Viridian Therapeutics, Inc. — Q2 2023 Form 10-Q
Business and period: Biopharmaceutical company developing treatments for serious and rare diseases, with its lead program targeting thyroid eye disease (TED). This unaudited report covers the quarter and six months ended June 30, 2023; the company has no approved products and no product-sale revenue.
Financial performance and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Collaboration revenue | $0.072 million | $0.256 million | $0.170 million | $0.472 million |
| Research and development expense | $40.1 million | $21.7 million | $90.8 million | $39.5 million |
| General and administrative expense | $19.3 million | $8.1 million | $41.1 million | $16.5 million |
| Operating loss | $59.3 million | $29.6 million | $131.7 million | $55.5 million |
| Net loss | $55.1 million | $29.5 million | $123.2 million | $55.2 million |
| Net loss per share, basic and diluted | $1.27 | $1.06 | $2.88 | $2.05 |
Revenue was from the Zenas BioPharma collaboration. With no product sales, gross margin is not applicable; the filing does not provide a meaningful product margin. Higher interest income partly offset operating losses: other income, net was $4.2 million in Q2 and $8.5 million for the first half, versus $0.1 million and $0.3 million, respectively, in 2022.
At June 30, cash and cash equivalents were $87.1 million and short-term investments were $247.2 million, totaling $334.3 million in cash, cash equivalents, and short-term investments. Total assets were $351.5 million and stockholders’ equity was $315.9 million. Long-term debt, net, was $4.7 million; the Hercules loan carried an 8.95% rate and matures October 2026. Six-month operating cash use was $107.2 million, versus $39.1 million in 2022. Investing activities provided $27.4 million, largely reflecting net sales and maturities of short-term investments; financing activities provided $11.3 million.
Changes and notable items
- First-half net loss more than doubled year over year, while operating cash use rose substantially. R&D spending increased with clinical-trial, manufacturing, personnel, preclinical, and licensing activity; G&A growth primarily reflected higher personnel and share-based compensation costs.
- R&D included a $15.0 million upfront payment for the Enable Injections delivery-system agreement and $5.0 million of stock issued as consideration under a May 2023 license and collaboration agreement. The latter was recorded as R&D expense.
- First-half share-based compensation was $27.5 million, including $6.9 million related to accelerated vesting and modification of the former CEO’s awards. The company also reported $0.9 million in CEO separation costs.
- Common shares outstanding increased from 41.3 million at year-end 2022 to 43.6 million at June 30, 2023. Series A preferred conversions, warrant and option exercises, employee stock purchases, and license-related shares contributed; potential dilutive securities are excluded from diluted loss per share as antidilutive.
Outlook, risks, and contingencies
- Management said June 30 liquidity was expected to fund operations into the second half of 2025, while the financial-statement note says resources were expected to suffice for at least 12 months from issuance. The company expects continued losses and substantial additional capital needs; actual cash runway depends on trial timing, results, costs, and financing access.
- Management expected THRIVE Phase 3 active-TED topline results in mid-2024 and planned to initiate THRIVE-2 for chronic TED in Q3 2023, with results expected by year-end 2024. After the period, the company reported positive Phase 2 chronic-TED data in July 2023. It also expected preliminary healthy-volunteer data for VRDN-001, VRDN-002, and VRDN-003 in Q4 2023, and planned to select a lead subcutaneous program by year-end 2023 for a Phase 2/3 trial in mid-2024. These are forward-looking expectations, not reported outcomes in this quarter.
- In August 2023, after quarter-end, the Hercules facility was amended to make up to $150 million available, subject to tranche timing and milestones; the company drew $15 million. At funded principal of at least $50 million, a $25 million minimum qualified-cash covenant applies, but is waived while market capitalization is at least $650 million. The debt is secured by company assets, and additional borrowing increases repayment obligations.
- Other risks include clinical safety and efficacy uncertainty, trial enrollment and timing, reliance on third-party manufacturers and CROs, competition, intellectual-property exposure, and the need for further financing, which could dilute shareholders or require partnering on less favorable terms. The company noted macroeconomic and geopolitical uncertainty and uninsured deposit balances above FDIC limits.
- Potential future payments include development and regulatory milestones, commercial milestones, and royalties under multiple license agreements. The Xencor license agreement was terminated July 25, 2023. Management reported no material pending legal proceedings, and concluded disclosure controls were effective at a reasonable level of assurance.
Investor verification points
- Confirm the current cash balance, burn rate, and assumptions supporting the stated runway, particularly as clinical spending expands.
- Track trial progress and readouts against stated timelines, and distinguish preliminary results from complete, final data and regulatory evidence.
- Review the amended Hercules facility’s tranche conditions, interest, collateral, minimum-cash covenant, and the impact of any further draws on liquidity.
- Assess dilution and financing overhang from equity issuance, preferred-stock conversion, options and warrants, alongside future license milestones, royalties, and related-party arrangements.