ADAGIO THERAPEUTICS: Discussion and analysis by management of the financial position and results of operations. (form 10-Q)

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You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and
our final prospectus for our initial public offering filed pursuant to Rule
424(b)(4) under the Securities Act of 1933, as amended, or the Securities Act,
with the Securities and Exchange Commission, or SEC, on August 6, 2021 (the
"Prospectus"). Unless the context requires otherwise, references in this
Quarterly Report on Form 10-Q to "we," "us," and "our" refer to Adagio
Therapeutics, Inc. together with its consolidated subsidiaries.

Forward-looking statements

The information contained in this discussion and analysis or set forth elsewhere
in this Quarterly Report on Form 10-Q, including information with respect to our
plans and strategy for our business and related financing, includes
forward-looking statements and information within the meaning of Section 27A of
the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are subject to the "safe harbor" created by those sections. These
forward-looking statements include, but are not limited to, statements
concerning our strategy, future operations, future financial position, future
revenues, projected costs, prospects and plans and objectives of management. We
may not actually achieve the plans, intentions or expectations disclosed in our
forward-looking statements and you should not place undue reliance on our
forward-looking statements. These forward-looking statements involve risks and
uncertainties that could cause our actual results to differ materially from the
results described in or implied by the forward-looking statements, including,
without limitation, the risks set forth in the "Risk Factors" section of this
Quarterly Report on Form 10-Q and in our other filings with the SEC. These
forward-looking statements are applicable only as of the date on which they are
made and we do not assume any obligation to update any forward-looking
statements.

Overview

Adagio Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused
on the discovery, development and commercialization of antibody-based solutions
for infectious diseases with pandemic potential. We are developing our lead
product candidate, ADG20, for the treatment and prevention of coronavirus
disease 2019, or COVID-19, the disease caused by the virus SARS-CoV-2 and its
variants. COVID-19 has caused the current global pandemic that remains a
significant global health crisis and has resulted in millions of deaths and
lasting health problems in many survivors. We believe that COVID-19 will become
an endemic disease requiring a variety of effective, safe and convenient
treatment and prevention options for years to come. We aim to address COVID-19
and future potential viral outbreaks by building a portfolio of antibodies with
broadly neutralizing activity against multiple members of the coronavirus family
or additional viruses with pandemic potential. Our portfolio of antibodies was
discovered by Adimab, LLC, or Adimab, an industry leader in translating target
hypotheses into therapeutically relevant antibodies with their proprietary
platform, which has resulted in more than 385 antibody discovery programs.

ADG20 is designed to be a potent, long-acting and broadly neutralizing antibody
for both the treatment and prevention of COVID-19 as either a single or
combination agent. Unlike other antibody-based therapies specifically targeting
SARS-CoV-2, ADG20 has demonstrated an ability in non-clinical studies to
neutralize SARS-CoV-2, including variants of concern, as well as a broad range
of SARS-like viruses with neutralization potency at IC50 (half maximal
inhibitory concentrations) of approximately 0.01 mcg/mL or less in live-virus
cellular assays. We believe this demonstrated in vitro neutralization activity
will translate into a low-clinical dose which, in turn, may translate into the
ability to conveniently deliver ADG20 as a single intramuscular, or IM,
injection. We believe these and other attributes of ADG20 differentiate it from
other antibodies that are either available under Emergency Use Authorization, or
EUA, or in development to address COVID-19. We have completed enrollment in our
first-in-human Phase 1 clinical trial of ADG20. Interim data demonstrated that
ADG20 was well tolerated and displayed a pharmacokinetic profile consistent with
an extended half-life monoclonal antibody, or mAb. Serum virus neutralizing
antibody titers measured the day following administration of ADG20 were similar
to or exceeded peak serum neutralizing antibody titers generated after two doses
of mRNA or adenovirus-based COVID-19 vaccines. Based on these data, we are
conducting two separate Phase 2/3 clinical trials: our STAMP trial to evaluate
ADG20 for the treatment of COVID-19 and our EVADE trial to evaluate ADG20 for
the prevention of COVID-19. Additionally, our portfolio includes multiple
broadly neutralizing antibodies, including ADG10, for potential use with ADG20
as a combination therapy for the treatment and prevention of COVID-19 and future
coronavirus outbreaks.

