Welcome to the Viridian Therapeutics Fourth Quarter and Full Year 2020 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Ferry of LifeSci Advisors. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and welcome to our fourth quarter and full year 2020 conference call. Today, after the market closed, we issued a press release providing our fourth quarter and full year-end 2020 financial results and business updates. 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 these -- 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 Dr. Jonathan Violin, Viridian's President and Chief Executive Officer. Jonathan, the floor is yours.

Thank you, Dan, and good afternoon, everyone. Thanks for joining us for our first quarterly update call as Viridian Therapeutics. I'm joined today by Barrett Katz, our Chief Medical Officer; and Jason Leverone, our Chief Financial Officer. I'll begin with a brief overview of the business and the development pipeline, highlighting key progress we've made in recent months. I'll then turn the call over to Barrett, who joined us in January, to provide an overview of thyroid eye disease and unmet needs we see as opportunities for our candidate therapeutics to address. Then Jason will review the financial results for the fourth quarter and full year 2020. We'll then open the call for questions. Let me start by saying how pleased I am with the execution of a complete transformation of our business over the last 6 months. This started in October with the merger of private Viridian Therapeutics with public miRagen Therapeutics with a concurrent financing, in effect, creating a brand-new company. I'm happy to report that we've made remarkable progress since then on many fronts. To highlight a few. We've integrated our operations and teams, and Viridian is now based in both Boulder, Colorado and Waltham, Massachusetts. We've begun expanding our team to support our new mission and to build Viridian for long-term success. This includes the appointment of Vahe Bedian as our Chief Scientist in October. Vahe co-founded private Viridian and brings to our team a wealth of antibody discovery and development experience and R&D leadership from both large pharma and small biotech. We also appointed Barrett Katz, an internationally recognized neuro-ophthalmologist, as our Chief Medical Officer in January. He'll introduce himself and his background to you today. But I'm thrilled that Viridian has attracted someone with this depth of experience in serving patients and leading clinical…

Thank you, Jonathan. It's been an exciting few weeks to say the least since I joined the team, and I appreciate having this opportunity to provide an overview of where we are and our strategy for moving 001 and 002 into the clinic as well as the development of our preclinical pipeline. Let me just take a moment and provide a brief overview of my own background. I'm trained as a physician in internal medicine, neurology, ophthalmology with some decades of experience as a practicing ophthalmologist and a neuro-ophthalmologist. I have an extensive understanding of eye diseases, including TED, and the real-world impact these debilitating diseases have on patients' lives. My career includes a residency in neurology at Harvard, a second residency in ophthalmology at Tufts, followed by fellowships in neurology at Boston Children's, in neuro-ophthalmology at UCSF and in neurology at the National Hospital in Queen's Square in London. I've served in leadership positions within the American Academy of Ophthalmology, the Association of University Professors of Ophthalmology and the Association for Research in Vision and Ophthalmology. As well, I've held the DeJur Chair in ophthalmology as Professor of Ophthalmology, Neurology and Neurosurgery at the Albert Einstein College of Medicine, where I also served as their Director of the Office Clinical Trials, both at Einstein and Montefiore in New York. In terms of R&D, I've always had a strong attraction to helping identify and developing new therapies. I've been active as a clinician, a scientist and a trialist. And during my time as Chairman of the Department of Ophthalmology at GW, I formulated and sponsored a joint fellowship, along with Dr. Wiley Chambers of Cedar, in ophthalmic drug development, clinical trials and regulatory affairs of the FDA. I then had the opportunity to transition really full-time to drug development with…

