Vir Biotechnology Inc.
02/23/2026 | Press release | Distributed by Public on 02/23/2026 16:29
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
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 in conjunction with our audited consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Unless the context requires otherwise, references in this Annual Report on Form 10-K to the "Company", "Vir Bio," "we," "our" and "us" refer to Vir Biotechnology, Inc. and its consolidated subsidiaries.
Our discussion and analysis below are focused on our financial results and liquidity and capital resources for the years ended December 31, 2025 and 2024, including year-over-year comparisons of our financial performance and condition for these years. Discussion and analysis of the year ended December 31, 2023 specifically, as well as the year-over-year comparison of our financial results and liquidity and capital resources for the years ended December 31, 2024 and 2023, are located in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 26, 2025. For a detailed discussion on our business environment, please read Item 1. Business, included in this Annual Report on Form 10-K. For additional information on the risks that could negatively impact our business, please read Item 1A. Risk Factors, included in this Annual Report on Form 10-K.
Overview
We are a clinical-stage biopharmaceutical company focused on powering the immune system to transform lives by discovering and developing medicines for serious infectious diseases and cancer. At Vir Bio, we have a bold vision - powering the immune system to transform lives. Our clinical-stage portfolio includes programs for CHD and multiple PRO-XTEN®dual-masked TCEs across validated targets in solid tumor indications. We also have a portfolio of preclinical programs across a range of infectious diseases and oncologic malignancies.
In HDV, our ECLIPSE registrational program is fully underway with all three trials initiated. Should the ECLIPSE program yield positive results that support regulatory approval and subsequent commercial launch, we believe the combination has the potential to be a new standard of care for hepatitis delta patients, for whom approved treatment options are either limited or unavailable. In oncology, we are advancing phase 1 clinical studies for our dual-masked TCEs: VIR-5500 in patients with PSMA-expressing mCRPC and VIR-5818 in patients with HER2-expressing tumors. We are also advancing our third TCE program, VIR-5525, in patients with EGFR-expressing tumors, with the first patient dosed in phase 1 clinical studies in July 2025. In addition, we are developing therapeutic candidates in HIV cure and other solid tumors, leveraging our expertise and platform strengths, and we have made available for external partnerships our next-generation preclinical influenza A and B antibodies and ADCs along with our next generation COVID mAbs.
We have an industry-leading management team and board of directors with significant immunology, infectious diseases, and oncology experience, including a proven track record of progressing product candidates from early-stage research through clinical development, and worldwide regulatory approval and commercialization experience. Given the global impact of infectious diseases and cancer, we are committed to developing transformative therapies that can make a meaningful difference in patients' lives.
Significant Developments
Following is a summary of significant developments affecting our business that have occurred and that we have reported since the filing of our Annual Report on Form 10-K for the year ended December 31, 2024.
Pipeline Programs
CHD
•To support global commercialization of the combination of tobevibart and elebsiran for the treatment of CHD, the Company granted Norgine an exclusive commercial license in Europe, Australia and New Zealand.
•Phase 2 SOLSTICE data presented at the 44ᵗʰ Annual J.P. Morgan Healthcare Conference in January 2026 showed the combination of tobevibart and elebsiran is well tolerated and achieved undetectable hepatitis delta virus RNA (HDV RNA TND) in 88% (21/24) of CHD participants evaluable at 96 Weeks of treatment. Previous positive Phase 2 SOLSTICE data at Week 48 were presented at the AASLD The Liver Meeting®2025 and simultaneously published in the New England Journal of Medicine.3
3Asselah T, Chattergoon MA, Jucov A, et al. "A Phase 2 Trial of Tobevibart plus Elebsiran in Hepatitis D" N Engl J Med. vol. 394, no. 4 (2026), 343-353, doi:10.1056/NEJMoa2508827.
