Viridian Therapeutics(VRDN) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Viridian Therapeutics, Inc. as of June 30, 2021, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets from $131.3 million at the end of 2020 to $118.2 million as of June 30, 2021, primarily due to reduced cash and cash equivalents, while total liabilities increased and stockholders' equity decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $27,704 | $45,897 | | Short-term investments | $81,597 | $81,742 | | Total current assets | $115,462 | $129,611 | | Total assets | $118,202 | $131,255 | | Liabilities & Equity | | | | Total current liabilities | $16,830 | $10,674 | | Total liabilities | $19,290 | $11,218 | | Total stockholders' equity | $98,912 | $120,037 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a net loss of $18.0 million for Q2 2021, a significant increase from $6.4 million in Q2 2020, with the six-month net loss growing to $36.4 million in 2021 from $14.5 million in 2020, driven by higher R&D and G&A expenses Statement of Operations Highlights (in thousands) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $1,090 | $168 | $2,541 | $996 | | Research and development | $12,565 | $3,836 | $26,371 | $9,939 | | General and administrative | $6,523 | $2,706 | $12,683 | $5,429 | | Net loss | $(17,964) | $(6,435) | $(36,424) | $(14,479) | | Net loss per share | $(2.21) | $(1.82) | $(5.04) | $(4.41) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities for the six months ended June 30, 2021, increased to $26.2 million from $15.2 million in the prior year, resulting in a net decrease in cash and cash equivalents of $18.2 million and an ending balance of $27.7 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(26,170) | $(15,248) | | Net cash (used in) provided by investing activities | $(333) | $2,001 | | Net cash provided by financing activities | $8,311 | $18,983 | | Net (decrease) increase in cash | $(18,192) | $5,736 | | Cash and cash equivalents at end of period | $27,704 | $30,582 | Notes to Condensed Consolidated Financial Statements The notes detail the company's focus on developing treatments for Thyroid Eye Disease (TED) with VRDN-001, highlight the October 2020 acquisition and $91.0 million financing, and confirm $109.3 million in cash and investments are expected to fund operations into 2024 - The company's most advanced program, VRDN-001, is an intravenously administered IGF-1R monoclonal antibody being developed for thyroid eye disease (TED)[30] - In October 2020, the company acquired Private Viridian and concurrently raised approximately $91.0 million through a private placement of Series A Preferred Stock[31][33] - As of June 30, 2021, the company had approximately $109.3 million in cash, cash equivalents, and short-term investments, which is expected to be sufficient to fund operations into 2024[39] - During the six months ended June 30, 2021, the company recognized $2.5 million in collaboration revenue related to its license agreement with Zenas BioPharma[98] - The company has license agreements with ImmunoGen and Xencor, which require future potential milestone payments of up to $48.0 million and $30.0 million, respectively, plus commercial milestones and royalties[112][113] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's focus on developing treatments for Thyroid Eye Disease (TED) with VRDN-001 and VRDN-002, noting a significant increase in operating expenses and net losses for Q2 and H1 2021, while confirming $109.3 million in cash and investments are expected to fund operations into 2024 Overview and Recent Developments The company is focused on developing therapeutics for Thyroid Eye Disease (TED), with lead program VRDN-001 on track for an IND filing in Q4 2021 and initial proof of concept data in Q2 2022, and VRDN-002 also expected to file an IND by year-end 2021 with Phase 1 data by mid-2022 - The company's lead candidate, VRDN-001, is being developed for Thyroid Eye Disease (TED), with an Investigational New Drug (IND) application planned for Q4 2021 and initial patient data expected in Q2 2022[152] - A second candidate, VRDN-002, is designed for subcutaneous injection and is also on track for an IND filing by the end of 2021, with Phase 1 data expected by mid-2022[153] Results of Operations For Q2 2021, revenue was $1.1 million and net loss was $18.0 million, compared to a $6.4 million loss in Q2 2020, driven by an $8.8 million rise in R&D and a $3.8 million increase in G&A costs, leading to a H1 2021 net loss of $36.4 million versus $14.5 million in 2020 Comparison of Operating Results (in thousands) | Metric | Q2 2021 | Q2 2020 | Change | H1 2021 | H1 2020 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,090 | $168 | +$922 | $2,541 | $996 | +$1,545 | | R&D Expenses | $12,565 | $3,836 | +$8,729 | $26,371 | $9,939 | +$16,432 | | G&A Expenses | $6,523 | $2,706 | +$3,817 | $12,683 | $5,429 | +$7,254 | | Net Loss | $(17,964) | $(6,435) | +$(11,529) | $(36,424) | $(14,479) | +$(21,945) | - The increase in R&D expenses in Q2 2021 was primarily due to an $8.3 million increase in preclinical outsourcing and manufacturing for lead candidates VRDN-001 and VRDN-002[182] - The increase in G&A expenses in Q2 2021 was mainly driven by a $2.0 million increase in personnel-related costs and a $1.0 million increase in consulting and recruiting fees[183] Liquidity and Capital Resources As of June 30, 2021, the company had $109.3 million in cash, cash equivalents, and short-term investments, projected to fund operations into 2024, but with an accumulated deficit of $315.3 million, substantial additional capital will be required, potentially causing stockholder dilution - The company had $109.3 million in cash, cash equivalents, and short-term investments as of June 30, 2021, with a projected cash runway into 2024[189] - In April 2021, the company entered into an Open Market Sale Agreement (ATM) with Jefferies to sell up to $50.0 million of its Common