Thank you, Barrett, and good afternoon, everyone. We entered 2021 in a strong financial position. And this year, we look to advance multiple programs in thyroid eye disease while expanding our discovery pipeline. As Jon mentioned, in the fourth quarter, we added approximately $115 million in cash from the merger and concurrent financing. The financing resulted in net proceeds of approximately $86.1 million. As a result, we are well positioned to support the clinical objectives of our 2 lead programs in TED and to enable the advancement of preclinical candidates in our discovery pipeline. We ended the year with $127.6 million in cash and investments, which we believe will be sufficient to fund our operations into the second half of 2023. Turning to revenue and expenses, which we also summarized in the press release issued after market today, revenue was $0.1 million for the quarter and $1.1 million for the year. This compared to $0.9 million and $4.5 million, respectively, for the comparable periods in 2019. The revenue decreased last year, primarily due to a decrease in R&D expenses reimbursable to us under a prior collaboration agreement related to our legacy microRNA programs. Research and development expenses were $15.3 million for the quarter and $28.3 million for the year. This compared to $8.4 million and $34.8 million, respectively, for the comparable periods in 2019. The increase in R&D expenses during the quarter was primarily due to a noncash license fee under our license agreement we entered with Xencor in December. Overall, R&D expenses decreased year-over-year. This was due primarily to decreases in personnel-related costs and clinical trial expenses associated with the legacy microRNA programs last year. These increases were partially offset by a noncash license fee under our new license agreement with Xencor. We also reported acquired in-process research and development expenses of $69.9 million during the fourth quarter and full year 2020. All IP R&D expenses resulted from the acquisition of private Viridian. The acquisition costs allocated to acquired IP R&D with no alternative future use was recorded as an expense at the acquisition date. We had no acquired IP R&D expenses in 2019. General and administrative expenses were $5.5 million for the quarter and $13.3 million for the year. This compared to $2.5 million and $11.6 million, respectively, for the comparable periods in 2019. The increase in G&A expenses last year was due primarily to increases in professional and personnel-related costs, including consulting and contract labor. Finally, as of March 15, 2021, our total shares of common stock outstanding on an as-converted basis was approximately 30.9 million. This included 7.2 million shares of common stock and approximately 23.7 million shares of common stock issuable upon the conversion of approximately 355,000 shares of preferred stock. Our shares of preferred stock became convertible into shares of common stock following the results of a meeting of our shareholders, which occurred on December 31, 2020. And with that, I'll ask the operator to open the call for questions.

[Operator Instructions] Our first question is from Chris Howerton with Jefferies.

Of course, congratulations on a transformative end of last year. So for me, I think -- maybe just 2 questions, some of the inbounds that I've gotten recently from investors. First would be in terms of interactions with the regulator and getting -- regulators, excuse me, and getting an IND filed by the end of this year. I guess it would be helpful if we could just get a little bit more color on what the operational activities that are gating to getting the IND filed would be one question. And then the second question is what features, in particular, are you hoping to gain alignment with on the FDA? And the subtext to that question is that what would be the plans and expectations if the FDA did not allow you to go directly into TED patients? And then the third question is related to freedom to operate. So we've had some questions recently around the idea of whether or not you would have freedom to operate within the context of TED, given the fact that Horizon or other competitors may or may not have a blocking intellectual property.

Great. Thanks, Chris. Good to hear from you and good questions. So why don't I start with the IP question, then we'll turn to the regulatory question. So we are very confident in our freedom to operate. Keep in mind, we're not developing a biosimilar. We're developing what we think will be a best-in-class product. And in the big picture, when you look across pretty much every biotech indication, there's multiple antibodies going after the same targets, right, TNF, CD20, PD-1, IL-17. The pathway we have ahead of us, we think, provides us ample freedom to operate. So we're just very confident in it. Then in terms of regulatory interactions, so we really are going to decline to comment until we've completed our dialogue, and we'll deliver -- we'll share our thoughts on plans on the far end of those conversations, but we're very comfortable with where we are in terms of our plans and our timing.

Okay. And then outside of discussions with the regulators, is there any other operations or gating factors that you just need to accomplish to get the IND filed?

Yes. The key focus and the biggest effort has been on manufacturing, where, as I said, we've made some very nice progress. And despite the headwinds everybody has been facing in COVID, we're -- I think we're quite confident now that we're on a good path to have done what we need to have done to support the IND by the end of the year.

Our next question is from Jason Butler with JMP Securities.

Congrats on all the progress you achieved in the short period of time. I guess, just first, somewhat of a follow-on question. Can you just talk about your progress with clinical trial site selection? How you're thinking about where to conduct the trials for both the VRDN-001 and 002 versus where TEPEZZA was studied in clinical studies as well as where it's -- the sites where it's most frequently used commercially?

Yes, Jason. I'll ask Barrett to comment on that, please.

Luckily for us, frankly, this is a relatively small community of tertiary-care physicians who wind up making therapeutic decisions for these patients. It's a small community. We know each other. We know the sites that were used in the past. We also know that many of these sites are interested in continuing their clinical trials. We're aware that there is many of the patients out there that do not qualify for this drug, and we've been thoughtfully talking to the potential PIs and sites about their level of interest and facility to become up and running as a site with relative quickness. And so what that means is we're casting a net widely. We're casting a net most especially in North America for this, but we're optimistic that the sites and the PIs and the patients are out there for us.

Great. Helpful. And then Barrett, you talked about some of the potential learnings from the TEPEZZA development program in terms of dose and dose regimen opportunities to further evaluate with VRDN-001. Can you maybe talk about what your biggest learnings from the commercial launch of TEPEZZA have been? And how that plays into your thinking about the development programs?