We were formed in June 2020. In July 2020, we entered into an assignment and
license agreement, or the Adimab Assignment Agreement, with Adimab, pursuant to
which we acquired certain rights to Adimab's antibodies relating to COVID-19 and
severe acute respiratory syndrome, or SARS, as well as related provisional
patent applications, know-how and data generated with respect to the associated
antibodies. In addition, Adimab granted to us a non-exclusive, worldwide license
to certain of Adimab's platform patents and technology for use in research and
development. In connection with the rights and license acquired, we issued
5,000,000 shares of our Series A preferred stock to Adimab.

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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 arrangements with
third parties for the manufacture of our product candidates and raising capital.
We rely heavily on external consultants and contract research organizations, or
CROs, to conduct our non-clinical, preclinical and clinical activities.
Additionally, we are currently dependent on WuXi Biologics (Hong Kong) Limited,
or WuXi, a contract development and manufacturing organization, or CDMO, for the
manufacture of our product candidates for clinical and commercial use. We expect
to continue to rely on third parties for clinical trials and the manufacture and
testing of our product candidates. Since our inception, we have financed our
operations with proceeds from sales of our preferred stock, and most recently,
with proceeds from our completed initial public offering, or IPO. Through June
30, 2021, we had received net proceeds of $464.7 million from the sales of our
preferred stock. To date, we have not generated any revenue from any sources,
including product sales. In February 2021, we advanced ADG20 into a Phase 1
clinical trial. We have not yet commenced significant development activities
with respect to other product candidates. Our ability to generate product
revenue sufficient to achieve profitability will depend heavily on the
successful development and eventual commercialization of one or more of our
product candidates, if approved. In August 2021, we completed our IPO pursuant
to which we issued and sold 20,930,000 shares of our common stock, including
2,730,000 shares of common stock pursuant to the full exercise of the
underwriters' option to purchase additional shares. We received aggregate net
proceeds from our IPO of approximately $330.9 million, after deducting
underwriting discounts and commissions, but before deducting estimated offering
expenses payable by the Company, which are estimated to be $3.8 million.

Since our inception, we have incurred significant losses, including net losses
of $65.3 million for the period from June 3, 2020 (inception) to December 31,
2020 and of $83.4 million for six months ended June 30, 2021. As of June 30,
2021, we had an accumulated deficit of $148.7 million. We expect to continue to
incur significant expenses and recognize substantial losses in the foreseeable
future as we expand and progress our research and development activities as well
as the associated 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, including any associated
manufacturing activities, and potential commercialization efforts. We anticipate
that our expenses will increase significantly in connection with our ongoing
activities, as we:

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continue to conduct our ongoing clinical trials of ADG20, including advancement
into late-stage global clinical trials, as well as initiate and complete
additional clinical trials of future product candidates or current product
candidates in new indications or patient populations;
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continue to advance the preclinical development of our other product candidates
and our preclinical and discovery programs;
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seek regulatory approval for any product candidates that successfully complete
clinical trials;
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pursue marketing approvals or EUA and reimbursement for our product candidates;
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acquire or in-license other product candidates, intellectual property and/or
technologies;
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develop, establish and validate our commercial-scale current good manufacturing
practices, or cGMP, manufacturing process;
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manufacture material under cGMP, for clinical trials and potential EUA and
commercial sales at our contracted manufacturing facilities;
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maintain, expand, enforce, defend and protect our intellectual property
portfolio;
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comply with regulatory requirements established by the applicable regulatory
authorities;
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establish a sales, marketing and distribution infrastructure and scale up
manufacturing capabilities to commercialize any product candidates for which we
may obtain regulatory approval or EUA;
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hire and retain additional personnel, including research, clinical, development,
manufacturing, quality control, quality assurance, regulatory and scientific
personnel;
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add operational, financial, corporate development, management information
systems and administrative personnel, including personnel to support our product
development and planned future commercialization efforts; and
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incur additional legal, accounting and other expenses in operating as a public
company.

