXi Biologics was $
Through June 30, 2024, the Company committed to noncancelable purchase obligations related to the procurement of materials to be used in future drug substance and drug product manufacturing under the Commercial Manufacturing Agreement. As of June 30, 2024, the total remaining contractually binding purchase obligations due to WuXi Biologics was $
17
Unless earlier terminated, the Commercial Manufacturing Agreement remains in effect for an initial period of five years from the date of the last amendment and restatement of the agreement and thereafter automatically renews for further successive periods of five years each. Either party may terminate the agreement upon the breach or default by the other party, other than a non-payment breach, that is not timely cured after notice thereof. Both parties are also entitled to terminate the Commercial Manufacturing Agreement if the other party becomes insolvent or is the subject of a petition in bankruptcy or of any other related proceeding or event. Either party may terminate either the Commercial Manufacturing Agreement in its entirety, or an individual order, (i) to the extent the other party suffers a force majeure event that is continuing for a predefined period of time and (ii) if the other party fails to make a payment when due under the arrangement and such non-payment is not timely cured after notice thereof. Until regulatory approval and future economic benefit is probable, the Company will continue to expense costs related to batches manufactured under the Commercial Manufacturing Agreement.
Other Contracts
The Company enters into agreements with third parties in the ordinary course of business for various products and services, including those related to research, preclinical and clinical operations, manufacturing and support, supply chain, and distribution. These contracts do not contain any material minimum purchase commitments. Certain of these agreements provide for termination rights subject to the payment of termination fees and/or wind-down costs. Under such agreements, the Company is contractually obligated to make certain payments to vendors upon early termination, primarily to reimburse them for their unrecoverable outlays incurred prior to cancellation as well as any amounts owed by the Company prior to early termination. The actual amounts the Company could pay in the future to the vendors under such agreements may differ from the purchase order amounts due to cancellation provisions. The termination fees were not probable of payment as of June 30, 2024 and December 31, 2023.
Legal Proceedings
From time to time, the Company may become involved in legal proceedings or other litigation relating to claims arising in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and estimated exposure amount. Legal fees and other costs associated with such proceedings are expensed as incurred.
On January 31, 2023, a securities class action lawsuit captioned Brill v. Invivyd, Inc., et. al., Case No. 1:23-CV-10254-LTS, was filed against the Company and certain of its former officers in the U.S. District Court for the District of Massachusetts. The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder on the basis of purportedly materially false and misleading statements and omissions concerning ADG20’s effectiveness against the Omicron variant of COVID-19. The complaint seeks, among other things, unspecified damages, attorneys’ fees, expert fees, and other costs. The court appointed lead plaintiffs for the action on June 28, 2023. On August 23, 2023, the lead plaintiffs filed an amended complaint that makes allegations similar to those in the original complaint and asserts the same claims against the same defendants as the original complaint. On October 19, 2023, the parties filed a joint stipulation to advise the court that the lead plaintiffs intended to seek leave to file a second amended complaint, and on November 22, 2023, the lead plaintiffs filed a second amended complaint that makes allegations similar to those in the prior complaints and asserts the same claims against the same defendants as the prior complaints. On January 12, 2024, the defendants filed a motion to dismiss the second amended complaint in its entirety. The lead plaintiffs filed an opposition to the motion to dismiss on February 26, 2024, and the defendants filed a reply in further support of their motion to dismiss on March 27, 2024. The court heard oral arguments on the defendants’ motion to dismiss on May 10, 2024, and took the matter under advisement.
The Company believes that is has strong defenses, and it intends to vigorously defend against this action. The lawsuit is in early stages, and, at this time, no assessment can be made as to the likely outcome or whether the outcome will be material to the Company.
Indemnification Agreements
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to its vendors, lessors, contract research organizations, contract development and manufacturing organizations (“CDMOs”), business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and its executive officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or executive officers. The maximum potential amount of future payments that the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims.
10. Common Stock
Shares Reserved for Future Issuance
As of June 30, 2024, the Company had reserved
18
Shelf Registration Statement
In September 2022, the Company filed a shelf registration statement on Form S-3 with the SEC (File No. 333-267643) and an accompanying base prospectus, which was declared effective by the SEC on October 5, 2022, for the offer and sale of up to $
ATM Facility
In December 2023, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”), pursuant to which the Company may, at its option, offer and sell shares of its common stock, with a sales value of up to $
In February 2024, the Company sold
Treasury Stock
In March 2023, the Company repurchased, and subsequently retired,
In May 2023, the Company repurchased
In October 2023, the Company repurchased
11. Stock-Based Compensation
2020 Equity Incentive Plan
The Company’s 2020 Equity Incentive Plan (the “2020 Plan”) provides for the Company to grant incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units and other stock-based awards to employees, members of the board of directors and consultants. The 2020 Plan is administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. The board of directors may also delegate to one or more officers of the Company the power to grant awards to employees and certain officers of the Company. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or its committee or any such officer if so delegated.
The exercise price for stock options granted may not be less than the fair market value of the Company’s common stock on the date of grant, as determined by the board of directors, or at least
As of June 30, 2024, there were
19
2021 Equity Incentive Plan
In July 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Equity Incentive Plan (the “2021 Plan”), which became effective immediately prior to and contingent upon the execution of the underwriting agreement related to the Company’s IPO. The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The number of shares reserved for issuance under the 2021 Plan was equal to
As of June 30, 2024, there were an aggregate of
Stock Option Valuation
The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. Prior to its IPO in August 2021, the Company had been a private company. Due to the proximity to the IPO, the Company continues to lack sufficient company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.
The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock options granted:
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Three Months Ended June 30, |
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Three Months Ended June 30, |
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Six Months Ended |
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Six Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Expected term (in years) |
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Expected volatility |
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Expected dividend yield |
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20
Stock Option Activity
The following table summarizes the Company’s stock option activity since December 31, 2023:
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Weighted- |
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Weighted- |
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Aggregate |
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(in years) |
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(in thousands) |
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Outstanding at December 31, 2023 |
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$ |
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$ |
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Granted |
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$ |
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— |
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— |
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Exercised |
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( |
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$ |
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— |
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— |
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Forfeited |
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( |
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$ |
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— |
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— |
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Outstanding at June 30, 2024 |
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$ |
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$ |
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Vested and expected to vest at June 30, 2024 |
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$ |
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$ |
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Options exercisable at June 30, 2024 |
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$ |
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$ |
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The weighted-average grant date fair value of stock options granted during the three and six months ended June 30, 2024 was $
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair market value of the common stock for the options that had exercise prices lower than the estimated fair value of the Company’s common stock at June 30, 2024 and 2023.
The total intrinsic value of stock options exercised was $
Stock-Based Compensation Expense
The Company recorded stock-based compensation expense (service-based stock options and employee stock purchase plan) in the following expense categories of its condensed consolidated statements of operations and comprehensive loss (in thousands):
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Three Months Ended June 30, |
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Three Months Ended June 30, |
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Six Months Ended |
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Six Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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Selling, general and administrative |
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$ |
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$ |
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$ |
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$ |
|
||||
As of June 30, 2024, $
In April 2024, David Hering ceased serving as the Company’s Chief Executive Officer and as a member of the Company’s board of directors. Pursuant to his separation agreement, the Company recognized approximately $
As of June 30, 2024, total unrecognized stock-based compensation expense related to unvested stock-based awards was $
2021 Employee Stock Purchase Plan
In July 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective immediately prior to and contingent upon the execution of the underwriting agreement related to the Company’s IPO. A total of
21
stock-based compensation expense. During both the three and six months ended June 30, 2023, the Company recognized less than $
Warrant Expense
In November 2022, the Company entered into the PHP MSA, the PHP Work Order and a warrant agreement with respect to the PHP Warrant. To compensate for the services and deliverables provided by PHP, the Company issued
The aggregate grant date fair value of the PHP Warrant was $
There were
12. Income Taxes
For the three and six months ended June 30, 2024 and 2023, the Company recorded
13. Defined Contribution Plan
The Company maintains a 401(k) Plan (the “401(k) Plan”) for the benefit of eligible employees. The 401(k) Plan is a defined contribution plan under Section 401(k) of the Internal Revenue Code of 1986, as amended, that covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Pursuant to the terms of the 401(k) Plan, the Company is required to make non-elective contributions of
14. Net Loss per Share
Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):
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Three Months Ended June 30, |
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Numerator: |
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Net loss attributable to common stockholders |
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( |
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$ |
( |
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$ |
( |
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Denominator: |
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Weighted-average common shares outstanding, basic and diluted |
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Net loss per share attributable to common stockholders, basic and diluted |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
( |
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Shares of unvested restricted common stock are not considered outstanding for accounting purposes until vested and were excluded from the calculations of basic net loss per share attributable to common stockholders for the three and six months ended June 30, 2023. There were no shares of unvested restricted common stock for the three and six months ended June 30, 2024.
The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated, because including them would have had an anti-dilutive effect:
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For the Six Months |
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For the Six Months |
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2024 |
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2023 |
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Stock options to purchase common stock |
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Unvested restricted common stock |
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Warrants to purchase common stock |
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22
15. Related Party Transactions
As of both June 30, 2024 and December 31, 2023, an aggregate of $
Adimab Assignment Agreement
Under the Adimab Assignment Agreement, Adimab, a principal stockholder of the Company, is entitled to receive milestone and royalty payments upon specified conditions and receives payments from the Company for providing ongoing services under the agreement (see Note 7).