Stock, selling 403,868 shares for net proceeds of approximately $7.1 million through June 30, 2021[122][195] - Net cash used in operating activities increased to $26.2 million for the first six months of 2021, up from $15.2 million in the same period of 2020, primarily due to a higher net loss[201] Quantitative and Qualitative Disclosures about Market Risk The company is a smaller reporting company and is therefore not required to provide the information requested under this item - As a smaller reporting company, Viridian is not required to provide quantitative and qualitative disclosures about market risk[206] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter, with no material changes in internal control over financial reporting during the most recent fiscal quarter - Management concluded that the company's disclosure controls and procedures were effective at a reasonable level of assurance as of June 30, 2021[208] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[209] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings that it believes would have a material adverse effect on its business, financial condition, or results of operations - The company reports no material legal proceedings as of the filing date[212] Risk Factors This section details numerous risks that could materially affect the company's business, including the need for additional capital, a history of significant losses, dependence on early-stage product candidates, clinical trial risks, reliance on third parties, and potential competition Risks Related to Financial Condition and Capital Requirements The company faces significant financial risks, including the need to raise additional capital to fund operations beyond its current runway into 2024, a history of incurring net losses ($36.4 million in H1 2021), and potential dilution to existing stockholders from future capital raises - The company will need to raise additional capital to fund operations beyond its current cash runway (into 2024) and to continue as a going concern[216] - The company has a history of significant net losses, with an accumulated deficit of $315.3 million as of June 30, 2021, and anticipates continued losses for the foreseeable future[220][221] - Raising additional capital may cause dilution to stockholders, restrict operations through covenants, or require relinquishing valuable rights to product candidates[232] Risks Related to Product Candidate Discovery and Development The company's success is heavily dependent on its early-stage product candidates, which face costly, lengthy, and uncertain clinical development, with inherent risks of trial failure, undesirable side effects, and difficulty in patient enrollment, where early promising results may not predict future success - Clinical trials are expensive, time-consuming, and inherently risky, with a high potential for failure at any stage of development[239] - The company is heavily dependent on the success of its early-stage product candidates, and there is no assurance that they will receive regulatory approval[247] - Product candidates may cause undesirable side effects that could delay or prevent regulatory approval or limit commercial viability[244] Risks Related to Regulatory Approval and Legal Compliance The company faces extensive regulatory hurdles, including potential competition from biosimilars for its biologic product candidates, ongoing stringent regulatory requirements post-approval, and compliance with complex healthcare fraud and abuse laws and data privacy regulations like GDPR and CCPA, with non-compliance leading to significant penalties - Biologic product candidates may be subject to competition from biosimilars, which could be approved 12 years after the reference product's approval, potentially shortening market exclusivity[261] - Even if a product is approved, the company will remain subject to ongoing and stringent regulatory requirements for manufacturing, marketing, and safety reporting[271] - The company is subject to numerous fraud and abuse laws, as well as data privacy regulations like GDPR and CCPA, and non-compliance could lead to substantial penalties and sanctions[281][287] Risks Related to Reliance on Third Parties The company heavily relies on third-party CROs for clinical trials and CMOs for manufacturing, where any failure to perform, comply with regulations, or avoid disruptions (e.g., from COVID-19) could substantially harm development timelines, regulatory approval, and supply for trials or commercialization - The company relies on third-party CROs to conduct clinical trials and CMOs to manufacture product candidates; failure of these parties to perform adequately could substantially harm the business[305] - The manufacturing process for biologic product candidates is complex and susceptible to production failures, contamination, and other disruptions that could delay or prevent supply for trials or commercialization[309] - Business operations could be adversely affected by health epidemics like the COVID-19 pandemic, which could disrupt clinical trials and the manufacturing supply chain[300] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for this reporting period - The company reports no unregistered sales of equity securities for the period[414] Defaults Upon Senior Securities This item is not applicable for this reporting period - The company reports no defaults upon senior securities[415] Mine Safety Disclosures This item is not applicable for this reporting period - The company has no mine safety disclosures to report[416] Other Information There is no other information to report for this period - The company reports no other information under this item[417] Exhibits This section provides an index of the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and XBRL data files - Lists all exhibits filed with the quarterly report, including corporate agreements, certifications, and interactive data files[418][419]