We do not anticipate generating revenue from product sales, including government
supply contracts, unless and until we successfully complete clinical development
and obtain marketing approvals or EUA for one or more of our product candidates.
We are currently establishing our commercial infrastructure to support the
anticipated marketing and distribution of our product candidates. Subject to
receiving marketing approval or EUA, we expect to enter into arrangements with
third parties for the sale, marketing and distribution of our product
candidates. Accordingly, if we obtain marketing approval or EUA for any of our
product candidates, we will incur significant additional commercialization
expenses related to product manufacturing, marketing, sales and distribution.

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As a result, we will need substantial additional funding to support our
continuing operations and pursue our growth strategy. Until such time as we can
generate significant revenue from product sales, if ever, we expect to finance
our operations through a combination of equity offerings, government or
private-party grants, debt financings, collaborations with other companies and
strategic alliances. We may be unable to raise additional funds or enter into
such other agreements or arrangements when needed on favorable terms, or at all.
If we fail to raise capital or enter into such agreements as, and when, needed,
we may have to significantly delay, scale back or discontinue the development
and commercialization of one or more of our product candidates or delay our
pursuit of potential in-licenses or acquisitions.

Because of the numerous risks and uncertainties associated with pharmaceutical
product development, 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 approval for any of our product
candidates. Even if we are able to generate 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.

We believe that our existing cash and cash equivalents, including the net
proceeds from our IPO received in August 2021, will enable us to fund our
operating expenses and capital expenditure requirements into the first quarter
of 2023. 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
"-Liquidity and Capital Resources."

Impact of COVID-19 on our operations

In March 2020, the World Health Organization declared the outbreak of COVID-19 a
global pandemic. The evolving and constantly changing impact of the pandemic
will directly affect the potential commercial prospects of ADG20 for the
treatment and prevention of COVID-19. The severity of the COVID-19 pandemic and
the continued emergence of variants of concern (such as the widespread Delta
variant), the availability, administration and acceptance of vaccines,
monoclonal antibodies and other treatment modalities and the potential
development of "herd immunity" by the global population will affect the design
and enrollment of our clinical trials, the potential regulatory authorization or
approval of our product candidates and the commercialization of our product
candidates, if approved.

In addition, our business and operations may be more broadly adversely affected
by the COVID-19 pandemic. The COVID-19 outbreak and government measures taken in
response have had a significant impact, both direct and indirect, on businesses
and commerce, as worker shortages have occurred, supply chains have been
disrupted, facilities and production have been suspended and demand for certain
goods and services, such as medical services and supplies, has spiked, while
demand for other goods and services, such as travel, has fallen. The global
COVID-19 pandemic continues to evolve rapidly, and we will continue to monitor
it closely. The ultimate extent of the impact of the COVID-19 pandemic on our
business, financial condition, operations and product development timelines and
plans remains highly uncertain and will depend on future developments, including
the duration and spread of the outbreak and its impact on our clinical trial
design and enrollment, trial sites, CROs, CDMOs and other third parties with
which we do business, as well as its impact on regulatory authorities and our
key scientific and management personnel. To date, we have experienced some
delays and disruptions in our development activities as a result of the COVID-19
pandemic. In the future, we anticipate there could be additional or even
significant disruptions, delays or uncertainties in our development activities
as a result of the COVID-19 pandemic as the outbreak progresses and some of our
CROs, CDMOs and other service providers continue to be impacted. We will
continue to monitor developments as we address the disruptions, delays and
uncertainties relating to the COVID-19 pandemic. These developments and the
impact of the COVID-19 pandemic on the financial markets and the overall economy
are highly uncertain and cannot be predicted. If the financial markets and/or
the overall economy are impacted for an extended period, our results and
operations may be materially adversely affected and may affect our ability to
raise capital.

Components of our operating results

Returned

To date, we have not generated any revenue from product sales, including
government supply contracts, or any other sources. If our development efforts
for our product candidates are successful and result in regulatory approval or
collaboration or license agreements with third parties, we may generate revenue
in the future from product sales or payments from collaboration or license
agreements that we may enter into with third parties, or any combination
thereof.

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Research and development costs

The nature of our activities and the main focus of our activities generate a significant amount of research and development costs. Research and development costs represent the costs that we incur for:

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the non-clinical and preclinical development of our product candidates,
including our discovery efforts;
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the procurement of our product candidates from third-party manufacturers; and
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the global clinical development of our product candidates.

