Viridian Therapeutics, Inc. (VRDN) Q1 2020 Earnings Report, Transcript and Summary

Greetings and welcome to the Miragen Therapeutics First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Ferry with LifeSci Advisors. Thank you, Mr. Ferry, you may begin. Gentlemen, it looks like we may have lost Dan off the line just now.

Hi, he had asked us to provide our email address and had asked us to record something.

Okay, that's something new. Mr. Ferry, are you with us?

He was in a different room.

Okay, rejoining Mr. Ferry.

Thank you, Operator. Good afternoon, everyone, and welcome to our first quarter 2020 conference call. Today, after the close, we issued a press release providing our financial results and corporate update for the first quarter. A replay of today's call will be available on the Investors section of our website approximately 1 hour after its completion. After our prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of today. Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K, and our other periodic reports on Forms 10-Q and 8-K filed with the SEC. I would now like to turn the call over to Miragen's President and Chief Executive Officer, Bill Marshall.

Thank you, Dan. Good afternoon, everyone, and thank you for joining us for our corporate update call for the first quarter 2020. I'm joined today by Diana Escolar, our Chief Medical Officer, and Jason Leverone, our Chief Financial Officer. We entered 2020 with a streamlined and more focused development strategy that we believe will help drive long term shareholder value. Over the course of the past couple of months, Miragen along with the rest of the world has had to face the far-reaching effects of the ongoing COVID-19 pandemic. In March, the Miragen leadership team was proactive in implementing steps to protect the health and wellbeing of our team, including practicing social distancing by having our administrative employees work from home and staggering shifts for essential lab employees. Our team has been quick to adapt to this new structure and I appreciate all their hard work and dedication to the continued advancement of our programs. However, as we look ahead, COVID-19 is or is expected to have some degree of impact on patients in our studies, certain clinical sites, external analytical functions and potentially regulators. As a result, we cannot confidently predict when we will achieve certain milestones. With that said, let me take this opportunity to provide an update on our lead programs and provide more detail on what might impact each program's specific milestones before handing the call over to Jason to provide a review of our financial results. Starting out with our most advanced clinical program, cobomarsen cutaneous T-cell lymphoma or CTCL, we began the first quarter with enrollment complete for the SOLAR Phase II clinical trial at a total of 37 patients per the modified trial design introduced in the fourth quarter of 2019. These patients will continue to be evaluated for safety and clinical response. We plan to assess the rate of an objective response in the skin that is durable for 4 months, defined as 50% or greater improvement in the severity of a patient's skin disease over the entire body as measured by mSWAT. The decision to assess skin response as opposed to overall response was driven by the fact that patients allowed into the trial only have skin disease and are verified not to have blood, nodal or visceral involvement at trial entry. Improvements in skin disease are thus intended to reflect efficacy of the drug, whereas progression in skin disease reflects lack of efficacy. We've reserved the ability to obtain follow-up analysis for blood, nodal or visceral disease as we deem necessary, based on the results obtained using mSWAT. As a result of the COVID-19 pandemic, we have seen an impact on clinical activities at some sites where the SOLAR trial is being conducted. Some patients have missed or are at risk for missing doses or in-person site visits for collection of primary endpoint patient data. To avoid missing doses for those patients who could not receive the infusions at their clinical sites, we have implemented home infusion services for this trial. This is intended to mitigate some of the impact of the COVID-19 pandemic on the SOLAR trial. Also worth mentioning, that under the trial's protocol, patients can miss up to a month in dosing. However, due to the nature of the primary endpoint in this trial, the collection of patient data cannot be performed remotely. In-person visits at clinical trial sites are required to collect mSWAT data and to demonstrate a patient's objective response for 4 consecutive months. There are two factors that may require some patients to have additional time on trial. Considering these disruptions, we are actively monitoring the impact the COVID-19 pandemic is having on the SOLAR trial. While over half the patients have been in the trial for a sufficient period of time to provide topline data prior to the escalation of the COVID-19 pandemic, we believe it is important to collect