Viridian Therapeutics(VRDN) - 2019 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for Miragen Therapeutics, Inc ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity changes, and cash flows, with explanatory notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Item | Sep 30, 2019 | Dec 31, 2018 | | :-------------------------------- | :----------- | :----------- | | Assets | | | | Cash and cash equivalents | $24,857 | $32,606 | | Short-term investments | $8,981 | $29,875 | | Total current assets | $38,217 | $65,370 | | Total assets | $38,813 | $66,147 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $10,385 | $6,733 | | Total liabilities | $15,644 | $14,803 | | Total stockholders' equity | $23,169 | $51,344 | | Total liabilities and stockholders' equity | $38,813 | $66,147 | - Total current assets decreased by approximately $27.15 million (41.5%) from December 31, 2018, to September 30, 2019, primarily due to reductions in cash, cash equivalents, and short-term investments[9] - Total stockholders' equity decreased by approximately $28.18 million (54.9%) from December 31, 2018, to September 30, 2019, largely driven by accumulated deficit[9] Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's revenue, expenses, and net loss over specified interim periods Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Item | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total revenue | $695 | $944 | $3,581 | $7,910 | | Research and development | $9,027 | $7,399 | $26,377 | $22,187 | | General and administrative | $2,898 | $2,696 | $9,112 | $8,354 | | Total operating expenses | $11,925 | $10,095 | $35,489 | $30,541 | | Net loss | $(11,230) | $(9,011) | $(31,755) | $(22,386) | | Net loss per share, basic and diluted | $(0.36) | $(0.29) | $(1.02) | $(0.77) | - Total revenue decreased by $0.25 million (26.4%) for the three months ended September 30, 2019, and by $4.33 million (54.7%) for the nine months ended September 30, 2019, compared to the respective prior periods[10] - Research and development expenses increased by $1.63 million (22.0%) for the three months and $4.19 million (18.9%) for the nine months ended September 30, 2019, driven by increased clinical trial and personnel costs[10] - Net loss increased by $2.22 million (24.6%) for the three months and $9.37 million (41.8%) for the nine months ended September 30, 2019, reflecting higher operating expenses and lower revenue[10] Condensed Consolidated Statements of Changes in Stockholders' Equity This section outlines the changes in the company's equity components, including common stock and accumulated deficit, over the reporting period Changes in Stockholders' Equity (in thousands) | Item | Dec 31, 2018 | Sep 30, 2019 | | :-------------------------------- | :----------- | :----------- | | Common Stock (shares) | 30,839,463 | 31,181,749 | | Common Stock (amount) | $308 | $312 | | Additional Paid-in Capital | $177,335 | $180,905 | | Accumulated Other Comprehensive Gain (Loss) | $(3) | $3 | | Accumulated Deficit | $(126,296) | $(158,051) | | Total Stockholders' Equity | $51,344 | $23,169 | - Total stockholders' equity decreased from $51.34 million at December 31, 2018, to $23.17 million at September 30, 2019, primarily due to a significant increase in accumulated deficit from net losses[12] - Additional paid-in capital increased by $3.57 million, reflecting issuances of common stock and share-based compensation expense during the nine-month period[12] Condensed Consolidated Statements of Cash Flows This section presents the cash inflows and outflows from operating, investing, and financing activities for the reporting periods Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(28,250) | $(18,669) | | Net cash provided by (used in) investing activities | $21,226 | $(38,998) | | Net cash provided by (used in) financing activities | $(725) | $41,926 | | Net decrease in cash and cash equivalents | $(7,749) | $(15,741) | | Cash and cash equivalents at end of period | $24,857 | $31,700 | - Net cash used in operating activities increased by $9.58 million, from $18.67 million in 2018 to $28.25 million in 2019, primarily due to a higher net loss[16][198] - Investing activities shifted from a net cash outflow of $39.00 million in 2018 to a net cash inflow of $21.23 million in 2019, driven by $54.00 million in maturities of short-term investments[16][199] - Financing activities shifted from a net cash inflow of $41.93 million in 2018 to a net cash outflow of $0.73 million in 2019, mainly due to a public offering in 2018 and higher principal payments on notes payable in 2019[16][200] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. DESCRIPTION OF BUSINESS This note describes Miragen Therapeutics, Inc.'s core business, product candidates, and financial outlook - Miragen Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on discovering and developing