Viridian Therapeutics, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2022. Filed November 14, 2022. Viridian is a clinical-stage biotechnology company with no approved products or product-sales revenue; its lead programs target thyroid eye disease (TED).
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $1.2 million | $0.2 million | $1.7 million | $2.7 million |
| Research and development expense | $22.1 million | $8.1 million | $61.6 million | $34.5 million |
| General and administrative expense | $8.9 million | $6.2 million | $25.3 million | $18.9 million |
| Net loss | $28.9 million | $14.0 million | $84.1 million | $50.5 million |
| Net loss per share | $0.86 | $1.25 | $2.88 | $5.95 |
- Revenue came from the related-party Zenas BioPharma collaboration, including milestone-related revenue. The company reported no product sales, so product gross margins are not applicable.
- Operating expenses rose substantially, principally due to increased clinical-trial, preclinical, manufacturing, personnel, and licensing costs. Operating losses are expected to continue.
- Cash and cash equivalents were $344.2 million and short-term investments were $87.1 million at September 30, totaling $431.3 million. Accumulated deficit was $442.4 million.
- Operating cash use was $59.8 million for the first nine months, versus $38.0 million a year earlier. Investing activities provided $65.5 million, largely reflecting investment maturities; financing activities provided $296.2 million.
- Long-term debt, net, was $4.6 million. The Hercules facility provides for up to $75 million across conditional tranches; $5 million had been drawn. Its rate was 8.95% at quarter-end, with substantially all borrower assets other than intellectual property pledged as collateral.
- Management stated that available resources, including the term loan, were expected to fund its clinical development plan into the second half of 2025. The notes also state that resources were expected to cover at least the 12 months following issuance of the financial statements.
Material changes and financing
- Compared with the prior-year quarter, Q3 revenue increased by $1.0 million, while R&D expense increased by $14.0 million and G&A expense by $2.6 million; net loss approximately doubled.
- For the nine-month comparison, collaboration revenue declined by $1.1 million due to timing of collaboration activities, partly offset by a milestone. R&D expense increased by $27.1 million and G&A by $6.4 million.
- The August 2022 public offering generated approximately $311.0 million gross proceeds from common and Series B preferred stock; the cash-flow statement reports $289.7 million net proceeds. The offering included 11.35 million common shares.
- A September 2022 at-the-market agreement permits up to $175 million of common-stock sales; no shares had been sold under it by quarter-end. The agreement carries a 3% sales commission.
Outlook, development, and risks
- VRDN-001: The company reported positive initial 10 mg/kg TED cohort results in August. In November, it reported additional results across the 10 and 20 mg/kg cohorts, including a 75% proptosis responder rate and 75% overall responder rate at week six; these small early-stage cohorts do not establish pivotal-trial efficacy. The company initiated the global Phase 3 THRIVE trial during Q3 and said it expected topline data from the 3 mg/kg cohort in early January 2023.
- VRDN-002: After first-in-human IV data, the company planned a subcutaneous proof-of-concept trial, with topline data expected in the second half of 2023.
- VRDN-003: The company expected to file an IND in Q2 2023 and obtain proof-of-concept data in Q4 2023. It planned to select VRDN-002 or VRDN-003 for registrational development by the end of 2023 and target a global Phase 3 program for a subcutaneous TED therapy in early 2024.
- The company expects R&D spending to rise as programs advance. It will require substantial additional capital over time; future financing may dilute shareholders, impose debt restrictions, or require licensing rights on unfavorable terms.
- Key operating risks include clinical and regulatory uncertainty, early-stage data not predicting later results, trial enrollment and manufacturing delays, reliance on third-party manufacturers and CROs, competition, and potential effects of COVID-19. The filing reported no material COVID-19 impact to date, but identified possible future disruption, including manufacturing capacity constraints.
- Potential future payments under licenses include up to $48 million in ImmunoGen development milestones and additional development and commercial milestones and royalties under ImmunoGen and Xencor agreements. These are contingent obligations, not current debt.
- Zenas and Paragon arrangements are related-party transactions due to Fairmount’s interests in the parties and board relationships. The filing reported no legal proceedings believed to have a material adverse effect. Management concluded disclosure controls were effective at a reasonable level of assurance.
Important facts for investors to verify
- Progress, safety, enrollment, and results in THRIVE and the planned VRDN-001, VRDN-002, and VRDN-003 studies against the stated timelines.
- Actual cash burn and whether the projected runway into the second half of 2025 remains achievable as clinical and manufacturing spending increases.
- Any future use of the $175 million ATM, additional equity issuance, or draws on conditional Hercules tranches, including resulting dilution and debt terms.
- The terms, milestone likelihood, and financial impact of related-party Zenas and Paragon agreements and third-party license obligations.
- Whether supply, trial-enrollment, regulatory, or competitive developments alter program timing, costs, or the clinical outlook.