UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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

March 31, 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 

001-41058

Vaxxinity, Inc.

(Exact name of registrant as specified in its charter) 

Delaware

86-2083865

(State or other jurisdiction of 

incorporation or organization)

(I.R.S. Employer

Identification No.)

1717 Main St

,

Ste 3388

Dallas

,

TX

75201

(

254

)

244-5739

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

__________________

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

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Class A Common Stock, par value

$0.0001 per share

VAXX

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, smaller reporting company, or an emerging growth

company. See 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).

☐

As of May 6, 2022, the registrant had

112,120,585

 shares of $0.0001 par value Class A common stock outstanding and

13,874,132

 shares of $0.0001 par value Class B

common stock outstanding.

SPECIAL NOTE REGARDING FORWARD -LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking statements are neither historical facts nor

assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of

our business, future plans and strategies and other future conditions. In some cases, you can identify forward-looking statements

because they contain words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “predict,” “project,” “target,”

“potential,” “seek,” “will,” “would,” “could,” “should,” “continue,” “contemplate,” “plan,” other words and terms of similar meaning

and the negative of these words or similar terms.

Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control.

We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance

and outcomes may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly

Report. In addition, even if our results of operations, financial condition and cash flows, and the development of the markets in which

we operate, are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may

not be indicative of results or developments in subsequent periods. New factors emerge from time to time that may cause our business

not to develop as we expect, and it is not possible for us to predict all of them. Factors that could cause actual results and outcomes

to differ from those reflected in forward-looking statements include, among others, the following:

• the prospects of UB-612 and other product candidates, including the timing of data from our clinical trials for UB-612

and other product candidates and our ability to obtain and maintain regulatory approval for our product candidates;

• our ability to develop and commercialize new products and product candidates;

• our ability to leverage our Vaxxine Platform;

• the rate and degree of market acceptance of our products and product candidates;

• our status as a clinical-stage company and estimates of our addressable market, market growth, future revenue,

expenses, capital requirements and our needs for additional financing;

• our ability to comply with multiple legal and regulatory systems relating to privacy, tax, anti-corruption and

other applicable laws;

• our ability to hire and retain key personnel and to manage our future growth effectively;

• competitive companies and technologies and our industry and our ability to compete;

• our and our collaborators’, including United Biomedical’s (“UBI”), ability and willingness to obtain, maintain, defend

and enforce our intellectual property protection for our proprietary and collaborative product candidates, and the scope

of such protection;

• the performance of third party suppliers and manufacturers and our ability to find additional suppliers and

manufacturers;

• our ability and the potential to successfully manufacture our product candidates for pre-clinical use, for clinical trials

and on a larger scale for commercial use, if approved;

• the ability and willingness of our third-party collaborators, including UBI, to continue research and development

activities relating to our product candidates;

• general economic, political, demographic and business conditions in the United States, Taiwan and other jurisdictions;

• the potential effects of government regulation, including regulatory developments in the United

States and other jurisdictions;

• ability to obtain additional financing in future offerings;

• expectations about market trends; and

• the effects of the Russia-Ukraine conflict and the COVID-19 pandemic on business operations, the initiation,

development and operation of our clinical trials and patient enrollment of our clinical trials.

We discuss many of these factors in greater detail under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the

year ended December 31, 2021. These risk factors are not exhaustive and other sections of this report may include additional

factors which could adversely impact our business and financial performance. Given these uncertainties, you should not place

undue reliance on these forward-looking statements.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits

completely and with the understanding that our actual future results may be materially different from what we expect. We qualify

all of the forward -looking statements in this Quarterly Report by these cautionary statements. Except as required by law, we

undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events

or otherwise.

As used in this Quarterly Report on Form 10-Q, unless otherwise specified or the context otherwise requires, the terms “we,”

“our,” “us,” the “Company” refer to Vaxxinity, Inc. and its subsidiaries. All brand names or trademarks appearing in this Quarterly

Report are the property of their respective owners.

4

Table of Contents

Page

5

6

7

9

10

22

32

33

35

35

35

35

38

5

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

VAXXINITY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

March 31,

December 31,

2022

2021

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

124,766

$

144,885

Amounts due from related parties

399

393

Prepaid expenses and other current assets

8,183

8,851

Total current assets

133,348

154,129

Property and equipment, net

12,594

12,173

Long-term prepaid fixed assets

157

199

Long-term deposits

1,351

—

Restricted cash

78

172

Total assets

$

147,528

$

166,673

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

1,460

$

3,192

Amounts due to related parties

16,787

19,407

Accrued expenses and other current liabilities

5,784

4,519

Notes payable

380

376

Total current liabilities

24,411

27,494

Other liabilities

Notes payable, net of current portion

10,226

10,323

Other long-term liabilities

236

237

Total liabilities

34,873

38,054

Commitments and contingencies (Note 16)

Preferred stock: $

0.0001

 par value,

50,000,000

 shares authorized at March 31, 2022 and December 31, 2021

—

—

Stockholders’ equity:

Class A common stock, $

0.0001

 par value;

1,000,000,000

 shares authorized,

111,967,092

 and

111,518,094

 shares issued and

outstanding at March 31, 2022 and December 31, 2021, respectively

278

278

Class B common stock, $

0.0001

 par value;

100,000,000

 shares authorized,

13,874,132

 shares issued and outstanding at

March 31, 2022 and December 31, 2021

—

—

Additional paid-in capital

360,121

357,822

Accumulated deficit

(247,744)

(229,481)

Total stockholders’ equity

112,655

128,619

Total liabilities and stockholders’ equity

$

147,528

$

166,673

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

6

VAXXINITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)

Three Months Ended March 31,

2022

2021

Revenue

$

—

$

17

Cost of revenue

—

1

Gross profit

—

16

Operating expenses:

Research and development

11,478

11,688

General and administrative

6,686

8,584

Total operating expenses

18,164

20,272

Loss from operations

(18,164)

(20,256)

Other (income) expense:

Interest expense

105

511

Interest income

(5)

—

Change in fair value of convertible notes

—

2,667

Change in fair value of simple agreement for future equity

—

8,365

Change in fair value of warrant liability

—

214

(Gain) loss on foreign currency translation, net

(1)

8

Other (income) expense

99

11,765

Net loss

$

(18,263)

$

(32,021)

Net loss per share, basic and diluted

$

(0.15)

$

(0.47)

Weighted average common shares outstanding, basic and diluted

125,709,613

68,550,993

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

7

VAXXINITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK

(in thousands, except share amounts)

(Unaudited)

Convertible Preferred Stock

Series Seed

Series Seed-1

Series Seed-2

Series A-1

Series A-2

Series A

Series B

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Total

Balance at December 31, 2020

7,831,528

$

10,383

22,876,457

$

20,903

14,615,399

$

11,315

1,871,511

$

4,640

6,307,690

$

15,234

—

$

—

—

$

—

$

62,475

Exchange of Series Seed, Series Seed-1, Series Seed-2, Series

A-1 and Series A-2 for Series A

(7,831,528)

(10,383)

(22,876,457)

(20,903)

(14,615,399)

(11,315)

(1,871,511)

(4,640)

(6,307,690)

(15,234)

53,502,585

62,475

—

—

—

Conversion of convertible notes to Series A preferred stock,

net of debt issuance costs

—

—

—

—

—

—

—

—

—

—

3,624,114

27,545

—

—

27,545

Conversion of notes payable with related parties to Series A

convertible preferred

—

—

—

—

—

—

—

—

—

—

423,230

2,205

—

—

2,205

Conversion of Simple Agreement for Future Equity to Series A

convertible preferred

—

—

—

—

—

—

—

—

—

—

4,539,060

35,600

—

—

35,600

Conversion of warrant liability to Series A convertible

preferred

—

—

—

—

—

—

—

—

—

—

134,106

614

—

—

614

Issuance of Series B convertible preferred stock, net of

issuance costs of $

55

—

—

—

—

—

—

—

—

—

—

—

—

5,441,863

43,480

43,480

Balance at March 31, 2021

—

$

—

—

$

—

—

$

—

—

$

—

—

$

—

62,223,095

$

128,439

5,441,863

$

43,480

$

171,919

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

8

VAXXINITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

Common Stock-Class A

Common Stock-Class B

Treasury Stock

Shares

Amount

Shares

Amount

Shares

Amount

Additional Paid-in

Capital

Accumulated

Deficit

Stockholders’

Equity (Deficit)

Balance at December 31, 2021

111,518,094

$

278

13,874,132

$

—

—

$

—

$

357,822

$

(229,481)

$

128,619

Issuance of common stock upon exercise of stock options

448,998

—

—

—

—

—

121

—

121

Stock-based compensation expense

—

—

—

—

—

—

2,178

—

2,178

Net loss

—

—

—

—

—

—

—

(18,263)

(18,263)

Balance at March 31, 2022

111,967,092

$

278

13,874,132

$

—

—

$

—

$

360,121

$

(247,744)

$

112,655

Common Stock-Class A

Common Stock-Class B

Treasury Stock

Shares

Amount

Shares

Amount

Shares

Amount

Additional Paid-in

Capital

Accumulated

Deficit

Stockholders’

Equity (Deficit)

Balance at December 31, 2020

60,360,523

$

272

10,999,149

$

—

(3,169,093)

$

(23)

$

4,682

$

(92,306)

$

(87,375)

Issuance of common stock upon exercise of stock options

9,785

—

—

—

—

—

4

—

4

Vesting of restricted stock

15,405

—

—

—

—

—

—

—

—

Issuance of common stock upon stock grant

485,836

—

—

—

—

—

103

—

103

Retirement of treasury stock upon reorganization

(3,169,093)

—

—

—

3,169,093

23

(23)

—

—

Stock-based compensation expense

—

—

—

—

—

—

3,440

—

3,440

Net loss

—

—

—

—

—

—

—

(32,021)

(32,021)

Balance at March 31, 2021

57,702,456

$

272

10,999,149

$

—

—

$

—

$

8,206

$

(124,327)

$

(115,849)

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

9

VAXXINITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Three Months Ended March 31,

2022

2021

Cash flows from operating activities:

Net loss

$

(18,263)

$

(32,021)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation expense

333

282

Amortization of debt issuance costs

14

228

Stock-based compensation expense

2,178

3,440

Non-cash interest expense

—

—

Change in fair value of convertible notes

—

2,667

Change in fair value of warrant liability

—

214

Change in fair value of simple agreement for future equity

—

8,365

Changes in operating assets and liabilities:

Accounts receivable

—

26

Amounts due from related parties

(6)

(5)

Prepaid expenses and other current assets

667

(12,752)

Long-term deposits

(1,351)

—

Deferred offering costs

—

(862)

Accounts payable

(1,733)

914

Amounts due to related parties

(2,620)

(1,671)

Accrued expenses and other current liabilities

1,268

2,937

Other long-term liabilities

(1)

(3)

Net cash used in operating activities

(19,514)

(28,241)

Cash flows from investing activities:

Purchase of property and equipment

(713)

—

Net cash used in investing activities

(713)

—

Cash flows from financing activities:

Proceeds from issuance of notes payable with related parties

—

2,000

Repayment of convertible notes payable

—

(2,000)

Repayment of notes payable

(107)

(104)

Proceeds from issuance of simple agreement for future equity

—

2,900

Proceeds from issuance of Series B convertible preferred stock, net of issuance costs

—

43,480

Proceeds from exercise of stock options

121

4

Net cash provided by financing activities

14

46,280

Increase (decrease) in cash, cash equivalents, and restricted cash

(20,213)

18,039

Cash, cash equivalents, and restricted cash at beginning of period

145,057

31,198

Cash, cash equivalents, and restricted cash at end of period

$

124,844

$

49,237

Supplemental Disclosure

Cash paid for interest

$

92

$

96

Noncash Financing Activities

Exchange of Series Seed, Series Seed-1, Series Seed-2, Series A-1 and Series A-2 for Series A preferred stock

$

—

$

62,475

Conversion of simple agreement for future equity into Series A preferred stock

$

—

$

35,600

Conversion of convertible notes payable into Series A preferred stock

$

—

$

27,545

Conversion of notes payable with related parties into Series A preferred stock

$

—

$

2,205

Conversion of warrant liability into Series A preferred stock

$

—

$

614

Retirement of treasury stock upon reorganization

$

—

$

23

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

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10

1. Nature of the Business

Vaxxinity, Inc., a Delaware corporation (“Vaxxinity ,” and together with its subsidiaries, the “Company”), was formed through the

combination of two separate businesses that originated from United Biomedical, Inc. (“UBI”) in two separate transactions: a spin-out

from UBI in 2014 of operations focused on developing chronic disease product candidates that resulted in United Neuroscience (“UNS”),

and a second spin-out from UBI in 2020 of operations focused on the development of a COVID-19 vaccine that resulted in C19 Corp.