RNA-targeted therapies, specifically microRNAs, for diseases with high unmet medical needs[18] - The company has three product candidates in clinical development: cobomarsen, remlarsen, and MRG-110[18] - As of September 30, 2019, the company had $33.8 million in cash, cash equivalents, and short-term investments, which are expected to fund operations through Q2 2020[20] - The Servier Collaboration Agreement was terminated effective February 1, 2020, meaning the company does not expect future revenue from this agreement[19] - The company has an accumulated deficit of $158.1 million as of September 30, 2019, and expects significant operating losses to continue[22] 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles and methods used in preparing the financial statements - The company adopted ASC 606 (Revenue from Contracts with Customers) and ASU 2018-07 (Share-Based Payment Accounting) effective January 1, 2019, with no material impact on financial statements[29][68][69] - Revenue recognition follows a five-step model, recognizing revenue when control of goods or services is transferred to the customer[32] - Research and development costs are expensed as incurred, including employee-related expenses, CRO fees, manufacturing costs, and license fees where future economic benefit is uncertain[43][44] - Investments are classified as available-for-sale securities and measured at fair value, with unrealized gains/losses reported in stockholders' equity[47][48] Fair Value Measurements (in thousands) | Item | Sep 30, 2019 (Level 1) | Dec 31, 2018 (Level 1) | | :-------------------------------- | :--------------------- | :--------------------- | | Money market funds | $24,917 | $32,936 | | U.S. treasury securities | $8,981 | $29,875 | | Total assets | $33,898 | $62,811 | | Common Stock warrants (Level 3) | $82 | $82 | 3. COST RESTRUCTURING PLAN This note details the company's cost reduction initiatives, including workforce reductions and associated charges - In August 2019, the company announced a cost restructuring plan to reduce costs and reallocate resources to cobomarsen and microRNA-29 mimics, eliminating approximately 26 positions[72][165] Restructuring Expense (in thousands) | Item | 2019 | | :---------------------- | :--- | | Retention | $787 | | Severance | $288 | | Other | $17 | | Total restructuring charges | $1,092 | - Restructuring charges of $1.1 million were recorded in Q3 2019, with $0.9 million in R&D and $0.2 million in G&A, with an additional $0.4 million expected in Q4 2019[73][166] 4. STRATEGIC ALLIANCE AND COLLABORATION WITH SERVIER This note describes the collaboration agreement with Servier, its termination, and the financial impact on revenue - The Servier Collaboration Agreement, initiated in October 2011 for RNA-targeting therapeutics in cardiovascular disease, was terminated by Servier effective February 1, 2020[75][76][168] - Upon termination, Miragen will regain global rights to MRG-110 in all indications and territories[76][169] Collaboration Revenue from Servier (in thousands) | Item | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Milestone payments | $0 | $0 | $0 | $3,690 | | Research and development reimbursable costs | $625 | $814 | $3,471 | $3,248 | | Total collaboration revenue | $625 | $814 | $3,471 | $6,938 | - Collaboration revenue decreased significantly in 2019, primarily due to a €3.0 million ($3.7 million) development milestone payment received in 2018 that did not recur in 2019[84][185] 5. PROPERTY AND EQUIPMENT This note provides details on the company's property and equipment, including depreciation and net book value Property and Equipment, Net (in thousands) | Item | Sep 30, 2019 | Dec 31, 2018 | | :-------------------------------- | :----------- | :----------- | | Lab equipment | $2,519 | $2,489 | | Leasehold improvements | $741 | $741 | | Computer hardware and software | $461 | $428 | | Furniture and fixtures | $166 | $159 | | Property and equipment, gross | $3,887 | $3,817 | | Less: accumulated depreciation and amortization | $(3,291) | $(3,090) | | Property and equipment, net | $596 | $727 | - Net property and equipment decreased from $727 thousand at December 31, 2018, to $596 thousand at September 30, 2019, primarily due to accumulated depreciation[85] - Depreciation and amortization expense was $0.1 million for the three months and $0.2 million for the nine months ended September 30, 2019 and 2018, recorded primarily in R&D[85] 6. ACCRUED LIABILITIES This note presents a breakdown of the company's accrued liabilities, including clinical trial costs and restructuring liabilities Accrued Liabilities (in thousands) | Item | Sep 30, 2019 | Dec 31, 2018 | | :-------------------------------- | :----------- | :----------- | | Accrued outsourced clinical trials and preclinical studies | $2,607 | $1,129 | | Restructuring liability | $804 | $0 | | Accrued