These costs include:

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personnel-related expenses, including salaries, bonuses, benefits and other
compensation-related costs, including stock-based compensation expense, for
employees engaged in research and development functions;
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expenses incurred under agreements with third parties, such as consultants,
contractors and CROs, that conduct the non-clinical and preclinical studies and
clinical trials of our product candidates and research programs;
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costs of procuring manufactured product candidates for use in non-clinical
studies, preclinical studies and clinical trials from third-party CDMOs;
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costs of outside consultants and advisors, including their fees and stock-based
compensation;
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payments made under third-party licensing agreements; and
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other expenses incurred as a result of research and development activities.

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 ADG20. Our
research and development costs consist primarily of external costs, such as fees
paid to CDMOs, CROs and consultants in connection with our non-clinical studies,
preclinical studies and clinical trials. 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. We expect that our research and development expenses will
increase substantially in the near term as we advance ADG20 through clinical
development on a global basis, pursue regulatory approval of ADG20, continue to
discover and develop additional product candidates and incur expenses associated
with hiring additional personnel to support our research and development
efforts, including the associated manufacturing activities.

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:

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the timing and progress of preclinical and clinical development activities;
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the number and scope of preclinical and clinical programs we decide to pursue;
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filing acceptable investigational new drug applications with the U.S. Food and
Drug Administration or comparable foreign applications that allow commencement
of our planned clinical trials or future clinical trials for our product
candidates;
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sufficiency of our financial and other resources to complete the necessary
preclinical studies and clinical trials, manufacture the product candidates and
complete associated regulatory activities;
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our ability to establish and maintain agreements with third-party manufacturers
for clinical supply for our clinical trials and successfully develop, obtain
regulatory approval or EUA for our product candidates;
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successful enrollment and timely completion of clinical trials, including our
ability to generate positive data from any such clinical trials;

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the costs associated with the development of any additional development programs
and product candidates we identify in-house or acquire through collaborations;
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the prevalence and severity of adverse events experienced with ADG20 or any
other product candidates;
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the terms and timing of any collaboration, license or other arrangement,
including the terms and timing of any milestone payments thereunder;
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our ability to obtain and maintain patent, trademark and trade secret protection
and regulatory exclusivity for our product candidates, if and when approved, and
otherwise protecting our rights in our intellectual property portfolio;
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receipt of timely marketing approvals from applicable regulatory authorities;
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our ability to maintain compliance with regulatory requirements, including good
clinical practices, current good laboratory practices and cGMPs, and to comply
effectively with other rules, regulations and procedures applicable to the
development and sale of pharmaceutical products;
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potential significant and changing government regulation, regulatory guidance
and requirements and evolving treatment guidelines; and
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the impact of any business interruptions to our operations or those of third
parties with which we work, particularly in light of the current COVID-19
pandemic.

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 addition, we may never succeed in obtaining
regulatory approval or EUA for any of our product candidates.

Current research acquired and development costs

Acquired in-process research and development, or IPR&D, expenses consist
primarily of the upfront costs we incurred in July 2020, as well as any costs of
contingent milestone payments and royalties we incurred in subsequent periods,
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, or 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 acquired IPR&D expenses in the future if and when we become
obligated to make contingent milestone and royalty 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 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.

We anticipate that our selling, general and administrative expenses will
increase significantly 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 potential commercialization of our product candidates. In
particular, we expect to incur additional commercialization expenses prior to
any regulatory approval or EUA of our product candidates as we continue to
expand our commercial function to support potential future product launches. We
also anticipate that we will incur 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.

Through June 30, 2021, we have operated as a virtual company. Therefore, we do
not incur material operating expenses for the rent, maintenance and insurance of
facilities or for depreciation of fixed assets.

Interest income

Interest income consists of interest earned from our cash and cash equivalents.
We expect our interest income will increase slightly as we invest the cash
received from our sales of Series C preferred stock in April 2021 and the net
proceeds from our IPO.

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Income taxes

For the three and six months ended June 30, 2021, and for the period of June 3, 2020 (creation) at June 30, 2020, the Company has not recorded any tax benefit for the net operating losses incurred or for the research and development tax credits generated during each period, due to its uncertainty of deriving a benefit from these items. .