During both the three and six months ended June 30, 2024, the Company did
During the three and six months ended June 30, 2024 and 2023, the Company did
Adimab Collaboration Agreement
Under the Adimab Collaboration Agreement, the Company is obligated to pay Adimab for certain fees, milestones and royalty payments (see Note 7).
During the three and six months ended June 30, 2024, the Company recognized $
During both the three and six months ended June 30, 2024, the Company did
Adimab Platform Transfer Agreement
Under the Adimab Platform Transfer Agreement, the Company is obligated to pay Adimab for certain fees, milestones and royalty payments (see Note 7).
During the three and six months ended June 30, 2024, the Company recognized a portion of the first annual fee as research and development expense under the Adimab Platform Transfer Agreement. During both the three and six months ended June 30, 2023, the Company did not recognize any research and development expense under the Adimab Platform Transfer Agreement.
Adimab DNA Sequencing Services Agreement
In May 2023, as amended in January 2024, the Company entered into a Services Agreement with Adimab for Adimab to perform DNA sequencing on yeast samples provided by the Company, and the delivery of the resulting data and information to the Company (the “Adimab DNA Sequencing Services Agreement”). In exchange for the services performed, the Company will pay Adimab a fee for each yeast-derived DNA template sample present in the well within the sequencer plate.
During both the three and six months ended June 30, 2024, the Company recognized less than $
Population Health Partners, L.P.
Under the PHP MSA and PHP Work Order, the Company was obligated to pay cash compensation for services and deliverables (see Note 8). Tamsin Berry, a member of the Company’s board of directors, is a Limited Partner of PHP.
During the three and six months ended June 30, 2024, the Company did
23
As of June 30, 2024, no amounts were due to PHP by the Company, and
24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on March 28, 2024 (the “2023 Form 10-K”). Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to Invivyd, Inc. together with its consolidated subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, but are not limited to, statements regarding our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, and are not guarantees of future performance. The words “may,” “anticipate,” “believe,” “could,” “expect,” “intends,” “might,” “plan,” “possible,” “potential,” “aim,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements speak only as of the date of this Quarterly Report on Form 10-Q and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements include, without limitation, statements about the following:
25
The foregoing list of forward-looking statements is not exhaustive. You should refer to the “Risk Factors” sections of the 2023 Form 10-K and this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Other sections of this Quarterly Report on Form 10-Q may include additional factors that could harm our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. You should, however, review the factors and risks and other information we describe in the reports we file from time to time with the SEC.
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Overview
Invivyd, Inc. is a biopharmaceutical company devoted to delivering protection from serious viral infectious diseases, beginning with SARS-CoV-2. Our proprietary INVYMAB™ platform approach combines state-of-the-art viral surveillance and predictive modeling with advanced antibody engineering. INVYMAB is designed to facilitate the rapid, serial generation of new monoclonal antibodies (“mAbs”) to keep pace with evolving viral threats.
On March 22, 2024, we received emergency use authorization (“EUA”) from the U.S. Food and Drug Administration (“FDA”) for PEMGARDA™ (pemivibart) injection, for intravenous use, a half-life extended investigational mAb, for the pre-exposure prophylaxis (prevention) of COVID-19 in adults and adolescents (12 years of age and older weighing at least 40 kg) who have moderate-to-severe immune compromise due to certain medical conditions or receipt of certain immunosuppressive medications or treatments and are unlikely to mount an adequate immune response to COVID-19 vaccination. Recipients should not be currently infected with or have had a known recent exposure to an individual infected with SARS-CoV-2.
In July 2024, we submitted a request to the FDA to amend the EUA for PEMGARDA, for the treatment of mild-to-moderate symptomatic COVID-19 in certain immunocompromised patients. The submission utilizes a rapid immunobridging pathway previously aligned in principle with the FDA. The EUA amendment request is based on positive immunobridging analyses of pemivibart versus comparator mAbs and data from our ongoing CANOPY Phase 3 clinical trial in participants with moderate-to-severe immune compromise. The COVID-19 treatment EUA request focuses on the critical treatment needs of people in the U.S. who have moderate-to-severe immune compromise and for whom alternative COVID-19 treatment options are not clinically appropriate or accessible.
PEMGARDA is our first mAb in a planned series of innovative mAb candidates designed to keep pace with SARS-CoV-2 viral evolution. As the SARS-CoV-2 virus evolves over time, we anticipate leveraging our INVYMAB platform approach to periodically introduce new or engineered mAb candidates, an approach that would be analogous to the periodic updates made to influenza and COVID-19 vaccines. In January 2024, we nominated VYD2311, a mAb optimized for neutralization potency against prominent SARS-CoV-2 variants, as a drug candidate, and we expect it will be the next pipeline program to advance into clinical development. In May 2024, we announced general alignment with the FDA on an expedient, repeatable immunobridging pathway to future potential EUAs for serial, novel mAbs for the prevention and treatment of symptomatic COVID-19. This pathway provides us with the opportunity to rapidly, efficiently, and durably deliver high value medicines that prevent and treat symptomatic COVID-19 in vulnerable populations. In addition to developing candidates for COVID-19, we expect to apply our INVYMAB platform approach to produce lead molecules for other viral diseases, such as influenza.
Globally, COVID-19 has caused millions of deaths and lasting health problems in many survivors and remains a significant global health concern, particularly for immunocompromised individuals. Isolation and mental health impacts, absenteeism from work, and educational losses for children have been profound consequences of this crisis. COVID-19 persists and continues to impact patients, notably those who are immunocompromised, and combating this disease will require a variety of effective and safe prevention and treatment options for years to come. By leveraging our capabilities, which we have developed through our experience with adintrevimab and pemivibart and nearly four years in the COVID-19 space, we aim to develop a continuous repertoire of SARS-CoV-2 neutralizing mAbs to keep pace with viral evolution.
26
PEMGARDA has not been approved, but has been authorized for emergency use by the FDA under an EUA, for pre-exposure prophylaxis of COVID-19 in certain adults and adolescent individuals (12 years of age and older weighing at least 40 kg). The emergency use of PEMGARDA is only authorized for the duration of the declaration that circumstances exist justifying the authorization of the emergency use of drugs and biological products during the COVID-19 pandemic under Section 564(b)(1) of the Federal Food, Drug, and Cosmetic Act (“FDCA”), 21 U.S.C. § 360bbb-3(b)(1), unless the declaration is terminated or authorization revoked sooner.
Since our inception, we have devoted substantially all of our resources to organizing and staffing, building an intellectual property portfolio, business planning, conducting research and development, establishing and executing arrangements with third parties for the manufacture of our product candidates, and raising capital. Our focus in recent months has been and will continue to be supporting the commercialization of PEMGARDA and establishing streamlined development pathways that could enable us to efficiently introduce new or engineered mAb candidates targeting SARS-CoV-2, leveraging our INVYMAB platform approach and previously generated safety and efficacy data from our clinical trials of adintrevimab and/or pemivibart, including pursuit of a potential EUA for COVID-19 treatment in certain immunocompromised people utilizing a rapid immunobridging pathway.
We rely on partnerships, external consultants and contract research organizations (“CROs”) to conduct discovery, nonclinical, preclinical, clinical and commercial activities. Additionally, we rely on contract testing laboratories and a contract development and manufacturing organization (“CDMO”) to execute our chemistry, manufacturing and controls development, testing and manufacturing activities. We have engaged WuXi Biologics (Hong Kong) Limited (“WuXi Biologics”), a CDMO, for the development and manufacture of our product candidates for clinical and commercial use. Further, in 2022, we secured dedicated laboratory space and expanded our research team in order to enable internal discovery and development of our mAb candidates, while continuing to leverage our existing partnership with Adimab, LLC (“Adimab”). We are focused on antibody discovery and use of Adimab’s platform technology, while building our internal capabilities. In addition, we expect to continue to rely on third parties for clinical trials and the manufacture and testing of our product candidates, as well as to perform ongoing research and development and other services on our behalf.
Since our inception, we have financed our operations primarily with net proceeds of $464.7 million from sales of our preferred stock, with net proceeds of $327.5 million from our initial public offering (“IPO”), and with net proceeds of $39.3 million from sales of our common stock under the Sales Agreement (as defined below). After receiving EUA in March 2024, we have also funded our operations from sales of PEMGARDA. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and commercialization of one or more of our product candidates, as they become authorized or approved.
Since our inception, we have incurred significant losses, including a net loss of $90.7 million for the six months ended June 30, 2024. As of June 30, 2024, we had an accumulated deficit of $822.8 million. We may continue to incur significant expenses and recognize losses in the foreseeable future as we expand and progress our research and development activities, manufacturing activities and commercialization efforts. In addition, our losses from operations may fluctuate significantly from period to period depending on the timing of our clinical trials and our expenditures on other research and development activities, manufacturing activities, and commercialization efforts. Our expenses could increase substantially in connection with our ongoing activities, as we:
27
We have implemented a go-to-market strategy, including building our own commercial and marketing organization and outsourcing to contract sales, market access and medical science liaison organizations. On March 22, 2024, we received EUA from the FDA for PEMGARDA, and as such, we will continue to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.