(“COVAXX”). On February 2, 2021, Vaxxinity was incorporated for the purpose of reorganizing and combining UNS and COVAXX

and on March 2, 2021, did so by acquiring all of the outstanding equity interests of UNS and COVAXX pursuant to a contribution and

exchange agreement (the “Contribution and Exchange Agreement”) whereby the existing equity holders of UNS and COVAXX

contributed their equity interests in each of UNS and COVAXX in exchange for equity in Vaxxinity (the “Reorganization”).

The Company is a biotechnology company currently focused on developing product candidates for human use in the fields of neurology

and coronaviruses utilizing its “Vaxxine Platform”—a peptide vaccine technology first developed by UBI and subsequently refined over

the last two decades. The Company is engaged in the development and commercialization of rationally designed prophylactic and

therapeutic vaccines to combat chronic disorders and infectious diseases with large patient populations and unmet medical need. UBI is

a significant shareholder of the Company and, therefore, considered a related party.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not

limited to, uncertainty of product development and commercialization, lack of marketing and sales history, development by its

competitors of new technological innovations, dependence on key personnel, market acceptance of products, product liability, protection

of proprietary technology, ability to raise additional financing, and compliance with government regulations. If the Company does not

successfully commercialize any of its product candidates, it will be unable to generate recurring product revenue or achieve profitability.

The Company’s product candidates are in development and will require significant additional research and development efforts,

including extensive pre-clinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant

amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. There can be no

assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s

intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any

approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when,

if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in

technology and is dependent upon the services of its employees and consultants.

Contribution and Exchange Agreement

On March 2, 2021, in accordance with the Contribution and Exchange Agreement, (i) all outstanding shares of UNS and COVAXX

preferred stock and common stock were contributed to Vaxxinity and exchanged for like shares of stock in Vaxxinity, (ii) the outstanding

options to purchase shares of UNS and COVAXX common stock were terminated and substituted with options to purchase shares of

common stock in Vaxxinity, (iii) the outstanding warrant to purchase shares of COVAXX common stock was cancelled and exchanged

for a warrant to acquire common stock in Vaxxinity and (iv) each outstanding Reorganization Convertible Note (as defined below) was

contributed to Vaxxinity and the holders of such notes received Series A preferred stock in Vaxxinity. In particular:

•

Each UNS common share and convertible preferred share was exchanged for 0.2191 shares of Vaxxinity common stock or

Series A preferred stock, as applicable;

•

Each share of COVAXX common and convertible preferred stock was exchanged for

3.4233

 shares of Vaxxinity common

stock or Series A preferred stock, as applicable (and prior to the closing of the Reorganization, all the holders of outstanding

COVAXX SAFEs agreed to convert such SAFEs into shares of Series A-3 preferred stock of COVAXX, which shares were

then exchanged for shares of Vaxxinity’s Series A preferred stock);

•

The Reorganization Convertible Notes were exchanged for an aggregate of

4,047,344

 shares of Vaxxinity’s Series A

preferred stock; and

•

Each outstanding option of both UNS and COVAXX to purchase common shares of UNS or COVAXX was terminated and

substituted with an option to purchase shares of Class A common stock of Vaxxinity. Each outstanding UNS option was

exchanged based on a conversion ratio of

0.2191

. Each outstanding COVAXX option was exchanged based on a conversion

ratio of

3.4233

.

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11

All parties to the Contribution and Exchange Agreement intended that the contribution of outstanding equity interests to Vaxxinity in

exchange for Vaxxinity’s common stock and preferred stock be treated as an integrated transaction for U.S. federal income tax purposes

that is governed by Section 351(a) of the Internal Revenue Code of 1986, as amended.

The Reorganization was determined to be a common control transaction, so the carrying values of all contributed assets and assumed

liabilities remained unchanged and the financial information for all periods in the financial statements presented prior to the

Reorganization are presented on a consolidated basis.

Reverse Stock Split 

On October 29, 2021, the Company effectuated a reverse stock split of 1-for-

1.556

 (the “Stock Split”) of the Company’s Class A and

Class B common stock pursuant to an amendment to the Company’s Amended and Restated Certificate of Incorporation approved by

the Company’s board of directors and stockholders. As a result of the Stock Split, the Company also adjusted the share and per share

amounts associated with its options and warrants to purchase shares of its common stock. These unaudited condensed consolidated

financial statements including the notes have been retroactively adjusted to reflect the Stock Split for all periods presented. Any

fractional shares that would have resulted from the Stock Split have been rounded down to the nearest whole share. 

Initial Public Offering

On November 15, 2021, the Company closed its IPO of

6,000,000

 shares of Class A common stock at a public offering price of $

13.00

per share. On November 18, 2021 the Company held a subsequent closing for the issuance of an additional

537,711

 shares of Class A

common stock pursuant to a 30-day option granted to the underwriters to purchase up to an additional

900,000

 shares of Class A common

stock at the IPO price, less underwriting discounts and commissions. The aggregate net proceeds to the Company from the offering,

after deducting underwriting discounts and commissions and other offering expenses payable by the Company, was approximately $

71.1

million. Upon the closing of the IPO, all previously outstanding shares of the Company’s redeemable convertible preferred stock were

automatically converted at the same ratio used for the Stock Split (1-for-

1.556

) into shares of its Class A common stock.

Liquidity

At three months ended March 31, 2022, the Company had $124.8 million of cash and cash equivalents. To date, the Company has

primarily financed its operations through the sale of convertible preferred stock and common stock and borrowings under promissory

notes (including Convertible Notes), a portion of which has been raised from related party entities. The Company has experienced

significant negative cash flows from operations since inception, and incurred a net loss of $18.3 million for the three months ended

March 31, 2022. Net cash used in operating activities for the three months ended March 31, 2022 was $19.5 million. In addition, as of

March 31, 2022, the Company has an accumulated deficit of $247.7 million. The Company expects to incur substantial operating losses

and negative cash flows from operations for the foreseeable future. As of the date these financial statements were available to be issued,

the Company expects its existing cash and cash equivalents to be sufficient to fund its operating expenses and capital expenditure

requirements for at least the next 12 months.

The Company will need to obtain additional funding beyond the period that is 12 months from the date these financial statements were

available to be issued whether through collaboration agreements, private or public equity or debt offerings or a combination thereof, and

such additional funding may not be available on terms the Company finds acceptable or at all. If the Company is unable to obtain

sufficient capital to continue to advance its programs, the Company would be forced to delay, limit, reduce or terminate its product

development or future commercialization efforts or grant rights to third parties to develop and market product candidates that the

Company would otherwise prefer to develop and market itself.

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which

contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The unaudited condensed

consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset

amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared using generally accepted

accounting principles in the United States of America (GAAP) and pursuant to the rules and regulations of the United States Securities

and Exchange Commission (“SEC”) for interim financial reporting. The unaudited condensed consolidated financial statements for the

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12

periods presented include the accounts of UNS and COVAXX that were parties to the Contribution and Exchange Agreement. All share

and per share amounts, as originally recorded by each entity, have been converted to a number of shares and per share amounts using

the conversion ratios determined under the Contribution and Exchange Agreement and the Stock Split ratio. 

These interim condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments

(consisting of normal recurring adjustments and accruals) necessary to fairly present the results of the interim periods. The condensed

consolidated balance sheet at December 31, 2021, has been derived from the audited financial statements at that date. Operating results

for the three months ended March 31, 2022 and cash flows for the three months ended March 31, 2022 are not necessarily indicative of

the results that may be expected for the fiscal year ended December 31, 2022 or any other future period. Certain information and footnote

disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in

the United States (“U.S. GAAP”) have been omitted in accordance with the rules and regulations for interim reporting of the SEC. These

interim unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included

in our report for the year ended December 31, 2021.

Leases

At inception of a contract, we determine whether an arrangement is or contains a lease. For all leases, we determine the classification as

either operating leases or financing leases. Operating leases are included in Operating lease right-of-use assets and Operating lease

liabilities in our Condensed Consolidated Balance Sheets.

Lease recognition occurs at the commencement date and lease liability amounts are based on the present value of lease payments over

the lease term. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise

that option. If a lease does not provide information to determine an implicit interest rate, we use our incremental borrowing rate in

determining the present value of lease payments. Right-of-use (ROU) assets represent our right to use an underlying asset for the lease

term, and lease liabilities represent our obligation to make lease payments under the lease. ROU assets also include any lease payments

made prior to the commencement date and exclude lease incentives received. Operating lease expense is recognized on a straight-line

basis over the lease term. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there

is a transfer of title or purchase option reasonably certain of exercise. Lease agreements with both lease and nonlease components, are

generally accounted for together as a single lease component.

Related party transactions

The Company has a Related Party policy which defines related parties, and assigns oversight responsibility for related party transactions

to the Company's Audit Committee. The Committee reviews in advance related party transactions, and considers multiple factors,

including the proposed aggregate value of the transaction, or, in the case of indebtedness, the amount of principal that would be involved,

the benefits to the Company of the proposed transaction, the availability of other sources of comparable products or services, and an

assessment of whether the proposed transaction is on terms that are comparable to the terms available to or from, as the case may be,

unrelated third parties. Under the policy, related party transactions are approved only if the Committee determines in good faith that the

transaction is not inconsistent with the interests of the Company and its shareholders.

Significant accounting policies 

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements are disclosed in

our annual financial statements for the year ended December 31, 2021. There have been no changes to the Company’s significant

accounting policies during the three months ended March 31, 2022.

Recently issued accounting pronouncements 

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the

Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued

standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Recently adopted accounting standards

In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). ASU 2018-11

provided an alternative method in addition to the modified retrospective transition method for ASU No. 2016-02, Leases: Amendments

to the FASB Accounting Standards Codification (“ASU 2016-02”), issued in February 2016. Under ASU 2018-11, an entity may elect

to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of

retained earnings in the period of adoption. Under ASU 2016-02, a lease is required to recognize assets and liabilities with lease terms

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13

of more than twelve months. ASU 2016-02 is effective for nonpublic business entities and public entities eligible to be Smaller Reporting

Companies for fiscal years beginning after December 15, 2021. 