employee compensation and related taxes | $652 | $1,704 | | Total accrued liabilities | $4,857 | $3,868 | - Total accrued liabilities increased by $989 thousand (25.6%) from December 31, 2018, to September 30, 2019[86] - The increase was primarily driven by a $1.48 million increase in accrued outsourced clinical trials and preclinical studies and the recognition of an $804 thousand restructuring liability[86] - Accrued employee compensation and related taxes decreased by $1.05 million[86] 7. NOTES PAYABLE This note details the company's outstanding loan agreements and future principal payment obligations - The company has a $10.0 million loan agreement with Silicon Valley Bank (2017 SVB Loan Agreement) from November 2017, with a 30-month payment period following an 18-month interest-only period[87] Notes Payable (in thousands) | Item | Sep 30, 2019 | Dec 31, 2018 | | :-------------------------------- | :----------- | :----------- | | Principal amount outstanding | $8,667 | $10,000 | | Total note payable | $9,231 | $10,298 | | Less: current maturities | $(3,972) | $(2,294) | | Note payable, net of current portion | $5,259 | $8,004 | - Principal amount outstanding decreased by $1.33 million from December 31, 2018, to September 30, 2019[91] Future Annual Minimum Principal Payments (in thousands) | Year | Amount | | :--- | :----- | | 2019 | $1,000 | | 2020 | $4,000 | | 2021 | $3,667 | | Total | $8,667 | 8. COMMITMENTS AND CONTINGENCIES This note outlines the company's various contractual obligations, including indemnifications, employment agreements, license fees, and lease commitments - The company has indemnification agreements with directors and officers, with unlimited potential future payments[92] - Employment agreements include severance packages for termination without cause or resignation for good reason, with enhanced benefits for change of control events[94][95] - License agreements with the University of Texas, Roche Innovation Center Copenhagen A/S (RICC), t2cure GmbH, and The Brigham and Women's Hospital involve milestone payments, royalties, and annual fees for intellectual property rights[96][101][112][117] - The RICC License Agreement requires milestone payments up to $5.2 million per licensed product, with $0.1 million incurred in 2019 and $0.7 million in 2018[102][104] - A multi-year facility lease for office and lab space extends through August 2020, with future minimum payments of $379 thousand[120][122] 9. CAPITAL STOCK This note provides information on the company's authorized and outstanding common stock, along with recent equity financing activities - The company is authorized to issue 100,000,000 shares of Common Stock ($0.01 par value) and 5,000,000 shares of preferred stock[123] - As of September 30, 2019, 31,181,749 shares of Common Stock were issued and outstanding[9] - Under the LLS Stock Purchase Agreement, the company expects to raise up to $5.0 million from LLS and its affiliates, with $1.4 million in net proceeds received as of October 31, 2019[124][189] - Under the ATM Agreement with Cowen, the company may sell up to $50.0 million in Common Stock, with $0.4 million net proceeds received in 2019 and $10.6 million cumulatively since March 2017[125][128][188] 10. WARRANTS This note details the company's outstanding common stock warrants, including exercise prices and expiration dates Outstanding Common Stock Warrants as of September 30, 2019 | Number of Underlying Shares | Exercise Price | Expiration Date | | :-------------------------- | :------------- | :-------------- | | 10,707 | $52.50 | 2020 | | 11,718 | $8.53 | 2025 | | 24,097 | $7.15 | 2024 | | Total: 46,522 | Weighted Average: $17.93 | | - The company had 46,522 Common Stock warrants outstanding as of September 30, 2019, with a weighted average exercise price of $17.93[131] 11. SHARE-BASED COMPENSATION This note describes the company's equity incentive plan, option activity, and share-based compensation expense recognized - The 2016 Equity Incentive Plan allows for the grant of various equity awards, with 1,290,930 shares available for issuance as of September 30, 2019[133][134] Common Stock Option Activity (in thousands) | Item | Number of Options | Weighted Average Exercise Price | | :-------------------------------- | :---------------- | :------------------------------ | | Outstanding at December 31, 2018 | 3,527 | $5.76 | | Granted | 1,078 | $2.89 | | Exercised | (142) | $0.60 | | Forfeited or expired | (429) | $5.49 | | Outstanding at September 30, 2019 | 4,034 | $5.20 | - The weighted-average grant-date fair value of options granted to employees and directors was $2.31 for the three months and $5.51 for the nine months ended September 30, 2019[139] Share-Based Compensation Expense (in thousands) | Item | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Research and development | $1,175 | $933 | | General and