As a result, we will require additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant product revenue, if ever, we expect to finance our operations through a combination of equity offerings, government or private-party funding or grants, debt financings or other capital sources, such as collaborations with other companies, strategic alliances or licensing arrangements. We may be unable to secure additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we are unable to secure additional funding when needed, we could be forced to curtail our planned operations and the pursuit of our growth strategy.
Because of the numerous risks and uncertainties associated with pharmaceutical product development and emergence of SARS-CoV-2 variants, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. We may never obtain regulatory authorization or approval for any of our product candidates other than PEMGARDA. Even with product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
Based on current operating plans and excluding any contribution from future revenues or external financing, we will not have sufficient cash and cash equivalents to fund our operating expenses and capital requirements beyond one year from the issuance date of the interim condensed consolidated financial statements in this Quarterly Report on Form 10-Q, and therefore, we have concluded that there is substantial doubt about our ability to continue as a going concern. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See the section entitled “Liquidity and Capital Resources” for more information.
Components of Our Results of Operations
Product Revenue, Net
In March 2024, we received EUA from the FDA for PEMGARDA. Product revenue, net consists of product revenue earned on the sales of PEMGARDA in the United States.
Cost of Product Revenue
Cost of product revenue includes PEMGARDA manufacturing costs, labor and overhead costs, and stability study costs. PEMGARDA manufacturing costs include manufacturing materials, third-party manufacturing costs, packaging costs and shipping costs.
Research and Development Expenses
The nature of our business and primary focus of our activities generates a significant amount of research and development costs. Research and development expenses represent costs incurred by us for:
Such costs consist of:
28
We expense research and development costs as incurred. Non-refundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered or the services rendered.
Our primary focus since inception has been the development of antibodies against COVID-19. Our research and development costs consist primarily of external costs, such as fees paid to a CDMO, CROs and consultants in connection with our nonclinical studies, preclinical studies, clinical trials and product manufacturing. To date, external research and development costs for any individual product candidate have been tracked commencing upon product candidate nomination. We do not allocate employee-related costs, costs associated with our discovery efforts and other internal or indirect costs to specific research and development programs or product candidates because these resources are used and these costs are deployed across multiple programs under development and, as such, are not separately classified.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher and more variable development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Our research and development expenses will increase as we continue to advance PEMGARDA and as we expect to advance VYD2311 through clinical development, including the associated manufacturing activities, pursue EUA or regulatory approval of our product candidates, and continue to discover and develop additional product candidates.
At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of our product candidates. This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of:
29
A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others.
In emergency situations, such as a pandemic, and with a declaration of a public health emergency by the U.S. Secretary of the Department of Health and Human Services (“HHS”), the FDA has the authority to issue an EUA. While the COVID-19 public health emergency declared by HHS under the Public Health Service Act expired on May 11, 2023, this does not impact the FDA’s ability to authorize COVID-19 drugs and biological products for emergency use. On March 22, 2024, we received EUA from the FDA for PEMGARDA. There can be no assurance that the public health emergency in the U.S. declared under the FDCA will continue to be in place for an extended period of time, that any of our other product candidates will be granted an EUA by the FDA, if we apply for such an authorization, or that we would be able to maintain an EUA, such as the EUA received for PEMGARDA, for an extended period of time. The emergency use of PEMGARDA is only authorized for the duration of the declaration that circumstances exist justifying the authorization of the emergency use of drugs and biological products during the COVID-19 pandemic under Section 564 of the FDCA, unless the declaration is terminated or authorization revoked sooner.
Acquired In-Process Research and Development Expenses
Acquired in-process research and development (“IPR&D”) expenses consist primarily of costs of contingent milestone payments incurred to acquire rights to Adimab’s antibodies relating to COVID-19 and SARS and related intellectual property and a license to certain of Adimab’s platform patents and technology (the “IPR&D assets”) for use in the research and development of our product candidates. We expensed the cost of the IPR&D assets because they had no alternative future use as of the acquisition date. We will recognize additional IPR&D expenses in the future if and when it is deemed probable that we will make contingent milestone payments to Adimab under the terms of the agreement by which we acquired the IPR&D assets.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries, bonuses, benefits, third-party fees and other compensation-related costs, including stock-based compensation, for our personnel and external contractors involved in our executive, finance, legal, business development and other administrative functions, as well as our commercial function. Selling, general and administrative expenses also include costs incurred for outside services associated with such functions, including legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax and administrative consulting services; insurance costs; market research costs; and other selling, general and administrative expenses. These costs relate to the operation of the business, unrelated to the research and development function, or any individual program.
Our selling, general and administrative expenses will increase in the future as our business expands and we increase our headcount to support the expected growth in our research and development activities and the commercialization of any authorized or approved product candidates, such as PEMGARDA. We also anticipate increased expenses associated with operating as a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services, director and officer insurance premiums, and investor and public relations costs. We also expect to incur additional intellectual property-related expenses as we file additional patent applications to protect innovations arising from our research and development activities.
In June 2022, and subsequently amended in September 2022, we entered into a lease agreement for dedicated laboratory and office space in Newton, Massachusetts for research and development purposes. Through June 30, 2024, we have operated as a hybrid company with employees working at our corporate headquarters and remotely. We have not incurred material operating expenses for the rent, maintenance and insurance of facilities, or for the depreciation of fixed assets.
Other Income, Net
Other income, net consists of interest income earned from our cash, cash equivalents and marketable securities and the net amortization or accretion of premiums and discounts related to our marketable securities. We expect our interest income to vary each reporting period depending on our average bank deposits, money market funds and investment balances during the period and market interest rates.
Income Taxes
Since our inception, we have not recorded any income tax expense or realized benefits for the net losses we have incurred or for the research and development tax credits generated in each period as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credit carryforwards will not be realized.
We continue to monitor the manner in which countries will enact legislation to implement the Pillar Two framework proposed by the Organisation for Economic Co-operation and Development, which proposes a 15% global corporate minimum tax. As of June 30, 2024, various countries have enacted aspects of Pillar Two while committing to enact additional aspects in future years. While we do not expect these rules to have a material impact on our effective tax rate, we continue to monitor these initiatives on a global basis.
30
Results of Operations
Comparison of the three months ended June 30, 2024 and 2023
The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023:
|
|
Three Months Ended June 30, |
|
|
Three Months Ended June 30, |
|
|
|
|
|||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Product revenue, net |
|
$ |
2,264 |
|
|
$ |
— |
|
|
$ |
2,264 |
|
Total revenue |
|
|
2,264 |
|
|
|
— |
|
|
|
2,264 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|||
Cost of product revenue |
|
|
88 |
|
|
|
— |
|
|
|
88 |
|
Research and development |
|
|
30,334 |
|
|
|
43,618 |
|
|
|
(13,284 |
) |
Acquired in-process research and development |
|
|
— |
|
|
|
150 |
|
|
|
(150 |
) |
Selling, general and administrative |
|
|
21,089 |
|
|
|
10,107 |
|
|
|
10,982 |
|
Total operating costs and expenses |
|
|
51,511 |
|
|
|
53,875 |
|
|
|
(2,364 |
) |
Loss from operations |
|
|
(49,247 |
) |
|
|
(53,875 |
) |
|
|
4,628 |
|
Other income: |
|
|
|
|
|
|
|
|
|
|||
Other income, net |
|
|
2,000 |
|
|
|
3,647 |
|
|
|
(1,647 |
) |
Total other income, net |
|
|
2,000 |
|
|
|
3,647 |
|
|
|
(1,647 |
) |
Net loss |
|
$ |
(47,247 |
) |
|
$ |
(50,228 |
) |
|
$ |
2,981 |
|
The following discussion presents the components of our expenses for the periods presented:
Product Revenue, Net
Product revenue, net was $2.3 million for the three months ended June 30, 2024. There was no product revenue, net for the three months ended June 30, 2023. The $2.3 million increase is the result of product sales in the second quarter of 2024 following the launch of PEMGARDA.
Cost of Product Revenue
Cost of product revenue was $0.1 million for the three months ended June 30, 2024. There was no cost of product revenue for the three months ended June 30, 2023. The $0.1 million is the result of PEMGARDA product sales following launch and certain period costs.
We began capitalizing our inventory costs in March 2024, in connection with EUA from the FDA and based upon our expectation that these costs would be recoverable through commercialization of PEMGARDA. Prior to the capitalization of our inventory costs, such costs were recorded as research and development expenses in the period incurred. Had our pre-EUA manufacturing costs been capitalized, our reported margins would have been approximately 80%.
Research and Development Expenses
|
|
Three Months Ended June 30, |
|
|
Three Months Ended June 30, |
|
|
|
|
|||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
Direct, external research and development expenses by program: |
|
|
|
|
|
|
|
|
|
|||
VYD222(1) |
|
$ |
4,563 |
|
|
$ |
31,452 |
|
|
$ |
(26,889 |
) |
VYD2311(2) |
|
|
17,221 |
|
|
|
— |
|
|
|
17,221 |
|
Adintrevimab |
|
|
220 |
|
|
|
612 |
|
|
|
(392 |
) |
Unallocated research and development expenses: |
|
|
|
|
|
|
|
|
|
|||
Personnel related (including stock-based compensation) |
|
|
3,842 |
|
|
|
6,501 |
|
|
|
(2,659 |
) |
External discovery-related and other costs |
|
|
4,488 |
|
|
|
5,053 |
|
|
|
(565 |
) |
Total research and development expenses |
|
$ |
30,334 |
|
|
$ |
43,618 |
|
|
$ |
(13,284 |
) |
(1) In March 2023, we announced the nomination of VYD222 as a novel mAb therapeutic option for COVID-19.
