Vir Biotechnology (VIR) Risk Analysis

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest in our company may be diluted and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt and equity financings, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as redeeming our shares, making investments, incurring additional debt, making capital expenditures, declaring dividends or placing limitations on our ability to acquire, sell or license intellectual property rights. If we raise additional capital through future collaborations, strategic alliances or licensing arrangements, we may have to relinquish valuable rights to our intellectual property, 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 raise additional capital when needed, we may be required to delay, limit, reduce or terminate our research and development programs or commercialization efforts or grant rights to develop and market product candidates that we would otherwise develop and market ourselves.

Effective internal control over financial reporting are necessary for us to provide reliable financial reports and effectively prevent fraud and operate successfully as a public company. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If our internal control over financial reporting is not effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting could also restrict our future access to the capital markets. A material weakness in internal control over financial reporting has in the past and could in the future lead to deficiencies in the preparation of financial statements. Deficiencies in the preparation of financial statements, could lead to litigation claims against us. Even if resolved in our favor, the defense of any such claims can be expensive and time-consuming and could divert resources and management's attention from our core business, and we may further be required to pay damages if any such claims or proceedings are not resolved in our favor. Such events could also affect our ability to raise capital to fund future business initiatives.

We have in the past and may in the future seek to acquire or invest in additional businesses and/or technologies that we believe complement or expand our product candidates, enhance our technical capabilities or otherwise offer growth opportunities in the United States and internationally. The pursuit of potential acquisitions and investments could divert management's attention from our core business and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated. In addition, we are exposed to market risks related to our investments, including changes in fair value of equity securities we hold, which is discussed in greater detail in "Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in this Annual Report on Form 10-K. We may not successfully integrate and realize the anticipated benefits from any acquired business. We face many risks in connection with acquisitions and investments, whether or not consummated. A significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. If our acquisitions do not yield expected returns, we may in the future be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our business, financial condition, results of operations and prospects. Furthermore, acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results. In addition, if an acquired business fails to meet our expectations, our business, financial condition, results of operations and prospects may suffer. We cannot assure you that we will be successful in integrating the businesses or technologies we may acquire. The failure to successfully integrate these businesses could have an adverse effect on our business, financial condition, results of operations and prospects.

In June 2024 and December 2024, we announced that the FDA granted Fast Track designation and Breakthrough Therapy designation, respectively, for the combination of tobevibart and elebsiran for the treatment of CHD. In addition, the combination received PRIME designation from the EMA and European orphan drug designation in December 2024 for the same indication. We can provide no assurances that the combination of tobevibart and elebsiran or any of our other product candidates that receive Fast Track, Breakthrough Therapy, Priority Review or similar designations in the U.S., EU or in any other regulatory jurisdictions will receive regulatory approval any sooner than other product candidates that do not have such designations, or at all. The FDA, EMA or other foreign regulatory authorities may also withdraw or revoke any such designation, or elect to treat designated candidates in a manner different from what was originally indicated, if determined that any such product candidates that receive such designations no longer meet the relevant criteria. Failure to realize the potential benefits of any of these designations could materially and adversely affect our business, financial condition, cash flows and results of operations. For additional information, see the sections titled in "Part I, Item 1. Business-Government Regulation and Product Approval-Expedited Development and Review Programs" and "Part I, Item 1. Business-Government Regulation and Product Approval-Foreign Regulation" in this Annual Report on Form 10-K.

Even if we are successful in achieving regulatory approval to commercialize any product candidate faster than our competitors, such product candidates may face competition from biosimilar or generic products. For example, in the United States, biologic product candidates are subject to approval and licensure under the BLA pathway, and small molecules, such as our siRNA product elebsiran, are subject to approval and licensure under the NDA pathway. The Biologics Price Competition and Innovation Act of 2009 creates an abbreviated pathway for the approval of biosimilar and interchangeable biologic products following the approval of an original BLA. The Drug Price Competition and Patent Term Restoration Act of 1984 (the Hatch-Waxman Act) creates a similar pathway for seeking approval of a generic version of an approved, small molecule innovator drug product. For additional information regarding biosimilars and exclusivity, see the section titled "Part I, Item 1. Business-Government Regulation and Product Approval-Biosimilars and Regulatory Exclusivity" in this Annual Report on Form 10-K. If competitors are able to obtain marketing approval for generics or biosimilars referencing our licensed small molecule or biologic products after the expiration of applicable periods of regulatory exclusivity, our products may become subject to competition from such generics or biosimilars, with the attendant competitive pressure and potential adverse consequences. Such competitive products may be able to immediately compete with us in each indication for which our product candidates may have received approval. In addition, the extent to which any regulatory exclusivity may apply to competing products authorized under an EUA is unclear and may not apply.

We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and commercial partners. Misconduct by these parties could include intentional failures, reckless and/or negligent conduct or unauthorized activities that violates (i) the laws and regulations of FDA and other regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities, (ii) manufacturing standards, (iii) federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations in the United States and abroad, (iv) laws that require the true, complete and accurate reporting of financial information or data, (v) insider trading laws that restrict the buying and selling of shares of securities while in possession of material non-public information, (vi) federal and state data privacy laws and regulations and (vii) contractual obligations of Vir Bio or such parties. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. Such misconduct also could involve the improper use of individually identifiable information, including, without limitation, information obtained in the course of clinical studies, creating fraudulent data in our preclinical or clinical studies or illegal misappropriation of drug product, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with these contractual provisions, laws or regulations. Additionally, we are subject to the risk that a person or government could allege such fraud, violations or other misconduct, even if none occurred. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could result in significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participating in government-funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, contractual damages, reputational harm and the curtailment or restructuring of our operations, any of which could have a negative impact on our business, financial condition, results of operations and prospects.

