Viridian Therapeutics(VRDN) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements For the six months ended June 30, 2023, Viridian Therapeutics reported a net loss of $123.2 million, a significant increase from the $55.2 million loss in the same period of 2022, driven by substantial rises in R&D and G&A expenses Condensed Consolidated Balance Sheets As of June 30, 2023, total assets were $351.5 million, a decrease from $435.1 million at December 31, 2022, primarily due to a reduction in cash, cash equivalents, and short-term investments Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $87,082 | $155,579 | | Short-term investments | $247,209 | $268,971 | | Total Assets | $351,467 | $435,091 | | Liabilities & Equity | | | | Total Liabilities | $35,610 | $40,027 | | Total Stockholders' Equity | $315,857 | $395,064 | | Total Liabilities & Stockholders' Equity | $351,467 | $435,091 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a net loss of $55.1 million for the three months and $123.2 million for the six months ended June 30, 2023, representing a significant increase in losses compared to the same periods in 2022, driven by higher research and development and general and administrative expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | 6 Months 2023 | 6 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Collaboration Revenue | $72 | $256 | $170 | $472 | | Research and Development | $40,083 | $21,712 | $90,823 | $39,458 | | General and Administrative | $19,264 | $8,108 | $41,095 | $16,467 | | Loss from Operations | $(59,275) | $(29,564) | $(131,748) | $(55,453) | | Net Loss | $(55,063) | $(29,491) | $(123,214) | $(55,184) | | Net Loss Per Share | $(1.27) | $(1.06) | $(2.88) | $(2.05) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2023, net cash used in operating activities was $107.2 million, with net cash provided by investing activities of $27.4 million and financing activities of $11.3 million, resulting in a net decrease in cash and cash equivalents of $68.5 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(107,187) | $(39,128) | | Net Cash Provided by Investing Activities | $27,418 | $22,826 | | Net Cash Provided by Financing Activities | $11,272 | $5,296 | | Net Decrease in Cash | $(68,497) | $(11,006) | Notes to Condensed Consolidated Financial Statements The notes detail the company's rare disease focus, particularly VRDN-001 for TED, confirm sufficient cash to fund operations for at least the next twelve months, and outline key agreements including collaborations, license obligations, and an upsized term loan facility - The company is a biopharmaceutical firm focused on rare diseases, with its most advanced program, VRDN-001, targeting Thyroid Eye Disease (TED) - As of June 30, 2023, the company had an accumulated deficit of $611.4 million and expects to continue generating operating losses. However, with approximately $334.3 million in cash, cash equivalents, and short-term investments, management expects to fund operations for at least the next twelve months[26][28] - In April 2022, the company entered into a loan agreement with Hercules Capital for up to $75.0 million, drawing an initial $5.0 million. In August 2023, this was amended to increase the available principal to $150.0 million, with an additional $15.0 million drawn[79][82][85] - The company has several key license agreements with potential future milestone payments, including up to $48.0 million to ImmunoGen, and up to $45.0 million to Enable Injections, plus potential commercial milestones and royalties for both[97][102] Management's Discussion and Analysis of Financial Condition and Results of Operations Management highlights significant progress in clinical programs for Thyroid Eye Disease (TED), with a net loss increase to $123.2 million for the first six months of 2023, and expects current cash of $334.3 million to fund operations into the second half of 2025 Overview and Recent Developments The company focuses on developing best-in-class medicines for rare diseases, with its lead program VRDN-001 targeting Thyroid Eye Disease (TED), showing positive clinical proof-of-concept data and advancing into Phase 3 trials, while also progressing subcutaneous candidates - VRDN-001 has established clinical proof-of-concept in both active and chronic Thyroid Eye Disease (TED)[140] - Key upcoming milestones include topline results from the THRIVE Phase 3 trial (active TED) in mid-2024 and the THRIVE-2 Phase 3 trial (chronic TED) by year-end 2024[140] - The company is advancing three subcutaneous (SC) candidates and plans to select a lead program by year-end 2023 to move into a pivotal trial in mid-2024[141][144] Results of Operations For the three and six months ended June 30, 2023, the company experienced a significant increase in operating expenses, primarily driven by higher R&D costs due to milestone/license fees, manufacturing, and personnel, alongside increased G&A expenses from personnel costs Comparison of Operating Expenses - Three Months Ended June 30 (in thousands) | Expense Category | 2023 | 2022 | Increase | | :--- | :--- | :--- | :--- | | Research and development | $40,083 | $21,712 | $18,371 | | General and administrative | $19,264 | $8,108 | $11,156 | - The Q2 2023 increase in R&D expenses was driven by higher costs for manufacturing ($4.5M), clinical trials ($5.0M), personnel ($5.0M), and milestone fees ($2.0M)[163] Comparison of Operating Expenses - Six Months Ended June 30 (in thousands) | Expense Category | 2023 | 2022 | Increase | | :--- | :--- | :--- | :--- | | Research and development | $90,823 | $39,458 | $51,365 | | General and administrative | $41,095 | $16,467 | $24,628 | - The six-month increase in R&D expenses was primarily due to a $14.5M net increase in milestone/license fees, a $12.3M increase in manufacturing costs, and a $9.7M increase in personnel costs[169] Liquidity and Capital Resources As of June 30, 2023, the company had $334.3 million in cash, cash equivalents, and short-term investments, which management believes is sufficient to fund operations into the second half of 2025, despite an accumulated deficit of $611.4 million and the need for substantial additional capital - The company has $334.3 million in cash, cash equivalents, and short-term investments as of June 30, 2023, which is expected to fund operations into the second half of 2025[173] - The company has an accumulated deficit of $611.4 million as of June 30, 2023, and has not generated any revenue from product sales[174] - In August 2023, the company