•The ECLIPSE 1 and ECLIPSE 3 Phase 3 trials have completed enrollment. The ECLIPSE 2 Phase 3 trial continues enrolling well. Topline data from the ECLIPSE 1 trial are expected in the fourth quarter of 2026. Topline data from the ECLIPSE 2 and ECLIPSE 3 trials are expected in the first quarter of 2027.
•Tobevibart and elebsiran combination therapy is supported by multiple U.S. and EU regulatory designations, including FDA Breakthrough Therapy designation, U.S. FDA Fast Track designation, European PRIME designation and European Orphan Drug designation, signifying the significant unmet need in CHD.
•ECLIPSE 1 evaluates the combination of tobevibart and elebsiran compared to deferred treatment in regions such as the U.S. where bulevirtide is not available or in other regions where its use is limited. ECLIPSE 2 evaluates the switch to the combination of tobevibart and elebsiran in participants who have not achieved undetectable hepatitis delta virus RNA with bulevirtide treatment. ECLIPSE 3 evaluates the combination of tobevibart and elebsiran compared to bulevirtide monotherapy in bulevirtide treatment-naïve participants. ECLIPSE 1 and 2 are designed to provide the registrational efficacy and safety data needed for potential submission to global regulatory agencies, including agencies in the U.S. and Europe. ECLIPSE 3 is expected to provide important supportive data to help establish access and reimbursement in key markets.
Solid Tumors
VIR-5500
•On February 19, 2026, we executed a global strategic collaboration with Astellas to advance PSMA-targeted PRO-XTEN®dual-masked TCE VIR-5500, currently in development for metastatic castration-resistant prostate cancer. Upon closing of the transaction, the parties will co-develop and co-commercialize VIR-5500. We will have the option to co-promote with Astellas in the U.S., and Astellas will obtain exclusive rights to commercialize outside the U.S.
Under the terms of the agreement, we will receive $335 million in upfront and near-term milestone payments, including $240 million in cash, $75 million in equity investment at a 50% premium, and a $20 million near-term milestone upon completion of manufacturing process technology transfer, anticipated in mid-2027. Global development costs for VIR-5500 will be shared between Astellas and Vir Biotechnology with a 60:40 split. Profits and losses will be shared equally in the U.S, and outside the U.S. we are entitled to receive tiered, double-digit royalties on net sales. In addition, we are eligible to receive up to $1.37 billion in additional development, regulatory and ex-U.S. sales milestones. Under the terms of our licensing agreement with Sanofi, we will share with Sanofi 20% of certain future collaboration proceeds from the Astellas collaboration agreement, including the upfront payment, equity premium and the portion of milestones, profit-share and royalties that exceed amounts already owed to Sanofi. The closing of the transaction is subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
•Positive updated Phase 1 data for VIR-5500 monotherapy shows dose-dependent anti-tumor activity and a well-tolerated safety profile to date in patients with mCRPC. The data will be shared in an oral presentation at the 2026 ASCO Genitourinary Cancers Symposium on February 26 (Oral Abstract #17). The oral presentation will be delivered by Dr. Johann de Bono, Principal Investigator and Director of the Drug Development Unit and Head of Prostate Cancer Targeted Therapy Group at the Institute of Cancer Research.
•Phase 1 monotherapy dose-escalation of weekly and once every three weeks dosing of VIR-5500 is complete, and we have defined a preliminary go-forward dose and regimen recommendation for expansion. In parallel, dose-escalation of VIR-5500 in combination with enzalutamide continues in early line mCRPC patients.
•We anticipate initiating monotherapy dose-expansion cohorts in late-line mCRPC and combination dose-expansion cohorts in both early-line mCRPC and metastatic hormone-sensitive prostate cancer (mHSPC) in the second quarter of 2026, followed by pivotal, Phase 3 trials in 2027.
VIR-5818
•Phase 1 dose-escalation of VIR-5818, a HER2-targeted PRO-XTEN®dual-masked TCE, in combination with pembrolizumab continues, with response data expected in the second half of 2026. VIR-5818 is the only dual-masked HER2-targeting TCE in clinical development and is being evaluated in multiple tumor types, including CRC.
