UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2022

OR

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

For the transition period from ___________________ to ___________________

Commission File Number: 001-40703

Adagio Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	85-1403134
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1601 Trapelo Road, Suite 178 Waltham, MA	02451
(Address of principal executive offices)	(Zip Code)

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	ADGI	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of August 8, 2022, the registrant had 108,830,525 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statement of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	89
Item 6.	Exhibits	91
Signatures		92

i

SUMMARY OF RISK FACTORS

The following summarizes the principal factors that make an investment in us speculative or risky, all of which are more fully described in the Risk Factors section below. This summary should be read in conjunction with the Risk Factors section and should not be relied upon as an exhaustive summary of the material risks facing our business.

Risks Related to our Financial Position and Capital Needs

•We have incurred significant losses since our inception. We expect to incur losses over the next several years and may never achieve or maintain profitability.

•We have a limited operating history and no history of commercializing products, which may make it difficult for an investor to evaluate the success of our business to date and to assess our future viability.

•We will need substantial additional funding to meet our financial obligations and to pursue our business objectives. If we are unable to raise capital when needed, we could be forced to curtail our planned operations and the pursuit of our growth strategy.

Risks Related to the Development of our Product Candidates

•Based on feedback received from the FDA in the second quarter of 2022, we decided to pause our planned submission of an Emergency Use Authorization (“EUA”) request for adintrevimab as a result of the Omicron BA.2 sublineage becoming the predominant variant in the United States. Published data has shown that in in vitro assays, adintrevimab has markedly reduced neutralization activity against the Omicron BA.2, BA.4, and BA.5 sublineages. While we intend to continue to engage with the FDA and to monitor the evolution of SARS-CoV-2 and the in vitro activity of adintrevimab against predominant variants in the United States to determine the optimal timing for an EUA request, we cannot be certain that adintrevimab will neutralize future variants and that we will submit an EUA for adintrevimab or whether an EUA will be granted if we do submit such request.

•All of our product candidates are currently in clinical and preclinical development. If we are unable to successfully develop, receive regulatory approval or EUA for and commercialize our product candidates for the indications we seek, or successfully develop any other product candidates, or experience significant delays in doing so, our business will be harmed.

•Because adintrevimab and any future product candidates represent novel approaches to the prevention and treatment of disease, there are many uncertainties regarding the development, market acceptance, third-party reimbursement coverage and commercial potential of our product candidates.

•Newly emerging and future SARS-CoV-2 variants could reduce the activity and effectiveness of adintrevimab as a potential prevention of or treatment for symptomatic COVID-19. We may not be able to modify adintrevimab to improve binding to such variants and obtain sufficient data on the activity and effectiveness of re-engineered adintrevimab in order to support an EUA or regulatory approval, and we may not be successful in identifying new antibodies that are suitable either as monotherapy or as combination therapy to mitigate the risk of reduced activity against future SARS-CoV-2 variants.

•There can be no assurance that the Public Health Emergency (as defined herein) will continue to be in place for an extended period of time and that the product we are developing for COVID-19 could be granted an EUA by the FDA or similar authorization by regulatory authorities outside of the United States if we decide to apply for such an authorization. If we do not apply for such an authorization or, if we do apply and no authorization is granted or, once granted, it is terminated, we will be unable to sell our product in the near future and instead, will be required to pursue solely the traditional regulatory approval processes of the FDA and comparable foreign authorities, which are lengthy, time consuming and inherently unpredictable. If we are not able to obtain required regulatory approval for our product candidates, our business will be substantially harmed.

•Success in preclinical studies or earlier clinical trials may not be indicative of results in future clinical trials. Our product candidates may not have favorable results in later clinical trials, if any, or receive regulatory approval.

•Lack of awareness or negative public opinion of monoclonal antibody therapies and increased regulatory scrutiny of monoclonal antibody therapies to prevent or treat COVID-19 may adversely impact the development or commercial success of our current and future product candidates.