administrative | $1,792 | $1,809 | | Total share-based compensation expense | $2,967 | $2,742 | - Total unrecognized share-based compensation costs were $6.4 million as of September 30, 2019, to be recognized over a weighted-average period of 2.25 years[142] 12. NET LOSS PER SHARE This note explains the calculation of net loss per share and the impact of potentially dilutive securities - Basic and diluted net loss per share are the same for all periods presented due to the company being in a loss position, making all potential common shares antidilutive[60][143] Potentially Dilutive Securities (in thousands) | Item | Sep 30, 2019 | Sep 30, 2018 | | :-------------------------------- | :----------- | :----------- | | Options to purchase Common Stock | 4,034 | 3,517 | | Warrants to purchase Common Stock | 47 | 49 | | Total | 4,081 | 3,566 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on Miragen Therapeutics, Inc.'s financial performance, liquidity, and operational developments Overview This section introduces Miragen Therapeutics, Inc.'s business model, product candidates, and strategic direction - Miragen Therapeutics is a clinical-stage biopharmaceutical company developing RNA-targeted therapies, specifically microRNAs, for diseases with high unmet medical needs[151] - The company's clinical-stage product candidates include cobomarsen (miR-155 inhibitor for blood cancers), remlarsen (miR-29 replacement for fibrotic conditions), and MRG-110 (miR-92 inhibitor for heart failure and healing)[151][152][153][154] - The Servier Collaboration Agreement for MRG-110 was terminated effective February 1, 2020, leading Miragen to regain global rights to MRG-110 and evaluate new development strategies[154] Recent Developments and Anticipated Milestones This section highlights key operational achievements, clinical trial progress, and future strategic objectives - For cobomarsen, the SOLAR Phase 2 clinical trial for CTCL began dosing in April 2019, with primary endpoint data now expected in the second half of 2021 due to site activation delays[157] - The SOLAR trial is supported by a collaboration with LLS, which invested an additional $0.5 million in October 2019 upon achieving an enrollment milestone[158] - Remlarsen's Phase 2 clinical trial for keloid formation has completed enrollment, with interim data expected by year-end 2019[160] - MRG-110 Phase 1 clinical trials showed increased angiogenesis and reduced alpha-smooth muscle actin expression, supporting its advancement to Phase 2, subject to capital availability[163][164] - A cost restructuring plan was announced in August 2019, eliminating 26 positions and incurring $1.1 million in charges in Q3 2019, with an additional $0.4 million expected in Q4 2019[165][166] Financial Operations Overview This section provides a general discussion of the company's revenue sources, operating expenses, and their expected trends - Revenue primarily consists of license fees, milestone payments, and R&D service reimbursements from collaboration agreements and grants[167] - The termination of the Servier Collaboration Agreement means no future revenue is expected from this source, and future revenue will fluctuate based on milestone achievements and product commercialization[168][170] - Research and development expenses are expected to increase as clinical trials advance and new programs are initiated, with costs including employee-related expenses, CRO fees, manufacturing, and license fees[171][175] - General and administrative expenses cover salaries, benefits, professional fees, and other support functions[177] Critical Accounting Policies and Estimates This section describes the significant accounting policies and judgments that materially affect the financial statements - The company's financial statements are prepared under U.S. GAAP, requiring estimates and assumptions, particularly for accrued expenses in clinical trials and preclinical studies[179][180] - Accrued expenses for clinical trials are based on estimates of costs incurred for services from CROs and other providers, with adjustments possible in future periods[180] Results of Operations This section analyzes the company's financial performance, comparing revenue and expenses across different reporting periods Comparison of Three Months Ended September 30 (in thousands) | Item | 2019 | 2018 | Change ($) | Change (%) | | :-------------------------- | :--- | :--- | :--------- | :--------- | | Revenue | $695 | $944 | $(249) | -26.4% | | Research and development | $9,027 | $7,399 | $1,628 | 22.0% | | General and administrative | $2,898 | $2,696 | $202 | 7.5% | | Net loss | $(11,230) | $(9,011) | $(2,219) | 24.6% | Comparison of Nine Months Ended September 30 (in thousands) | Item | 2019 | 2018 | Change ($) | Change (%) | | :-------------------------- | :--- | :--- | :--------- | :--------- | | Revenue | $3,581 | $7,910 | $(4,329) | -54.7% | | Research and development | $26,377 | $22,187 | $4,190 | 18.9% | | General and administrative | $9,112 | $8,354 | $758 | 9.1% | | Net loss | $(31,755) | $(22,386) | $(9,369) | 41.9% | - The decrease in nine-month revenue was primarily due to a $3.7 million development milestone payment in 2018 that did not recur in 2019 and a $0.9 million decrease in grant revenue[185] - Nine-month R&D expenses increased by $4.2 million, driven by $2.9 million in clinical development and manufacturing costs for cobomarsen and $2.3 million in personnel-related costs, partially offset by decreased technology license fees[186] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations and its need for future capital - As of September 30, 2019, the company had $33.8 million in cash, cash equivalents, and short-term investments, expected to fund operations through Q2 2020[187] - The company has an accumulated deficit of $158.1 million as of September 30, 2019, and has not generated revenue from product sales[190] - The termination of the Servier Collaboration Agreement for MRG-110 necessitates seeking new development and licensing partners, with future development subject to capital availability[191][192] - The cost restructuring plan in August 2019 aimed to reduce costs and focus resources on cobomarsen and microRNA-29 mimics, incurring $1.1 million in charges in Q3 2019[193] - The company will require substantial additional capital through equity/debt financings or collaborations to fund ongoing clinical development and operations[194] Summarized Cash Flows (in thousands) | Cash Flow Activity | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Operating activities | $(28,250) | $(18,669) | | Investing activities | $21,226 | $(38,998) | | Financing activities | $(725) | $41,926 | | Total | $(7,749) | $(15,741) | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section addresses the company's exposure to market risks and how they are managed - The company has no applicable quantitative and qualitative disclosures about market risk[207] ITEM 4. CONTROLS AND PROCEDURES This section reports on the effectiveness of the company's disclosure controls and internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable level of assurance as of September 30, 2019[209] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[210] PART II. OTHER INFORMATION This section provides additional legal, risk, and administrative information not covered in the financial statements ITEM 1. LEGAL PROCEEDINGS This section discloses any material legal actions or proceedings involving the company - The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or results of operations[212] ITEM 1A. RISK FACTORS This section details the significant risks and uncertainties that could materially impact the company's business, financial condition, and future prospects Risks Related to Our Financial Condition and Capital Requirements This section outlines risks associated with the company's liquidity, funding needs, and ability to continue operations - The company's current liquidity position and recurring losses raise substantial doubt about its ability to continue as a going concern, requiring additional capital beyond Q2 2020[214][219] - Failure to raise additional capital could force the company to delay or discontinue product development, reduce headcount, seek unfavorable strategic alliances, or cease operations[216][217][218] - The company has an accumulated deficit of $158.1 million as of September 30, 2019, and expects significant losses to continue as product candidates advance through clinical trials[221][225] - Raising additional capital through equity sales will dilute existing stockholders, and debt financing may impose restrictive covenants[233] Risks Related to the Development of Our Product Candidates This section addresses the inherent risks in clinical trials, regulatory approvals, and the unproven nature of microRNA-targeted therapies - Clinical trials are costly, time-consuming, and inherently risky, with potential for delays or failures due to various factors including patient enrollment difficulties, adverse events, or regulatory changes[235][236][258][259] - The microRNA-targeted therapeutic approach is unproven, with no such therapeutics yet approved, increasing development complexity and uncertainty[239][241][242] - Product candidates may cause undesirable side effects, leading to clinical trial delays, regulatory approval limitations, or significant negative consequences post-approval[244][245][246] - Negative public opinion or increased regulatory scrutiny of microRNA therapies could damage public perception and hinder development or approval[249] - The company is heavily dependent on the success of its early-stage clinical candidates, and earlier preclinical/clinical results may not predict future