VIR-5525
•The Phase 1 study of VIR-5525, an EGFR-targeted PRO-XTEN®dual-masked TCE, continues enrollment as expected. VIR-5525 is being evaluated in a variety of EGFR-expressing solid tumors in areas of high unmet need, such as NSCLC, CRC, HNSCC and cSCC.
Preclinical Pipeline Candidates
•We are currently progressing a number of PRO-XTEN®masked TCEs in preclinical studies directed at clinically validated targets with potential applications across a variety of solid tumors, including lung, colorectal and bladder. These preclinical candidates integrate the PRO-XTEN®masking technology with novel TCEs discovered and engineered using our antibody discovery platform and our proprietary dAIsY™ AI engine.
•We have advanced a broadly neutralizing antibody to development candidate status in our HIV cure program in collaboration with the Gates Foundation.
Corporate Update
•In March 2025, we and Alnylam amended and restated their collaboration agreement (Restated Alnylam Agreement), with Alnylam electing not to opt-in to its profit-sharing option for elebsiran in CHB and CHD indications.
Financial Overview
We were incorporated in April 2016 and commenced principal operations later that year. To date, we have focused primarily on organizing and staffing our company, business planning, identifying, acquiring, developing and in-licensing our technology platforms and product candidates, and conducting preclinical studies and clinical trials.
We have financed our operations primarily through sales of our common stock from our initial public offering, subsequent follow-on offering, and payments received under our grant and collaboration agreements. As of December 31, 2025, we had $781.6 million in cash, cash equivalents, and investments. Based upon our current operating plan, we believe that the $781.6 million will enable us to fund our operations for at least the next 12 months. However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional financing to fund our long-term operations sooner than planned. In addition, as of December 31, 2025, we had $8.9 million in restricted cash and cash equivalents. See the section titled "Liquidity, Capital Resources and Capital Requirements-Funding Requirements and Conditions" below for additional information.
Our net loss was $438.0 million for the year ended December 31, 2025, compared to net loss of $522.0 million and $615.1 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $1.2 billion. Although we recorded net income for the years ended December 31, 2022 and 2021, we have otherwise incurred net losses since inception and may continue to incur net losses in the foreseeable future.
Our primary use of our capital resources is to fund our operating expenses, which consist primarily of expenditures related to identifying, acquiring, developing, manufacturing and in-licensing our technology platforms and product candidates, conducting preclinical studies and clinical trials, and to a lesser extent, selling, general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses. In particular, we expect our expenses and losses to increase over time as we continue our research and development efforts, advance our product candidates through preclinical and clinical development, seek regulatory approval, and begin to prepare for commercialization. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials expenditures and our expenditures on other research and development activities.
We manufacture product candidates for three therapeutic modalities: mAbs, masked TCEs and siRNA. We have established our own internal process, analytical and pharmaceutical development, manufacturing, supply chain and quality organizations that work with our selected CDMOs, to develop, manufacture, test and supply our early- and late-stage product candidates developed with our proprietary and external technology platforms. Contract development and manufacturing of our antibody, TCE and siRNA product candidates is supported at our San Francisco, California, corporate headquarters for process, analytical and formulation development, small-scale non-cGMP manufacturing for preclinical studies and selected quality control testing. Our headquarters also conducts cell line development for our antibody and TCE product candidates.