The Company adopted the new standard on January 1, 2022 using the modified retrospective approach. The Company has elected to

apply the transition method that allows companies to continue applying the guidance under the lease standard in effect at that time in

the comparative periods presented in the condensed financial statements and recognize a cumulative-effect adjustment to the opening

balance of accumulated deficit on the date of adoption. The Company has elected to combine lease components (for example fixed rent

payments) with non-lease components (for example, common-area maintenance costs) on our facility, lab equipment and CRO

embedded lease asset classes. The Company also elected the “package of practical expedients”, which permits the Company not to

reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs.

In addition, the Company also elected the short-term lease practical expedients allowed under the standard. Lastly, the Company did not

elect the practical expedient allowing the use-of-hindsight which would require the Company to reassess the lease term of its leases

based on all facts and circumstances through the effective date.

Results for reporting period beginning after January 1, 2022 are presented under the new standard, while prior period amounts are not

adjusted and continue to be reported under the accounting standards in effect for the prior period. Upon adoption of the new lease

standard, on January 1, 2022, the Company was not entered into any leases subject to ASC 842 and did not capitalize a ROU asset or

lease liability.

3. Fair Value Measurements

The Company's money market accounts are shown at fair value based on unadjusted quoted market prices in active markets for identical

assets.

The following table presents information about the Company’s financial instruments measured at fair value on a recurring basis and

indicate the level of the fair value hierarchy used to determine such fair values (in thousands):

March 31, 2022

Level 1

Level 2

Level 3

Total

Assets:

Money market account

$

119,796

$

—

$

—

$

119,796

Total assets

$

119,796

$

—

$

—

$

119,796

December 31, 2021

Level 1

Level 2

Level 3

Total

Assets:

Money market account

$

139,794

$

—

$

—

$

139,794

Total assets

$

139,794

$

—

$

—

$

139,794

During the three months ended March 31, 2022 and the year ended December 31, 2021, there were

no

 transfers between Level 1, Level

2 and Level 3.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

March 31,

December 31,

2022

2021

Prepaid materials and supplies

$

3,657

$

3,517

Deposits

3,468

4,379

Clinical prepayments

709

614

Other

349

341

$

8,183

$

8,851

The Company’s prepaid material and supplies related to enzyme-linked immunosorbent assay (“ELISA”) test production, of which $

1.0

million was paid to a related party and $

2.5

 million related to materials to be utilized during its Phase 3 COVID-19 vaccine clinical trial.

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14

5. Property and Equipment

Property and equipment, net consisted of the following (in thousands):

March 31,

December 31,

2022

2021

Airplane

$

11,983

$

11,983

Laboratory and computer equipment

2,560

1,831

Software

169

168

Facilities, furniture and fixtures

110

85

Vehicles

86

87

Total property and equipment

14,908

14,154

Less: accumulated depreciation

(2,314)

(1,981)

Property and equipment, net

$

12,594

$

12,173

Depreciation expense for the three months ended March 31, 2022 and 2021 was $

0.3

 million. 

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

March 31,

December 31,

2022

2021

Accrued external research and development

$

3,498

$

1,501

Accrued bonuses

1,200

2,294

Accrued professional fees and other

1,055

692

Accrued interest

31

32

$

5,784

$

4,519

7. Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in thousands):

March 31,

December 31,

2022

2021

Accrued tax provision

236

236

Accrued rent

—

1

$

236

$

237

As of March 31, 2022 and December 31, 2021, approximately $

0.2

 million of the accrued tax provision relates to penalties and interest

the Company may be subject to paying for late filing fees related to a foreign subsidiary. The Company expects these amounts to be

forgiven but has accrued for them until the statute of limitations expires and it is appropriate to write them off.

8. Notes Payable

Notes Payable with Related Parties

In December 2018, the Company entered into related party convertible notes payable (the “2018 Related Notes” and together with the

Convertible Notes, the “Reorganization Convertible Notes”) for $

2.0

 million in aggregate proceeds, received in three tranches. The 2018

Related Notes bore simple interest at an annual rate of

5

% and contain a number of provisions addressing events of default and

prepayment. In accordance with the Contribution and Exchange Agreement, on March 2, 2021, the 2018 Related Notes were converted

into Series A preferred stock. 

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

15

During the three months ended March 31, 2021, the Company recognized interest expense of less than $

0.1

 million on the 2018 Related

Notes.

2019 Executive Note

In November 2019, the Company borrowed $

0.1

 million from its Chief Executive Officer (the “2019 Executive Note”). No formal loan

agreement was executed. The Company has elected to accrue interest at an annual rate of

5

%, consistent with the terms and conditions

of the Convertible Notes and 2018 Related Notes, which was the closest benchmark the Company could evaluate. The 2019 Executive

Note was repaid in August 2021. 

The activity of the 2018 Related Notes and 2019 Executive Note is as follows (in thousands):

2018 Related Notes and 2019 Executive Note

Related Party

Principal

Accrued

Interest

Balance

December 31, 2020

$

2,100

$

194

$

2,294

Accrued interest

—

18

18

Conversion

(2,000)

(205)

(2,205)

March 31, 2021

$

100

$

7

$

107

Note Payable—Airplane

In connection with the acquisition of an airplane, the Company entered into a note payable agreement (the “2025 Note”) in June 2020

for $

11.5

 million, with an annual interest rate of

3.4

% and a maturity date of June 9, 2025. Principal and interest payments are payable

monthly in the amount of $

0.07

 million with a final payment of $

9.4

 million at maturity. The 2025 Note is guaranteed by the co-founders

of the Company. In addition, the Company incurred debt issuance costs of $

0.3

 million, which are being amortized over the term of the

loan. There are no financial covenants associated with the 2025 Note. 

The carrying value of the 2025 Note is as follows (in thousands):

March 31,

December 31,

2022

2021

Principal

$

10,776

$

10,883

Unamortized debt issuance cost

(170)

(184)

Carrying amount

10,606

10,699

Less: current portion

(380)

(376)

Note payable, net of current portion and debt issuance cost

$

10,226

$

10,323

As of March 31, 2022, the remaining principal payments for the 2025 Note, are as follows (in thousands):

Amount

2022

$

322

2023

444

2024

458

2025

9,552

$

10,776

Interest expense associated with the 2025 Note was $

0.1

 million for each of the three months ended March 31, 2022 and 2021. As of

March 31, 2022, accrued interest of less than $

0.1

 million was included in accrued expenses and other liabilities in the accompanying

condensed consolidated balance sheets as of March 31, 2022 (unaudited) and December 31, 2021.

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

16

Note Payable—Paycheck Protection Program

The Company applied for and received a loan, which is in the form of a note dated May 5, 2020, from HSBC Bank USA, National

Association (“HSBC”) in the aggregate amount of approximately $

0.3

 million (the “PPP Loan”), pursuant to the Paycheck Protection

Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides

for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. As of

March 31, 2021, there were no events of default under the PPP Loan. 

The Company paid off the PPP Loan in full, including all accrued but unpaid interest to the repayment date, in August 2021.

9. Convertible Preferred Stock

In connection with the Reorganization, each UNS convertible preferred share was exchanged for

0.2191

 shares of Vaxxinity preferred

stock and each share of COVAXX convertible preferred stock was exchanged for

3.4233

 shares of Vaxxinity preferred stock. During

the first and second quarters of 2021, the Company raised gross proceeds of $

122.8

 million in connection with its Series B preferred

stock financing. The Company issued a total of

15,365,574

 shares at a price of $

8.00

 per share. All shares of the Company’s Series B

preferred stock converted into shares of the Company’s Class A common stock concurrently with the closing of the initial public offering. 

As of March 31, 2022 and December 31, 2021, Vaxxinity’s Amended and Restated Certificate of Incorporation authorized

50,000,000

shares of preferred stock with a par value of $

0.0001

 per share. There were no shares of preferred stock outstanding as of March 31,

2022 and December 31, 2021.

10. Common Stock

As explained in Note 1, in accordance with the Contribution and Exchange Agreement, on March 2, 2021, all outstanding shares of

common stock of UNS and COVAXX were contributed to Vaxxinity and exchanged for an aggregate of

60,360,523

 shares of

Vaxxinity’s Class A common stock and

10,999,149

 shares of Vaxxinity’s Class B common stock. Each UNS share of common stock

was exchanged for

0.2191

 shares of Vaxxinity common stock and each share of COVAXX common stock was exchanged for

3.4233

shares of Vaxxinity common stock. 

As of March 31, 2022 and December 31, 2021, Vaxxinity’s Amended and Restated Certificate of Incorporation authorized

1,100,000,000

 shares of common stock with a par value of $

0.0001

 per share, of which

1,000,000,000

 shares have been designated as

Class A common stock and

100,000,000

 shares have been designated as Class B common stock. 

Holders of Class A common stock and Class B common stock have identical rights, except with respect to voting and conversion. Except

as otherwise expressly provided in Vaxxinity’s Amended and Restated Certificate of Incorporation or Bylaws, or required by applicable

law, holders of Class A common stock will be entitled to one vote per share on all matters submitted to a vote of stockholders and

holders of our Class B common stock will be entitled to ten votes per share on all matters submitted to a vote of stockholders. 

Holders of Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of

stockholders, except (i) amendments to Vaxxinity’s Amended and Restated Certificate of Incorporation to increase or decrease the par

value of a class of capital stock, in which case the applicable class would be required to vote separately to approve the proposed

amendment and (ii) amendments to Vaxxinity’s Amended and Restated Certificate of Incorporation that alter or change the powers,

preferences or special rights of a class of capital stock in a manner that affects its holders adversely, in which case the applicable class

would be required to vote separately to approve the proposed amendment. 

Holders of common stock are entitled to receive, ratably, dividends as may be declared by Vaxxinity’s board of directors out of funds

legally available therefor if the board of directors, in its discretion, determines to issue dividends. 

The voting, dividend, and liquidation rights of the holders of common stock are subject to and qualified by the rights, powers, and

preferences of the holders of Vaxxinity’s preferred stock. 

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

17

The Company has reserved shares of common stock for issuance for the following purposes:

March 31,

December 31,

2022

2021

Options issued and outstanding

20,274,077

21,387,909

Options available for future grants

6,727,691

7,209,538

Warrants issued and outstanding

1,928,020

1,928,020

28,929,788

30,525,467

11. Stock-Based Compensation

Stock Options

As of March 31, 2022 there were options for

13,911,622

 shares of Class A stock outstanding and options for

6,362,455

 shares of Class

B stock outstanding, of which

8,466,456

 Class A and

4,897,414

 Class B shares were exercisable, respectively. As of March 31, 2022,

the maximum number of stock options awards available for future issuance under the Company’s plans is

6,727,691

.

The following table summarizes stock option activity during the three months ended March 31, 2022:

Number of Stock

Options

Outstanding

Weighted Price

Per Share

Weighted

Contractual

Term (years)

Aggregate

Intrinsic Value

(in thousands)

Balance at December 31, 2021

21,387,909

$

5.25

7.4

$

49,684

Granted

303,086

5.36

Exercised

(842,938)

(3.89)

Forfeited

(573,980)

(5.16)

Balance at March 31, 2022

20,274,077

$

5.31

7.5

$

32,167

Options vested and exercisable at March 31, 2022

13,363,870

$

4.46

7.1

$

27,022

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the options and the fair value of the

common stock for those options that had exercise prices lower than the fair value of the common stock as of March 31, 2022.

The intrinsic value of options exercised during the three months ended March 31, 2022 was $

3.6

 million.

The weighted-average grant-date fair value per share of options granted during the three months ended March 31, 2022 was $

4.02

.

