Viridian Therapeutics, Inc. quarterly report, Q1 FY2022

Viridian Therapeutics, Inc. — Q1 2022 Form 10-Q

Reporting period: Three months ended March 31, 2022. Viridian is a clinical-stage biotechnology company developing treatments for thyroid eye disease (TED) and other serious or rare diseases. It had no approved products and generated no product-sale revenue.

Financial performance and position

MetricQ1 2022Q1 2021 / comparison
Collaboration revenue$0.2 million$1.5 million; down $1.2 million
Research and development expense$17.7 million$13.8 million; up $3.9 million
General and administrative expense$8.4 million$6.2 million; up $2.2 million
Net loss$25.7 million$18.5 million
Net loss per share, basic and diluted$0.98$2.91
Operating cash used$21.0 million$11.5 million
Cash, cash equivalents and short-term investments$175.4 million at March 31$196.9 million at December 31, 2021

Operating expenses exceeded collaboration revenue, resulting in a $25.9 million operating loss. Product gross margin is not applicable because there were no product sales. Cash and cash equivalents were $30.9 million, with $144.6 million of short-term investments. Total liabilities were $16.5 million; no debt was reported on the March 31 balance sheet. Accumulated deficit was $384.0 million.

Material changes and notable items

  • Revenue came from the related-party Zenas BioPharma collaboration and fell primarily because of the timing of work performed.
  • R&D expense increased with higher personnel costs and clinical-trial spending; it included a non-refundable $2.5 million Paragon Therapeutics option fee. The filing identifies Paragon as a related-party transaction.
  • G&A expense rose with increased staffing, director costs, and professional fees.
  • Net loss increased year over year, while loss per share declined because weighted-average shares increased substantially, including through conversion of Series A preferred stock. During the quarter, 47,871 preferred shares converted into 3.19 million common shares.
  • Investing activities provided $8.9 million, mainly from maturities of short-term investments. Unrealized investment losses of $0.8 million were recorded in comprehensive loss.

Outlook, risks and contingencies

  • Management expected existing resources to fund planned operations into 2024; the financial-statement note separately states resources were expected to be sufficient for at least 12 months from issuance. Viridian expects continuing operating losses and will need additional capital.
  • On April 1, 2022, after quarter-end, Viridian drew $5.0 million under a Hercules loan agreement providing access to up to $75.0 million in conditional tranches. The loan bears floating interest, capped at 8.95%, and is secured by substantially all borrower assets other than intellectual property. Interest-only payments initially run through April 2024, subject to milestone-based extensions.
  • VRDN-001 Phase 1/2 TED proof-of-concept data from 10 mg/kg and 20 mg/kg cohorts were expected in Q3 2022; 3 mg/kg cohort data were expected in Q4 2022. VRDN-002 Phase 1 data were expected in Q3 2022, with a TED subcutaneous proof-of-concept trial planned as a next step.
  • Key risks include clinical and regulatory uncertainty, the need for additional financing, possible delays or disruption to trials, manufacturing or supply chain, competition, and COVID-19 impacts. The company reported no material COVID-19 business impact to date. It disclosed no material legal proceedings and no material changes to previously reported risk factors.
  • Potential future obligations include development and commercial milestones and royalties under license agreements, including up to $48.0 million in ImmunoGen development milestones and milestone obligations under Xencor licenses; amounts depend on future events.

Important facts for investors to verify

  • Whether clinical trial enrollment, timing, safety findings and anticipated data releases for VRDN-001 and VRDN-002 remain on track.
  • Cash burn and runway assumptions, especially in light of the different runway statements and the company’s continuing need for capital.
  • Actual Hercules borrowings, interest costs, milestone conditions, collateral terms and any effects on future financing flexibility.
  • Potential dilution from preferred-stock conversions, equity plans, warrants, ATM capacity and future financing.
  • Related-party arrangements and the timing and amount of collaboration revenue, license milestones, royalties and other contingent obligations.