Our Collaboration, License and Grant Agreements
We have entered into collaboration, license and grant arrangements with various third parties. For details regarding these and other agreements, see the section titled "Business-Our Collaboration, License and Grant Agreements" and Note 5 Grant Agreementsand Note 6 Collaboration and License Agreementsto our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Components of Operating Results
Revenues
Other than sotrovimab, we have not obtained regulatory approval for our product candidates, and we do not expect to generate any significant revenue from the sale of our product candidates until we complete clinical development, submit regulatory filings and receive approvals from the applicable regulatory bodies for such product candidates, if ever. Although we have previously recognized revenue from our profit-share related to sotrovimab under our definitive collaboration agreement with GSK executed in June 2020, or the 2020 GSK Agreement, we expect to continue to incur net operating losses for the foreseeable future. In December 2024, the FDA revoked EUA granted to sotrovimab in May 2021. Although certain countries outside the U.S. continue to maintain access to 500 mg IV while noting that the clinical efficacy is unknown or uncertain against existing and emerging variants, we cannot predict whether other countries will further limit the use of sotrovimab. We do not expect meaningful license and collaboration revenue in the future from the sale of sotrovimab for the treatment of COVID-19.
Our revenues consist of the following:
License and collaboration revenueincludes revenues generated from license rights issues to Norgine and GSK, including our profit-share from the sales of sotrovimab pursuant to the 2020 GSK Agreement.
Grant revenueis comprised of revenue derived from grant agreements with government-sponsored and private organizations.
Other revenueincludes recognition of revenue generated from research and development services under third-party contracts and from a third-party clinical supply agreement.
Operating Expenses
Cost of Revenue
Cost of revenue currently represents royalties earned by third-party licensors on net sales of sotrovimab. We recognize these royalties as cost of revenue when we recognize the corresponding revenue that gives rise to payments due to our licensors.
Research and Development
To date, our research and development expenses have related primarily to discovery efforts and preclinical and clinical development of our product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. We do not track all research and development expenses by product candidate.
Research and development expenses consist primarily of costs incurred for our product candidates in development and prior to regulatory approval, which include:
•expenses related to license and collaboration agreements, and change in fair value of certain contingent consideration obligations arising from business acquisitions;
•personnel-related expenses, including salaries, benefits and stock-based compensation for personnel contributing to research and development activities;
•expenses incurred under agreements with third-party CDMO, CROs, and consultants;
•clinical costs, including laboratory supplies and costs related to compliance with regulatory requirements; and
•other allocated expenses, including expenses for rent and facilities maintenance, and depreciation and amortization.
We expect our research and development expenses to increase substantially in absolute dollars over time as we advance our product candidates into and through preclinical and clinical studies and pursue regulatory approval of our product candidates. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors including: the safety and efficacy of our product candidates, early clinical data, investment in our clinical programs, the ability of collaborators to successfully develop our licensed product candidates, competition, manufacturing capability and commercial viability.
In addition, under our license agreement with Sanofi and other licensors, we may incur additional clinical, and regulatory milestone payments based on the development progress of certain clinical programs. We may also be required to pay commercial milestone payments and royalties in the event of a successful product launch and our receipt of commercial revenues. Therefore, we are unable to predict the timing or the final cost to complete our clinical programs or validation of our manufacturing and supply processes and delays may occur due to numerous factors. Factors that could cause or contribute to delays or additional costs include, but are not limited to, those discussed in the "Part I, Item 1A. Risk Factors" section of this Annual Report.
As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate significant revenue from the commercialization and sale of any of our product candidates. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical and clinical studies, regulatory developments, our ongoing assessments as to each product candidate's commercial potential. We cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured (if at all) and to what degree such arrangements will affect our development plans and capital requirements.
Our clinical development costs may vary significantly based on factors such as:
•whether a collaborator is paying for some or all of the costs;
•per patient trial costs;
•the number of studies required for approval;
•the number of sites included in the studies;
•enrollment and retention of patients in studies in countries disrupted by geopolitical events, including civil or political unrest;
•the length of time required to enroll eligible patients;
•the number of patients that participate in the studies;
•the number of doses that patients receive;
•the drop-out or discontinuation rates of patients;
•potential additional safety monitoring requested by regulatory agencies;
•the duration of patient participation in the studies and follow-up;
•the cost and timing of manufacturing our product candidates;
•the phase of development of our product candidates; and
•the efficacy and safety profile of our product candidates.