Restricted Stock

The following table summarizes the Company’s restricted stock activity for the three months ended March 31, 2022:

Number of

Shares

Weighted

Average

Grant Date

Fair Value

Per Share

Unvested at December 31, 2021

—

$

—

Issued

300,000

3.76

Unvested at March 31, 2022

300,000

$

3.76

Stock-based compensation expense recognized on vested restricted stock was immaterial for the three months ended March 31, 2022.

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

18

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense in the following expense categories in the accompanying unaudited

condensed consolidated statements of operations (in thousands):

Three Months Ended March 31,

2022

2021

General and administrative

$

1,371

$

3,167

Research and development

807

273

Total stock-based compensation expense

$

2,178

$

3,440

As of March 31, 2022, total unrecognized compensation cost related to the unvested stock-based awards was $

24.2

 million, which is

expected to be recognized over a weighted average period of

3.0

 years.

12. Income Taxes

The Company computes its expected annual effective income tax rate in accordance with ASC 740 and makes changes on a quarterly

basis, as necessary, based on certain factors such as changes in forecasted annual pre-tax income; changes to actual or forecasted

permanent book to tax differences; impacts from tax audits with state, federal or foreign tax authorities; impacts from tax law changes;

or change in judgment as to the realizability of deferred tax assets. The Company identifies items which are unusual and non-recurring

in nature and treats these as discrete events. The tax effect of discrete items is recorded in the quarter in which the discrete events occur. 

The Company’s effective tax rate for the three months ended March 31, 2022 and 2021 was

0.00

%, due primarily to its uncertainty of

realizing a benefit from net operating losses incurred during the period.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the

recorded deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent on the generation of future

taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversal

of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on these items

and the consecutive years of pretax losses (resulting from impairment), management determined that enough uncertainty exists relative

to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance for all taxing

jurisdictions.

The Company files income tax returns in the U.S. federal and various state and local jurisdictions. The Company also files returns in

numerous foreign jurisdictions that have varied years remaining open for examination, but generally the statute of limitations is three

to four years from when the return is filed. As of March 31, 2022, the Company currently has no ongoing audits.

The Company has US net operating loss (“NOL”) carryforwards for federal and state income tax purposes. Use of the NOL

carryforwards is limited under Section 382 of the Internal Revenue Code, as we have had a change in ownership of more than 50% of

our capital stock over a three-year period as measured under Section 382 of the Internal Revenue Code. These complex changes of

ownership rules generally focus on ownership changes involving shareholders owning directly or indirectly 5% or more of our stock,

including certain public “groups” of shareholders as set forth under Section 382 of the Internal Revenue Code, including those arising

from new stock issuances and other equity transactions. Some of these NOL carryforwards will expire if they are not used within

certain periods. At this time, we consider it more likely than not that we will not have sufficient taxable income in the future that will

allow us to realize these NOL carryforwards.

13. Net Loss Per Share

The Company’s unvested restricted common shares have been excluded from the computation of basic net loss per share. 

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

19

The Company’s potentially dilutive securities, which include options, unvested restricted stock, convertible notes payable and

convertible preferred stock, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the

net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net

loss per share is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at

each period end, from the computation of diluted net loss per share as of March 31, 2022 and March 31, 2021 because including them

would have had an anti-dilutive effect:

March 31,

March 31,

2022

2021

Options and RSUs issued and outstanding

20,574,077

19,712,504

Warrants issued and outstanding stock

1,928,020

128,702

22,502,097

19,841,206

14. Commitments and Contingencies

Contractual Obligations 

The Company enters into agreements with contract research organizations (“CROs”) to conduct clinical trials and preclinical studies

and contract manufacturing organizations (“CMOs”) to produce vaccines and other potential product candidates. Contracts with CROs

and CMOs are generally cancellable, with notice, at the Company’s option. 

As of March 31, 2022, the Company had remaining prepayments to CROs of $

3.1

 million and remaining prepayments to CMOs of $

2.6

million for activities associated with the conduct of its clinical trials and for the production of the Company’s anticipated vaccine product

candidate. 

Michael J. Fox Foundation Grant

On November 3, 2021, the Company was awarded a grant from the Michael J. Fox Foundation for Parkinson’s Research (“MJFF”) in

the amount of $

0.8

 million to be used in a project for the exploration of markers for target engagement in individuals immunized with

UB-312, an active

a

-Synuclein immunotherapy. The Company will oversee sample management, sample preparation (IgG fractions)

and distribution, as well as characterize the binding properties of the antibodies against pathological forms of aSyn. As funding is

expected to be utilized over a two-year period, as cash is received, the amount expected to the utilized within twelve months is recognized

to short-term restricted cash/deposits, with a corresponding short-term accrued liability, which is released as the related expenses are

offset. The Company recognizes payments from MJFF as a reduction of research and development expenses, in the same period as the

expenses that the grant is intended to reimburse are incurred. The remaining balance of cash received is recognized to long-term restricted

cash/deposits, with a corresponding long-term accrued liability. As of March 31, 2022, the balance of short-term restricted cash/deposits

and the corresponding short-term accrued liability was $

0

 and the balance of long-term restricted cash/deposits and the corresponding

long-term accrued liability was $

0

. For the three months ended March 31, 2022, the Company did not recognize any reduction of research

and development expenses for amounts reimbursed through the grant.

Lease Agreements

The Company has short-term leases resulting in $

0.1

 million short-term lease expense and less than $

0.1

 million variable lease expense

during the three months ended March 31, 2022. As of March 31, 2022, the Company has not entered into any finance lease agreements

or operating lease agreements resulting in the capitalization of a ROU asset or lease liability.

License Agreements

In August 2021, Vaxxinity entered into a license agreement (the “Platform License Agreement”) with UBI and certain of its affiliates

that expanded intellectual property rights previously licensed under previously issued license agreements with UBI. As part of the

agreement, Vaxxini ty obtained a worldwide, sublicensable (subject to certain conditions), perpetual, fully paid-up, royalty-free license

to research, develop, make, have made, utilize, import, export, market, distribute, offer for sale, sell, have sold, commercialize or

otherwise exploit peptide-based vaccines in the field of all human prophylactic and therapeutic uses, except for such vaccines related to

human immunodeficiency virus (HIV), herpes simplex virus (HSE) and Immunoglobulin E (IgE). The patents and patent applications

licensed under the Platform License Agreement include claims directed to a CpG delivery system, artificial T helper cell epitopes and

certain designer peptides and proteins utilized in UB-612. As described above, in consideration for the Platform License Agreement,

the Company issued to UBI a warrant to purchase Class A common stock (the “UBI Warrant”). 

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

20

The Company considered ASC 805, “Business Combinations” (“ASC 805”) and ASC 730, “Research and Development” (“ASC 730”)

in determining how to account for the issuance of the Class A common stock warrants. The Class A common stock warrants were issued

to a related party in exchange for a license agreement. The majority of the voting interests in the related party and that of the Company

were held by a group of immediate family members, at the time of the transaction, and as such the transaction constitutes a common

control transaction, which requires the license to be accounted for at the carrying value in the books of the transferor. As the related

party did not have any basis in the assets licensed, there was no accounting impact for the Company.

Indemnification Agreements 

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to employees, consultants,

vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of

breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered

into indemnification agreements with members of its board of directors and executive officers that will require the Company, among

other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The

maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in

many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is

not aware of any indemnification arrangements that could have a material effect on its financial position, results of operations, or cash

flows, and it has not accrued any liabilities related to such obligations as of March 31, 2022 and December 31, 2021. 

Legal Proceedings

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. As of March 31,

2022 and December 31, 2021, the Company was not a party to any material legal matters or claims.

15. Benefit Plans

In March 2018, the Company established a defined contribution savings plan under Section 401(k) of the Code. This plan covers

substantially all U.S. employees who meet minimum age and service requirements and allows participants to defer a portion of their

annual compensation on a pre-tax basis. The Company does not make matching contributions to the Plan.

The Company offers its Ireland-based employees a Personal Retirement Savings Account (“PRSA”) that allows participants to defer a

portion of their annual compensation. The Company provides contributions equal to

4

% of each participant’s annual salary. During both

of the three months ended March 31, 2022 and 2021, the Company contributed less than $

0.1

 million to PRSA accounts.

16. Related Party Transactions

The Company has related party arrangements with UBI and a number of its affiliated companies listed namely, United Biomedical, Inc.,

Asia (“UBI-Asia”), UBI Pharma, Inc. (“UBI-P”), United BioPharma, Inc (“UBP”) and UBI IP Holding (“UBI-IP”).

As of March 31, 2022 UBI owned

44

% of the Company’s stock. The majority of the voting interests in both UBI and the Company were

held by a group of immediate family members, and as such the entities are under common control.

Total amounts due to related parties were $

16.8

 million and $

19.4

 million as of March 31, 2022 and December 31, 2021, respectively.

Total amounts due from related parties were $

0.4

 million and $

0.4

 million as of March 31, 2022 and December 31, 2021, respectively. 

Total service fees incurred were $

0.8

 million and $

8.7

 million for the three months ended March 31, 2022 and 2021, respectively. 

Taiwan Centers for Disease Control Grant (“Taiwan CDC”) 

UBI-Asia, which is responsible for applying for and managing grants on our behalf under the COVID-19 program, was awarded a grant

by the Taiwan CDC for COVID-19 vaccine development. The Company contracted with UBI-Asia to conduct a two-phase study of a

COVID-19 vaccine clinical trial in Taiwan. The grant provides that costs incurred to complete the two phases of the clinical trial will

be reimbursed based on the achievement of certain milestones as provided in the agreement.

The Company provides administrative services to UBI-IP. Under the arrangement, the Company issues vendor payments and provides

technical services mostly for legal services on behalf UBI-IP. The Company bills UBI-IP for services based on the costs incurred with

no markup.

VAXXINITY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

21

Total related party operating activity, including the activity described above, are as follows (in thousands):

March 31,

December 31,

2022

2021

Consolidated balance sheet

Assets

Prepaid expenses and other current assets

$

3,546

$

3,517

Amounts due from related parties

399

393

Property and equipment, net

299

337

Liabilities

Amounts due to related parties

16,787

19,407

Accrued expenses

168

—

Three Months Ended March 31,

2022

2021

Operating expenses

Research and development

Services provided by related parties

784

10,633

Taiwan CDC grant reimbursement from related party

—

(2,417)

General and administrative

Services provided by related parties

—

507

17. Subsequent Events

The Company has evaluated subsequent events and has concluded that no events or transactions have occurred that require disclosure

in the accompanying consolidated financial statements, except as follows:

Coalition for Epidemic Preparedness Innovations (“CEPI”) Grant

In April 2022, the Company entered into an agreement with the Coalition for Epidemic Preparedness Innovations (“CEPI”) whereby

CEPI has agreed to provide funding of up to US$

9.25

 million to co-fund a Phase 3 clinical trial of Vaxxinity’s next generation UB-612

COVID-19 vaccine candidate as a heterologous – or ‘mix-and-match’ – booster dose. The Phase 3 trial, which began in the US earlier

this year, is evaluating the ability of UB-612 to boost COVID-19 immunity against the original strain and multiple variants of concern

including Omicron - in people aged 16 years or older, who have been previously immunized with an authorized COVID-19 vaccine.

The Company will also be performing further manufacturing scale-up work to enable readiness for a pivotal trial and potential

commercialization. If successful, a portion of the released doses of the commercial product will be delivered to the COVID-19 Vaccines

Global Access (“COVAX”) consortium for distribution to developing countries at low cost.

Lease

In April 2022, the Company entered into a facility lease agreement for an additional

4,419

 square feet of space in New York, New York.

