Viridian Therapeutics, Inc. quarterly report, Q3 FY2017

Business context and reporting period

This filing is Miragen Therapeutics, Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2017—not a filing by Viridian Therapeutics, Inc. The company is a clinical-stage RNA-targeted therapeutics developer; it reported no product-sale revenue. Miragen completed a reverse merger with Signal Genetics in February 2017, and the statements give retroactive effect to the merger exchange ratio.

Financial performance and position

Revenue was primarily collaboration reimbursements and grant revenue. Q3 revenue increased mainly because Servier-reimbursed research activity rose; nine-month revenue declined as prior Servier license revenue had been fully recognized in 2016. Operating expenses substantially exceeded revenue; conventional product margins are not meaningful because the company had no approved products or product sales.

At September 30, cash and cash equivalents were $42.81 million, current assets $46.42 million, and current liabilities $6.53 million. Notes payable totaled $3.37 million carrying value ($3.17 million principal), including $1.98 million current. Accumulated deficit was $87.21 million. Management believed cash on hand would fund normal operations through the end of 2018.

Material changes versus prior comparable periods

• Q3 revenue rose approximately 74% year over year, while net loss widened approximately 40%.
• Nine-month revenue decreased approximately 5%; net loss increased approximately 78%, reflecting higher R&D and G&A spending.
• Nine-month R&D expense rose $4.84 million, chiefly from manufacturing activity for MRG-106 and increased personnel costs. G&A rose $4.11 million, including public-company, merger-related, legal, and personnel costs.
• Cash rose from $22.10 million at December 31, 2016 to $42.81 million, supported principally by the February financing and ATM sales; operating cash use increased substantially.
• Preferred stock converted to common stock in connection with the merger. The February private financing generated $40.7 million gross; ATM sales generated about $2.7 million gross through September 30.

Outlook, management commentary, and risks

• Management expects significant expenses and operating losses to continue for several years, with R&D spending expected to increase. Additional capital will be needed; the company may use equity, debt, grants, or collaborations. Further equity issuance may dilute shareholders.
• Planned development included a Phase 2 MRG-106 trial for mycosis fungoides in the second half of 2018; a Phase 2a MRG-201 keloid study in the first half of 2018; and Phase 1 MRG-110 trials in the first half of 2018. These are plans, not guaranteed milestones.
• MRG-106 had generally been well tolerated in its Phase 1 study, but worsening itching on two occasions was deemed dose-limiting toxicity. MRG-201 was generally well tolerated in healthy volunteers, with injection-site reactions most common. MRG-110 had not yet entered human trials.
• The Servier collaboration was amended to focus on MRG-110 and allow Servier to add another target through September 2019. Servier’s rights exclude the United States and Japan; potential milestone and royalty payments depend on development and commercialization.
• Key risks include early-stage clinical uncertainty, safety and delivery challenges for novel microRNA therapeutics, manufacturing and third-party dependence, financing needs, competition, intellectual-property and licensing risks, and potential delays in trials or regulatory approval. The company reported no material legal proceedings and no off-balance-sheet arrangements.
• After quarter-end through November 7, 2017, the company sold 403,306 additional ATM shares for approximately $3.9 million gross and $3.8 million net proceeds. Disclosure controls were assessed as effective at a reasonable level of assurance.

Important facts for investors to verify

• Confirm the issuer identity: this is Miragen Therapeutics, Inc. (ticker MGEN in 2017), not Viridian Therapeutics, Inc.
• Review clinical-trial updates, especially MRG-106’s dose-limiting itching events and the timing and results of planned trials.
• Assess cash runway against the reported $20.9 million nine-month operating cash use, planned development spending, and management’s end-2018 estimate.
• Track further ATM issuance and potential dilution; the filing reports additional post-quarter sales and an ATM capacity of up to $50 million.
• Check Servier collaboration progress, cost-sharing terms, milestone conditions, and whether the amended collaboration produces future milestone or royalty revenue.