success[250][256] Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters This section covers risks associated with obtaining and maintaining regulatory approvals, as well as compliance with healthcare laws and government funding requirements - Breakthrough Therapy or Fast Track designations may not lead to faster development or approval, nor do they guarantee marketing approval[270][271][272] - Accelerated approval for product candidates, including cobomarsen, may require confirmatory trials, and failure to verify clinical benefit or comply with post-approval requirements could lead to withdrawal of approval[274][275][276] - Approved products will be subject to ongoing regulatory requirements (manufacturing, labeling, promotion, safety reporting), and non-compliance could result in fines, withdrawal of approval, or other penalties[278][279][282] - Healthcare legislative reforms (e.g., ACA challenges, drug pricing measures) could adversely affect the business by limiting reimbursement or increasing pricing pressures[286][287][289] - Non-compliance with healthcare fraud and abuse laws (Anti-Kickback, False Claims, HIPAA, GDPR) could lead to substantial penalties, exclusion from government programs, and reputational harm[290][291][293][294][309] - Reliance on government funding may impose requirements that limit actions, increase costs, and subject the company to potential financial penalties[295][296][301] Risks Related to Our Intellectual Property This section discusses challenges in obtaining, maintaining, and enforcing intellectual property rights, including patent protection and potential infringement claims - The company may not successfully obtain or maintain necessary intellectual property rights for microRNA targets, product compounds, and processes through acquisitions and in-licenses, hindering business growth[312][314] - Reliance on patents, trade secrets, and confidentiality agreements carries risks, including failure to obtain broad patent claims, challenges to validity, and difficulty in protecting trade secrets[315][317][329][330] - Changes in U.S. patent law, such as the Leahy-Smith America Invents Act and Supreme Court rulings, could diminish patent value and increase prosecution/enforcement costs[323][324][326][328] - Third-party claims of intellectual property infringement are a significant risk in the biotechnology industry, potentially leading to substantial litigation expenses, damages, or injunctions[331][334][335] - Failure to comply with license agreement obligations or disruptions with licensors could result in loss of critical license rights[342] - Protecting intellectual property rights globally is expensive and challenging, as foreign laws may offer less protection, and enforcement actions can be costly and divert resources[347][349][350] Risks Related to Our Reliance on Third Parties This section highlights risks associated with dependence on third-party contractors for clinical trials, manufacturing, and potential collaborations - The company relies heavily on third-party CROs to conduct clinical trials and manufacturers for product candidates, posing risks if these parties fail to perform or comply with regulations[351][353][355] - Disruptions in the supply of product candidates or active ingredients from third-party manufacturers could delay clinical trials and regulatory approval[354] - Commercial manufacturing costs for product candidates are uncertain and may not be commercially feasible, impacting viability[357] - Collaborations, if formed, carry risks such as insufficient resource commitment, disagreements, and potential termination, as seen with the Servier Collaboration Agreement[361][362] - Indemnification agreements with third parties could lead to substantial liabilities if obligations exceed insurance coverage or collaborators fail to indemnify[363][365] Risks Related to Commercialization of Our Product Candidates This section outlines challenges in marketing, sales, competition, market acceptance, and reimbursement for the company's product candidates - Limited marketing and sales experience means the company must establish capabilities or find collaborators, with potential for delays or failure to generate revenue[366][367] - Forming strategic collaborations is competitive and complex; failure to do so could alter development plans and require significant internal investment[368][369][370] - Market opportunities for product candidates may be smaller than anticipated, requiring significant market share to achieve profitability, especially for rare diseases like MF[372] - The company faces substantial competition from major pharmaceutical and biotechnology companies with greater resources, potentially leading to faster product development or market dominance by competitors[373][374][376] - Commercial success depends on market acceptance by physicians, patients, and