•We may experience delays or difficulties in the enrollment and/or retention of patients in clinical trials, or we may pause, delay or terminate enrollment in our clinical trials, which could in turn delay or prevent our receipt of necessary regulatory approvals.

ii

•We may not be successful in our efforts to build a pipeline of additional product candidates through internal efforts or through partnerships for discovery of novel antibody product candidates.

•Our business and operations may be adversely affected by the evolving and ongoing COVID-19 global pandemic.

Risks Related to the Manufacturing of our Product Candidates

•Monoclonal antibody therapies are complex and difficult to manufacture. We could experience manufacturing problems or may be unable to access raw materials due to global supply chain shortages, that result in delays in the development or commercialization of our product candidates or otherwise harm our business.

Risks Related to the Commercialization of Our Product Candidates

•The affected populations for adintrevimab or our other product candidates may be smaller than we or third parties currently project, which may affect our ability to enroll our clinical trials as well as the addressable markets for our product candidates.

•Adintrevimab and our other monoclonal antibody product candidates may face significant competition from vaccines, antiviral agents and other therapeutics for COVID-19 that are currently available or in development.

Risks Related to Our Intellectual Property

•If we are unable to obtain, maintain and enforce patent protection for our current and future product candidates, or if the scope of the patent protection obtained is not sufficiently broad, our competitors or other third parties could develop and commercialize products similar or identical to ours and our ability to successfully develop and commercialize our product candidates may be adversely affected.

•Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain.

Risks Related to Ownership of Our Common Stock and Our Status as a Public Company

•We previously identified a material weakness in our internal control over financial reporting. We may identify future material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we fail to establish and maintain adequate internal control over financial reporting, we may not be able to produce timely and accurate financial statements, and we may conclude that our internal control over financial reporting is not effective, which may adversely affect our business.

iii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ADAGIO THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(UNaudited)

(In thousands, except share and per share amounts)

	June 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	474,885		$	542,224
Marketable securities		—			49,194
Prepaid expenses and other current assets		6,476			25,293
Total current assets		481,361			616,711
Property and equipment, net		91			83
Operating lease right-of-use assets		2,861			—
Other non-current assets		299			3,297
Total assets	$	484,612		$	620,091
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	14,232		$	5,783
Accrued expenses		52,624			56,277
Operating lease liabilities, current		969			—
Other current liabilities		58			—
Total current liabilities		67,883			62,060
Early-exercise liability		1		6
Operating lease liabilities, non-current		1,889			—
Other non-current liability		—			6
Total liabilities		69,773			62,072
Commitments and contingencies (Note 8)
Stockholders’ equity (deficit):
Preferred stock (undesignated), $0.0001 par value; 10,000,000 shares            authorized and no shares issued and outstanding at June 30, 2022            and December 31, 2021		—			—
Common stock, $0.0001 par value; 1,000,000,000 shares authorized,            109,773,173 shares issued and 108,780,525 shares outstanding at            June 30, 2022; 1,000,000,000 shares authorized, 111,251,660 shares            issued and 110,782,909 shares outstanding at December 31, 2021		11			11
Treasury stock, at cost; 992,648 shares and 468,751 shares at           June 30, 2022 and December 31, 2021, respectively		—			—
Additional paid-in capital		858,593			850,125
Accumulated other comprehensive loss		—			(8	)
Accumulated deficit		(443,765	)		(292,109	)
Total stockholders’ equity (deficit)		414,839			558,019
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	484,612		$	620,091

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

1

ADAGIO THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(UNaudited)

(In thousands, except share and per share amounts)

	Three Months Ended June 30,			Three Months Ended June 30,			Six Months Ended June 30,			Six Months Ended June 30,
	2022			2021			2022			2021
Operating expenses:
Research and development(1)	$	37,129		$	35,067		$	129,164		$	69,204
Acquired in-process research and development(2)		—			2,500			—			3,500
Selling, general and administrative		14,620			7,124			23,324			10,695
Total operating expenses		51,749			44,691			152,488			83,399
Loss from operations		(51,749	)		(44,691	)		(152,488	)		(83,399	)
Other income (expense):
Other income (expense), net		759			18			832			26
Total other income (expense), net		759			18			832			26
Net loss		(50,990	)		(44,673	)		(151,656	)		(83,373	)
Other comprehensive income (loss)
Unrealized gain on available-for-sale securities, net of tax		—			—			8			—
Comprehensive loss	$	(50,990	)	$	(44,673	)	$	(151,648	)	$	(83,373	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.47	)	$	(178.86	)	$	(1.40	)	$	(663.94	)
Weighted-average common shares outstanding, basic and diluted		108,166,890			249,769			108,019,051			125,574