interrupted endpoint data with consistent dosing in the remaining patients. However, due to the impact on the trial caused by the pandemic, we cannot predict at this time when we will be able to do so. Accordingly, we are not providing guidance at this time. As part of our broader strategy to assess the potential of cobomarsen to treat miR-155 elevated blood cancers, we are evaluating cobomarsen in a first-in-human Phase I expansion indication trial in patients with adult T-cell leukemia/lymphoma or ATLL. At the beginning of the first quarter, we were pleased to announce positive data from this trial, specifically in a subset of ATLL patients with residual disease after chemotherapy or other treatments. In this trial, cobomarsen was observed to prolong disease stabilization and median survival team in aggressive ATLL patients with persistent residual disease after chemotherapy and other therapies. The disease stabilization in these patients is marked by a decrease in biomarkers of tumor cell activation and proliferation, providing evidence of the biological mechanism of action of cobomarsen on disease stabilization. We believe that the overall survival, biomarker and safety data we observed for cobomarsen provide a basis for its continued development in patients with aggressive ATLL, especially considering that these patients have historically had a very poor prognosis. Our next step for this program is to explore a potential expedited development path for cobomarsen in ATLL. This quarter we plan to request a meeting with the FDA. While we would normally expect this meeting to take place in Q3 of this year, the FDA is currently prioritizing its efforts on COVID vaccines, therapies and trials. While we have not been notified that the FDA is likely to deviate from its meeting protocol, we know that prioritizing COVID-19 is important and must take priority. As such, we are uncertain if our request for a meeting on ATLL will occur on the standard FDA timeline. Therefore, we cannot provide assurance that the meeting will occur as originally expected in the third quarter of 2020. Turning to our fibrosis programs that are centered on the replacement of microRNA-29, which is found at abnormally low levels in a number of pathologic fibrotic conditions, MicroRNA-29 is believed to play an important role in the regulation of certain processes that contribute to fibrosis. We believe that increasing the levels of microRNA-29 by administration of our proprietary microRNA mimics could provide benefit to patients with excessive fibrous connective tissue deposition, which has become extreme or pathological in an organ or tissue. We are currently developing 2 distinct microRNA-29 mimics, remlarsen and MRG-229, for the treatment of various forms of pathological fibrosis. In December 2019, we announced that our pipeline development efforts will be primarily focused on the development of MRG-229 as a potential treatment for patients with idiopathic pulmonary fibrosis or IPF. We believe that the efficacy and safety profile of MRG-229 positions it as a potentially differentiated approach for IPF. This program is supported in part by a grant in collaboration with the National Institutes of Health and Yale University. During the first quarter of 2020, we made progress in our preclinical studies leading to the release of additional funding by the NIH in April of 2020. We expect to report this additional preclinical safety and efficacy data for MRG-229 during the second quarter of 2020. I want to restate that we are grateful for their continued support of this important program. Our Phase II trial assessing remlarsen for safety, tolerability and activity in the potential prevention or reduction of keloid formation in patients with a history of keloid scars, a form of pathological scarring, is progressing as planned. Currently we are working to complete the analysis of the one-year primary endpoint data. However, due to the potential impact of the COVID-19 pandemic on clinical sites, we cannot accurately predict when we'll be able to report this topline data which had previously been expected in the second half of 2020. We are also evaluating remlarsen in ocular fibrotic conditions such as corneal injury and keratitis. In preclinical studies we have previously observed that topical administration of remlarsen to an injured rat cornea resulted in faster healing of the cornea with reduced scarring and hazing. Remlarsen has also been observed in in vitro studies to regulate microRNA-29 pharmacodynamic biomarkers in the cornea. We intend to seek a collaboration partner for the future development of remlarsen in cutaneous and ocular fibrotic conditions. In summary, our pipeline continues to advance and we see tremendous opportunities for each of our programs. And while the COVID 19 pandemic has created uncertainty in our ability to accurately guide on the timing of certain milestones, we remain confident in our ability to deliver important results from these programs. With that, I will now turn the call over to our Chief Financial Officer, Jason Leverone.