Selling, General and Administrative
Our selling, general and administrative expenses consist primarily of personnel-related expenses for personnel in executive, finance and other administrative functions, facilities and other allocated expenses, other expenses for outside professional services, including legal, audit and accounting services, insurance costs and change in fair value of certain contingent consideration obligations arising from business acquisitions. Personnel-related expenses consist of salaries, benefits and stock-based compensation. In the long-term as we advance our research and development programs toward potential commercialization, we expect our selling, general, and administrative expenses to increase in absolute dollars to support commercialization activities and related expansion in research and development activities.
Restructuring, Long-Lived Asset Impairment and Related Charges, Net
Restructuring, long-lived asset impairment and related charges, net consist primarily of charges incurred in connection with our cost saving initiatives implemented during the second half of 2024 and 2023, respectively, including severance and other employee-related expenses and long-lived assets impairment charges and disposal losses.
Change in Fair Value of Equity Investments
Change in fair value of equity investments consists of the remeasurement of our investment in Brii Biosciences Limited's, or Brii Bio Parent, ordinary shares based on the quoted market price at each reporting date.
Interest Income
Interest income consists of interest earned on our cash, cash equivalents and investments.
Other Expense, Net
Other expense, net consists of gains and losses from foreign currency transactions, investment management expenses, and the remeasurement of our contingent consideration obligation.
(Provision for) Benefit from Income Taxes
(Provision for) benefit from income taxes consists primarily of income taxes on our domestic and foreign operations.
Results of Operations
Comparison of Years Ended December 31, 2025 and 2024
The following table summarizes our results of operations for the years presented (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 |
Change
|
|||||||||||||||
| Revenues: | |||||||||||||||||
| License and collaboration revenue | $ | 63,130 | $ | 61,370 | $ | 1,760 | |||||||||||
| Grant revenue | 2,036 | 10,493 | (8,457) | ||||||||||||||
| Other revenue | 3,390 | 2,342 | 1,048 | ||||||||||||||
| Total revenues | 68,556 | 74,205 | (5,649) | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Cost of revenue | 26 | 845 | (819) | ||||||||||||||
| Research and development | 455,966 | 506,499 | (50,533) | ||||||||||||||
| Selling, general and administrative | 92,074 | 119,031 | (26,957) | ||||||||||||||
| Restructuring, long-lived assets impairment and related charges, net | (182) | 34,995 | (35,177) | ||||||||||||||
| Total operating expenses | 547,884 | 661,370 | (113,486) | ||||||||||||||
| Loss from operations | (479,328) | (587,165) | 107,837 | ||||||||||||||
| Other income: | |||||||||||||||||
| Change in fair value of equity investments | 1,729 | (5,528) | 7,257 | ||||||||||||||
| Interest income | 40,238 | 71,809 | (31,571) | ||||||||||||||
| Other expense, net | (409) | (2,221) | 1,812 | ||||||||||||||
| Total other income | 41,558 | 64,060 | (22,502) | ||||||||||||||
| Loss before (provision for) benefit from income taxes | (437,770) | (523,105) | 85,335 | ||||||||||||||
| (Provision for) benefit from income taxes | (217) | 1,145 | (1,362) | ||||||||||||||
| Net loss | $ | (437,987) | $ | (521,960) | $ | 83,973 | |||||||||||
Revenues
The increase in license and collaboration revenue for the year ended December 31, 2025 compared to the same period in 2024 was primarily due to the recognition of $64.3 million license revenue related to the initial payment received under the Norgine Agreement. We granted Norgine an exclusive license with respect to commercial rights to the combination of tobevibart and elebsiran for the treatment of CHD in Europe, Australia, and New Zealand. Such increase was partially offset by $51.7 million revenue during the first quarter of 2024 when GSK's rights to select up to two additional non-influenza target pathogens under the 2021 GSK Agreement expired on March 25, 2024, and lower GSK profit-sharing revenue in 2025 from GSK under our 2020 GSK Agreement.