Results of operations

Comparison of the three months ended June 30, 2021 at the period of June 3, 2020 (creation) at June 30, 2020

The following table summarizes our results of operations for the three months
ended June 30, 2021 and for the period from June 3, 2020 (inception) to June 30,
2020:

                                                                     Period from
                                                 Three Months        June 3, 2020
                                                    Ended           (Inception) to
                                                   June 30,            June 30,
(in thousands)                                       2021                2020             Change
Operating expenses:
Research and development                        $       35,067     $             48     $   35,019
Acquired in-process research and development             2,500                    -          2,500
Selling, general and administrative                      7,124                   50          7,074
Total operating expenses                                44,691                   98         44,593
Loss from operations                                   (44,691 )                (98 )      (44,593 )
Other income (expense):
Interest income                                             23                    -             23
Other expense                                               (5 )                  -             (5 )
Total other income (expense), net                           18                    -             18
Net loss and comprehensive loss                 $      (44,673 )   $        

(98) $ (44,575)

The following discussion presents the components of our expenses for the periods presented:

Research and development costs

                                                                     Period from
                                                 Three Months        June 3, 2020
                                                    Ended           (Inception) to
                                                   June 30,            June 30,
(in thousands)                                       2021                2020             Change
Direct, external research and development
expenses by program:
ADG20                                           $       28,031     $              -     $   28,031
Unallocated research and development
expenses:
Personnel-related costs                                  5,340                   48          5,292
External discovery-related and other costs               1,696                    -          1,696
Total research and development expenses         $       35,067     $        

48 $ 35,019


Research and development expenses were $35.1 million for the three months ended
June 30, 2021, compared to less than $0.1 million for the period from June 3,
2020 (inception) to June 30, 2020. The increase of $28.0 million in direct costs
related to our ADG20 program was primarily due to overall increases in our
clinical study costs and manufacturing expenses, for which there were no costs
incurred during the period from June 3, 2020 (inception) to June 30, 2020.


Personnel-related costs, including salaries, bonuses, benefits and other
compensation-related costs, were $4.1 million and stock-based compensation
expense was $1.2 million for the three months ended June 30, 2021, compared to
personnel-related costs of less than $0.1 million for the period from June 3,
2020 (inception) to June 30, 2020. The overall increase in personnel-related
costs is attributable to the hiring of individuals to support the development of
ADG20. The increase in external discovery related costs and other of $1.7
million was primarily driven by $1.2 million in professional services and
consulting costs and $0.5 million of other research and development related
costs.


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Current research acquired and development costs

Acquired IPR&D expenses of $2.5 million for three months ended June 30, 2021
consisted of the cost we incurred in the period under the Adimab Assignment
Agreement for a milestone payment that became due to Adimab in April 2021 upon
the dosing of the first patient in a Phase 2 clinical trial evaluating ADG20.
The amount of this contingent payment was recognized as an IPR&D expense based
on the nature of the associated assets acquired from Adimab on the date of the
milestone achievement. We expensed the cost of the IPR&D assets because they had
no alternative future use as of the acquisition date. The Company did not incur
any IPR&D expense for the period from June 3, 2020 (inception) to June 30, 2020.

Selling, general and administrative expenses

                                                                         Period from
                                                     Three Months        June 3, 2020
                                                         Ended          (Inception) to
                                                       June 30,            June 30,
(in thousands)                                           2021                2020             Change
Personnel-related costs                              $       4,054     $             48     $    4,006
Professional and consultant fees                             2,949                    2          2,947
Other                                                          121                    -            121

Total selling, general and administrative expenses $ 7,124 $

50 $ 7,074


Selling, general and administrative expenses for the three months ended June 30,
2021 were $7.1 million, compared to $0.1 million for the period from June 3,
2020 (inception) to June 30, 2020. Personnel-related costs increased by $4.0
million due to increased hiring to support general and administrative functions.
Personnel-related costs included salaries and wages and stock-based compensation
expense of $1.9 million and $2.2 million, respectively, for the three months
ended June 30, 2021, compared to $0 for the period from June 3, 2020 (inception)
to June 30, 2020. The increase of $2.9 million in professional services and
consultant fees and $0.1 million of other expenses is attributable to costs
incurred as we prepared to become a public company.