(2) In March 2024, we announced the nomination of VYD2311 as a novel mAb therapeutic option for COVID-19.
Research and development expenses were $30.3 million for the three months ended June 30, 2024, compared to $43.6 million for the three months ended June 30, 2023. The $13.3 million decrease in research and development expenses was primarily due to the following:
31
Acquired In-Process Research and Development (“IPR&D”) Expenses
There was no IPR&D expense recognized during the three months ended June 30, 2024.
IPR&D expenses of $0.2 million for the three months ended June 30, 2023 consisted entirely of license fees due to WuXi Biologics under the Cell Line License Agreement.
Selling, General and Administrative Expenses
|
|
Three Months Ended June 30, |
|
|
Three Months Ended June 30, |
|
|
|
|
|||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
Personnel related (including stock-based compensation) |
|
$ |
12,401 |
|
|
$ |
5,484 |
|
|
$ |
6,917 |
|
Professional and consultant fees |
|
|
7,641 |
|
|
|
4,322 |
|
|
|
3,319 |
|
Other |
|
|
1,047 |
|
|
|
301 |
|
|
|
746 |
|
Total selling, general and administrative expenses |
|
$ |
21,089 |
|
|
$ |
10,107 |
|
|
$ |
10,982 |
|
Selling, general and administrative expenses were $21.1 million for the three months ended June 30, 2024, compared to $10.1 million for the three months ended June 30, 2023. The $11.0 million increase in selling, general and administrative expenses was primarily due to the following:
Other Income
Other income was $2.0 million for the three months ended June 30, 2024, consisting primarily of interest earned on our invested cash balances.
Other income was $3.6 million for the three months ended June 30, 2023, consisting of $1.6 million of interest earned on our invested cash balances and $2.0 million of net accretion of discounts related to our marketable securities.
32
Comparison of the six months ended June 30, 2024 and 2023
The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:
|
|
Six Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
|
|||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
Revenue: |
|
|
|
|
|
|
|
|
|
|||
Product revenue, net |
|
$ |
2,264 |
|
|
$ |
— |
|
|
$ |
2,264 |
|
Total revenue |
|
|
2,264 |
|
|
|
— |
|
|
|
2,264 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|||
Cost of product revenue |
|
|
88 |
|
|
|
— |
|
|
|
88 |
|
Research and development |
|
|
61,494 |
|
|
|
70,819 |
|
|
|
(9,325 |
) |
Acquired in-process research and development |
|
|
— |
|
|
|
975 |
|
|
|
(975 |
) |
Selling, general and administrative |
|
|
36,018 |
|
|
|
21,152 |
|
|
|
14,866 |
|
Total operating costs and expenses |
|
|
97,600 |
|
|
|
92,946 |
|
|
|
4,654 |
|
Loss from operations |
|
|
(95,336 |
) |
|
|
(92,946 |
) |
|
|
(2,390 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|||
Other income (expense), net |
|
|
4,593 |
|
|
|
7,397 |
|
|
|
(2,804 |
) |
Total other income (expense), net |
|
|
4,593 |
|
|
|
7,397 |
|
|
|
(2,804 |
) |
Net loss |
|
$ |
(90,743 |
) |
|
$ |
(85,549 |
) |
|
$ |
(5,194 |
) |
The following discussion presents the components of our expenses for the periods presented:
Product Revenue, Net
Product revenue, net was $2.3 million for the six months ended June 30, 2024. There was no product revenue, net for the six months ended June 30, 2023. The $2.3 million increase is the result of product sales in the second quarter of 2024 following the launch of PEMGARDA.
Cost of Product Revenue
Cost of product revenue was $0.1 million for the six months ended June 30, 2024. There was no cost of product revenue for the six months ended June 30, 2023. The $0.1 million is the result of PEMGARDA product sales following launch and certain period costs.
We began capitalizing our inventory costs in March 2024, in connection with EUA from the FDA and based upon our expectation that these costs would be recoverable through commercialization of PEMGARDA. Prior to the capitalization of our inventory costs, such costs were recorded as research and development expenses in the period incurred. Had our pre-EUA manufacturing costs been capitalized, our reported margins would have been approximately 80%.
Research and Development Expenses
|
|
Six Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
|
|||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
Direct, external research and development expenses by program: |
|
|
|
|
|
|
|
|
|
|||
VYD222(1) |
|
$ |
23,300 |
|
|
$ |
40,367 |
|
|
$ |
(17,067 |
) |
VYD2311(2) |
|
|
19,129 |
|
|
|
— |
|
|
|
19,129 |
|
Adintrevimab |
|
|
347 |
|
|
|
3,149 |
|
|
|
(2,802 |
) |
Unallocated research and development expenses: |
|
|
|
|
|
|
|
|
|
|||
Personnel-related costs |
|
|
10,580 |
|
|
|
13,797 |
|
|
|
(3,217 |
) |
External discovery-related and other costs |
|
|
8,138 |
|
|
|
13,506 |
|
|
|
(5,368 |
) |
Total research and development expenses |
|
$ |
61,494 |
|
|
$ |
70,819 |
|
|
$ |
(9,325 |
) |
(1) In March 2023, we announced the nomination of VYD222 as a novel mAb therapeutic option for COVID-19.
(2) In March 2024, we announced the nomination of VYD2311 as a novel mAb therapeutic option for COVID-19.
Research and development expenses were $61.5 million for the six months ended June 30, 2024, compared to $70.8 million for the six months ended June 30, 2023. The $9.3 million decrease in research and development expenses was primarily due to the following:
33
Acquired In-Process Research and Development (“IPR&D”) Expenses
There was no IPR&D expense recognized during the six months ended June 30, 2024.
IPR&D expenses of $1.0 million for the six months ended June 30, 2023 consisted of a $0.4 million milestone payment that became due to Adimab in March 2023 upon dosing of the first subject in a Phase 1 clinical trial evaluating VYD222 under the Adimab Assignment and License Agreement and $0.6 million in license fees due to WuXi Biologics under the Cell Line License Agreement.
Selling, General and Administrative Expenses
|
|
Six Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
|
|||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
Personnel-related costs |
|
$ |
19,796 |
|
|
$ |
11,752 |
|
|
$ |
8,044 |
|
Professional and consultant fees |
|
|
14,684 |
|
|
|
8,502 |
|
|
|
6,182 |
|
Other |
|
|
1,538 |
|
|
|
898 |
|
|
|
640 |
|
Total selling, general and administrative expenses |
|
$ |
36,018 |
|
|
$ |
21,152 |
|
|
$ |
14,866 |
|
Selling, general and administrative expenses were $36.0 million for the six months ended June 30, 2024, compared to $21.2 million for the six months ended June 30, 2023. The $14.8 million increase in selling, general and administrative expenses was primarily due to the following:
Other Income
Other income was $4.6 million for the six months ended June 30, 2024, consisting primarily of interest earned on our invested cash balances.
Other income was $7.4 million for the six months ended June 30, 2023, consisting primarily of $2.7 million of interest earned on our invested cash balances and $4.7 million of net accretion of discounts related to our marketable securities.
Liquidity and Capital Resources
Sources of Liquidity
Through June 30, 2024, we have incurred significant operating losses and negative cash flows from operations. Although we received an EUA from the FDA for PEMGARDA in March 2024, we may continue to incur significant expenses and potential operating losses for the foreseeable future as we commercialize PEMGARDA and advance the development of our other product candidates. To date, we have financed our operations primarily with net proceeds of $464.7 million from sales of our preferred stock, with aggregate net proceeds from our IPO in August 2021 of $327.5 million, and with net proceeds of $39.3 million from sales of our common stock under the Sales Agreement (as defined below). After receiving EUA in March 2024, we have also funded our operations from sales of PEMGARDA.
In December 2023, we entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”), pursuant to which we may, at our option, offer and sell shares of our common stock, with a sales value of up to $75.0 million, from time to time, through Cantor, acting as sales agent, in transactions deemed to be “at the market offerings”, as defined in Rule 415 under the Securities Act of 1933, as amended. Cantor is entitled to a commission of 3% of the gross proceeds from any sales of such shares. In February 2024, we sold 9,000,000 shares of our common stock under the Sales Agreement
34
at an average price of $4.50 per share for $39.3 million in net proceeds. As of June 30, 2024, $34.5 million remained available for sale under the Sales Agreement.
As of June 30, 2024, we had cash and cash equivalents of $147.9 million.