The lease is estimated to commence in April 2022 and expire March 2029 with no option to renew. The lease will be recognized and

measured in accordance with ASC 842 guidance.

22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be rea d together with our unaudited

condensed consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly

Report. We intend for this discussion to provide you with information that will assist you in understanding our unaudited condensed

consolidated financial statements, the changes in key items in those unaudited condensed consolidated financial statements from

period to period and the primary factors that accounted for those changes.

Some of the information contained in this discussion and

analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business

and related financing, includes forward -looking statements that involve risks, uncertainties and assumptions. See the section of this

Quarterly Report titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements. As a

result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report, our actual results could

differ materially from management’s expectations and the results described in or implied by the forward-looking statements contained

in the following discussion and analysis.

Overview

Vaxxinity is engaged in the development and commercialization of rationally designed prophylactic and therapeutic vaccines to combat

chronic disorders and infectious diseases with large patient populations and unmet medical needs. While vaccines have traditionally

been unable to effectively and safely combat chronic diseases, we believe our platform could overcome the traditional hurdles facing

vaccines in this area. Our Vaxxine Platform relies on a synthetic peptide vaccine technology first developed by UBI and subsequently

refined over the last two decades. We believe our vaccines have the potential to combat conditions that have not yet been successfully

treated, or which have primarily been addressed with monoclonal antibodies (“mAbs”) which, while generally effective, are extremely

costly and cumbersome to administer, and thus have limited accessibility. Our pipeline primarily consists of five programs focused on

chronic disease, particularly neurodegenerative disorders, in addition to other neurology and cardiovascular indications. Given the global

COVID-19 pandemic and our Vaxxine Platform’s applicability to infectious disease, we are also opportunistically advancing a product

candidate that addresses SARS-CoV-2.

We separated our business from UBI through two transactions: a spin-out from UBI in 2014 of operations focused on developing chronic

disease product candidates that resulted in UNS, and a second spin-out from UBI in 2020 of operations focused on the development of

a COVID-19 vaccine that resulted in COVAXX. On February 2, 2021, Vaxxinity was incorporated for the purpose of reorganizing and

combining UNS and COVAXX and did so on March 2, 2021 through the Reorganization. The Reorganization was determined to be a

common control transaction, so the carrying values of all contributed assets and assumed liabilities remained unchanged and the financial

information for all periods in this section of the financial statements presented prior to the Reorganization are presented on a consolidated

basis. Unless the context requires otherwise, in this section we use the terms “Vaxxinity,” “we,” “us” and “our” to refer to our operations

(including through UNS and COVAXX) both prior to and after the Reorganization.

Since our spin-out transactions from UBI, we have focused on organizing and staffing our business, business planning, raising capital,

developing our Vaxxine Platform and pipeline candidates, identifying and testing potential product candidates and conducting clinical

trials. We have also developed a SARS CoV-2 antibody ELISA test, which received an EUA from the FDA in January 2021.

Our current pipeline consists of six programs from early to late-stage development, including five programs focused on chronic disease.

Our neurodegenerative chronic disease pipeline has three primary programs: UB-311, our leading neurology product candidate, in

development for Alzheimer’s Disease (“AD”); UB-312, in development for Parkinson’s Disease (“PD”) and other synucleinopathies;

and an anti-tau product candidate which has the potential to address multiple neurodegenerative conditions, including AD. Additionally,

we have two other primary programs focused on chronic disease: UB-313, which targets CGRP to prevent migraines; and our anti-

PCSK9 program, which targets hypercholesterolemia to reduce the risk of cardiac events. Through our Vaxxine Platform, we believe

we may be able to address a wide range of other chronic diseases, including chronic diseases that are or could potentially be successfully

treated by mAbs, which increasingly dominate the treatment paradigm for many chronic diseases.

In addition to our chronic disease pipeline, given our Vaxxine Platform’s applicability to infectious disease and the global need for

additional vaccines to address SARS-CoV-2, we are advancing an infectious disease product candidate. We have reported interim results

of our UB-612 Phase 1, Phase 2, and Phase 1 extension clinical trials. An EUA application for UB-612 was denied by the TFDA in

August 2021. We are pursuing accelerated pathways to authorization with regulators in multiple jurisdictions, including high income

countries and LMICs, based on a Phase 3 heterologous booster trial of UB-612 that began in the first half of 2022.

To date, our revenue has been generated from the modest sales of our ELISA test and the sale of an option to negotiate a license with

UNS (which option has expired). As a result, our ability to generate revenue sufficient to achieve profitability will depend on the eventual

regulatory approval, and commercialization of one or more of our product candidates. We have not yet obtained any regulatory approvals

for our pipeline product candidates.

23

We have principally funded our operations through financing transactions. Through March 31, 202 2, we received gross proceeds of

$306.1 million in connection with various financial instruments, including the sale of preferred and common stock, the issuance of

promissory notes (including convertible promissory notes (“Convertible Notes”)), the entry into simple agreements for future equity

(“SAFEs”), and proceeds from our initial public offering. 

Costs associated with research and development are the most significant component of our expenses. These costs can vary greatly from

period to period depending on the timing of various trials for our product candidates. We expect our allocated research and development

costs and general and administrative expenses to increase over time as we expand the number of product candidates that we are advancing

and to incur increased costs as a result of operating as a public company. Further, we anticipate incurring greater selling and marketing

expenses if we commercialize any of our product candidates in the future. Our product candidates are in clinical stage or pre-clinical

stage development, and we have generated limited revenue to date and have incurred significant operating losses since inception. Net

losses were $18.3 million and $32.0 million for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022,

we had an accumulated deficit of $247.7 million. We expec

t our expenses and capital requirements will increase over time in connection

with our planned operations, which include:

•

continuing pre-clinical studies, existing clinical trials, or initiating new clinical trials for product candidates UB-311, UB-312,

UB-313, our COVID-19 product candidate and other product candidates;

•

hiring additional clinical, quality control, medical, scientific and other technical personnel to support clinical and research and

development programs;

•

expanding operational, financial and management systems and infrastructure, expanding our facilities and increasing personnel

to support operations;

•

undertaking actions to meet the requirements and demands of being a public company;

•

maintaining, expanding and protecting our intellectual property portfolio;

•

seeking regulatory approvals for any product candidates that successfully complete clinical trials; and

•

undertaking pre-commercialization activities to establish sales, marketing , pharmacovigilance and distribution capabilities for

any product candidates for which we may receive regulatory approval in regions where we elect to commercialize products

on our own or jointly with third parties.

As of the date of this Report, we expect our existing cash and cash equivalents will be sufficient to fund our operating expenses and

capital expenditure requirements for at least the next 12 months. We also believe that cash and cash equivalents on hand will enable us

to fund our operating expenses and capital requirements into the second half of 2023. Thereafter, our viability will depend on our ability

to raise additional capital to finance operations, to successfully commercialize our product candidates and/or to enter into collaborations

with third parties for the development of our product candidates. If we are unable to do any of the foregoing, we would be forced to

delay, limit, reduce or terminate our product candidate development or future commercialization efforts. Our estimates are based on a

variety of assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than expected. See “—

Liquidity and Capital Resources.” 

Business Update Regarding COVID-19 Pandemic

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The onset of the pandemic led to our

institutional prioritization of COVID-19 vaccine development efforts, which correlated to a decline in research and development

expenditures for our chronic disease product candidates. To date, our operations have not been negatively impacted by the COVID-19

pandemic in a material manner. However, at this time, we cannot predict the specific extent, duration or full impact that the COVID-19

pandemic will have on our financial condition and operations, but the development of clinical supply materials could be delayed and

enrollment of patients in our studies may be delayed or suspended, as hospitals and clinics in areas where we are conducting trials shift

resources to cope with the COVID-19 pandemic and may limit access or close facilities due to the COVID-19 pandemic. Additionally,

if our trial participants are unable to travel to our clinical study sites as a result of quarantines or other restrictions resulting from the

COVID-19 pandemic, we may experience higher drop-out rates or delays in our clinical studies. The impact of the COVID-19 pandemic

on our financial performance will depend on future developments, including the duration and spread of the pandemic and related

governmental advisories and restrictions. 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 may be materially adversely affected. See “Risk Factors—Risks Related to Our Business and Industry

in our Annual Report on Form 10-K for the year ended December 31, 2021—The ongoing coronavirus pandemic has caused

interruptions or delays of our business plan. Delays caused by the coronavirus pandemic may have a significant adverse effect on our

business.”

24

Components of Our Unaudited Condensed Consolidated Results of Operations

Revenue 

No revenue was generated during the three months ended March 31, 2022. Revenue for the three months ended March 31, 2021 was

less than $0.1 million and consisted of commercial sales of our ELISA tests. We do not expect to generate any meaningful revenue

unless and until we obtain regulatory approval of and commercialize our product candidates, and we do not know when, or if, this will

occur. If our development efforts for our product candidates are successful and result in commercialization, we may generate additional

revenue in the future from a combination of product sales or payments from collaboration or license agreements that we have entered

into or may enter into with third parties. See “Risk Factors—Risks Related to the Discovery and Development of Product Candidates in

our Annual Report on Form 10-K for the year ended December 31, 2021. We have incurred significant losses since our inception. We

expect to incur losses for the foreseeable future and may never achieve or maintain profitability.”

Cost of Revenue 

Cost of revenue consists of kit production costs consisting of materials, labor and overhead expenses directly related to ELISA tests sold

and the costs of expired ELISA tests, which are not available for commercial sale. 

If our development efforts in respect of our current pipeline of product candidates are successful and result in regulatory approval, we

expect our cost of revenue will increase in relative proportion to the level of our revenue as we commercialize the applicable product

candidate. We expect that cost of revenue will increase in absolute dollars as and if our revenue grows and will vary from period to

period as a percentage of revenue. 

Research and Development Expenses 

The design, initiation and execution of candidate discovery and development programs of our future potential product candidates is key

to our success and involves significant expenses. Prior to initiating these programs, project teams incorporating individuals from the

essential disciplines within Vaxxinity scope out the activities, timing, requirements, inclusion and exclusion criteria and the primary and

secondary endpoint. Once we have decided to proceed, our Vaxxine Platform enables the iteration of drug candidates in the discovery

phase through rapid, rational design and formulation. After we have identified drug candidates, the costs of scaling the formulation from

research grade to clinical grade, then to commercial grade, typically consumes significant resources. In addition, to internal research

and development, we utilize service providers, including related parties, to complete activities we do not have the internal resources to

handle.

Research and development expenses consist primarily of costs incurred for research activities, including drug discovery efforts and the

development of our product candidates. We expense research and development costs as incurred, which include:

•

expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval;

•

expenses incurred under agreements with CROs that are primarily engaged in the oversight and conduct of our clinical trials,

preclinical studies and drug discovery efforts and contract manufacturers that are primarily engaged to provide preclinical

and clinical drug substance and product for our research and development programs;

•

other costs related to acquiring and manufacturing materials in connection with our drug discovery efforts and preclinical

studies and clinical trial materials, including manufacturing validation batches, as well as investigative sites and consultants

that conduct our clinical trials, preclinical studies and other scientific development services;

•

payments made in cash or equity securities under third-party licensing, acquisition and option agreements;

•

employee-related expenses, including salaries and benefits, travel and stock-based compensation expense for employees

engaged in research and development functions;

•

costs related to compliance with regulatory requirements; and

•

facilities-related costs, depreciation and other expenses, which include rent and utilities.

