Viridian Therapeutics(VRDN) - 2019 Q4 - Annual Report

Part I Business Miragen Therapeutics is a clinical-stage biopharmaceutical company developing RNA-targeted therapies for high unmet medical needs, with a pipeline of three clinical-stage candidates and a strategy focused on microRNA expertise, expedited regulatory pathways, and strategic collaborations Company Overview and Product Pipeline Miragen is a clinical-stage biopharmaceutical company developing proprietary RNA-targeted microRNA therapies, with three clinical-stage product candidates for cancers, pathological fibrosis, and heart failure - The company's core focus is on RNA-targeted therapies, specifically microRNAs, for diseases with high unmet medical needs[20] Clinical Stage Product Candidates | Product Candidate | Target MicroRNA | Indication(s) | | :--- | :--- | :--- | | Cobomarsen | miR-155 (Inhibitor) | Cutaneous T-cell lymphoma (CTCL), Adult T-cell leukemia/lymphoma (ATLL) | | Remlarsen / MRG-229 | miR-29 (Replacement) | Pathological fibrosis (e.g., Idiopathic Pulmonary Fibrosis - IPF) | | MRG-110 | miR-92 (Inhibitor) | Heart failure, wound healing, ischemic disease | Our Strategy The company's strategy leverages microRNA expertise to advance lead candidates, utilize FDA rare disease pathways, and seek collaborations for pipeline expansion and new target identification - A core part of the strategy is to utilize FDA's rare disease development pathways (orphan drug, fast track, breakthrough therapy) to potentially streamline clinical development and reduce time to market for its product candidates[23] - The company plans to continue developing its lead candidates: cobomarsen for blood cancers like CTCL and ATLL, and remlarsen/MRG-229 for pathological fibrosis, with a specific focus on MRG-229 for Idiopathic Pulmonary Fibrosis (IPF)[23] - Miragen intends to seek collaborations with other biotechnology and pharmaceutical companies to develop additional product candidates, particularly for disease areas where development costs would exceed its resources[23] Our Product Candidates The company's clinical pipeline includes cobomarsen for CTCL/ATLL, remlarsen/MRG-229 for pathological fibrosis, and MRG-110 for heart failure, with key milestones anticipated for 2020 Anticipated Milestones for Product Candidates | Milestone | Product Candidate | Indication | Expected Timing | | :--- | :--- | :--- | :--- | | Report preclinical safety & efficacy data | MRG-229 | IPF | Q2-2020 | | Meet with FDA for expedited path | Cobomarsen | ATLL | Q3-2020 | | Report topline data from Phase 2 trial | Cobomarsen | CTCL | Q3-2020 | | Report primary endpoint data from Phase 2 trial | Remlarsen | Cutaneous Fibrosis | 2H-2020 | - Enrollment in the Phase 2 SOLAR trial for cobomarsen in CTCL was stopped to allow for an interim analysis of 37 patients, with topline data expected in Q3 2020[36][37] - Following positive interim Phase 1 data in ATLL, the company is focusing its expansion efforts for cobomarsen on this indication and plans to meet with the FDA to discuss an expedited development pathway[26][27] - The collaboration with Servier for MRG-110 was terminated in February 2020, resulting in Miragen regaining full global rights. The company is exploring potential new collaborations for its future development[52] Strategic Collaborations and License Agreements The company relies on key collaborations and license agreements, including a terminated Servier agreement, and ongoing agreements with the University of Texas, RICC, and Yale, involving milestone and royalty payments - The collaboration agreement with Servier for MRG-110 was terminated in February 2020. This agreement was a significant source of revenue, generating $4.3 million in 2019 and $7.4 million in 2018[72] - The company has an exclusive patent license with the University of Texas, requiring potential future milestone payments up to ~$0.6 million for clinical trial initiations and $2.5 million upon regulatory approvals in the U.S. and other regions, plus low-single-digit royalties[76] - Under a license agreement with Roche Innovation Center Copenhagen (RICC), Miragen is obligated to make milestone payments up to $5.2 million per licensed product and pay mid-single-digit royalties on net sales[80][82] - A subcontract with Yale University, funded by an NIH grant, supports the development of a miR-29 mimic for IPF. Miragen retains rights to its solely developed IP and has an exclusive option to license IP developed by Yale under the agreement[86][87] Manufacturing, Sales, and Marketing Miragen fully outsources manufacturing and has not yet established a commercial strategy, considering future partnerships or an in-house sales force - The company fully outsources its manufacturing, relying on third-party contract manufacturers for all required materials and finished product candidates for clinical trials[97] - No commercial strategy for sales, marketing, or distribution has been defined, as all product candidates are still in development. Future options include strategic partnerships or establishing an in-house commercial force[98] Intellectual Property As of December 31, 2019, Miragen's IP portfolio includes 298 patents and applications, with key U.S. patents for lead candidates expiring between 2033 and 2036 - As of year-end 2019, the company's patent portfolio consists of 298 patents and applications, of