Business context and reporting period
Registrant discrepancy: The supplied filing is for Miragen Therapeutics, Inc. (Nasdaq: MGEN), not Viridian Therapeutics, Inc. It is an unaudited Form 10-Q for the quarter ended March 31, 2020, comparing results with Q1 2019.
Miragen was a clinical-stage RNA-targeted therapeutics company. Its candidates included cobomarsen for certain cancers, remlarsen and MRG-229 for fibrotic conditions, and MRG-110 for ischemic disease and tissue repair. It had no approved products and no product-sales revenue.
Financial performance and position
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Total revenue | $0.828 million | $0.372 million |
| Research and development | $6.103 million | $8.751 million |
| General and administrative | $2.723 million | $3.357 million |
| Operating loss | $7.998 million | $11.736 million |
| Net loss | $8.044 million | $11.629 million |
| Basic and diluted loss per share | $0.18 | $0.38 |
| Net cash used in operations | $8.459 million | $11.809 million |
Revenue comprised $0.681 million of collaboration revenue and $0.147 million of grant revenue. Revenue and earnings margins based on product sales are not meaningful because the company had no product sales.
At March 31, 2020, cash and cash equivalents were $36.103 million, with no short-term investments. Total assets were $39.050 million and total liabilities were $12.050 million. Note payable carrying value was $7.366 million, including $6.667 million principal. Accumulated deficit was $176.216 million.
Cash increased $11.257 million during the quarter: operating outflow of $8.459 million was offset by $2.001 million of investing inflows and $17.715 million of financing inflows. Financing included a February public offering of shares and warrants that generated approximately $13.9 million net, plus other equity proceeds. Common shares outstanding rose to 53.077 million from 34.862 million at year-end 2019.
Material changes versus the prior comparable period
- Net loss narrowed by approximately $3.6 million; management attributed the lower R&D expense primarily to reduced personnel and consulting costs after restructuring and lower cobomarsen clinical-development and manufacturing costs.
- Revenue more than doubled, mainly from increased Servier-reimbursable activity and grant revenue. Servier’s termination of its collaboration became effective in February 2020, ending this source of collaboration reimbursement going forward; Miragen regained global rights to MRG-110.
- Operating cash use declined by $3.350 million. Financing cash flow increased substantially compared with Q1 2019, principally due to the public offering and other stock sales.
- The company adopted lease accounting standard ASC 842 in 2020, recognizing a right-of-use asset and lease liability of about $0.4 million at adoption, with no material income-statement effect.
Outlook, risks and unusual items
- Management estimated existing cash, together with the April 2020 SVB loan amendment’s six-month deferral of interest-only payments and extension of the loan maturity, would fund operations into the third quarter of 2021. It also stated that additional capital would be required. Management had not concluded that substantial doubt existed as of March 31, 2020.
- In April 2020, the SVB loan was amended to extend the interest-only period and maturity by six months. The filing presents revised principal payments of $1.0 million in 2020, $4.0 million in 2021 and $1.667 million in 2022. The company also received an approximately $1.7 million Paycheck Protection Program loan at 1% interest; forgiveness was uncertain, and the filing discusses eligibility, repayment and reputational risks.
- COVID-19 disrupted clinical-trial activity. Miragen no longer expected SOLAR trial topline data in Q3 2020, citing missed or at-risk doses and site visits and the need for in-person endpoint data. Timing for final Phase 2 remlarsen data was also uncertain. The company said COVID-19 could impair trial execution and access to financing, and it could not estimate the financial effect.
- Management reported positive Phase 1 cobomarsen observations in ATLL and planned to seek an FDA discussion on a potential expedited development path; FDA timing was uncertain. Additional preclinical MRG-229 data were expected in Q2 2020. These were expectations, not guarantees.
- The August 2019 restructuring targeted about 44 positions, approximately half the then workforce. Cumulative charges were $2.2 million through March 31, 2020; about $0.2 million of additional charges, primarily retention-related, were expected in the remainder of 2020.
- The company did not expect to meet remaining LLS funding milestones following changes to the SOLAR trial. Equity issuance and outstanding warrants present material dilution risk. Nasdaq minimum-bid-price compliance was also at risk; the filing notes a possible reverse split and a compliance deadline extended through June 30, 2020.
- No material legal proceedings or off-balance-sheet arrangements were reported. Disclosure controls and procedures were assessed as effective at a reasonable level of assurance.
Important facts for investors to verify
- Confirm the intended issuer: this filing names Miragen Therapeutics, Inc., not Viridian Therapeutics, Inc.
- Check subsequent filings for actual cash burn, financing, and whether the stated runway into Q3 2021 remained achievable.
- Verify the terms and ultimate forgiveness or repayment of the PPP loan, and the effects of the April SVB amendment.
- Track clinical-trial status and data timing for SOLAR, remlarsen and MRG-229, and any FDA feedback on cobomarsen in ATLL.
- Assess dilution from additional equity sales, options and the 7.5 million public-offering warrants exercisable at $1.10 per share.
- Review Nasdaq listing compliance and any reverse-split action, as well as the loss of Servier collaboration revenue.