We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information

provided to us by service providers. This process involves reviewing open contracts and purchase orders, communicating with personnel

to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred

for the service when we have not yet been invoiced or otherwise notified of actual costs. Any nonrefundable 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.

25

Such amounts are expensed as the related goods are delivered or the related services are performed, or until it is no longer expected that

the goods will be delivered or the services rendered, at which point the net remainder is expensed.

We rely on related parties for certain services to advance our research and development programs, including manufacturing, quality

control, testing, validation, supply services, research support, development and clinical functions. During the three months ended

March 31, 2022 and 2021, related party expenses were approximately 4% and 43% of our operating expenses, respectively. We expect

this reliance on related parties to continue to diminish in the future.

Where appropriate, we allocate our third-party research and development expenses on a program-by-program basis. These expenses

primarily relate to outside consultants, CROs, contract manufacturers and research laboratories in connection with pre-clinical

development, process development, manufacturing and clinical development activities. We do not allocate our internal costs, such as

employee costs, costs associated with our discovery efforts, laboratory supplies and facilities, including depreciation or other indirect

costs, to specific programs because these costs often relate to platform development, to multiple programs simultaneously or to discovery

of new programs, and any such allocation would necessarily involve significant estimates and judgments and, accordingly, would be

imprecise. When we refer to the research and development expenses associated with a specific program, these refer exclusively to the

allocated third-party expenses associated with that product candidate. All other research and development costs are referred to as

unallocated costs.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical

development, primarily due to the increased size and duration of later-stage clinical trials. Additionally, greater research and

development overhead is required to support broader and more rapid development of our Vaxxine Platform and new product candidates.

As a result, we expect that our research and development expenses will increase as we continue our existing and planned clinical trials

and conduct increased pre-clinical and clinical development activities, including submitting regulatory filings for product candidates,

and focus more generally on the development of our chronic disease product candidates. A significant driver of such increases would

be the initiation of our Phase 2b trial for UB-311. We currently expect to initiate a Phase 2b early AD efficacy trial in the second half

of 2022. If we decide to advance UB-311 through the clinic without a strategic partner, our costs would increase more significantly than

if we engage a partner to fund the development of UB-311.

At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the

pre-clinical and clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from

any of our product candidates

General and Administrative Expenses 

General and administrative expenses consist primarily of salaries and benefits, travel and stock-based compensation expense for

personnel in executive, business development, finance, human resources, legal, information technology and administrative functions.

General and administrative expenses also include facility- related costs as well as insurance costs and professional fees for legal, patent,

consulting, investor and public relations, accounting and audit services and other general operating expenses not otherwise classified as

research and development expenses. We expense general and administrative costs as incurred.

We also anticipate that our general and administrative expenses will increase in the future as a result of increased costs associated with

being a public company. In each case these increases will likely include increased costs related to the hiring of additional personnel and

fees to outside consultants, personnel-related stock-based compensation costs, lawyers and accountants, among other expenses, and, in

the case of public company-related expenses, services associated with maintaining compliance with Nasdaq listing and SEC

requirements, director and officer liability insurance costs and investor and public relations costs.

Other Expense (Income) 

Interest Expense 

Interest expense consists of (i) interest expense recognized on the note payable entered into during June 2020 for the acquisition of an

airplane (the “2025 Note”), (ii) interest expense recognized on the Convertible Notes and (iii) interest expense recognized on other

promissory notes, including $0.1 million borrowed from our Chief Executive Officer (the “Executive Note”) and a related party

Convertible Note payable for $2.0 million in aggregate proceeds that was received in three tranches (the “2018 Related Notes”). The

Executive Note was repaid in full in August 2021 and the 2018 Related Notes were converted into Series A preferred stock concurrently

with the Reorganization.

Interest Income

Interest income consists of income earned on our cash and cash equivalents. 

26

Change in Fair Value of Convertible Notes, SAFEs and Series A-1 Warrant Liability 

We issued a series of Convertible Notes during the years 2018 through 2021, a series of SAFEs during 2020 and 2021, and warrants to

purchase shares of our Series A-1 preferred stock (“Series A-1 Warrants”) during 2020, each of which were measured and accounted

for at fair value. We remeasured the fair value of each of the Convertible Notes, SAFEs and Series A-1 Warrants at each reporting date

and recognize changes in the fair value in our unaudited condensed consolidated statements of operations. Inputs to the calculation of

fair value generally included market and acquisition comparable(s) as well as other variables. In connection with the Reorganization, all

outstanding Convertible Notes, SAFEs, and Series A-1 Warrants were exchanged for shares of Series A preferred stock, which were

subsequently exchanged into shares of Class A common stock upon closing of the IPO in November 2021.

Loss on Foreign Currency Translation, Net 

Our foreign subsidiaries, which are wholly-owned by Vaxxinity, use the U.S. dollar as their functional currency and maintain records

in the local currency. Nonmonetary assets and liabilities are remeasured at historical rates and monetary assets and liabilities are

remeasured at exchange rates in effect at the end of the reporting period. Income statement accounts are remeasured at average exchange

rates for the reporting period. The resulting gains or losses are included in foreign currency (losses) gains in the unaudited condensed

consolidated financial statements.

Provision for Income Taxes 

We have not recorded any significant amounts related to income tax but have reserved $0.6 million of unrecognized tax benefits against

NOLs. We have not recorded any income tax benefits for the majority of our net losses we incurred to date. 

We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities

for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements

or our tax returns. 

Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis

of existing assets and liabilities and for loss and credit carryforwards, which are measured using the enacted tax rates and laws in effect

in the years in which the differences are expected to reverse. The realization of our deferred tax assets is dependent upon the generation

of future taxable income, the amount and timing of which are uncertain. Valuation allowances are provided, if, based upon the weight

of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of March 31, 2022, we

continue to maintain a full valuation allowance against all of our deferred tax assets based on evaluation of all available evidence. We

file income tax returns in the U.S. federal and state jurisdictions and may become subject to income tax audit and adjustments by related

tax authorities. Our tax return periods (for entities then in existence) for U.S. federal income taxes for the tax years since 2017 remain

open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions. We record reserves for

potential tax payments to various tax authorities related to uncertain tax positions, if any. The nature of uncertain tax positions is subject

to significant judgment by management and subject to change, which may be substantial. These reserves are based on a determination

of whether and how much a tax benefit taken by us in our tax filings or positions is more likely than not to be realized following the

resolution of any potential contingencies related to the tax benefit. We develop our assessment of uncertain tax positions, and the

associated cumulative probabilities, using internal expertise and assistance from third-party experts. As additional information becomes

available, estimates are revised and refined. Differences between estimates and final settlement may occur resulting in additional tax

expense. Potential interest and penalties associated with such uncertain tax positions is recorded as a component of our provision for

income taxes. 

Factors Affecting the Comparability of Our Unaudited Condensed Consolidated Results of Operations 

Reorganization

On March 2, 2021, Vaxxinity entered into the Contribution and Exchange Agreement, pursuant to which the outstanding equity interests

of UNS and COVAXX were contributed to Vaxxinity in return for equity interests in Vaxxinity, resulting in UNS and COVAXX

becoming wholly owned subsidiaries of Vaxxinity. Accordingly, all share and per share amounts prior to the Reorganization have been

adjusted to reflect the Reorganization. As a result, the historical financial information between January 1, 2021 and March 2, 2021

described in this Quarterly Report refers to the combined historical financial information of UNS and COVAXX. Our operations for the

three months ended March 31, 2022 reflects the operations of Vaxxinity and its subsidiaries. Our operations for the three months ended

March 31, 2021 reflects the operations of UNS and COVAXX businesses on a condensed consolidated basis for the period from January

1, 2021 to March 1, 2021 and of Vaxxinity and its subsidiaries for the remainder of that three-month period. See Note 1 to our unaudited

condensed consolidated financial statements included elsewhere in this Quarterly Report. 

27

Condensed Consolidated Results of Operations

Comparison of the Three Months Ended March 31, 2022 and 2021

The following table summarizes our unaudited condensed consolidated results of operations for the three months ended March 31, 2022

and 2021, together with the dollar change in those items from period to period (in thousands): 

Three Months Ended March 31,

Change

2022

2021

$

%

Revenue

$

—

$

17

(17)

-100%

Costs of revenue

—

1

(1)

-100%

Gross (loss) profit

—

16

(16)

-100%

Operating expenses:

Research and development

11,478

11,688

(210)

-2%

General and administrative

6,686

8,584

(1,898)

-22%

Total operating expenses

18,164

20,272

(2,108)

-10%

Loss from operations

(18,164)

(20,256)

2,092

-10%

Other (income) expense:

Interest expense

105

511

(406)

-79%

Interest income

(5)

—

(5)

100%

Change in fair value of convertible notes

—

2,667

(2,667)

-100%

Change in fair value of simple agreements for future equity

—

8,365

(8,365)

-100%

Change in fair value of warrant liability

—

214

(214)

-100%

Loss (gain) on foreign currency translation, net

(1)

8

(9)

-113%

Other (income) expense, net

99

11,765

(11,666)

-99%

Net loss

$

(18,263)

$

(32,021)

13,758

-43%

Revenue 

Total revenue was $— million and less than $0.1 million for the three months ended March 31, 2022 and 2021, respectively. All revenue

and comparable decreases were due to sales of our ELISA tests. We are not actively pursuing commercialization of our ELISA tests at

this time.

Gross Margin

Gross margin was $— million and less than $0.1 million for the three months ended March 31, 2022 and 2021, respectively. All gross

margin and comparable decreases were due to sales of our ELISA tests. We are not actively pursuing commercialization of our ELISA

tests at this time.

Research and Development Expenses

Research and development expenses were $11.5 million and $11.7 million for the three months ended March 31, 2022 and 2021,

respectively. The $0.2 decrease was comprised of a $3.9 million decrease in allocated costs (i.e., costs that can be directly attributed to

a specific clinical program) , and a $3.7 million increase in unallocated costs. The decrease in allocated costs was primarily due to a

decrease of $6.0 million in costs related to UB-612, partially offset by increases in spend of $0.9 million on our PCSK9 program, $0.8

million on our UB-313 migraine program and $0.7 million on our UB-312 Parkinson’s Disease program. The $3.7 million increase in

unallocated costs was driven by increased salaries and personnel-related costs of $2.6 million, stock-based compensation expense of

$0.5 million and $0.2 million in rent and other overhead associated with laboratory space in Florida. 

General and Administrative Expenses

General and administrative expenses were $6.7 million and $8.6 million for the three months ended March 31, 2022 and 2021,

respectively. The $1.9 million decrease was primarily due to decreases in professional services and other expenses of $1.2 million related

to our March 2021 Reorganization, and decreases of $2.0 million in stock-based compensation and recruiting expenses, partially offset

by increased audit fees of $0.4 million and insurance costs of $0.9 million related to being a public company, and increased salaries and

personnel-related costs of $0.1 million. 

28

Interest Expense

Interest expense was $0.1 million and $0.5 million for the three months ended March 31, 2022 and 2021, respectively. The $0.4 million

decrease was due to the exchange of Convertible Notes for Series A preferred stock in connection with the Reorganization. 

Interest Income

Interest income on cash was less than $0.1 million and $— million for the three months ended March 31, 2022 and 2021, respectively.

Change in Fair Value of Convertible Notes, SAFEs and Series A-1 Warrant Liability

In connection with the Reorganization, all outstanding Convertible Notes, SAFEs and Series A-1 Warrants were exchanged into shares

of Series A preferred stock, which were subsequently exchanged into shares of Class A common stock upon the closing of the IPO in

November 2021.

