Viridian Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Viridian is a clinical-stage biotechnology company developing antibody therapies, chiefly for thyroid eye disease (TED). It has no approved products and has generated no product-sales revenue. Comparisons with 2020 reflect a different business mix following the October 2020 acquisition of Private Viridian.
Financial performance and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $1.09 million | $0.17 million | $2.54 million | $1.00 million |
| Research and development expense | $12.57 million | $3.84 million | $26.37 million | $9.94 million |
| General and administrative expense | $6.52 million | $2.71 million | $12.68 million | $5.43 million |
| Operating loss | $18.00 million | $6.37 million | $36.51 million | $14.37 million |
| Net loss | $17.96 million | $6.44 million | $36.42 million | $14.48 million |
| Basic and diluted loss per share | $2.21 | $1.82 | $5.04 | $4.41 |
| Operating cash used | Not separately presented | Not separately presented | $26.17 million | $15.25 million |
Revenue was collaboration revenue, not product sales: Q2 2021 revenue came from Zenas BioPharma, while the 2020 comparative period primarily reflected legacy microRNA research reimbursements. Product margins are not applicable because the company had no product sales; the filing does not provide a meaningful product gross margin.
- Liquidity: At June 30, 2021, cash and cash equivalents were $27.70 million and short-term investments were $81.60 million, totaling $109.30 million. Current assets were $115.46 million and current liabilities $16.83 million.
- Cash flows: Six-month investing cash use was $0.33 million; financing provided $8.31 million. Cash and cash equivalents declined by $18.19 million from year-end 2020.
- Debt and obligations: No notes payable were outstanding. Operating lease liabilities totaled approximately $1.61 million; future minimum lease payments were approximately $1.8 million through 2024.
- Equity and accumulated losses: Accumulated deficit was $315.31 million. Common shares outstanding were 8.61 million at June 30, 2021; 340,219 Series A preferred shares remained outstanding and were convertible, subject to stated limitations.
Changes versus prior comparable periods
- Q2 revenue rose to $1.09 million from $0.17 million, while six-month revenue increased to $2.54 million from $1.00 million, primarily reflecting the Zenas collaboration rather than product sales.
- Q2 research and development expense increased $8.73 million year over year; management attributed the increase mainly to preclinical outsourcing and manufacturing development for VRDN-001 and VRDN-002. Six-month R&D expense increased $16.43 million, largely for those programs.
- Q2 general and administrative expense increased $3.82 million, driven by personnel-related costs, consulting and recruiting, and board compensation. Six-month G&A expense increased $7.25 million.
- Net loss widened to $17.96 million for Q2 and $36.42 million for the first half. Operating cash use increased $10.92 million year over year in the first half.
- Viridian sold legacy lab equipment in Q2 for approximately $75,000 and recorded a loss of approximately $67,000.
Outlook, risks, and notable items
- Management expected available cash, cash equivalents, and investments to fund planned operations into 2024, while stating that additional capital will be needed. The estimate depends on development pace, trial results, financing access, and other assumptions; spending could exceed expectations.
- Management planned to file an IND for VRDN-001 in Q4 2021, with initial TED proof-of-concept data expected in Q2 2022. It planned to file an IND for VRDN-002 by year-end 2021, with Phase 1 data expected by mid-2022 and a low-volume subcutaneous study planned for 2022. These are forward-looking plans, not guarantees.
- Key risks include early-stage clinical and regulatory uncertainty, trial enrollment and safety, reliance on third-party manufacturers and CROs, competition in TED, intellectual-property and licensing exposure, dilution or constraints from future financing, and potential COVID-19-related disruption. The company reported no material COVID-19 impact as of June 30, 2021.
- The Zenas arrangement may be a related-party transaction: a significant Viridian stockholder also held a significant interest and board seat at Zenas. Zenas-related deferred revenue was $1.6 million at quarter-end.
- The ImmunoGen license carries up to $48 million in development milestones and up to $95 million in commercial milestones, plus mid-single-digit royalties if applicable products are commercialized. The Xencor license carries up to $30 million in development milestones and up to $25 million in commercial milestones, plus mid-single-digit royalties.
- Subsequent to quarter-end, Viridian announced a new CFO and an additional office lease. Management said disclosure controls were effective at a reasonable level of assurance, with no material quarterly change in internal control over financial reporting. The company reported no material legal proceedings.
Important facts for investors to verify
- Reconcile ATM proceeds: The filing gives inconsistent figures for 2021 ATM sales. The equity statement reports approximately $7.1 million net proceeds through June 30, and the cash-flow statement reports $8.529 million of common-stock issuance proceeds before related issuance costs. MD&A instead states approximately $18.8 million net proceeds during Q2. Verify the actual shares sold, gross and net proceeds, and any correction or clarification.
- Confirm runway assumptions: Assess whether the stated runway into 2024 remains supported by the clinical-development budget, cash burn, and financing needs.
- Track clinical execution: Verify whether the planned VRDN-001 and VRDN-002 IND, trial, and data milestones were achieved and whether results support further development.
- Review dilution and related-party matters: Monitor Series A preferred conversions, equity sales and options, and the terms and governance of the Zenas collaboration.
- Evaluate contingent costs: Track license milestones and royalties, lease commitments, and the potential cash or dilution effects of future financing.