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented:
|
|
Six Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
Net cash used in operating activities |
|
$ |
(91,813 |
) |
|
$ |
(78,572 |
) |
Net cash (used in) provided by investing activities |
|
|
(140 |
) |
|
|
107,631 |
|
Net cash provided by financing activities |
|
|
39,193 |
|
|
|
812 |
|
Net (decrease) increase in cash and cash equivalents |
|
$ |
(52,760 |
) |
|
$ |
29,871 |
|
Operating Activities
During the six months ended June 30, 2024, operating activities used $91.8 million of cash, primarily due to our net loss of $90.7 million and changes in our operating assets and liabilities of $16.0 million, partially offset by non-cash charges of $14.9 million. The changes in our operating assets and liabilities primarily consisted of a $15.8 million decrease in accrued expenses, a $2.9 million increase in accounts receivables, a $2.6 million increase in inventory, a $1.6 million increase in other non-current assets, a $0.8 million decrease in operating lease liabilities, a $0.8 million decrease in other non-current liabilities and a $0.6 million decrease in accounts payable, partially offset by a $7.4 million decrease in prepaid expenses and other current assets, and a $1.7 million increase in deferred revenue. The decrease in accrued expenses was primarily due to the timing of vendor invoicing and payments. The decrease in prepaid expenses and other current assets was primarily due to the utilization of WuXi Biologics manufacturing prepayments.
During the six months ended June 30, 2023, operating activities used $78.6 million of cash, primarily due to our net loss of $85.5 million, partially offset by non-cash charges of $6.5 million and changes in our operating assets and liabilities of $0.4 million. The changes in our operating assets and liabilities primarily consisted of a $5.3 million increase in accrued expenses and a $2.6 million increase in accounts payable, partially offset by a $6.6 million decrease in prepaid expenses and other current assets, a $0.8 million decrease in operating lease liabilities and a $0.1 million increase in other non-current assets. The increase in accounts payable and accrued expenses was primarily due to the timing of vendor invoicing and payments. The decrease in prepaid expenses and other current assets was primarily due to up-front payments related to our Phase 1 clinical trial for VYD222 and up-front payments to WuXi Biologics for manufacturing costs.
Investing Activities
Net cash used in investing activities during the six months ended June 30, 2024 consisted of $0.1 million in purchases of property and equipment.
Net cash provided by investing activities during the six months ended June 30, 2023 consisted of $199.4 million in maturities of marketable securities, offset by $91.2 million in purchases of marketable securities and $0.6 million in purchases of property and equipment.
Financing Activities
Net cash provided by financing activities during the six months ended June 30, 2024 consisted of $39.3 million from the issuance of common stock under the Sales Agreement, $0.2 million from exercises of stock options, $0.2 million from the issuance of common stock under the employee stock purchase plan, offset by $0.4 million in payments for offering costs related to the Sales Agreement.
Net cash provided by financing activities during the six months ended June 30, 2023 consisted of $0.7 million from exercises of stock options and $0.1 million from the issuance of common stock under the employee stock purchase plan.
Funding Requirements
Our expenses could increase in connection with our ongoing activities, particularly as we advance the nonclinical and preclinical studies and the clinical trials of our product candidates, including any associated manufacturing activities, and commercialization efforts. Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including:
35
Substantial Doubt about Ability to Continue as a Going Concern
In accordance with Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we are required to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern from the issuance date of our consolidated financial statements. Based on current operating plans and excluding any contribution from future revenues or external financing, we will not have sufficient cash and cash equivalents to fund our operating expenses and capital requirements beyond one year from the issuance of these consolidated financial statements, and therefore, we have concluded that there is substantial doubt about our ability to continue as a going concern. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
Until such time, if ever, as we can generate significant product revenue, we expect to finance our operations through a combination of equity offerings, government or private-party funding or grants, debt financings or other capital sources, such as collaborations with other companies, strategic alliances or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences and anti-dilution protections that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to secure additional funds through contribution from revenues, equity or debt financings or through other sources, when needed, we may be required to delay, limit, reduce or terminate our product development programs or any commercialization efforts or grant rights to develop and market product candidates to third parties that we would otherwise prefer to develop and market ourselves.
Contractual Obligations and Commitments
36
Through June 30, 2024, we committed to noncancelable purchase obligations related to commercial drug substance and drug product manufacturing under the Commercial Manufacturing Services Agreement with WuXi Biologics, which was entered into in December 2020, amended and restated in August 2021 and further amended and restated in September 2023 (as amended and restated, the “Commercial Manufacturing Agreement”). As of June 30, 2024, the total remaining contractually binding commercial drug substance and drug product purchase obligations due to WuXi Biologics was $52.6 million, which is expected to be paid in 2024 and 2025. As of June 30, 2024, $15.6 million related to the contractually binding commercial drug substance and drug product batches was included in accounts payable and accrued expenses, which is expected to be paid in 2024. Through June 30, 2024, we committed to noncancelable purchase obligations of $24.7 million related to the procurement of materials to be used in future drug substance and drug product manufacturing under the Commercial Manufacturing Agreement, which is expected to be paid in 2024. As of June 30, 2024, $6.0 million related to the procurement of materials to be used in future drug substance and drug product manufacturing was included in accounts payable and accrued expenses, which is expected to be paid in 2024. For additional information, see Note 9 to our condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q. Other than the above noted transactions, during the three and six months ended June 30, 2024, there were no material changes to our contractual obligations from those described in the 2023 Form 10-K.
Critical Accounting Policies and Significant Judgments and Estimates
Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies and estimates are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in the 2023 Form 10-K. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. There have been no significant changes to our critical accounting policies and estimates from those described in the 2023 Form 10-K.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations and cash flows is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in the JOBS Act, and may remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the completion of our IPO. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenues exceed $1.235 billion or we issue more than $1.0 billion of non-convertible debt in the previous three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies.
37
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Financial Officer (our principal executive officer and principal financial officer), evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2024, our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
38
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
On January 31, 2023, a securities class action lawsuit captioned Brill v. Invivyd, Inc., et. al., Case No. 1:23-CV-10254-LTS, was filed against us and certain of our former officers in the U.S. District Court for the District of Massachusetts. The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder on the basis of purportedly materially false and misleading statements and omissions concerning ADG20’s effectiveness against the Omicron variant of COVID-19. The complaint seeks, among other things, unspecified damages, attorneys’ fees, expert fees, and other costs. The court appointed lead plaintiffs for the action on June 28, 2023. On August 23, 2023, the lead plaintiffs filed an amended complaint that makes allegations similar to those in the original complaint and asserts the same claims against the same defendants as the original complaint. On October 19, 2023, the parties filed a joint stipulation to advise the court that the lead plaintiffs intended to seek leave to file a second amended complaint, and on November 22, 2023, the lead plaintiffs filed a second amended complaint that makes allegations similar to those in the prior complaints and asserts the same claims against the same defendants as the prior complaints. On January 12, 2024, the defendants filed a motion to dismiss the second amended complaint in its entirety. The lead plaintiffs filed an opposition to the motion to dismiss on February 26, 2024, and the defendants filed a reply in further support of their motion to dismiss on March 27, 2024. The court heard oral arguments on the defendants’ motion to dismiss on May 10, 2024, and took the matter under advisement.
We believe that we have strong defenses, and we intend to vigorously defend against this action. The lawsuit is in early stages, and, at this time, no assessment can be made as to the likely outcome or whether the outcome will be material to us.
Item 1A. Risk Factors.
Information regarding risks and uncertainties related to our business appears in Part I, Item 1A. “Risk Factors” of the 2023 Form 10-K. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors set forth in the 2023 Form 10-K, other than as described below.
Risks Related to Our Dependence on Third Parties
We currently rely on third parties to conduct, supervise, analyze and monitor a significant portion of our nonclinical activities and clinical trials for our product candidates, and if those third parties do not successfully carry out their contractual duties, comply with regulatory requirements or otherwise perform satisfactorily, we may not be able to obtain or maintain regulatory authorization or approval or successfully commercialize product candidates, or such authorization or approval or commercialization may be delayed or impaired, and our business may be substantially harmed.
We have engaged contract research organizations (“CROs”) and other third parties to conduct nonclinical activities and clinical trials for our product candidates, and to monitor and manage data. We expect to continue to rely on third parties such as clinical data management organizations, medical institutions and clinical investigators to conduct such activities and trials. We also rely on third parties for their research and discovery capabilities, including the nonclinical activity of assay development and virology testing of our product candidates. Any of these third parties may terminate their engagements with us, some in the event of an uncured material breach and some at any time for convenience. If any of our relationships with these third parties terminate, we may not be able to timely enter into arrangements with alternative third parties on commercially reasonable terms, if at all. Switching or adding CROs or other third-party vendors requires management time and focus, and may involve substantial cost or result in delays that materially impact our ability to meet our desired program timelines for our product candidates. Though we intend to carefully manage our relationships with our CROs and other third-party vendors, there can be no assurance that we will not encounter challenges or delays in the future or that any such delays or challenges will not have a material adverse impact on our business, financial condition and prospects.