Thank you, Bill. Good afternoon, everyone. In today's press release, we reported our first quarter 2020 financial results. We ended the quarter with $36.1 million in cash and cash equivalents compared to $26.8 million of cash, cash equivalents and short-term investments at the end of 2019. Net cash provided by financing activities was $17.7 million during the quarter as compared to $0.2 million during the first quarter of last year. Net cash provided by financing activities in the first quarter of 2020 included $18.7 million aggregate net proceeds from sales of our common stock partially offset by $1 million in principle payments on our notes payable during the quarter. Net cash used by operating activities was $8.5 million for the quarter. This compared to $11.8 million during the first quarter of last year. We believe that our current cash and cash equivalents will be sufficient to fund our operations into the third quarter of 2021. Revenue was $0.8 million for the quarter compared to $0.4 million in the first quarter of 2019. The increase in revenue was primarily due to increases in grant revenue and amounts due to us under a license and collaboration agreement during the first quarter of 2020. Research and development expenses were $6.1 million for the quarter. This compared to $8.8 million for the first quarter of last year. The decrease in R&D expenses was due primarily to decreased personnel related costs and clinical and related manufacturing development activities associated with our Phase II SOLAR trial of cobomarsen. General and administrative expenses were $2.7 million for the quarter. This compared to $3.4 million for the first quarter of last year. The decrease in G&A expenses was due primarily to decreased personnel related costs partially offset by an increase in legal expenses during the first quarter of 2020. Finally, our net loss was $8 million or $0.18 per share for the first quarter of 2020. This compared to a net loss of $11.6 million or $0.38 per share for the first quarter of last year. With that, I'll ask the operator to open the call for questions.

[Operator Instructions] Our first question comes from Liana Moussatos with Wedbush. Please proceed with your question.

Thank you for taking my question. For Jason, how should we think about operating expenses in 2Q and the rest of the year versus Q1 given the COVID delays?

Thanks, Liana. So our operating expenses decreased to $8.8 million this quarter. That's down from our quarterly average last year of about $11.6 million in 2019 and down from $11 million last quarter. I think going forward I would expect sort of a similar result next quarter, but decreasing on a quarterly basis thereafter and year-over-year as we expect to incur lower overall workforce expenses and lower overall expenses associated with the SOLAR trial in 2020.

Our next question comes from Leland Gershell with Oppenheimer & Company. Please proceed with your question.

Good afternoon. Thanks for taking my questions. I have a couple of questions on the MRG-229 program for IPF. Wanted to ask, as we await the preclinical data, what will we see? What types of results could we see in the data? And also wanted to ask, with regards to potential use in COVID-19, given that this is an antifibrotic in the lung, could there be a potential use of 229 for coronavirus? Thanks.

Thanks, Leland. So the 229 data that we have generated has been focused on exploratory toxicology in certain organisms as well as some additional efficacy studies, both in preclinical systems in animals as well as precision cut human lung slices. The data basically is sort of a prelude, it was an important factor in our presentation of materials to the National Institutes of Health that was a significant milestone in freeing up additional funding. We had planned to present this at a scientific meeting, but as you know, there's been a lot of delays at this point due to COVID. And what we're working on now is the strategy for an appropriate release of that data which we will do in the quarter and we'll keep people updated on when we anticipate doing that. As far as the potential utility in COVID, we have been really reviewing that with a very, with high interest. I think the molecule does show some interesting antifibrotic activity in multiple conditions. We're really looking now to understand whether or not MiR29 is decreased in the setting of COVID infection. But we're also interested potentially in exploring cobomarsen's role. Because cobomarsen is known to have some interesting activity in blunting certain inflammatory responses. So really, for both of the lead clinical programs, we're exploring the potential and would really love to be able to provide any relief from this terrible pandemic.

Great. And just one additional follow-up, are you looking at an inhaled formulation at this point, or not yet or what are your plans on the delivery? Thanks.