Other income

Other income was less than $0.1 million for the three months ended June 30, 2021
and $0 for the period from June 3, 2020 (inception) to June 30, 2020, consisting
primarily of interest earned on invested cash balances.

Comparison of the six months ended June 30, 2021 at the period of June 3, 2020
(creation) at June 30, 2020

The following table summarizes our results of operations for the six months
ended June 30, 2021 and for the period from June 3, 2020 (inception) to June 30,
2020:

                                                                   Period from
                                                 Six Months        June 3, 2020
                                                    Ended         (Inception) to
                                                  June 30,           June 30,
(in thousands)                                      2021               2020             Change
Operating expenses:
Research and development                        $     69,204     $             48     $   69,156
Acquired in-process research and development           3,500                    -          3,500
Selling, general and administrative                   10,695                   50         10,645
Total operating expenses                              83,399                   98         83,301
Loss from operations                                 (83,399 )                (98 )      (83,301 )
Other income (expense):
Interest income                                           32                    -             32
Other expense                                             (6 )                  -             (6 )
Total other income (expense), net                         26                    -             26
Net loss and comprehensive loss                 $    (83,373 )   $            (98 )   $  (83,275 )




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Research and development costs

                                                                   Period from
                                                 Six Months        June 3, 2020
                                                    Ended         (Inception) to
                                                  June 30,           June 30,
(in thousands)                                      2021               2020             Change
Direct, external research and development
expenses by program:
ADG20                                           $     58,683     $              -     $   58,683
Unallocated research and development
expenses:
Personnel-related costs                                7,601                   48          7,553
External discovery-related and other costs             2,920                    -          2,920
Total research and development expenses         $     69,204     $          

48 $ 69,156


Research and development expenses were $69.2 million for the six months ended
June 30, 2021, compared to less than $0.1 million for the period from June 3,
2020 (inception) to June 30, 2020. The increase of $58.7 million in direct costs
related to our ADG20 program was primarily due to overall increases in our
clinical study costs and manufacturing expenses, for which there were no costs
incurred for the period from June 3, 2020 (inception) to June 30, 2020.


Personnel-related costs, including salaries, bonuses, benefits and other
compensation-related costs, were $6.2 million and stock-based compensation
expense was $1.4 million for the six months ended June 30, 2021, compared to
personnel-related costs of less than $0.1 million for the period from June 3,
2020 (inception) to June 30, 2020. The overall increase in personnel-related
costs is attributable to the hiring of more individuals to support the
development of ADG20. The increase in external discovery-related and other costs
and other of $2.9 million was primarily driven by $2.1 million in professional
services and consulting services and $0.8 million of other research and
development related costs.

Current research acquired and development costs

Acquired IPR&D expenses of $3.5 million for the six months ended June 30, 2021
consisted of the costs we incurred in the period under the Adimab Assignment
Agreement for a $1.0 million milestone payment that became due to Adimab in
February 2021 upon the dosing of the first patient in a Phase 1 clinical trial
evaluating ADG20 and a $2.5 million milestone payment that became due to Adimab
in April 2021 upon the dosing of the first patient in the first Phase 3 clinical
trial of a product licensed under the agreement. The amounts of these contingent
payments were recognized as an IPR&D expense based on the nature of the
associated assets acquired from Adimab on the date of the milestone achievement.
We expensed the cost of the IPR&D assets because they had no alternative future
use as of the acquisition date. The Company did not incur any IPR&D expense for
the period from June 3, 2020 (inception) to June 30, 2020.

