Viridian Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Viridian is a clinical-stage biopharmaceutical company developing treatments for thyroid eye disease (TED) and other serious or rare diseases. It has no products approved for sale and generated no product-sales revenue.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Collaboration revenue | $0.1 million | $0.2 million; down $0.1 million |
| Research and development expense | $50.7 million | $17.7 million; up $33.0 million |
| General and administrative expense | $21.8 million | $8.4 million; up $13.5 million |
| Operating loss | $72.5 million | $25.9 million |
| Other income, net | $4.3 million | $0.2 million |
| Net loss | $68.2 million | $25.7 million |
| Basic and diluted net loss per share | $1.61 | $0.98 |
| Net cash used in operating activities | $62.0 million | $21.0 million |
- Cash and investments: $373.9 million at March 31, comprising $88.5 million of cash and cash equivalents and $285.3 million of short-term investments. This compares with approximately $424.6 million at December 31, 2022.
- Cash flows: Investing activities used $13.3 million, primarily reflecting net purchases of short-term investments; financing provided $8.2 million, mainly from option and warrant exercises and employee stock purchases. Cash and cash equivalents declined $67.1 million during the quarter.
- Debt and liquidity: Debt carrying value was $4.7 million, against $5.0 million principal drawn under a secured Hercules term-loan facility offering up to $75.0 million in tranches. The loan’s interest rate was 8.95%, with interest-only payments extended through October 2024; principal repayment is scheduled thereafter, with maturity in October 2026.
- Margins: Not meaningful for this development-stage company given minimal collaboration revenue and no product sales.
Material changes and unusual items
- R&D expense rose 186% year over year, primarily reflecting the $15.0 million Enable Injections license fee, increased manufacturing and chemistry costs, headcount-related expense, preclinical work including Paragon collaboration costs, and clinical-trial spending.
- G&A expense rose 161%, mainly due to increased personnel costs, including severance and a $6.5 million share-based compensation charge related to the former CEO’s separation and accelerated vesting/modification of awards.
- Interest and other income increased to $4.5 million, chiefly from short-term investments, partly offset by $0.2 million of interest expense.
- Common shares outstanding were 43.1 million at March 31, up from 41.3 million at December 31, including shares issued upon conversion of Series A preferred stock and exercises of options and warrants. Weighted-average shares for the quarter were 42.2 million.
Outlook, management commentary, and risks
- Management expected cash, cash equivalents, short-term investments, and the term loan to fund the stated clinical development plan into the second half of 2025. However, the liquidity note says current resources are expected to be sufficient for at least 12 months from the financial-statement issuance date. These runway statements differ and merit clarification.
- Management expects continued operating losses and increasing R&D expense as programs advance; additional capital will be required. Financing availability, terms, clinical progress, and spending changes could shorten or extend the estimated runway.
- VRDN-001 chronic TED proof-of-concept topline data were expected in June or July 2023. The THRIVE Phase 3 active TED trial was ongoing, with topline results expected mid-2024; initiation of the chronic TED THRIVE-2 Phase 3 trial was planned for mid-2023, with results expected by year-end 2024.
- Viridian planned to file an IND for VRDN-003 in Q2 2023 and expected topline results from Phase 1 studies of VRDN-003 and subcutaneous VRDN-001 in Q4 2023. It planned to select a lead subcutaneous program by year-end 2023 and advance it toward a pivotal trial in mid-2024.
- Key risks include clinical efficacy, safety, enrollment and regulatory uncertainty; reliance on third-party manufacturers and research vendors; competition; future financing and potential shareholder dilution; and macroeconomic, supply-chain, and banking risks. The company also disclosed potential future development, regulatory, commercial milestone and royalty obligations under license agreements.
- The company reported no material legal proceedings and concluded that disclosure controls were effective at a reasonable level of assurance; no material changes to internal control over financial reporting were reported.
Important facts for investors to verify
- Clarify the apparent difference between the liquidity note’s minimum 12-month funding statement and management’s runway estimate into the second half of 2025, including the assumptions and whether undrawn loan tranches are included.
- Track clinical-trial milestones and actual data releases against the stated 2023–2024 timelines, particularly VRDN-001 TED results and the subcutaneous program selection.
- Assess the pace of operating cash use and the extent to which rising clinical, manufacturing, and preclinical spending changes the funding runway.
- Review financing and dilution exposure, including preferred-stock conversions, equity plans, the available ATM program, and the conditions attached to undrawn Hercules tranches.
- Monitor related-party arrangements with Zenas and Paragon, and the material contingent milestone, commercial milestone, and royalty obligations in licensing agreements.