The $2.7 million change in fair value of the Convertible Notes recognized during the three months ended March 31, 2021 related to the

revaluation of the Convertible Notes upon conversion to equity. The $8.4 million change in fair value of SAFEs recognized during the

three months ended March 31, 2021 related to insight into the pricing of Vaxxinity’s next stock issuance at a higher valuation. The $0.2

million change in fair value of Series A-1 Warrants recognized during the three months ended March 31, 2021 related to an increase in

value of the Series A-1 preferred stock. 

Loss on Foreign Currency Translation, Net 

The net loss of foreign currency translation reflected a de minimis increase in the foreign exchange rate for the three months ended

March 31, 2022 compared to the three months ended March 31, 2021. 

Liquidity and Capital Resources

Sources of Liquidity 

We have generated limited revenue from sales of our ELISA tests and have not yet commercialized any of our product candidates, which

are in various phases of pre-clinical and clinical development. Prior to going public in late 2021, we financed operations primarily

through the issuance of convertible preferred stock, borrowings under promissory notes (including Convertible Notes) and the execution

of SAFEs. Through December 31, 2020, we received gross proceeds of $99.3 million in connection with the issuance of various financial

instruments, including the sale of preferred stock, the issuance of promissory notes (including Convertible Notes), and the execution of

SAFEs. In addition, we also generated revenue from the sale of an option to negotiate a license with UNS (which option has expired)

and the sales of ELISA tests in 2020 and 2021. During the year ended December 31, 2021, we raised a total of $198.8 million, which

consisted of $71.1 million in net proceeds from the issuance of common stock in connection with the IPO, $122.8 million in net proceeds

from the issuance of Series B preferred shares, $2.0 million in net proceeds from the issuance of convertible debt, and $2.9 million in

net proceeds from the issuance of SAFEs. At March 31, 2022, we had $124.8 million in cash and cash equivalents, compared to $144.9

million as of December 31, 2021. The decrease in cash and cash equivalents balances for the periods reported are primarily due to the

factors described under “Cash Flows” below.

29

Cash Flows

The following table provides information regarding our cash flows for the three months ended March 31, 2022 and 2021 (in thousands): 

March 31,

December 31,

2022

2021

Balance Sheet Data:

Cash and cash equivalents

124,766

144,885

Restricted cash

78

172

Total assets

147,528

166,673

Total liabilities

34,873

38,054

Total stockholders' equity (deficit)

112,655

128,619

Three Months Ended March 31,

2022

2021

Statement of Cash Flow Data:

Net cash flows used in operating activities

$

(19,514)

$

(28,241)

Net cash flows used in investing activities

(713)

—

Net cash flows provided by financing activities

14

46,280

Net increase in cash, cash equivalents and restricted cash

$

(20,213)

$

18,039

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2022 was $19.5 million, primarily resulting from a $18.3

million net loss, an unfavorable $3.8 million change in operating assets and liabilities and total non-cash items of $2.5 million. The

changes in net operating assets and liabilities were primarily due to a decrease of $2.6 million in amounts due to related party, a $1.3

million increase in accrued expenses and other current liabilities, a $1.7 million decrease in accounts payable and other liabilities, a $0.7

million decrease in prepaid expenses, and a $1.4 million decrease in long-term deposits. The primary non-cash adjustments to net loss

consisted of $2.2 million of stock-based compensation and $0.3 million in depreciation. 

Investing Activities

Net cash used in investing activities totaled $0.7 million for the three months ended March 31, 2022. The cash used in investing activities

consisted primarily of the acquisition of equipment. 

Financing Activities

Net cash provided by financing activities was less than $0.1 million for the three months ended March 31, 2022. We repaid $0.1 million

in relation to a note payable and received $0.1 million from the exercise of stock options.

Funding Requirements

We have generated approximately $3.7 million in revenue since inception and have incurred net losses in each reporting period since

inception. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize

our product candidates. We do not know when, or if, this will occur. If we do not receive regulatory approval for any of our product

candidates, or if we receive approval but our commercialization results fall short of our expectations, we will continue to incur significant

losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals

for, our product candidates and begin to commercialize any approved products.

As of the date of this Quarterly Report, we expect our existing cash and cash equivalents will be sufficient to fund our operating expenses

over the next 12 months. As of March 31, 2022, other than our 2025 Note, we have no material debt obligations.

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. Our future capital requirements will depend on many factors, which include:

•

the number of discovery and pre-clinical programs that we pursue and the speed with which they are advanced;

•

the number, size, and nature of clinical trials that we conduct;

30

•

the length of time it takes for regulators to review and approve any product candidates that successfully complete clinical

trials;

•

the timing and manner in which we manufacture our pre-clinical and clinical drug material, the terms on which we can have

such manufacturing completed, and the extent to which we undertake commercialization of any drug products, if approved;

•

the extent to which we establish sales, marketing, medical affairs and distribution infrastructure to commercialize any product

candidates;

•

the timing and extent to which we expand our operational, financial and management systems and infrastructure, and

facilities; 

•

the timing and extent to which we increase our personnel to support operations, including necessary increases in headcount to

conduct and expand our clinical trials, commercialize any approved products and support our operations as a public

company; and

•

the number of patent applications we must file and claims we must defend in order to maintain, expand and protect our

intellectual property portfolio, and the costs of preparing, filing and prosecuting patent applications, maintaining and

protecting our intellectual property rights.

Until such time, if ever, as we can generate positive cash flows from operations, we expect to finance our cash needs through public or

private equity offerings, strategic collaborations and debt financing. To the extent that we raise additional capital through the sale of our

Class A common stock, convertible securities or other equity securities, shareholders’ ownership interest will be diluted and the terms

of these securities could include liquidation or other preferences and anti-dilution protections. In addition, debt financing, if available,

may result in fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take

specific actions, such as incurring additional debt, making capital expenditures, creating liens, redeeming shares or declaring dividends.

If we raise additional funds through strategic collaborations or marketing, distribution or licensing arrangements with third parties, we

may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that

may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or

terminate our product candidate development or future commercialization efforts or grant rights to third parties to develop and market

product candidates that we would otherwise prefer to develop and market ourselves. 

Contract Research and Manufacturing Organizations

We recorded accrued expenses of $3.5 million and $1.5 million in our balance sheet for expenditures incurred by CROs and contract

manufacturers as of March 31, 2022 and December 31, 2021, respectively. 

Tax -Related Obligations

We have reserved $0.6 million of unrecognized tax benefits against NOLs. Additionally, as of three months ended March 31, 2022, we

accrued $0.2 million in interest and penalties related to prior year tax filings.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and do not currently have, any off-balance sheet arrangements, as defined in the rules and

regulations of the SEC. 

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect

the amounts reported in our unaudited condensed consolidated financial statements and accompanying notes. Management bases its

estimates on historical experience, market and other conditions, and various other assumptions it believes to be reasonable. Although

these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, the estimation

process is, by its nature, uncertain given that estimates depend on events over which we may not have control. In addition, if our

assumptions change, we may need to revise our estimates, or take other corrective actions, either of which may also have a material

effect on our unaudited condensed consolidated financial statements. Significant estimates contained within these unaudited condensed

consolidated financial statements include, but are not limited to, the estimated fair value of our common stock, stock-based

compensation, income tax valuation allowance and the accruals of research and development expenses. We base our estimates on

historical experience, known trends and other market-specific or other relevant factors that we believe to be reasonable under the

circumstances. On an ongoing basis, management evaluates its estimates, as there are changes in facts and circumstances. If market and

31

other conditions change from those that we anticipate, our unaudited condensed consolidated financial statements may be materially

affected.

While our significant accounting policies are described in more detail in the notes to our unaudited condensed consolidated financial

statements appearing elsewhere in this Quarterly Report, we believe that the following critical accounting policies and estimates have a

higher degree of inherent uncertainty and require our most significant judgments.

Accrued Research and Development Expenses

As part of the process of preparing our unaudited condensed consolidated financial statements, we are required to estimate accrued

research and development expenses. As we advance our programs, we anticipate conducting more complex clinical studies resulting in

greater research and development expenses, which will place even greater emphasis on the accrual. This process involves reviewing

open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our

behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced

or otherwise notified of actual costs. The majority of our service providers invoice in arrears for services performed, on a pre-determined

schedule or when contractual milestones are met; however, some require advance payments. We make estimates of accrued expenses as

of each balance sheet date in the unaudited condensed consolidated financial statements based on facts and circumstances known to us

at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments if necessary.

Examples of estimated accrued research and development expenses include fees paid to:

•

vendors, including research laboratories, in connection with pre-clinical development activities;

•

CROs and investigative sites in connection with pre-clinical studies and clinical trials; and

•

contract manufacturers in connection with drug substance and drug product formulation of pre-clinical studies and clinical

trial materials.

We base our expenses related to pre-clinical studies and clinical trials on our estimates of the services received and efforts expended

pursuant to quotes and contracts with multiple research institutions and CROs that supply, conduct and manage pre-clinical studies and

clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may

result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services

provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the successful

enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which

services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or

the level of effort varies from the estimate, we adjust the accrual or the prepaid expense accordingly. Although we do not expect our

estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed

relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low

in any particular period. To date, our estimated accruals have not differed materially from actual costs incurred.

Stock-Based Compensation

We measure all stock-based awards granted to employees, directors and non-employees based on their fair value on the date of the grant

and recognize the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting

period of the respective award. Forfeitures are accounted for as they occur. We grant stock options and restricted stock awards that are

subject to service vesting conditions.

We classify stock-based compensation expense in our unaudited condensed consolidated statements of operations in the same manner

in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

We estimate the fair value of each stock option grant using the Black-Scholes option-pricing model, which requires the use of subjective

assumptions that could materially impact the estimation of fair value and related compensation expense to be recognized. These

assumptions include (i) the expected volatility of our stock price, (ii) the periods of time over which recipients are expected to hold their

options prior to exercise (expected lives), (iii) expected dividend yield on our common stock, and (iv) risk-free interest rates, which are

based on quoted U.S. Treasury rates for securities with maturities approximating the options’ expected lives. Developing these

assumptions requires the use of judgment. Both prior to and after the IPO, we lacked company-specific historical and implied volatility

information. Therefore, we estimate our expected stock volatility based on the historical volatility of a publicly traded set of peer

companies. The expected term of the Company’s options has been determined utilizing the “simplified” method for awards that qualify

as “plain-vanilla” options. The expected term of options granted to non-employees is equal to the contractual term of the option award.

The expected dividend yield is zero as we have never paid dividends and do not currently anticipate paying any in the foreseeable future.

32

Simple Agreement for Future Equity

During the three months ended March 31, 2021, we entered into SAFEs. The SAFEs were not mandatorily redeemable, nor did they

require us to repurchase a fixed number of shares. We determined that the SAFEs contained a liquidity event provision that embodied

an obligation indexed to the fair value of the equity shares and could require us to settle the SAFE obligation by transferring assets or

cash. Our SAFEs represented a recurring measurement that is classified within Level 3, disclosed and defined in Note 3 to our unaudited

condensed consolidated financial statements included elsewhere in this Report, of the fair value hierarchy wherein fair value is estimated

using significant unobservable inputs, including an estimate of the number of months to a liquidity event, volatility rates and the

estimation of the most likely conversion feature for converting the SAFE.

The fair value of the SAFEs on the date of issuance was determined to equal the proceeds we received. The value of the SAFEs on the

date of conversion into Series A preferred stock was determined to be equal to the fair value of the Series A preferred stock issued in

connection with the Reorganization.