The decrease in grant revenue for the year ended December 31, 2025 compared to the same period in 2024 was primarily due to lower revenue recognized in accordance with our agreement with BARDA and to a lesser extent, lower revenue recognized from the Gates Foundation. All but one of our grant agreements with the Gates Foundation expired in 2025, and we terminated our agreement with BARDA at the end of 2024.
The change in other revenue for the year ended December 31, 2025 compared to the same period in 2024 was nominal.
Cost of Revenue
The decrease in cost of revenue for the year ended December 31, 2025 compared to the same period in 2024 was nominal.
Research and Development Expenses
The following table shows the primary components of our research and development expenses for the years presented (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| Personnel | $ | 125,274 | $ | 162,960 | $ | (37,686) | |||||||||||
| Licenses, collaborations and contingent consideration | 125,058 | 129,846 | (4,788) | ||||||||||||||
| Clinical costs | 87,173 | 57,624 | 29,549 | ||||||||||||||
| Contract manufacturing | 47,622 | 40,081 | 7,541 | ||||||||||||||
| Other | 70,839 | 115,988 | (45,149) | ||||||||||||||
| Total research and development expenses | $ | 455,966 | $ | 506,499 | $ | (50,533) | |||||||||||
The decrease in research and development expenses for the year ended December 31, 2025 compared to the same period in 2024 was primarily due to:
•lower other R&D expenses related to de-prioritized research and development programs and other ongoing cost savings;
•lower personnel expenses associated with headcount reductions;
•lower license, collaborations and contingent consideration expenses due to the expensing of $102.8 million in-process research and development obtained as part of our license agreement with Sanofi in the third quarter of 2024, partially offset by the $75.0 million milestone payment due upon VIR-5525 achieving first-in-human dosing in the third quarter of 2025, the $30.0 million expense in connection with signing the Restated Alnylam Agreement, and milestone payments due upon the enrollment of the first patient in phase 3 ECLIPSE registrational program for CHD in the first quarter of 2025.
partially offset by:
•higher clinical cost due to the initiation of our phase 3 ECLIPSE registrational program and progression of our oncology programs.
Selling, General and Administrative Expenses
The decrease in selling, general and administrative expenses for the year ended December 31, 2025 compared to the same period in 2024 was primarily due to efficiencies and cost savings from previously announced restructuring initiatives.
Restructuring, Long-Lived Assets Impairment and Related Charges, Net
The decrease in restructuring, long-lived assets impairment and related charges for the year ended December 31, 2025 compared to the same period in 2024 was primarily due to the substantial completion of previously announced restructuring initiatives by the end of 2024.
Change in Fair Value of Equity Investments
Our equity investment consisted solely of shares of Brii Bio Parent, which is a marketable equity investment and remeasured to fair value at each reporting period. For the year ended December 31, 2025, we recognized an unrealized gain of $1.7 million, compared to an unrealized loss of $5.5 million for the same period in 2024.
Interest Income
The decrease in interest income was primarily due to lower balances of cash, cash equivalents, and investments and lower interest rates for the year ended December 31, 2025 compared to the same period in 2024.
Other Expense, Net
The change in other expense, net, for the year ended December 31, 2025 compared to the same period in 2024 was nominal.
(Provision for) Benefit from Income Taxes
The change in (provision for) benefit from income taxes for the year ended December 31, 2025 compared to the same period in 2024 was nominal.
Liquidity, Capital Resources and Capital Requirements
Sources of Liquidity
To date, we have financed our operations primarily through sales of our common stock from our initial public offering and subsequent follow-on offering, sales of our convertible preferred securities, and payments received under our grant and collaboration agreements. As of December 31, 2025, we had $781.6 million in cash, cash equivalents, and investments. In November 2023, we entered into a sales agreement (the Sales Agreement) with Cowen and Company, LLC, as sales agent (TD Cowen), pursuant to which the Company may from time to time offer and sell shares of its common stock for an aggregate offering price of up to $300.0 million, through or to TD Cowen, acting as sales agent or principal. The shares will be offered and sold under the shelf registration statement on Form S-3 and a related prospectus that we filed with the SEC on November 3, 2023. We will pay TD Cowen a commission of up to 3.0% of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide TD Cowen with customary indemnification and contribution rights. As of December 31, 2025, no shares have been issued under the Sales Agreement. The Sales Agreement will expire in November 2026.