I guess what I would say is, I would rather not comment on another company's behavior, how good or bad. And certainly, Horizon has much to be congratulated for. But most compellingly for us, we want to establish the proof-of-concept of efficacy of our antibody, and we fully expect to explore dose-ranging activities and look at other avenues of administration besides the intravenous infusion.

Okay. Great. And then just last one for me. What will be the gating steps to giving more color on additional programs like VRDN-004? Is it patent-related? Or we wait until you're close to entering clinical development or both or other?

Yes. Thanks, Jason. So that's obviously a competitive consideration, and that's a balance. We'd love to share what we're doing. We're very excited about it but don't want to tip our hand too early. And so when the balance favors discussing what exactly VRDN-004 is for, we'll happily share it. But we haven't really given guidance on when that might be.

Our next question is from Leland Gershell with Oppenheimer.

My congratulations as well. It sounds like encouraging progress on the subcutaneous possibility for 001. Just wanted to get kind of further color where you think you are in that opportunity. Are you -- do you think you need more development of the subcu formulation? Or is it just a matter of more kind of testing and evaluation? And should that move into the clinic, would you -- maybe if you could describe to us a bit more what your clinical development plan would be that kind of alongside the IV as you move into 2022?

Sure. Leland, yes, that's exciting progress. Really looks highly likely now that we can achieve a formulation that's appropriate for the kind of convenient, low-volume subcutaneous injection that we think would make for an improved product. We'd like to be ready to explore this route in the clinic after we've established the IV proof-of-concept. But it -- I think of it as a really nice upside potential for this program. When we conceived the 001, the baseline was that it would be an IV drug, always thinking that subcu is possible. Now it looks more possible, especially if it is active at relatively low doses. And that, of course, is the next thing that we need to figure out is what doses deliver the efficacy that these patients need.

Got you. So is it a question perhaps of increased frequency but subcu and, therefore, getting the same amount of drug on board? Or you don't really know? You'll have to wait until clinical evaluation for kind of the dose intervals and the amounts?

Right. There's obviously a trade-off between the amount of drug you get and the frequency of what you have to give it. And the key thing we need to learn to make -- to understand what that profile might look like is the doses that deliver efficacy. And that's -- and we can find that out with IV dosing.

All right. Great. And then if you could remind us for 002. Do we have a sense of what the dosing intervals would be at this point? I know it's still preclinical, but just based on the data you have, if you could either remind us or share with us what the view is on the frequency.

Yes, great question. We really need the human PK to understand that. And I'm actually really excited about that first clinical experience, which we think will be healthy volunteers. The PK from that study should help answer the question that you just posed. And so even before we have some efficacy data for that molecule, I'm hoping, middle of the year, next year, if we have some nice proof-of-concept data from 001, that will support that we're able to find molecules that deliver the kinds of efficacy that TEPEZZA has shown this mechanism can do. So if we've established that we're able to find molecules to deliver efficacy, and then we have, hopefully, some impressive PK out of 002, well, that would put that program in a very good position even before we get into thyroid eye disease patients.

Our next question is from Laura Chico with Wedbush Securities.

I just wanted to start off maybe on 001 and the Phase II study. Barrett, your comments earlier around TEPEZZA, essentially setting a high bar here. I'm just curious if you could maybe opine a little bit on what you actually need to see coming out of the Phase II study in order to consider advancing 001. I guess, also in the context of 002, is this more on just a similar efficacy? Is there other benefits you're looking at just on the 001 side? And then I have a follow-up question there.

Great. Thanks, Laura. This is Jon. Yes, Barrett, please go ahead.

I think that TEPEZZA has shown very, very impressive efficacy. The efficacy comes at a cost. There are significant downsides to this intervention with that drug in terms of patient inconvenience; patient cost; and frankly, side effects from muscles spasms to deafness to inflammatory bowel disease to glucose intolerance. We expect, in fact, with our antibody to be able to mitigate those side effects and be first-in-class.

That's very helpful. Just in terms of my follow-up question then, and I think you kind of answered this a little bit, but I'll just clarify. Your 001 and 002, should we presume that you would be considering advancing both in parallel in the future? And I guess, as Barrett mentioned, there might be opportunities to pursue both the acute TED space but also the chronic. It certainly seems like one may be better suited there. So just to clarify, would you be looking to advance both of these in parallel going forward?