In addition, any third parties conducting our nonclinical activities or our clinical trials, or monitoring and managing our data, will not be our employees, and except for remedies available to us under our agreements with such third parties, we cannot control whether or not they devote sufficient time and resources to our programs. If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, or if the quality or accuracy of the nonclinical, clinical or other data they generate or otherwise obtain is compromised or not timely made available to us or regulatory authorities, due to the failure to adhere to applicable protocols, regulatory requirements, contractual obligations or for other reasons, our preclinical studies or clinical trials may be extended, delayed or terminated, the strength and reliability of our data may be adversely impacted, which may impact our ability to obtain or maintain regulatory authorization or approval, or result in modification to the regulatory authorization or approval documents (e.g., Emergency Use Authorization (“EUA”) fact sheet, letter of authorization or prescribing information), and may impact our ability to successfully commercialize our product candidates. Consequently, our results of operations and the commercial prospects for our product candidates may be harmed, our costs could increase substantially and our ability to generate revenue could be impaired significantly. For example, following receipt of EUA from the U.S. Food and Drug Administration (“FDA”) in March 2024 for PEMGARDA™ (pemivibart) for the pre-exposure prophylaxis (prevention) of COVID-19 in certain adults and adolescent individuals (12 years of age and older weighing at least 40 kg), we were informed in mid-July 2024 by our third-party authentic virus neutralization assay (“AVNA”) vendor that a possible contamination event may have impacted the AVNA potency value generated by such vendor for pemivibart against JN.1, which was the dominant circulating SARS-CoV-2 variant in the United States between January 2024 and
39
April 2024. Along with the pseudotyped neutralization assay (“PVNA”) potency value for pemivibart against JN.1, the PEMGARDA Fact Sheet reflects the AVNA potency value for pemivibart against JN.1. In light of this potential contamination event, the FDA has indicated that revisions will likely be made to the PEMGARDA Fact Sheet are under consideration. We are pursuing additional AVNA assay work with multiple third-party AVNA vendors to reassess the AVNA potency value for pemivibart against JN.1, while also working with our third-party PVNA vendor to continue to generate and provide the FDA with PVNA potency data against SARS-CoV-2 variants, as required by the PEMGARDA EUA. The timeline for completing this additional AVNA assay work remains uncertain and the ultimate outcome of such work and its impact on the PEMGARDA EUA remains uncertain at this time.
Our reliance on CROs and other third parties reduces our control over our nonclinical activities and clinical trials, but does not relieve us of our regulatory responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with standards, commonly referred to as current Good Clinical Practices (“cGCPs”), for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. If we or any of our CROs or other third parties, including trial sites, fail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before authorizing or approving our product candidates. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials complies with cGCP regulations. In addition, our clinical trials must be conducted with product produced under current Good Manufacturing Practices conditions. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory authorization or approval process for our product candidates.
We also are required to register certain clinical trials and post the results of certain completed clinical trials on a government-sponsored database, such as ClinicalTrials.gov, within specified timeframes. This remains our obligation regardless of whether we have contracted any third party to assist and failure to do so can result in fines, adverse publicity and civil and criminal sanctions.
In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the trial. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized, which may lead to the delay or denial of regulatory authorization or approval for our product candidates.
We also expect to rely on other third parties to label, package, store and distribute product supplies for our clinical trials. Any performance failure on the part of such third parties could delay clinical development or marketing approval or authorization of our product candidates or commercialization of our products, producing additional losses and depriving us of potential revenue.
If our CROs or other third-party vendors do not successfully carry out their contractual duties, comply with regulatory requirements or otherwise perform satisfactorily, we may not be able to obtain or maintain regulatory authorization or approval or successfully commercialize product candidates, or such authorization or approval or commercialization may be delayed or impaired, and our business may be substantially harmed.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities; Use of Proceeds
We did not issue any unregistered equity securities during the three months ended June 30, 2024.
Purchases of Equity Securities by the Issuer
We did not purchase any of our equity securities during the three months ended June 30, 2024.
Item 5. Other Information.
Trading Plans
During the three months ended June 30, 2024, none of our directors or officers
40
Item 6. Exhibits.
Exhibit Number |
|
Description |
3.1 |
|
|
3.2 |
|
|
3.3 |
|
|
3.4 |
|
|
3.5 |
|
|
3.6 |
|
|
10.1*+# |
|
Employment Agreement by and between the Company and Timothy Lee, dated May 30, 2024. |
10.2+ |
|
|
10.3*+ |
|
Separation Agreement by and between the Company and David Hering, dated May 3, 2024. |
10.4*+# |
|
Separation Agreement by and between the Company and Jeremy Gowler, dated May 31, 2024. |
31.1* |
|
|
32.1^ |
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* |
|
Filed herewith. |
+ |
|
Indicates management contract or compensatory plan. |
# |
|
Certain schedules to this agreement have been omitted in accordance with Item 601(a)(5) of Regulation S-K. A copy of any omitted schedules will be furnished supplementally to the Securities and Exchange Commission upon request. |
^ |
|
Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing. |
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
INVIVYD, INC. |
|
|
|
|
|
Date: August 14, 2024 |
|
By: |
/s/ William Duke, Jr. |
|
|
|
William Duke, Jr. |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
42
Exhibit 10.1
Employment AGREEMENT
This Employment Agreement (“Agreement”) is made between Invivyd, Inc., a Delaware corporation (the “Company”), and Timothy Lee (“Executive”), this 30th day of May, 2024.
Whereas, the Company desires to employ Executive in the role of Chief Commercial Officer of the Company, providing Executive with certain compensation and benefits in return for such employment services, and Executive desires to accept such employment and provide personal services to the Company in return for certain compensation and benefits set forth herein; and
Whereas, the Company and Executive desire for this Agreement to be effective as of June 5, 2024 (the “Effective Date”);
Whereas, as a condition of employment, Executive agrees to enter into an Employee Proprietary Information and Inventions Assignment Agreement (“PIIA Agreement”) in a form acceptable to the Company on or before the Effective Date.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
For purposes of this Section 3(c), no act, or failure to act, on Executive’s part shall be deemed “willful” if done, or omitted to be done, by Executive in good faith and with reasonable belief that Executive’s act, or failure to act, was in the best interest of the Company.
In the case of any termination for Cause, the Company shall provide written notice to Executive setting forth to a reasonable extent at least the principal acts or omissions of Executive giving rise to Cause for termination. It is agreed to by the parties that the below par or below average financial performance of the Company and/or its subsidiaries, in and of itself shall not constitute Cause for employment termination under this Agreement.
A termination for Cause under this Section 3(c) (other than with respect to Section 3(c)(ii)) shall in no event become effective under the Agreement unless the provisions of this paragraph are complied with. Executive must be given written notice by the Company of the intention to
terminate Executive’s employment for Cause, such notice to be given within three (3) months of the Company learning of such act or acts or failure or failures to act. Executive shall have ten (10) days after the date that such written notice has been given to Executive in which to cure such conduct, to the extent such cure is possible. If Executive fails to cure such conduct, Executive shall thereupon be terminated for Cause.
If the Company cures the Good Reason Condition during the Cure Period, Good Reason shall be deemed not to have occurred.
If Executive’s employment is terminated by the Company without Cause as provided in Section 3(d) or Executive terminates employment for Good Reason as provided in Section 3(e) and in each case the Date of Termination occurs during the Change in Control Period, then, in addition to the Accrued Obligations, and subject to the signing of the Separation Agreement by Executive and the Separation Agreement becoming fully effective, all within the time frame set forth in the Separation Agreement but in no event more than sixty (60) days after the Date of Termination:
IN WITNESS WHEREOF, the parties have executed this Agreement effective on the Effective Date.
INVIVYD, INC.
By: /s/ Marc Elia
Its: Chairperson of the Board of Directors
TIMOTHY LEE
/s/ Timothy Lee
[***]
[***]
Appendix A
Outside Activities
Appendix B
FORM SEPARATION AGREEMENT
[Date]
[Name]
[Address]
Re: Separation Agreement
Dear [Name]:
This letter sets forth the substance of the separation agreement (the “Agreement”) which Invivyd, Inc. (the “Company”) is offering to you to aid in your employment transition.
The Company is offering severance to you in reliance on Treasury Regulation Section 1.409A-1(b)(9) and the short term deferral exemption in Treasury Regulation Section 1.409A-1(b)(4). Any payments made in reliance on Treasury Regulation Section 1.409A-1(b)(4) will be made not later than March 15, 20__. For purposes of Code Section 409A, your right to receive any installment payments under this Agreement (whether severance payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment.
If you are currently participating in the Company’s group health insurance plans, your participation as an employee will end on [the Separation Date] or [the last day of the month in which separation occurs]. Thereafter, to the extent provided by the federal COBRA law or, if applicable, state insurance laws, and by the Company’s current group health insurance policies,
you will be eligible to continue your group health insurance benefits at your own expense. Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish.
Deductions for the 401(k) Plan will end with your last regular paycheck. You will receive information by mail concerning 401(k) plan rollover procedures should you be a participant in this program.
You may be eligible for unemployment insurance benefits after the Separation Date.