which 216 are issued or allowed[99] Key U.S. Patent Expiration Outlook | Product Candidate | U.S. Patent(s) | Projected Expiration Year | | :--- | :--- | :--- | | Cobomarsen | 9,771,585; 9,994,852 | 2036 | | MRG-110 | 9,803,202 | 2033 | | Remlarsen | 9,376,681; 9,994,847 | 2035 | Competition Miragen faces intense competition from other microRNA and oligonucleotide developers, as well as major pharmaceutical companies treating the same diseases - Competition is categorized into three groups: other microRNA-targeted developers, other oligonucleotide therapeutic developers, and companies treating the same diseases with different modalities[108][112] - Major pharmaceutical companies with marketed or developing therapies for CTCL include Bristol-Myers Squibb, Merck, Takeda, and Novartis[108] - Key competitors with marketed therapeutics for pulmonary fibrosis include Boehringer Ingelheim and F. Hoffmann-La Roche[109] Government Regulation The company's operations are extensively regulated by the FDA and other authorities, covering drug development, approval, and post-market compliance, including various expedited programs and healthcare laws - The FDA drug approval process requires extensive preclinical studies, an effective IND application, and adequate and well-controlled human clinical trials (typically Phases 1, 2, and 3) to establish safety and efficacy before an NDA can be submitted and approved[112][113][120] - The company may seek Orphan Drug Designation for products treating rare diseases (affecting <200,000 people in the U.S.), which can provide benefits like seven years of market exclusivity upon approval[127][129] - Expedited FDA programs such as Fast Track, priority review, accelerated approval, and Breakthrough Therapy Designation are available for drugs that treat serious conditions and address unmet medical needs, potentially speeding up the development and review process[131][132][133] - The business is subject to numerous healthcare regulations, including the federal Anti-Kickback Statute, False Claims Act, HIPAA for patient data privacy, and the Physician Payments Sunshine Act for reporting payments to healthcare professionals[143][144][145][150] Risk Factors The company faces significant risks related to its financial viability, product development uncertainties, regulatory hurdles, intellectual property, reliance on third parties, and potential impacts from health epidemics like COVID-19 - The company needs to raise additional capital to continue as a going concern. Current resources are projected to fund operations only into the third quarter of 2021[169] - The company has a history of significant net losses ($41.9 million in 2019) and an accumulated deficit of $168.2 million as of December 31, 2019, with no products approved for sale[175] - The therapeutic approach using microRNAs is novel and unproven, with no such products yet approved by the FDA, making the development timeline, cost, and likelihood of approval highly uncertain[197][199] - The business could be adversely affected by health epidemics like the COVID-19 outbreak, which could disrupt clinical trial sites, patient enrollment, and third-party manufacturing operations[314][317][318] Unresolved Staff Comments The company reports that it has no unresolved staff comments from the SEC - None[401] Properties The company leases 27,128 square feet of office and laboratory space in Boulder, Colorado, under a lease expiring in December 2020 - The company leases 27,128 sq. ft. of office and lab space in Boulder, CO, with the lease expiring in December 2020[402] Legal Proceedings The company is not currently a party to any legal proceedings that would materially adversely affect its business or financial condition - The company is not currently a party to any material legal proceedings[403] Mine Safety Disclosures This item is not applicable to the company - Not applicable[404] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on The Nasdaq Capital Market under 'MGEN', with no dividends paid or anticipated, as earnings are retained for business growth - Common stock is traded on The Nasdaq Capital Market under the symbol MGEN[407] - The company has not paid and does not anticipate paying dividends, intending to retain all future earnings for business development[409] Selected Financial Data This item is not applicable to the company - Not applicable[410] Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported an increased net loss of $41.9 million in 2019, with decreased revenue and higher R&D expenses, and projects current capital to fund operations into Q3 2021 Results of Operations For 2019, revenue decreased to $4.5 million due to a non-recurring milestone, while R&D expenses increased to $34.8 million, resulting in a net loss of $41.9 million Comparison of Operations (2019 vs. 2018) | Financial Metric | 2019 (in thousands) | 2018 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | $4,461 | $8,386 | ($3,925) | | Research and development expenses | $34,794 | $30,421 | $4,373 | | General and administrative expenses | $11,646 | $11,049 | $597 | | Net loss | ($41,873) | ($32,703) | ($9,170) | - The decrease in revenue was primarily due to a €3.0 million ($3.7 million) development milestone payment from the Servier Collaboration Agreement in 2018 that did not recur in 2019[433] - The increase in R&D expenses was