Viridian Therapeutics(US:VRDN)2022-03-11 13:11Part I Item 1. Business The company develops 'fast-follower' therapies for serious diseases, with a primary focus on Thyroid Eye Disease (TED) Company Overview and Strategy The company's strategy is to develop 'fast-follower' and 'bio-superior' therapies for clinically validated targets - Viridian's business model is to develop 'fast-follower' and 'bio-superior' therapies for diseases with existing proof-of-concept, aiming to improve upon first-generation drugs in efficacy, safety, or convenience18 - The company's primary focus is on Thyroid Eye Disease (TED), a debilitating autoimmune disease2128 - Key strategic elements include rapidly advancing VRDN-001 for quick market entry, developing the more convenient subcutaneous VRDN-002, and expanding the portfolio beyond TED29 Thyroid Eye Disease (TED) and Market Potential TED is a sight-threatening autoimmune disorder with a significant market validated by the success of Tepezza® - TED is a sight-threatening autoimmune disorder causing inflammation, proptosis (bulging eyes), double vision, and potential blindness3132 - The only FDA-approved therapy for TED is Horizon Therapeutics' Tepezza® (teprotumumab), an anti-IGF-1R antibody, which validates the mechanism of action for Viridian's candidates2137 TED Market Potential | Metric | Value | | :--- | :--- | | Annual Incidence (U.S.) | Over 60,000 patients | | Patients Requiring IV Treatment (U.S.) | 20,000 - 25,000 annually | | Tepezza® 2021 Net Sales | $1.66 billion | Product Candidates The company's pipeline is led by VRDN-001 (intravenous) and VRDN-002 (subcutaneous) for Thyroid Eye Disease - VRDN-001: The most advanced program, an intravenous (IV) anti-IGF-1R monoclonal antibody, with initial Phase 1/2 data expected in Q2 20222346 - VRDN-002: A next-generation anti-IGF-1R antibody designed for low-volume subcutaneous injection, with initial Phase 1 data expected mid-20222447 - VRDN-003: An exploratory program evaluating hypotheses that may yield a product profile differentiated beyond VRDN-00248 Intellectual Property, Competition, and Licensing The company protects its candidates with patent applications and navigates a competitive landscape through strategic licensing - As of December 31, 2021, the company has multiple patent applications for VRDN-001 and VRDN-002, with potential expirations no earlier than 20414950 - Key competitors in the TED space include Horizon Therapeutics plc (Tepezza®), Immunovant, Inc, Novartis International AG, Harbour BioMed, and Valenza Bio Inc51 - The company has key licensing agreements with ImmunoGen for VRDN-001 technology and Xencor for IGF-1R antibody technology525455 Government Regulation and Manufacturing The company is subject to extensive government regulation and relies entirely on third-party contract manufacturing - The company is subject to extensive regulation by the FDA and comparable foreign authorities, governing all stages of product development5883 - The company may seek expedited development pathways such as Orphan Drug Designation, Fast Track, and Breakthrough Therapy Designation737678 - Viridian does not own manufacturing facilities and is entirely dependent on third-party CDMOs for the production of its product candidates124125 Item 1A. Risk Factors The company faces significant financial, clinical development, third-party reliance, and competitive risks - Financial Risk: The company has a history of losses ($79.4 million in 2021) and an accumulated deficit of $358.3 million, requiring additional capital to fund operations beyond 2024133137138 - Clinical Development Risk: The company is heavily dependent on the success of its early-stage product candidates, and clinical trial outcomes are uncertain153159164 - Third-Party Reliance Risk: Viridian relies on CROs and CMOs to conduct clinical trials and manufacture its products, and any failure by these parties could harm development194196 - Commercial and Competitive Risk: The company faces substantial competition from larger companies, and success depends on market acceptance, pricing, and reimbursement251256 Item 1B, 2, 3, 4 The company reports no unresolved SEC comments, leases office space, and has no material legal proceedings - The company has no unresolved SEC staff comments296 - Leased properties include approximately 4,371 sq ft of office space in Waltham, MA and 27,128 sq ft of office and lab space in Boulder, CO297 - The company is not currently a party to any material legal proceedings298 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's stock trades on Nasdaq, it does not pay dividends, and it recently issued shares in a private placement - Common stock is traded on The Nasdaq Capital Market under the symbol "VRDN"302 - The company has never paid dividends and does not anticipate paying them in the foreseeable future, retaining earnings for business development303 - On December 2, 2021, the company issued 394,737 shares of common stock to Xencor in a private placement as an upfront payment for licensed rights304 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The company's net loss decreased in 2021 due to a non-recurring