• has violated its personnel policies, handbooks, contracts of employment, or covenants of good faith and fair dealing;
• has discriminated against you on the basis of age, race, color, sex (including sexual harassment), national origin, ancestry, disability, religion, sexual orientation, marital status, parental status, source of income, entitlement to benefits, any union activities or other protected category in violation of any local, state or federal law, constitution, ordinance, or regulation, including but not limited to: Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 (42 U.S.C. 1981), the Civil Rights Act of 1991, the Genetic Information Nondiscrimination Act, Executive Order 11246, which prohibit discrimination based on race, color, national origin, religion, or sex; the Americans with Disabilities Act and Sections 503 and 504 of the Rehabilitation Act of 1973, which prohibit discrimination against the disabled, the Age Discrimination in Employment Act (ADEA), which prohibits discrimination based on age, the Older Workers Benefit Protection Act, the National Labor Relations Act, the Lily Ledbetter Fair Pay Act, the anti-retaliation provisions of the Sarbanes-Oxley Act, or any other federal or state law regarding whistleblower retaliation; the Massachusetts Fair Employment Practices Act (M.G.L. c. 151B), the Massachusetts Equal Rights Act, the Massachusetts Equal Pay Act, the Massachusetts Privacy Statute, the Massachusetts Sick Leave Law, the Massachusetts Civil Rights Act, the Connecticut Whistleblower Law, the Connecticut Fair Employment Practices Act; all as amended, and any and all other federal, state or local laws, rules, regulations, constitutions, ordinances or public policies, whether known or unknown, prohibiting employment discrimination;
• has violated any employment statutes, such as the WARN Act which requires that advance notice be given of certain workforce reductions; the Employee Retirement Income Security Act of 1974 (ERISA) which, among other things, protects employee benefits; the Fair Labor Standards Act of 1938, which regulates wage and hour matters; the National Labor Relations Act, which protects forms of concerted activity; the Family and Medical Leave Act of 1993, which requires employers to provide leaves of absence under certain circumstances; the Fair Credit Reporting Act, the Employee Polygraph Protection Act, the Massachusetts Payment of Wages Act (M.G.L. c. 149 sections 148 and 150), the Massachusetts Overtime regulations (M.G.L. c. 151 sections 1A and 1B), the Massachusetts Meal
Break regulations (M.G.L. c. 149 sections 100 and 101), the Connecticut Family and Medical Leave Act, the Connecticut Free Speech Law, the Connecticut minimum wage and wage payment laws, all as amended, and any and all other federal, state or local laws, rules, regulations, constitutions, ordinances or public policies, whether known or unknown relating to employment laws, such as veterans’ reemployment rights laws;
• has violated any other laws, such as federal, state, or local laws providing workers’ compensation benefits, restricting an employer’s right to terminate employees, or otherwise regulating employment; any federal, state or local law enforcing express or implied employment contracts or requiring an employer to deal with employees fairly or in good faith; any other federal, state or local laws providing recourse for alleged wrongful discharge, retaliatory discharge, negligent hiring, retention, or supervision, physical or personal injury, emotional distress, assault, battery, false imprisonment, fraud, negligent misrepresentation, defamation, intentional or negligent infliction of emotional distress and/or mental anguish, intentional interference with contract, negligence, detrimental reliance, loss of consortium to you or any member of your family, whistleblowing, and similar or related claims.
Notwithstanding the foregoing, other than events expressly contemplated by this Agreement you do not waive or release rights or Claims that may arise from events that occur after the date this waiver is executed or your right to enforce this Agreement. Also excluded from this Agreement are any Claims which cannot be waived by law, including, without limitation, any rights you may have under applicable workers’ compensation laws and your right, if applicable, to file or participate in an investigative proceeding of any federal, state or local governmental agency. Nothing in this Agreement shall prevent you from filing, cooperating with, or participating in any proceeding or investigation before the Equal Employment Opportunity Commission, United States Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal government agency, or similar state or local agency (“Government Agencies”), or exercising any rights pursuant to Section 7 of the National Labor Relations Act. You further understand this Agreement does not limit your ability to voluntarily communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. While this Agreement does not limit your right to receive an award for information provided to the Securities and Exchange Commission, you understand and agree that, you are otherwise waiving, to the fullest extent permitted by law, any and all rights you may have to individual relief based on any Claims that you have released and any rights you have waived by signing this Agreement. If any Claim is not subject to release, to the extent permitted by law, you waive any right or ability to be a class or collective action representative or to otherwise participate in any putative or certified class, collective or multi-party action or proceeding based on such a Claim in which any of the Company Parties is a party. This Agreement does not abrogate your existing rights under any
Company benefit plan or any plan or agreement related to equity ownership in the Company; however, it does waive, release and forever discharge Claims existing as of the date you execute this Agreement pursuant to any such plan or agreement.
If this Agreement is acceptable to you, please sign below and return the original to me on or after your Separation Date, but no later than the date that is [twenty-one (21)/forty-five (45)] days after you receive this Agreement. This offer will expire if we have not received your executed copy by that date.
I wish you good luck in your future endeavors.
Sincerely,
Invivyd, Inc.
By: ____________________________________
Julie Green
Chief Human Resources Officer
Agreed to and Accepted:
________________________________________
Timothy Lee
CONSIDERATION PERIOD
I, ____________________, understand that I have the right to take at least [21][45] days to consider whether to sign this Agreement, which I received on ___________ __, 20__. If I elect to sign this Agreement before [21][45] days have passed, I understand I am to sign and date below this paragraph to confirm that I knowingly and voluntarily agree to waive the 21-day consideration period.
Agreed:
Signature
__________________________________________
Date
Appendix C
PIIA AGREEMENT
Exhibit 10.3
SEPARATION AGREEMENT
April 19, 2024, as modified on May 3, 2024
David Hering
[***]
[***]
Re: Separation Agreement
Dear Dave:
This letter sets forth the substance of the separation agreement (the “Agreement”) which Invivyd, Inc. (the “Company”) is offering to you to aid in your employment transition.
The Company is offering severance to you in reliance on Treasury Regulation Section 1.409A-1(b)(9) and the short term deferral exemption in Treasury Regulation Section 1.409A-1(b)(4). Any payments made in reliance on Treasury Regulation Section 1.409A-1(b)(4) will be made not later than March 15, 2025. For purposes of Code Section 409A, your right to receive any installment payments under this Agreement (whether severance payments, reimbursements or otherwise) shall
be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment.
If you are currently participating in the Company’s group health insurance plans, your participation as an employee will end on the last day of the month in which separation occurs. Thereafter, except as provided in Section 5 of the Employment Agreement (with the additional consideration that Section 5(b) of the Employment Agreement remains in effect, but if you properly elect to receive COBRA benefits, as defined therein, the Company will not require you make a copayment of premium amounts at the active employees’ rate but rather will subsidize the cost of COBRA premiums for you and your eligible dependents in addition to paying a monthly amount equal to the monthly employer contribution that the Company would have made to provide health insurance to you and your eligible dependents if you had remained employed by the Company, as set forth in Section 5(b) of the Employment Agreement), to the extent provided by the federal COBRA law or, if applicable, state insurance laws, and by the Company’s current group health insurance policies, you will be eligible to continue your group health insurance benefits at your own expense. Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish.
Deductions for the 401(k) Plan will end with your last regular paycheck. You will receive information by mail concerning 401(k) plan rollover procedures should you be a participant in this program.
You may be eligible for unemployment insurance benefits after the Separation Date. The Massachusetts Department of Unemployment Assistance, not the Company, will determine your eligibility for such benefits.
• has violated its personnel policies, handbooks, contracts of employment, or covenants of good faith and fair dealing;
• has discriminated against you on the basis of age, race, color, sex (including sexual harassment), national origin, ancestry, disability, religion, sexual orientation, marital status, parental status, source of income, entitlement to benefits, any union activities or other protected category in violation of any local, state or federal law, constitution, ordinance, or regulation, including but not limited to: Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 (42 U.S.C. 1981), the Civil Rights Act of 1991, the Genetic Information Nondiscrimination Act, Executive Order 11246, which prohibit discrimination based on race, color, national origin, religion, or sex; the Americans with Disabilities Act and Sections 503 and 504 of the Rehabilitation Act of 1973, which prohibit discrimination against the disabled, the Age Discrimination in Employment Act (ADEA), which prohibits discrimination based on age, the Older Workers Benefit Protection Act, the National Labor Relations Act, the Lily Ledbetter Fair Pay Act, the anti-retaliation provisions of the Sarbanes-Oxley Act, or any other federal or state law regarding whistleblower retaliation; the Massachusetts Fair Employment Practices Act (M.G.L. c. 151B), the Massachusetts Equal Rights Act, the Massachusetts Equal Pay Act, the Massachusetts Privacy Statute, the Massachusetts Sick Leave Law, the Massachusetts Civil Rights Act, the Vermont Fair Employment Practices Act, the Vermont Parental and Family Leave Act, all as amended, and any and all other federal, state or local laws, rules, regulations, constitutions, ordinances or public policies, whether known or unknown, prohibiting employment discrimination;
• has violated any employment statutes, such as the WARN Act, which requires that advance notice be given of certain workforce reductions; the Employee Retirement Income Security Act of 1974 (ERISA) which, among other things, protects employee benefits; the Fair Labor Standards Act of 1938, which regulates wage and hour matters; the National Labor Relations Act, which protects forms of concerted activity; the Family and Medical Leave Act of 1993, which requires employers to provide leaves of absence under certain circumstances; the Fair Credit Reporting Act, the Employee Polygraph Protection Act, the Massachusetts Payment of Wages Act (M.G.L. c. 149 sections 148 and 150), the Massachusetts Overtime regulations (M.G.L. c. 151 sections 1A and 1B), the Massachusetts Meal Break regulations (M.G.L. c. 149 sections 100 and 101), the Vermont Fair Employment Practices Act, the Vermont Parental and Family Leave Act, all as amended, and any and all other federal, state or local laws, rules, regulations, constitutions, ordinances or public policies, whether known or unknown relating to employment laws, such as veterans’ reemployment rights laws;
• has violated any other laws, such as federal, state, or local laws providing workers’ compensation benefits, restricting an employer’s right to terminate employees, or otherwise regulating employment; any federal, state or local law enforcing express or implied employment contracts or requiring an employer to deal with employees fairly or in good faith; any other federal, state or local laws providing recourse for alleged wrongful discharge, retaliatory discharge, negligent hiring, retention, or
supervision, physical or personal injury, emotional distress, assault, battery, false imprisonment, fraud, negligent misrepresentation, defamation, intentional or negligent infliction of emotional distress and/or mental anguish, intentional interference with contract, negligence, detrimental reliance, loss of consortium to you or any member of your family, whistleblowing, and similar or related claims.