We are currently conducting process development and manufacturing materials for product candidates of three different therapeutic modalities: monoclonal antibodies, siRNAs and TCEs. Except for process, analytical and formulation development, cell line development, non-cGMP manufacturing and quality control testing for preclinical studies, we do not own or operate facilities for large-scale process development or product manufacturing, storage and distribution, or testing. We are dependent on multiple third parties, including strategic collaborators and CDMOs, to obtain product raw materials and components, develop large-scale manufacturing processes for and manufacture clinical and future commercial supplies of our product candidates. The actual cost to manufacture our product candidates, including the requisite scale-up activities for commercial supplies, is difficult to estimate and could affect the commercial viability and competitive position of our product candidates. Additionally, scaling up a biologic manufacturing process is a difficult and uncertain task and involves additional risks, including cost overruns, process reproducibility, stability issues, cGMP compliance, lot consistency and timely availability of sufficient quantity of raw materials. The facilities used by our CDMOs to develop and manufacture our product candidates must be inspected and approved by the FDA or other regulatory authorities. We do not control the day-to-day operations of, and are completely dependent on, our CDMOs for compliance with cGMP requirements. If our CDMOs cannot successfully manufacture materials that conform to the requirements of the FDA or other health authorities, we will not be able to secure or maintain regulatory approval for our product candidates. In addition, we have limited control over the oversight of personnel or subcontractors of our CDMOs. If the FDA or a comparable foreign regulatory authority does not approve our CDMOs' facilities for our product candidates or if it withdraws any such approval, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for, or market our product candidates. Any significant delay in the supply of a product candidate, or its raw material components, for an ongoing clinical trial could considerably delay completion of our clinical studies, product testing and potential regulatory approval. We also intend to rely on CDMOs to supply us with sufficient quantities of our product candidates to be used, if approved, for commercialization. Any shortfall in a CDMO's manufacturing capacity or reduction in anticipated manufacturing titer, yield per batch or batch success rates may adversely impact our ability to meet market demand. Furthermore, if we are not able to produce supply at low enough costs, it could negatively impact our ability to generate revenue, harm our reputation, and could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, we currently rely on strategic collaborators and third-party suppliers and CDMOs that operate outside the United States and will likely continue to rely on these organizations in the future. Such third-party suppliers and CDMOs may be subject to trade restrictions and other foreign regulatory requirements which could increase the cost or reduce the supply of materials available to us, delay the procurement or supply of such materials or adversely affect our ability to secure significant commitments from governments to purchase our potential therapies. Our reliance on third-party suppliers and CDMOs exposes us to other risks, including: - the commitment of excess manufacturing capacity or excess raw materials due to insufficient market demand for our product candidates and responsibility for the associated costs;- costs and validation of new equipment and facilities required for scale-up;- inability of our CDMOs to execute process development, technology transfers, cGMP manufacturing, manufacturing or testing procedures, and other logistical support requirements appropriately or on a timely basis;- inability to negotiate development and manufacturing agreements with third parties under commercially reasonable terms, if at all;- greater costs and competition for access to an increasingly smaller pool of potential CDMO as a result of consolidation in the contract manufacturing industry;- breach, termination or nonrenewal of development and manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us;- reliance on single sources for raw materials or components, including the risk that such single source may not remain in business or will be purchased by a competitor or other company not interested in continuing production, or the lack of qualified backup suppliers for those raw materials or components;- limited ownership to the intellectual property rights to any improvements made by our third parties in the manufacturing process for our product candidates;- price increases or decreased availability of product raw materials or components;- disruptions to operations of our third-party suppliers and CDMO by conditions unrelated to our business or operations, including supply chain issues, capacity constraints, facility outages (including due to contamination), transportation and labor disruptions, global competition for resources, regulatory requirements or actions (including recalls or failure by the supplier or CDMO to comply with cGMP), adverse financial developments or the bankruptcy of the supplier or CDMO, or general economic conditions;- disruptions caused by geopolitical events, including civil or political unrest, terrorism, insurrection or war (such as the ongoing conflicts in the Middle East and Eastern Europe), as well as man-made or natural disasters, or public health pandemics or epidemics to which our third-party suppliers or CDMOs may be differently exposed than us; and - carrier disruptions or increased costs that are beyond our control, including increases in materials, labor or other manufacturing-related costs or higher supply chain logistics costs. Suppliers and CDMOs may extend lead times, limit supplies, change manufacturing schedules, increase prices, or require significant upfront fees due to capacity and material supply constraints or other factors beyond our control. For example, the lead time needed to establish a relationship with a new raw material or component supplier or CDMO can be lengthy, and we may experience delays in meeting demand in the event we must switch to a new supplier or CDMO. The time and effort to technology transfer to a new CDMO or qualify a new supplier or CDMO could result in manufacturing delays, additional costs, diversion of resources or reduced manufacturing capacity or yields, any of which would negatively impact our operating results. Due to limited knowledge of the manufacturing process during development stages, potential product loss and contaminations could lead to batch failures. Furthermore, we currently rely on a limited number of third-party suppliers and CDMOs that are able to meet our supply requirements for synthetic siRNAs. Our CDMOs could face risks in meeting our delivery time requirements or provide adequate amounts of synthetic siRNAs to meet our needs, which may include extended lead times, delays or shortages of raw materials and components, synthesis and purification failures and/or contamination during the manufacturing process, or difficulty complying with the applicable manufacturing requirements. To fulfill our siRNA supply requirements, we may need to secure alternative suppliers of synthetic siRNAs or key raw materials and components, and such alternative third-party suppliers are limited and may not be readily available, or we may be unable to enter into agreements with them on reasonable terms and in a timely manner. Further, alternative suppliers would require filing and regulatory approvals.