driven by a $3.4 million rise in clinical development and manufacturing costs for cobomarsen and a $2.5 million increase in personnel-related costs, including restructuring charges[434] Liquidity and Capital Resources As of December 31, 2019, the company held $26.8 million in cash, projecting funds to last into Q3 2021, and has utilized various equity financing vehicles - As of December 31, 2019, the company held $26.8 million in cash, cash equivalents, and short-term investments[435] - The company projects its current cash resources, supplemented by recent stock sales, will be sufficient to fund operations into the third quarter of 2021[435] - In February 2020, the company raised approximately $14.0 million in net proceeds from a public offering of common stock and warrants[439] - In December 2019, the company entered into a common stock purchase agreement with Aspire Capital for up to $20.0 million, of which $5.1 million had been raised as of January 2020[438] Cash Flows In 2019, net cash used in operating activities increased to $36.1 million, while investing activities provided $28.2 million, and financing activities provided only $0.1 million Summarized Cash Flows (2019 vs. 2018) | Activity | 2019 (in thousands) | 2018 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($36,056) | ($26,844) | | Net cash provided by (used in) investing activities | $28,226 | ($29,907) | | Net cash provided by financing activities | $70 | $41,916 | Quantitative and Qualitative Disclosures About Market Risk This item is not applicable to the company - Not applicable[452] Financial Statements and Supplementary Data The required financial statements and supplementary data are provided elsewhere in the report, starting on page F-1 - The financial statements are located in Part IV, Item 15(a)(1) of the Annual Report[453] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure This item is not applicable to the company - Not applicable[454] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2019, with an unqualified opinion from KPMG LLP - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2019[455] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2019[458] - The independent registered public accounting firm, KPMG LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2019[459] Other Information This item is not applicable to the company - Not applicable[461] Part III Directors, Executive Officers, and Corporate Governance Information for this item is incorporated by reference from the definitive proxy statement for the 2020 annual meeting of stockholders - Information is incorporated by reference from the definitive proxy statement for the 2020 annual meeting of stockholders[464] Executive Compensation Information for this item is incorporated by reference from the definitive proxy statement - Information is incorporated by reference from the definitive proxy statement[466] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the definitive proxy statement - Information is incorporated by reference from the definitive proxy statement[467] Certain Relationships and Related Transactions and Director Independence Information for this item is incorporated by reference from the definitive proxy statement - Information is incorporated by reference from the definitive proxy statement[468] Principal Accounting Fees and Services Information for this item is incorporated by reference from the definitive proxy statement - Information is incorporated by reference from the definitive proxy statement[469] Part IV Exhibits, Financial Statement Schedules The financial statements are submitted separately, financial statement schedules are omitted, and a list of exhibits is referenced - The financial statements are submitted in a separate section beginning on page F-1[472] - Financial statement schedules have been omitted[473] Form 10-K Summary The company reports that there is no Form 10-K summary - None[475] Financial Statements Report of Independent Registered Public Accounting Firm KPMG LLP issued unqualified opinions on the consolidated financial statements and the effectiveness of internal control over financial reporting for 2019, noting the adoption of ASC Topic 606 - KPMG LLP issued an unqualified opinion on the consolidated financial statements[486] - KPMG LLP issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2019[487][494] Consolidated Financial Statements The consolidated financial statements present the company's financial position and results for 2019 and 2018, showing a net loss of $41.9 million in 2019 and decreased cash and equivalents Consolidated Balance Sheet Data (as of Dec 31) | Account | 2019 (in thousands) | 2018 (in thousands) | | :--- | :--- | :--- | | Total Assets | $30,262 | $66,147 | | Total Liabilities | $14,508 | $14,803 | | Total Stockholders' Equity | $15,754 | $51,344 | Consolidated Statement of Operations Data (Year Ended Dec 31) | Account | 2019 (in thousands) | 2018 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $4,461 | $8,386 | | Total Operating Expenses | $46,440 | $41,470 | | Net Loss | ($41,873) | ($32,703) | | Net Loss Per Share | ($1.34) | ($1.10) | Notes to Consolidated Financial Statements The notes detail the company's liquidity, accounting policy changes, a 2019 restructuring, the termination of the Servier collaboration, loan agreements, and capital stock transactions