third-party payors, influenced by efficacy, safety, cost, and reimbursement[378][379] - Failure to obtain or maintain adequate reimbursement or insurance coverage for products could limit marketability and revenue generation[385][387][388] Risks Related to Our Business Operations This section covers operational risks, including key personnel retention, organizational growth, IT systems, and tax implications - Future success depends on retaining key personnel, including the CEO, and attracting/motivating other qualified scientific and technical staff in a competitive industry[391] - Expanding the organization will require additional managerial and operational resources, and difficulties in managing this growth could disrupt operations[392] - Failure to effectively manage operational changes, including past and potential future restructuring charges (e.g., August 2019 plan), could harm business and financial performance[393][394][395] - Failure in IT and storage systems could disrupt business operations, lead to unauthorized data access, and result in fines or litigation[397] - The ability to use net operating losses (NOLs) to offset future taxable income may be limited due to expiration periods and ownership change rules (Section 382 of the Code), potentially increasing future tax liabilities[398][399][400] - New or future changes to tax laws, such as the Tax Cuts and Jobs Act of 2017, could adversely affect the company's effective tax rate and financial condition[401][403] Risks Related to Ownership of our Common Stock This section addresses risks concerning stock price volatility, listing requirements, corporate governance, and dividend policy - The market price of the company's common stock is expected to be volatile due to various factors, including regulatory approvals, clinical trial results, competition, and macroeconomic conditions[404][405][407] - Failure to meet Nasdaq Capital Market listing requirements, such as the minimum bid price, could result in delisting, negatively impacting stock price and liquidity[409][410][411][413][414] - Compliance with public company laws and regulations (e.g., Sarbanes-Oxley Act) incurs significant costs and demands on management, which will increase after ceasing to be an 'emerging growth company' on December 31, 2019[415][429] - Anti-takeover provisions in charter documents and Delaware law could make acquisitions more difficult and prevent stockholders from replacing management[416] - The company does not anticipate paying cash dividends in the foreseeable future, making capital appreciation the sole source of gain for stockholders[418] - Failure to maintain proper and effective internal controls could impair the ability to produce accurate financial statements, leading to loss of investor confidence and a negative impact on stock price[424][426][427][428] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section reports on any unregistered sales of equity securities and the application of their proceeds - Not applicable for this reporting period[430] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section discloses any defaults on senior securities by the company - Not applicable for this reporting period[431] ITEM 4. MINE SAFETY DISCLOSURES This section provides disclosures related to mine safety, if applicable to the company's operations - Not applicable for this reporting period[432] ITEM 5. OTHER INFORMATION This section includes any other material information not covered in previous items - Not applicable for this reporting period[433] ITEM 6. EXHIBITS This section lists all documents filed as exhibits to the report, including agreements and certifications - The exhibits include corporate governance documents (Certificate of Incorporation, Bylaws), key agreements (Amendment to Research Subaward Agreement with Yale University, Assignment and Assumption Agreement with LLS TAP Miragen, LLC, Amendment to Amended and Restated License Agreement with Roche Innovation Center Copenhagen A/S), and certifications (Rule 13a-14(a), 18 U.S.C. 1350)[436] FORWARD-LOOKING STATEMENTS This section provides a cautionary note regarding forward-looking statements, highlighting inherent risks and uncertainties - The report contains forward-looking statements based on current expectations, involving substantial risks and uncertainties, which may cause actual results to differ materially[146][147] - Readers are cautioned not to place undue reliance on forward-looking statements and are advised to review the 'Risk Factors' section for a comprehensive understanding of business risks[147][148] SIGNATURES This section contains the official certifications and signatures of the company's principal executive and financial officers - The report is duly signed by William S. Marshall, Ph.D., Chief Executive Officer, and Jason A. Leverone, Chief Financial Officer, on November 8, 2019[442]