(1)Includes related-party amounts of $2,285 and $4,285 for the three and six months ended June 30, 2022, respectively, and $247 and $435 for the three and six months ended June 30, 2021, respectively (see Note 15).

(2)Includes no related-party amounts for both the three and six months ended June 30, 2022, and $2,500 and $3,500 for the three and six months ended June 30, 2021, respectively (see Note 15).

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

2

ADAGIO THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE

PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

(In thousands, except share amounts)

	Convertible Preferred Stock				Common Stock					Treasury Stock						Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Shares			Amount			Capital			Income (Loss)			Deficit			Equity (Deficit)
Balances at December 31, 2020		12,647,934	$	169,548		5,593,240		$	1		22,600,000		$	(85	)	$	154		$	—		$	(65,319	)	$	(65,249	)
Stock-based compensation expense		—		—		—			—		—			—			587			—			—			587
Net loss		—		—		—			—		—			—			—			—			(38,700	)		(38,700	)
Balances at March 31, 2021		12,647,934	$	169,548		5,593,240		$	1		22,600,000		$	(85	)	$	741		$	—		$	(104,019	)	$	(103,362	)
Issuance of Series C convertible preferred stock, net of issuance costs of $337		4,296,550		335,163		—			—		—			—			—			—			—			—
Issuance of common stock		—		—		6,000			—		—			—			66			—			—			66
Stock-based compensation expense		—		—		—			—		—			—			3,342			—			—			3,342
Vesting of restricted common stock from early-exercised options		—		—		—			—		—			—			3			—			—			3
Retirement of treasury stock		—		—		—			—		(22,600,000	)		85			(85	)		—			—			—
Net loss		—		—		—			—		—			—			—			—			(44,673	)		(44,673	)
Balances at June 30, 2021		16,944,484	$	504,711		5,599,240		$	1	$	—		$	—		$	4,067		$	—		$	(148,692	)	$	(144,624	)
	Convertible Preferred Stock				Common Stock					Treasury Stock						Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Shares			Amount			Capital			Income (Loss)			Deficit			Equity (Deficit)
Balances at December 31, 2021		—	$	—		110,782,909		$	11		468,751		$	—		$	850,125		$	(8	)	$	(292,109	)	$	558,019
Vesting of restricted common stock from early-exercised options		—		—		—			—		—			—			1			—			—			1
Exercise of stock options		—		—		50,353			—		—			—			47			—			—			47
Repurchase of unvested restricted common stock		—		—		(1,158,089	)		—		1,158,089			—			—			—			—			—
Retirement of treasury stock		—		—		—			—		(1,626,840	)		—			—			—			—			—
Stock-based compensation expense		—		—		—			—		—			—			1,983			—			—			1,983
Unrealized gain on available-for-sale securities, net of tax		—		—		—			—		—			—			—			8			—			8
Net loss		—		—		—			—		—			—			—			—			(100,666	)		(100,666	)
Balances at March 31, 2022		—	$	—		109,675,173		$	11		—		$	—		$	852,156		$	—		$	(392,775	)	$	459,392
Exercise of stock options		—		—		98,000			—		—			—			76			—			—			76
Repurchase of unvested restricted common stock		—		—		(992,648	)		—		992,648			—			—			—			—			—
Stock-based compensation expense		—		—		—			—		—			—			6,361			—			—			6,361
Net loss		—		—		—			—		—			—			—			—			(50,990	)		(50,990	)
Balances at June 30, 2022		—	$	—		108,780,525		$	11		992,648		$	—		$	858,593