Funding Requirements and Conditions
Our primary use of our capital resources is to fund our operating expenses, which consist primarily of expenditures related to identifying, acquiring, developing, manufacturing and in-licensing our technology platforms and product candidates, and conducting preclinical studies and clinical trials, and to a lesser extent, selling, general and administrative expenditures.
In December 2024, the FDA revoked EUA granted to sotrovimab in May 2021. We do not expect to generate significant revenue from the sale of our other product candidates until we complete clinical development, submit regulatory filings and receive approvals from the applicable regulatory bodies for such product candidates, if ever. We may continue to incur net losses for the foreseeable future. Based upon our current operating plan, we believe that our existing cash, cash equivalents and investments as of December 31, 2025 as noted above will enable us to fund our operations for at least the next 12 months from the filing date of this Annual Report on Form 10-K.
However, our operating plan may change as a result of many factors currently unknown to us, and we may need to raise additional capital to complete the development and commercialization of our product candidates and fund certain of our existing manufacturing and other commitments. We expect to finance our cash needs through public or private equity or debt financings, third-party (including government) funding, and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. See the sections titled "Risk Factors-Risks Related to Our Financial Position and Capital Needs-Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our product candidates." and "Risk Factors-Risks Related to Our Financial Position and Capital Needs-We may require substantial additional funding to finance our operations. If we are unable to raise capital when needed, we could be forced to delay, reduce or terminate certain of our research and development programs or other operations" for a description of the risks that may be associated with any future capital raises.
We have based our projections of operating capital requirements on assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of biotechnology products, we are unable to estimate the exact amount of our operating capital requirements. See the section titled "Risk Factors-Risks Related to Our Financial Position and Capital Needs" for a description of certain risks that will affect our future capital requirements.
We have various operating lease arrangements for office and laboratory spaces located in California and Switzerland with contractual lease periods expiring between 2033 and 2035. As of December 31, 2025, we expect to make total lease payments of $121.4 million through 2035.
To date, we have entered into collaboration, license and acquisition agreements where the payment obligations are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones, and we are required to make royalty payments in connection with the sale of products developed under those agreements. For additional information regarding these agreements, including our payment obligations thereunder, see the sections titled "Part I, Item 1. Business-Our Collaboration, License and Grant Agreements," as well as Note 6 Collaboration and License Agreementsto our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. For information related to our future commitments under our facilities and manufacturing agreements, see Note 9Leasesand Note 10 Commitments and Contingenciesto our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements.
Cash Flows
The following table summarizes our cash flows for the years presented (in thousands):
| Years Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
|
Net cash (used in) provided by:
|
|||||||||||
| Operating activities | $ | (391,781) | $ | (446,352) | |||||||
| Investing activities | 310,371 | 499,367 | |||||||||
| Financing activities | 3,785 | 4,388 | |||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents | $ | (77,625) | $ | 57,403 | |||||||
Operating Activities
Cash used in operating activities is derived by adjusting our net loss for non-cash items and changes in operating assets and liabilities. Cash used in operating activities decreased in 2025 compared to 2024 primarily due to $64.3 million initial payment received under the Norgine Agreement and ongoing cost saving realized through headcount reductions, the closing of our St. Louis, Missouri and Portland, Oregon sites and de-prioritized research and development programs in 2025, along with $103.7 million upfront payment made under our license agreement with Sanofi in 2024. The decrease was partially offset by $75 million milestone payment related to the first patient dosed in Phase 1 study evaluating VIR-5525 and $50.5 million milestone payments related to the enrollment of the first patient in ECLIPSE registrational program for CHD in 2025.