R&D expense, while operating expenses increased Results of Operations Operational results for 2021 show a lower net loss compared to 2020, driven by a non-recurring IPR&D expense Comparison of Years Ended December 31, 2021 and 2020 (in thousands) | Financial Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Revenue | $2,963 | $1,050 | $1,913 | | Research and development expenses | $56,886 | $28,304 | $28,582 | | General and administrative expenses | $25,805 | $13,265 | $12,540 | | Acquired in-process R&D expense | $0 | $69,861 | ($69,861) | | Net loss | ($79,413) | ($110,715) | $31,302 | - The $28.6 million increase in R&D expenses in 2021 was primarily due to a $22.8 million increase in preclinical outsourcing and manufacturing for VRDN programs343 - The $12.5 million increase in G&A expenses in 2021 was mainly driven by a $9.6 million increase in personnel-related costs due to higher headcount346 - Acquired IPR&D expense of $69.9 million was recorded in 2020 related to the acquisition of Private Viridian, with no corresponding expense in 2021345 Liquidity and Capital Resources The company has sufficient cash to fund operations into 2024, supported by recent financing activities - As of December 31, 2021, the company had $197.0 million in cash, cash equivalents, and short-term investments, which is expected to fund planned operations into 2024347 - The company has an accumulated deficit of $358.3 million as of December 31, 2021348 Cash Flow Summary (in thousands) | Activity | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($54,581) | ($29,779) | | Net cash used in investing activities | ($74,292) | ($50,481) | | Net cash provided by financing activities | $125,275 | $101,311 | - Financing activities in 2021 were primarily driven by net proceeds of $107.3 million from the sale of common stock and $15.7 million from the sale of Series B Preferred Stock363 Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, this disclosure is not required - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk365 Item 8. Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements and related notes for 2021 and 2020 Report of Independent Registered Public Accounting Firm The auditor issued a clean opinion and identified accrued clinical trial costs as a critical audit matter - The auditor, KPMG LLP, issued an opinion that the consolidated financial statements present fairly, in all material respects, the financial position of the company400 - A critical audit matter was identified related to the evaluation of accrued outsourced clinical trials and preclinical studies due to subjective judgment required406407 Consolidated Financial Statements This section provides key data from the company's balance sheets and statements of operations Consolidated Balance Sheet Data (in thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash, cash equivalents, and short-term investments | $196,965 | $127,639 | | Total Assets | $203,709 | $131,255 | | Total Liabilities | $15,993 | $11,218 | | Total Stockholders' Equity | $187,716 | $120,037 | Consolidated Statement of Operations Data (in thousands) | Metric | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Total Revenue | $2,963 | $1,050 | | Research and Development | $56,886 | $28,304 | | General and Administrative | $25,805 | $13,265 | | Net Loss | ($79,413) | ($110,715) | | Net Loss Per Share | ($6.66) | ($31.13) | Notes to Consolidated Financial Statements This section details key accounting policies, including asset acquisition and revenue recognition - The October 2020 acquisition of Private Viridian was accounted for as an asset acquisition, resulting in a $69.9 million charge for acquired IPR&D485486 - In 2021, the company recognized $3.0 million in collaboration revenue related to its license agreement with Zenas BioPharma490 - As of December 31, 2021, the company had federal net operating loss carryforwards of approximately $157.8 million555556 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reported no disagreements with its accountants on accounting and financial disclosure - None367 Item 9A. Controls and Procedures Management concluded that disclosure controls and internal controls over financial reporting were effective - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021368 - Based on an evaluation using the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2021371373 Item 9B. Other Information The company updated its registered agent and office in Delaware - On March 9, 2022, the company changed its registered agent and registered office in Delaware375 Part III Items 10, 11, 12, 13, and 14 Required information on governance and compensation is incorporated by reference from the upcoming proxy statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's 2022 Proxy Statement380382383 Part IV Item 15. Exhibits, Financial Statement Schedules This section lists the financial statements and exhibits filed with the annual report - This item contains the index to the consolidated financial statements and a list of all exhibits filed with the report386387 Item 16. Form 10-K Summary The company has not provided a Form 10-K summary - None395