Selling, general and administrative expenses

                                                                        Period from
                                                      Six Months        June 3, 2020
                                                         Ended         (Inception) to
                                                       June 30,           June 30,
(in thousands)                                           2021               2020             Change
Personnel-related costs                              $      5,549     $             48     $    5,501
Professional and consultant fees                            4,918                    2          4,916
Other                                                         228                    -            228

Total selling, general and administrative expenses $ 10,695 $

50 $ 10,645


Selling, general and administrative expenses for the six months ended June 30,
2021 were $10.7 million, compared to $0.1 million for the period from June 3,
2020 (inception) to June 30, 2020. Personnel-related costs increased by $5.5
million due to increased hiring to support general and administrative functions.
Personnel-related costs included salaries and wages and stock-based compensation
expense of $3.0 million and $2.5 million, respectively, for the six months ended
June 30, 2021, compared to $0 for the period from June 3, 2020 (inception) to
June 30, 2020. The increase of $4.9 million in professional services and
consultant fees and $0.2 million in other expenses is attributable to costs
incurred as we prepared to operate as a public company.

Other income

Other income was less than $0.1 million for the six months ended June 30, 2021
and $0 for the period from June 3, 2020 (inception) to June 30, 2020, consisting
of primarily of interest earned on invested cash balances.

                                       31

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Liquidity and capital resources

Sources of liquidity

Since our inception in June 2020, we have not generated any revenue from any
sources, including from product sales, and have incurred significant operating
losses and negative cash flows from operations. We expect to incur significant
expenses and operating losses for the foreseeable future as we advance the
clinical development of our product candidates. To date, we have funded our
operations with proceeds from sales of our preferred stock, and most recently,
with proceeds from our IPO completed in August 2021. Through June 30, 2021, we
had received net proceeds of $464.7 million from sales of our preferred stock.
As of June 30, 2021, we had cash and cash equivalents of $392.5 million.

In August 2021, we completed our IPO whereby we issued and sold 20,930,000 common shares, including 2,730,000 common shares following the full exercise of the underwriters’ option to purchase additional shares. We received total net proceeds from our IPO of approximately $ 330.9 million, after deduction of subscription discounts and commissions, but before deduction of the estimated offering costs payable by the Company, which are estimated at $ 3.8 million.

Cash flow

The following table summarizes our sources and uses of cash for each of the
periods presented:

                                                               Period from
                                             Six Months       June 3, 2020
                                               Ended         (Inception) to
                                              June 30,          June 30,
(in thousands)                                  2021              2020
Net cash used in operating activities       $    (57,311 )   $             -
Net cash provided by financing activities        334,832                   -
Net increase in cash and cash equivalents   $    277,521     $             -


Operating Activities

During the six months ended June 30, 2021, operating activities used $57.3
million of cash, primarily due to our net loss of $83.4 million, partially
offset by non-cash stock-based compensation expense of $3.9 million and net cash
provided by changes in our operating assets and liabilities of $22.1 million.
Net cash provided by changes in our operating assets and liabilities consisted
of a $2.2 million increase in accounts payable and a $21.1 million increase in
accrued expenses, both partially offset by a $1.2 million increase in prepaid
expenses and other current assets. The increases in accounts payable and accrued
expenses were primarily due to amounts owed to vendors in connection with our
research and development activities, including increased external costs
associated with clinical trials and manufacturing, as well as increases in
accrued employee bonuses. The increase in prepaid expenses and other current
assets was primarily due to prepayments for external research and development
activities. We had no cash used in or provided by operating activities for the
period from June 3, 2020 (inception) to June 30, 2020.

Investment activities

We had no cash used or provided by investing activities for the six months ended
June 30, 2021 or for the period of June 3, 2020 (creation) at June 30, 2020.

Fundraising activities

During the six months ended June 30, 2021 net cash provided by financing
activities was $335.3 million, which is primarily related to net proceeds from
the issuance of our Series C preferred stock in April 2021. We had no cash used
in or provided by financing activities for the period from June 3, 2020
(inception) to June 30, 2020.

                                       32

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Funding requirements

We expect our expenses to increase substantially in connection with our ongoing
activities, particularly as we advance the non-clinical and preclinical studies
and the current and future clinical trials of our product candidates. Our
funding requirements and timing and amount of our operating expenditures will
depend on many factors, including:

?
the rate of progress in the development of AGD20 and our other product
candidates;
?
the scope, progress, results and costs of non-clinical studies, preclinical
development, laboratory testing and clinical trials for ADG20 and future product
candidates and associated development programs;
?
the extent to which we develop, in-license or acquire other product candidates
and technologies in our pipeline;
?
the scope, progress, results and costs as well as timing of process development
and manufacturing scale-up and validation activities associated with ADG20 and
our future product candidates and other programs as we advance them through
preclinical and clinical development;
?
the number and development requirements of product candidates that we may
pursue;
?
the costs, timing and outcome of regulatory review of our product candidates;
?
our headcount growth and associated costs as we expand our research and
development capabilities and establish a commercial infrastructure;
?
the timing and costs of securing sufficient capacity for commercial supply of
our product candidates, or the raw material components thereof;
?
the costs and timing of future commercialization activities, including product
manufacturing, marketing, sales and distribution, for any of our product
candidates for which we receive marketing approval or EUA;
?
the costs necessary to obtain regulatory approvals, if any, for products in the
United States and other jurisdictions, and the costs of post-marketing studies
that could be required by regulatory authorities in jurisdictions where approval
is obtained;

                                       33
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?
the costs and timing of preparing, filing and prosecuting patent applications,
maintaining and enforcing our intellectual property rights and defending any
intellectual property-related claims;
?
the continuation of our existing licensing and collaboration arrangements and
entry into new collaborations and licensing arrangements, if at all;
?
the need and ability to hire additional research, clinical, development,
scientific and manufacturing personnel;
?
the costs we incur in maintaining business operations;
?
the need to implement additional internal systems and infrastructure;
?
the effect of competing technological, product and market developments;
?
the revenue, if any, received from commercial sales of our product candidates
for which we receive marketing approval;
?
the costs of operating as a public company; and
?
the progression of the COVID-19 pandemic and emergence of potential outbreaks of
other coronaviruses, including the impact of any business interruptions to our
operations or to those of our contract manufacturers, suppliers or other vendors
resulting from the COVID-19 pandemic or other similar public health crises.

As of September 20, 2021, we believe that our existing cash, cash equivalents
and short-term investments, including the net proceeds from our IPO, will enable
us to fund our operating expenses and capital expenditure requirements into the
first quarter of 2023. 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 substantial product revenue, we
expect to finance our operations through a combination of equity offerings,
government or private-party grants, debt financings, collaborations, strategic
alliances and licensing arrangements. To the extent that we raise additional
capital through the sale of equity or convertible debt securities, ownership
interest will be diluted, and the terms of such securities may include
liquidation or other preferences and anti-dilution protections that adversely
affect as a common stockholders' rights. Additional 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
debt, making acquisitions or capital expenditures or declaring dividends, which
could adversely constrain our ability to conduct our business, and may require
the issuance of warrants, which could potentially dilute your ownership
interest. 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 raise additional funds through 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 future
commercialization efforts or grant rights to develop and market product
candidates to third parties that we would otherwise prefer to develop and market
ourselves.

Obligations and contractual commitments

There have been no material changes to our contractual obligations from those
described in the Prospectus. For additional information, see Note 7 to our
consolidated financial statements appearing in this Quarterly Report on Form
10-Q.

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
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 our Prospectus. 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 from those described in the Prospectus.

Off-balance sheet provisions

We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
Securities and Exchange Commission.

Recently published accounting position papers

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 consolidated financial statements appearing elsewhere in this
Quarterly Report on Form 10-Q.

                                       34

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Internal control over financial reporting

We identified a material weakness in our internal control over financial
reporting that existed as of June 30, 2021. See Item 4, Controls and Procedures.
If we are unable to remediate this material weakness, or if we identify
additional material weaknesses in the future or otherwise fail to maintain
effective internal control over financial reporting, we may not be able to
accurately or timely report our financial condition or results of operations,
which may adversely affect our business.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act of 2012 permits an "emerging growth
company" such as us to take advantage of an extended transition period to comply
with new or revised accounting standards applicable to public companies until
those standards would otherwise apply to private companies. We have elected not
to "opt out" of such extended transition period, which means that when a
standard is issued or revised and it has different application dates for public
or private companies, we will adopt the new or revised standard at the time
private companies adopt the new or revised standard and will do so until such
time that we either (i) irrevocably elect to "opt out" of such extended
transition period or (ii) no longer qualify as an emerging growth company. We
may choose to early adopt any new or revised accounting standards whenever such
early adoption is permitted for private companies.

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