amended its loan agreement with Hercules Capital, increasing the total available principal from $75.0 million to $150.0 million and drew an additional $15.0 million[181] - The company has a $175.0 million At-The-Market (ATM) agreement with Jefferies, under which no shares were sold in the first six months of 2023[182] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Viridian Therapeutics is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[192] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, 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 the end of the quarter[194] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[195] 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 is not currently involved in any material legal proceedings[197] Risk Factors The company faces significant risks related to its financial condition, the uncertain outcomes of product development and clinical trials, regulatory approvals, reliance on third parties, and intellectual property protection Risks Related to Financial Condition and Capital Requirements The company has a history of significant losses, with an accumulated deficit of $611.4 million as of June 30, 2023, and will need to raise substantial additional capital, with potential future financing causing dilution or operational restrictions - The company will need to raise additional capital to fund operations and service obligations; failure to do so when needed could prevent it from continuing as a going concern[199] - The company has a limited operating history, has historically incurred significant losses ($611.4M accumulated deficit as of June 30, 2023), and anticipates continued losses[203] - Raising additional capital may cause dilution to stockholders, involve restrictive debt covenants, or require relinquishing valuable rights to technologies or product candidates on unfavorable terms[213][214][215] Risks Related to Product Candidate Discovery and Development The company's success is heavily dependent on its early-stage product candidates, with clinical trials being expensive, time-consuming, and uncertain, carrying a high risk of failure, potential for undesirable side effects, and challenges in patient enrollment for rare diseases - Clinical development is expensive, time-consuming, and involves significant risk; a failure of one or more clinical trials can occur at any stage[219] - The company is heavily dependent on the success of its product candidates, which are in early stages of development, and cannot guarantee that data will be sufficient for regulatory approval[226] - Early positive results from preclinical studies and clinical trials are not predictive of future results in larger, later-stage trials[230] - Difficulty enrolling and maintaining patients in clinical trials for rare diseases could delay or prevent the completion of these trials[232] Risks Related to Regulatory Approval and Legal Compliance The company's biologic product candidates may face competition from biosimilars, may not receive special regulatory designations, and will be subject to extensive ongoing regulatory requirements and healthcare reform measures, alongside stringent fraud, abuse, and data privacy laws - Product candidates regulated as biologics may face competition from biosimilars sooner than anticipated under the BPCIA, which allows for an abbreviated approval pathway for competing products[241] - The company may not receive or maintain expedited regulatory designations such as Orphan Drug, Breakthrough Therapy, or Fast Track, which could hinder development timelines[244][245][246] - Even if a product is approved, the company will remain subject to ongoing and extensive regulatory requirements for manufacturing, labeling, and marketing, and failure to comply can lead to significant penalties[250] - The company is subject to various federal and state healthcare laws, including anti-kickback, false claims, and data privacy regulations (e.g., GDPR), with non-compliance carrying substantial penalties[255] Risks Related to Reliance on Third Parties Viridian heavily relies on third-party CROs for clinical trials and CMOs for manufacturing, lacking internal capabilities, making it vulnerable to supply chain disruptions, regulatory non-compliance, and complex biologic manufacturing issues that could harm development and commercialization - The company relies on third-party CROs for clinical trials and CMOs for manufacturing, and is responsible for their compliance with regulatory standards like GCP and cGMP[262] - The company lacks internal manufacturing capabilities and relies on a limited number of third-party suppliers, making it vulnerable to supply chain disruptions which could delay clinical trials[266][271] - The manufacturing process for biologic product candidates is complex and prone to issues like contamination or variability, which could lead to product loss, delays, and harm the company's reputation[267][268] Unregistered Sales of Equity Securities and Use of Proceeds In May and July 2023, the company issued a total of 243,902 shares of common stock to two accredited investors as partial consideration for certain licenses and rights, relying on the exemption from registration provided by Section 4(a)(2) of the Securities Act - On May 22, 2023, and July 14, 2023, the company issued a combined 243,902 shares of common stock to two accredited investors as partial consideration for licenses and rights granted to the company[377] Defaults Upon Senior Securities Not applicable - There were no defaults upon senior securities during the period[378] Mine Safety Disclosures Not applicable - The company has no mine safety disclosures to report[379] Other Information On August 7, 2023, the company amended its Loan and Security Agreement with Hercules Capital, Inc., increasing the total term loan facility from $75 million to $150 million, secured by substantially all of the company's assets excluding intellectual property - On August 7, 2023, the company amended its loan agreement with Hercules Capital, increasing the aggregate term loan facility available from $75 million to $150 million[380] Exhibits This section lists the exhibits filed with the quarterly report, including corporate governance documents, material contracts such as the amended loan agreement, and certifications from the principal executive and financial officers - The report includes several exhibits, notably the First Amendment to the Loan and Security Agreement with Hercules Capital, Inc., and required officer certifications[383]