Convertible Notes

Beginning in 2018, we issued Convertible Notes that bore simple interest at annual rates ranging from 4.8% to 6%. All unpaid principal,

together with the accrued interest thereon, for the Convertible Notes were payable upon the event of default or upon maturity, which

ranged from one to three years. The Convertible Notes contained a number of provisions addressing automatic and optional conversion,

events of default and prepayment provisions. We determined that a portion of the Convertible Notes contained a liquidity event

provision, requiring them to be measured and accounted for at fair value at each reporting date. We determined that Convertible Notes

requiring a measurement to fair value represented a recurring measurement that was classified within Level 3 of the fair value hierarchy

wherein fair value is estimated using significant unobservable inputs, as disclosed and defined in Note 3 in our Annual Report on Form

10-K for the year ended December 31, 2021.

Taiwan Centers for Disease Control Grant

UBIA, which is responsible for applying for and managing grants on our behalf, was awarded a grant by the Taiwan Centers for Disease

Control (“TCDC”) for COVID-19 vaccine development. The grant provides that costs incurred to complete the two phases of the clinical

trial will be reimbursed based on the achievement of certain milestones as defined in the agreement. We are entitled to reimbursement

under the TCDC grant. At each reporting date, we assess the status of all of the activities involved in completing the clinical study in

relation to the milestones. We account for the amounts that have been received from the TCDC to reimburse costs incurred on the

clinical study and not expected to be refunded back to the TCDC as contra research and development expenses in the accompanying

unaudited condensed consolidated statement of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk in the ordinary course of our business. These risks primarily relate to foreign currency and changes in

interest rates. 

Foreign Currency Exchange Risk 

We have limited exposure to foreign currency exchange risk as most of our operating activities are primarily denominated in U.S.

dollars. We believe actual foreign exchange gains and losses did not have a significant impact on our results of operations for any periods

presented herein. The results of the analysis based on our financial position as of March 31, 2022, indicated that a hypothetical 10%

increase or decrease in applicable foreign currency exchange rates would not have a material effect on our financial results.

Interest Rate Risk 

We are exposed to market risk related to changes in interest rates. As of March 31, 2022 and December 31, 2021, our cash equivalents

consisted of interest-bearing checking accounts and money market accounts. We issued Convertible Notes, which Convertible Notes

were exchanged for Series A preferred stock in connection with the Reorganization. The Convertible Notes bore simple interest at the

annual rates ranging from 4.8% to 6%, with redemption terms payable at the earlier of one year, or upon the event of default. In addition,

the Convertible Notes contained provisions addressing automatic and optional conversion. Given the redemption of the Convertible

Notes, and the short-term nature and fixed interest rate, we believe there is no material exposure to interest rate risk. Additionally, the

2025 Note we entered into for the year ended December 31, 2020 bears an annual interest rate of 3.4% and matures in June 2025. Given

the fixed interest rate of the 2025 Note, we believe there is no material exposure to interest rate risk. The results of the analysis based

on our financial position as of March 31, 2022, indicated that a hypothetical 100 basis point increase or decrease in risk-free rates would

not have a material effect on our financial results.

Our measurement of interest rate risk involves assumptions that are inherently uncertain and, as a result, cannot precisely estimate the

impact of changes in interest rates on net interest revenues. Actual results may differ from simulated results due to balance growth or

33

decline and the timing, magnitude, and frequency of interest rate changes, as well as changes in market conditions and management

strategies, including changes in asset and liability mix. 

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

Our management, with the participation of our principal executive officer and principal accounting officer, evaluated, as of the end of

the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in

Rules 13a-15(e) and 15d-15(e) under the Exchange Act). In designing and evaluating our disclosure controls and procedures,

management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable

assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact

that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls

and procedures relative to their costs. Based on management’s evaluation and as a result of the material weaknesses described below,

our principal executive officer and principal accounting officer concluded that, as of March 31, 2022, our disclosure controls and

procedures were not effective at the reasonable assurance level.

Report on Internal Control Over Financial Reporting

This Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation

report of our independent registered public accounting firm due to a transition period established by the rules of the SEC for newly

public companies.

Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a

reasonable possibility that a material misstatement of a company’s annual and interim financial statements will not be detected or

prevented on a timely basis.

Management identified material weaknesses in the design and operation of our internal controls over financial reporting during the

preparation of our audited consolidated financial statements for the year ended December 31, 2021. These material weaknesses related

to: 

• performing our financial close process, including account reconciliation and analysis on a timely basis, accruing for related-party

transactions, recording stock-based compensation expense and aggregating and mapping amounts from trial balances to financial

statements; 

• ensuring that formal processes exist for identifying, analyzing and accounting for key contracts and complex, non-routine

transactions; and

• proper segregation of duties and responsibilities within our finance department, including authorization and review of accounting

entries. 

Remediation Measures

We are investing resources to remediate the material weaknesses identified in the preparation of our audited consolidated financial

statements for the year ended December 31, 2021 described above through a combination of hiring additional qualified accounting and

financial reporting personnel and further evolving and refining our accounting processes and policies. These remediation activities

involve the following:

• having hired, and continuing to hire, additional accounting personnel with the appropriate level of skill and experience for public

company financial reporting;

• designing and implementing a formal financial close process that includes multiple levels of reviews of accounting entries; and

• supplementing our resources for evaluating and accounting for complex transactions and stock options through the use of third-

party advisors.

While we are working to remediate the identified material weaknesses as timely and efficiently as possible, at this time we cannot

provide an estimate of costs expected to be incurred in connection with our remediation efforts, we cannot provide an estimate of the

time it will take to complete remediation, nor can we provide assurance that our efforts will successfully prevent any errors or omissions

that may result because of these material weaknesses.

34

Changes in Internal Control over Financial Reporting

Other than the measures described in “Remediation Measures” above, there were no changes in our internal control over financial

reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2022 that have

materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

35

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time we are a party to various litigation matters incidental to the conduct of our business. We are not presently party to

any legal proceedings the resolution of which we believe would have a material adverse effect on our business, prospects, financial

condition, liquidity, results of operation, cash flows or capital levels. 

Item 1A. Risk Factors.

As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called

for by this Item 1A. Risk factors describing the major risks to our business can be found under Item 1A., “Risk Factors,” in our Annual

Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

There were no unregistered sales of equity securities during the quarterly period ended March 31, 2022.

Use of Proceeds

On November 15, 2021, the Company closed its IPO, as discussed in Note 1 of our consolidated financial statements in the Annual

Report on Form 10-K for the year ended December 31, 2021. The aggregate net proceeds to us from the offering, after deducting

underwriting discounts and commissions and other offering expenses payable by us, was approximately $71.1 million. The proceeds

from our IPO have been invested primarily in money market accounts. There has been no material change in the expected use of the net

proceeds from our IPO as described in our prospectus filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on

November 12, 2021.

Item 6. Exhibits.

The following exhibits required by Item 601 of Regulation S-K are filed herewith or have been filed previously with the SEC as indicated

below:

Exhibit

No.

Index to Exhibits

3.1

Amended and Restated Certificate of Incorporation of Vaxxinity, Inc. to be in effect upon the completion of this

offering (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K (File No. 001-41058) filed on

November 17, 2021).

3.2

Amended and Restated Bylaws of Vaxxinity, Inc. to be in effect upon the completion of this offering (incorporated by

reference to Exhibit 3.2 of our Current Report on Form 8-K (File No. 001 -41058) filed on November 17, 2021).

4.1

Warrant to Purchase Shares of Class A Common Stock of Vaxxinity, Inc. (incorporated by reference to Exhibit 4.1 of

our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).

4.2

Description of Registered Securities

*

10.1

Form of Indemnification Agreement between Vaxxinity, Inc. and each of its directors and executive officers

(incorporated by reference to Exhibit 10.1 of our Registration Statement on Form S-1 (File No. 333-260163) filed on

October 8, 2021).

10.2

Registration Rights Agreement (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No.

001-41058) filed on November 17, 2021).

10.3

Voting Agreement, dated as of October 1, 2021, among Mei Mei Hu, Louis Reese, Blackfoot Healthcare Ventures LLC

and United Biomedical, Inc. (incorporated by reference to Exhibit 10.3 of our Registration Statement on Form S-1 (File

No. 333-260163) filed on October 8, 2021).

§

10.4

Platform License Agreement, dated as of August 5, 2021, among Vaxxinity, Inc., United Biomedical, Inc., UBI IP

Holdings and UBI US Holdings, LLC (incorporated by reference to Exhibit 10.4 of our Registration Statement on Form

S-1 (File No. 333-260163) filed on October 8, 2021).

§

36

10.5

United Neuroscience 2017 Share Option and Grant Plan (incorporated by reference to Exhibit 10.5 of our Registration

Statement on Form S-1 (File No. 333-260163) filed on October 8, 2021).

 †

10.6

C19 Corp. 2020 Stock Option and Grant Plan (incorporated by reference to Exhibit 10.6 of our Registration Statement

on Form S-1 (File No. 333-260163) filed on October 8, 2021).

 †

10.7

Vaxxinity, Inc. 2021 Stock Option and Grant Plan (incorporated by reference to Exhibit 10.7 of our Registration

Statement on Form S-1 (File No. 333-260163) filed on October 8, 2021).

 †

10.8

Letter agreement by and between United Neuroscience, LLC and Dr. Farshad Guirakhoo, dated May 4, 2020

(incorporated by reference to Exhibit 10.8 of our Registration Statement on Form S-1 (File No. 333-260163) filed on

October 8, 2021).

 †

10.9

Vaxxinity, Inc. 2021 Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit 10.9 of our

Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).

 †

10.10

Vaxxinity, Inc. 2021 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.10 of our Registration

Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).

 †

10.11

Form of Incentive Stock Option Grant Notice under the 2021 Stock Option and Grant Plan (incorporated by reference to

Exhibit 10.11 of our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).

 †

10.12

Form of Non-Qualified Stock Option Grant Notice under the 2021 Stock Option and Grant Plan (incorporated by

reference to Exhibit 10.12 of our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5,

2021).

 †

10.13

Form of Restricted Stock Award Notice under the 2021 Stock Option and Grant Plan (incorporated by reference to

Exhibit 10.13 of our Registration Statement on Form S-1/A (File No. 333 -260163) filed on November 5, 2021).

 †

10.14

Form of Notice of Stock Option Award 2021 Omnibus Incentive Compensation Plan (incorporated by reference to

Exhibit 10.14 of our Registration Statement on Form S-1/A (File No. 333 -260163) filed on November 5, 2021).

 †

10.15

Form of Notice of Restricted Stock Unit Award 2021 Omnibus Incentive Compensation Plan (incorporated by reference

to Exhibit 10.15 of our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).

 †

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1

Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-

Oxley Act of 2002**

101.INS

Inline XBRL Instance Document*

101.SCH

Inline XBRL Taxonomy Extension Schema Document*

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document*

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document*

104

Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).*

__________________________

* Filed herewith.

** Furnished herewith.

† Indicates management contract or compensatory plan, contract or arrangement.

37

§ Portions of the exhibit, marked by brackets, have been omitted because the omitted information (i) is not material and (ii) would

likely cause competitive harm if publicly disclosed.

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf

by the undersigned, thereunto duly authorized on May 9, 2022.

VAXXINITY, INC.

By:

/s/ Mei Mei Hu

Mei Mei Hu, 

President and Chief Executive Officer

(Principal executive officer)

By:

/s/ Jason Pesile

Jason Pesile

Senior Vice President, Finance & Accounting

(Principal financial and accounting officer)