Business context and reporting period
Filing identity: The supplied filing is Miragen Therapeutics, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2017—not a filing identified as Viridian Therapeutics, Inc. Investors should verify the company and filing before relying on this summary.
Miragen was a clinical-stage RNA-targeted therapeutics company. Its lead candidates, MRG-106 for certain cancers and MRG-201 for pathological fibrosis, were in Phase 1 trials. On February 13, 2017, the company completed a reverse merger with privately held Miragen, adopted the Miragen name, and began trading as MGEN. Private Miragen was the accounting acquirer; the merger was accounted for as an asset acquisition. Prior-period financial statements reflect the share exchange and par-value change.
Financial results and liquidity
| Metric | Q1 2017 | Q1 2016 / prior date |
|---|---|---|
| Total revenue | $0.462 million | $0.917 million |
| Research and development expense | $4.120 million | $3.466 million |
| General and administrative expense | $3.281 million | $0.992 million |
| Operating loss | $6.939 million | $3.541 million |
| Net loss | $6.980 million | $3.623 million |
| Basic and diluted loss per share | $0.60 | $5.58 |
| Net cash used in operating activities | $8.183 million | $4.170 million |
Revenue comprised $10,000 under the Servier collaboration and $452,000 in grant revenue. The company reported no product-sales revenue. Cash and cash equivalents were $54.273 million at March 31, 2017, versus $22.104 million at December 31, 2016. Total assets were $57.794 million; total liabilities were $9.800 million. Notes payable totaled $4.321 million, including $1.974 million current and $2.347 million long-term. Stockholders’ equity was $47.994 million, following conversion of all preferred stock in connection with the merger.
Cash increased by $32.169 million during the quarter. Financing provided $39.116 million net, chiefly from a $40.7 million common-stock financing before costs; investing activities provided $1.236 million, including $1.280 million cash acquired in the merger. Management said cash on hand was expected to fund operations through 2018. The company also had an ATM agreement permitting up to $50 million of share sales; no shares had been sold under it by quarter-end.
Changes, outlook, and risks
- Revenue fell $455,000 year over year, primarily because Servier collaboration revenue declined by $0.9 million, partly offset by $0.5 million more grant revenue. The filing says the Servier license fees had been fully recognized by December 2016.
- R&D expense increased $0.654 million, reflecting higher manufacturing and personnel costs, partly offset by lower outsourced preclinical costs. G&A increased $2.289 million, mainly from merger, public-company, professional-services, and personnel costs.
- Operating cash use increased $4.013 million year over year, reflecting higher losses, including merger-related professional costs and increased R&D spending. The company reported a $74.1 million accumulated deficit and expected significant losses and expenses for several years.
- Management expected MRG-201’s Phase 1 trial to conclude in Q2 2017 and additional results in the second half of 2017. Interim MRG-106 data were expected at the 2017 ASCO meeting. As of March 31, MRG-106 had been generally safe and well tolerated in 18 of 19 patients described in the filing; 54 volunteers had participated in the MRG-201 trial, 47 of whom received the candidate.
- A May 2017 Servier amendment, after quarter-end, added MRG-110 (miR-92) as a target, returned three former targets to Miragen, extended the research collaboration through September 2019 or completion of agreed work, and provided for a specified milestone payment under stated conditions. The filing does not provide a clear dollar amount for that payment.
- Key risks include early-stage clinical and regulatory uncertainty, the unproven microRNA approach, safety and drug-delivery challenges, reliance on external manufacturers and collaborators, potential need for additional capital and dilution, and the possibility that available capital or financing may not support planned development. Management stated that additional capital would ultimately be required.
Most important facts to verify
- Confirm the filing belongs to Miragen Therapeutics, Inc. and not Viridian Therapeutics, Inc.; also confirm the merger’s effects on period comparability.
- Check the basis and assumptions behind management’s cash-runway estimate through 2018 and the timing and cost of planned clinical development.
- Review subsequent MRG-106 and MRG-201 trial results, safety updates, and whether stated trial milestones were achieved.
- Review the executed May 2017 Servier amendment for the milestone amount, cost-sharing terms, and resulting rights and obligations.
- Assess remaining debt maturities, the availability and terms of the additional $5 million loan tranche, and any future use of the $50 million ATM facility.