Yes, for MGR-229, we actually explored, the original grant that we obtained, part of that was looking at inhaled delivery and really more focused on remlarsen. What we found in that case was that remlarsen is deliverable via inhaled therapy. The bioavailability isn't fantastic, and what we decided to do was really re-orient our efforts. MRG-229 has two significant improvements from remlarsen. One is that it's much more extensively chemically modified, that leading to increases in both potency and certainly durability of effect. And then the second key thing that we did was we appended a targeting conjugate to the molecule. And what we've been able to do is essentially we've used a few different conjugate approaches that we're still exploring. MRG-229 has a conjugate which is targeted towards myofibroblasts. And what we've seen is that with parenteral administration, we get good distribution to the lung. In addition, we see distribution to the liver and kidney. So we believe a parenterally administered compound for MRG-229 would be the appropriate path forward.

Thank you. Our next question comes from Jonathan Miller with Evercore ISI. Please proceed with your question.

Hi, guys, thanks for taking the question. I guess I would love a little bit more clarity on the SOLAR trial and some of the delays that you're experiencing, not just there, but elsewhere as well. It seems like patient dosing is still generally on protocol, but the endpoints are not being collected. Does this interrupt the ORR for clock that's going on? Do you have to start again from month one? And also on delay, are you guiding the FDA meeting won't happen in 3Q or is this just an unknown at this point?

Thanks, John. Great questions. So what we've seen in the SOLAR trial is obviously there are a couple of sites that have been impacted due to restrictions on patient visits. Now, as you noted, we have been able to implement home infusion, so we have been able to mitigate that risk to some degree, but not in all cases. So we do in the protocol allow for patients to miss up to a month of dosing. And if you remember, the terminal elimination half-life of the compound is something like 3 weeks. So the drug has decent resonance time and we are doing everything we can to maintain continuity in dosing. You also struck on the key think and that is the mSWAT measurements. These are measurements that can't be done remotely. The patients need to visit the clinical sites. It's also important that there's a consistence monitor that actually reads the mSWAT score. And one of the things that we've seen at some sites is that we have actually been able to continue dosing, but we couldn't do -- the monitors were not allowed in to do the mSWAT measurement. And again, it's important as you know, when we do the mSWAT measurement, once we get beyond the partial response, we need to monitor that consistently for 4 months in a row. And the current guidelines would suggest that if that's interrupted, we need to then monitor it consecutively for 4 months. We're uncertain around whether there will be any sort of alterations in the way that the FDA would consider ORR for measurements. And at this point, we're just -- there are so many uncertainties around when we can get the sites open to get the monitors back in line, and the impacts, that we're just going to at this point withdraw guidance. On the ATLL front, the team, we've all, we've moved to a remote workplace at this point, but the team has been intensely focused on really getting together the information necessary to put the package together, request the meeting with the FDA. We altered our guidance a little bit to say that we're still on track. Anything that we can control internally, and we feel confident that we can deliver on, we are going to guide on. And so what we've said now is that we're still on track to submit the request in the second quarter, so we'll have the request into the agency. The thing that we can't control is the potential for delays in when that meeting will occur. As I said, we haven't been informed that the FDA has delayed it, but I think again, it is a factor beyond our control and I think the prioritization of COVID activities, we believe, is vitally important. And as well on the SOLAR front, we are very -- putting patient safety ahead of things. Because these are typically of an age and sometimes immunocompromised in a way that we'd be putting them at risk to enter sites. So we're being I would say conservative on both fronts, but I think it's factors that are really just beyond our control at this point.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Bill Marshall for closing comments.

Great. We want to thank everyone for taking the time this afternoon and for your support as we work to bring life changing medicines to patients. I want to thank the Miragen team, the investigators and clinical site staff for their dedication to helping patients. I also want to thank the healthcare works on the front line and hospitals across the country for their selfless work in the ongoing battle with COVID-19. Everyone, please stay safe. Thank you very much.

Gentlemen, this concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.