Notwithstanding the foregoing, you do not waive or release rights or Claims that may arise from events that occur after the date this waiver is executed or your right to enforce this Agreement. Also excluded from this Agreement are any Claims which cannot be waived by law, including, without limitation, any rights you may have under applicable workers’ compensation laws and your right, if applicable, to file or participate in an investigative proceeding of any federal, state or local governmental agency. Nothing in this Agreement shall prevent you from filing, cooperating with, or participating in any proceeding or investigation before the Equal Employment Opportunity Commission, United States Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal government agency, or similar state or local agency (“Government Agencies”), or exercising any rights pursuant to Section 7 of the National Labor Relations Act. You further understand this Agreement does not limit your ability to voluntarily communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. While this Agreement does not limit your right to receive an award for information provided to the Securities and Exchange Commission, you understand and agree that, you are otherwise waiving, to the fullest extent permitted by law, any and all rights you may have to individual relief based on any Claims that you have released and any rights you have waived by signing this Agreement. If any Claim is not subject to release, to the extent permitted by law, you waive any right or ability to be a class or collective action representative or to otherwise participate in any putative or certified class, collective or multi-party action or proceeding based on such a Claim in which any of the Company Parties is a party. This Agreement does not abrogate your existing rights under any Company benefit plan or any plan or agreement related to equity ownership in the Company, or under this Agreement; however, it does waive, release and forever discharge Claims existing as of the date you execute this Agreement pursuant to any such plan or agreement.
If this Agreement is acceptable to you, please sign below and return the original to me on your Separation Date, which is at least twenty-one (21) days after you receive this Agreement. This offer will expire if we have not received your executed copy on the Separation Date.
I wish you good luck in your future endeavors.
Sincerely,
Invivyd, Inc.
By: /s/ Julie Green
Julie Green
Chief Human Resources Officer
[Signature Page to Follow]
By signing below, you represent and warrant that you have full legal capacity to enter into this Agreement, you have carefully read and understand this Agreement in its entirety, have had a full opportunity to review this Agreement with an attorney of your choosing, and have executed this Agreement voluntarily, without duress, coercion or undue influence.
PLEASE SIGN ON THE SEPARATION DATE
Agreed to and Accepted:
/s/ David Hering
David Hering
Date: 5/10/2024
Exhibit 10.4
SEPARATION AGREEMENT
May 31, 2024
Jeremy Gowler
[***]
[***]
Re: Separation Agreement
Dear Jeremy:
This letter sets forth the substance of the separation agreement (the “Agreement”) which Invivyd, Inc. (the “Company”) is offering to you to aid in your employment transition.
The Company is offering severance to you in reliance on Treasury Regulation Section 1.409A-1(b)(9) and the short term deferral exemption in Treasury Regulation Section 1.409A-1(b)(4). Any payments made in reliance on Treasury Regulation Section 1.409A-1(b)(4) will be made not later than March 15, 2025. For purposes of Code Section 409A, your right to receive any installment payments under this Agreement (whether severance payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment.
If you are currently participating in the Company’s group health insurance plans, your participation as an employee will end on the last day of the month in which separation occurs. Thereafter, to the extent provided by the federal COBRA law or, if applicable, state insurance laws, and by the Company’s current group health insurance policies, you will be eligible to continue your group health insurance benefits at your own expense. Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish.
Deductions for the 401(k) Plan will end with your last regular paycheck. You will receive information by mail concerning 401(k) plan rollover procedures should you be a participant in this program.
You may be eligible for unemployment insurance benefits after the Separation Date.
Notwithstanding the foregoing, other than events expressly contemplated by this Agreement you do not waive or release rights or Claims that may arise from events that occur after the date this waiver is executed or your right to enforce this Agreement. Also excluded from this Agreement are any Claims which cannot be waived by law, including, without limitation, any rights you may have under applicable workers’ compensation laws and your right, if applicable, to file or participate in an investigative proceeding of any federal, state or local governmental agency. Nothing in this Agreement shall prevent you from filing, cooperating with, or participating in any proceeding or investigation before the Equal Employment Opportunity Commission, United States Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission, any other federal government agency, the California Department of Fair Employment and Housing, or similar state or local agency (“Government Agencies”), or exercising any rights pursuant to Section 7 of the National Labor Relations Act. You further understand this Agreement does not limit your ability to voluntarily communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. While this Agreement does not limit your right to receive an award for information provided to the Securities and Exchange Commission, you understand and agree that, you are otherwise waiving, to the fullest extent permitted by law, any and all rights you may have to individual relief based on any Claims that you have released and any rights you have waived by signing this Agreement. If any Claim is not subject to release, to the extent permitted by law, you waive any right or ability to be a class or collective action representative or to otherwise participate in any putative or certified class, collective or multi-party action or proceeding based on such a Claim in which any of the Company Parties is a party. This Agreement does not abrogate your existing rights under any Company benefit plan or any plan or agreement related to equity ownership in the Company; however, it does waive, release and forever discharge Claims existing as of the date you execute this Agreement pursuant to any such plan or agreement.
Waiver of Rights under California Civil Code Section 1542. You further acknowledge that you have read Section 1542 of the Civil Code of the State of California, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
You understand that Section 1542 gives you the right not to release existing claims of which you are not now aware, unless you voluntarily choose to waive this right. Even though you are aware of this right, you nevertheless hereby voluntarily waive the right described in Section 1542 and any other statutes of similar effect, and elect to assume all risks for claims that now exist in your favor, known or unknown, arising from the matters released in this Agreement. You acknowledge that different or additional facts may be discovered in addition to what you now know or believe to be true with respect to the matters released in this Agreement, and you agree that this Agreement will be and remain in effect in all respects as a complete and final release of the matters released, notwithstanding any such different or additional facts.
Acknowledgement of Legal Effect of Release. BY SIGNING THIS AGREEMENT, YOU UNDERSTAND THAT YOU ARE WAIVING ALL RIGHTS YOU MAY HAVE HAD TO PURSUE OR BRING A LAWSUIT OR MAKE ANY LEGAL CLAIM AGAINST THE COMPANY OR THE COMPANY PARTIES, INCLUDING, BUT NOT LIMITED TO, CLAIMS THAT IN ANY WAY ARISE FROM OR RELATE TO YOUR EMPLOYMENT OR THE TERMINATION OF THAT EMPLOYMENT, FOR ALL OF TIME UP TO AND INCLUDING THE DATE OF THE EXECUTION OF THIS AGREEMENT. YOU FURTHER UNDERSTAND THAT BY SIGNING THIS AGREEMENT, YOU ARE PROMISING NOT TO PURSUE OR BRING ANY SUCH LAWSUIT OR LEGAL CLAIM SEEKING MONETARY OR OTHER RELIEF, INCLUDING, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AS AN “AGGRIEVED EMPLOYEE” UNDER THE PRIVATE ATTORNEY’S GENERAL ACT (“PAGA”).
You acknowledge that with your receipt of this Agreement you also received an “Age Discrimination in Employment Act Disclosure,” attached as Schedule A, that contains information regarding (i) any class, unit, or group of individuals covered by the Company’s reduction in force (the “Layoff”), any eligibility factors to receive Severance Benefits in connection with the Layoff, and any time limits applicable to the Layoff; and (ii) the job titles and ages of all individuals selected for the Layoff, and the ages of all individuals in the same job classification or organizational unit who are not selected for the Layoff.
If this Agreement is acceptable to you, please sign below and return the original to me on or after your Separation Date, but no later than the date that is forty-five (45) days after you receive this Agreement. This Agreement will be null and void if we have not received your executed copy by that date.
I wish you good luck in your future endeavors.
Sincerely,
Invivyd, Inc.
By: /s/ Julie Green___________________________
Julie Green
Chief Human Resources Officer
do not execute prior to the separation date
By signing below, you represent and warrant that you have full legal capacity to enter into this Agreement, you have carefully read and understand this Agreement in its entirety, have had a full opportunity to review this Agreement with an attorney of your choosing, and have executed this Agreement voluntarily, without duress, coercion or undue influence.
Agreed to and Accepted:
/s/ Jeremy Gowler_______________________________
Jeremy Gowler
Date: 6/29/2024
CONSIDERATION PERIOD
I, _Jeremy Gowler______________, understand that I have the right to take at least 45 days to consider whether to sign this Agreement, which I received on May 31, 2024. If I elect to sign this Agreement before 45 days have passed, I understand I am to sign and date below this paragraph to confirm that I knowingly and voluntarily agree to waive the 45-day consideration period.
Agreed:
/s/ Jeremy Gowler
Signature
_6/29/2024_________________________________
Date
Schedule A
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, William Duke, Jr., certify that:
Date: August 14, 2024 |
|
By: |
/s/ William Duke, Jr. |
|
|
|
William Duke, Jr. |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Invivyd, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
Date: August 14, 2024 |
|
By: |
/s/ William Duke, Jr. |
|
|
|
William Duke, Jr. |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
This certification accompanies the Report to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.