Investing Activities
Cash provided by investing activities during 2025 decreased compared to the same period in 2024 primarily due to lower cash provided by maturities and sales of investment, net of investment purchases.
Financing Activities
Cash provided by financing activities during 2025 compared to the same period in 2024 was nominal.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of our consolidated financial statements requires us to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. The critical accounting policies, estimates and judgments that we believe to have the most significant impacts on our consolidated financial statements are described below. For more details on our critical accounting policies, refer to Note 2 Summary of Significant Accounting Policiesto our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Asset Acquisitions
We make certain judgments to determine whether acquisitions and other similar transactions should be accounted for as acquisitions of assets or business combinations using the guidance in Accounting Standard Codification, or ASC, Topic 805, Business Combinations,by first applying a screen test to assess if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met, further assessment is required to determine whether we have acquired inputs and a substantive process that together significantly contribute to the ability to create outputs, which would meet the definition of a business.
If determined to be an asset acquisition, we account the transaction using the cost accumulation and allocation method. Under this method, the cost of the acquisition, including direct acquisition-related costs, is allocated to the assets acquired or liabilities assumed on a relative fair value basis. Goodwill is not recognized in an asset acquisition, and any difference between consideration transferred and the fair value of the net assets acquired is allocated to the certain identifiable assets acquired based on their relative fair values.
Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the consideration is paid or becomes payable (unless the contingent consideration payments are subject to guidance in ASC 480, Distinguishing Liabilities from Equity, or ASC 815, Derivatives and Hedging). Upon recognition of the contingent consideration payments, the amount is included in the cost of the acquired asset or group of assets.
Accrued R&D expenses
We expense all research and development costs in the periods in which they are incurred. Clinical development costs compose a significant component of research and development costs. We typically contract with third parties, including CROs and CDMOs to conduct and manage preclinical studies and clinical trials, research services, and clinical manufacturing services on our behalf. When billing terms under these contracts do not coincide with the timing of when the work is performed, we estimate our obligations for services provided but not yet billed as of the period end based on a number of factors that include, but are not limited to, our knowledge of the research and development programs and clinical manufacturing activities, the status of the programs and activities, invoicing to date, and the provisions in the contracts. We obtain information regarding unbilled services directly from outside service providers and perform procedures to support our estimates based on our internal understanding of the services provided to date. However, we may also be required to estimate these services based on information available to our internal clinical and manufacturing administrative staff if such information is not able to be obtained timely from our service providers. Accrued R&D expenses are included in accrued and other liabilities on the consolidated balance sheets. In the event that advance payments are made to a CRO, CDMO or other outside service providers, the payments are recorded within prepaid expenses and/or other current assets and other assets on the consolidated balance sheet and subsequently recognized as research and development expense when the associated services are performed. The status and timing of actual services performed may vary from our estimates, resulting in adjustments to expense in future periods. Changes in these estimates could materially affect our results of operations.
Contingent Consideration associated with a Business Combination
Contingent consideration related to a business combination are initially measured at their estimated fair values on the transaction date and subsequently remeasured each subsequent reporting period with changes recorded in the consolidated statement of operations.
The estimated fair value of the contingent consideration related to the Humabs acquisition is determined by calculating the probability-weighted clinical and regulatory milestone payments based on the assessment of the likelihood and estimated timing that certain milestones will be achieved, as well as by using a Monte Carlo simulation model that includes significant estimates and assumptions pertaining to commercialization events and sales targets. The estimated fair value uses certain significant unobservable inputs categorized within level 3 of the fair value hierarchy, including the probabilities of achieving clinical and regulatory approval of the development projects, the subsequent commercial success and discount rates.
Recent Accounting Pronouncements Not Yet Adopted
See Note 2 Summary of Significant Accounting Policiesto our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition or results of operations.
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