Sure. I'll take that one. Look, at worst, it's redundancy to have these programs in parallel, right? It's multiple shots on goal. At best, if the half-life extension, other features that we've engineered into 002 work, it could be meaningfully better than 001. So it very much satisfies our goal of staying at the forefront of the field. Beyond that, the kind of questions that you're raising are extremely interesting. We just need to see some clinical data from these molecules to understand how the pieces fit together.

Okay. That's helpful, Jon. And maybe just one quick one to sneak in here. Just in terms of R&D expense, as you have indicated cash runway into the second half of 2023, but wondering if you could just kind of talk a little bit here about the cadence of spend in '21, just with 001 and 002 progressing towards clinic here.

Sure. Jason, that's all you.

Great. Thanks, Laura. I think the first thing to point out is our expenses and our burn will not be comparable to last year. Our operations are different. Prior to the merger, we were in a cost-cutting mode. But this year, we're really investing to build out the team, advance those programs, like you said, at the same time and also invest meaningfully in our discovery pipeline. So we haven't given guidance exactly on expenses, and I do expect some degree of variability quarter-to-quarter. But what we've tried to do is very carefully consider this in our reflected cash guidance today.

Our next question is from Michael Higgins with Ladenburg Thalmann.

Congrats, guys, on the continued progress. A couple of questions for you from this week's news out of China with Lonnie Moulder's company, Zenas BioPharma, which your assets are well noted. If you can give us any guidance as to the progress of those plans? Obviously, it's a [ team ] that's leading that, but there also seems to be your asset. So looking for some timing feedback from you and also any feedback on the terms when we might see some activity there.

Sure. Thanks, Michael. Maybe I'll describe Zenas a little bit since it is a new company. So this is -- it's based in the U.S. and China. As you noted, it's founded and led by a strong team of veterans of both U.S. and China biotech. And we've granted Zenas rights to develop and commercialize our IGF-1R antibodies in China, where we know there's high unmet need. And we see numerous ways of working with Zenas to maximize the value of our thyroid eye disease programs worldwide. But we haven't disclosed numbers. Really, what we're focused on at the moment is that it's a highly collaborative relationship. There's just a lot of value in working with them as we generate data worldwide to maximize the value of our programs.

Just a follow-up on that, if I could. Might be something -- might we see something posted in May from Q1 related to terms of this agreement that's announced in March? And also on the other half of that is any potential for reduction in cost as you proceed in development?

Yes. So we've not shared any plans as to what we will and won't disclose. Obviously, any relationship like this is helpful, but I'll point back to the cash runway that Jason has mentioned as really our baseline and how we'll be operating.

Just one last question on that. In terms of the timing there in Europe, is it fair to think that they are roughly 2 to 3 quarters behind regulatory-wise? And I guess, the second one here, sorry, what should we look for from Europe? Is that also a similar kind of a timing?

Yes. So I really can't comment on Zenas' plans for China. And while we're certainly interested in Europe, we've not said anything about our specific plans there. But certainly, we reiterate our interest.

Our next question is from Vernon Bernardino with H.C. Wainwright.

Dr. Katz, it's good to meet you. Perhaps, this is a question more directed towards you. You had mentioned from your learnings with TEPEZZA, the side effects, which you noted. And other than perhaps the routes of -- different routes of administration, just wondering if you had -- you must have an idea now whether there are efficiencies that you could probably gain from the development pathway for VRDN-001 and/or 002, such that it could be actually advanced faster? Or do you think it will probably follow the same kind of time line and same size of studies and so on?

Vernon, yes, we've not said anything about our later-stage development timelines, but I'll let Barrett comment on the general question.

I think one of the advantages of the strong efficacy of this receptor blockade is the large response between the drug-treated patients and the placebo-treated patients. So what that means is -- and as you've seen in other studies in TED, this means that you can get away with smaller numbers of patients. But again, we're talking about our drug. We expect to be doing this in a very carefully planned development path that will be vetted by the agency to help us walk through the steps that will be needed to bring this through to the TED patients and to do our exploration, both of the dose-ranging needs and of the alternative routes of intervention.

Like your basic position is because of the differences, if you know, on TEPEZZA, you can probably get -- avoid some of those same side effects? Or is it a matter of convenience as far as dosing and, therefore, achievement of better efficacy?

I think both, to be frank.

I appreciate that, and good progress on and congratulations on the combination. I look forward to your new days.

This concludes the question-and-answer session. I would like to turn the conference back over to Jonathan Violin for any closing remarks.

Thank you, and thanks, everyone, for joining us today. As I hope you've heard, we're very excited about both our recent progress and our upcoming milestones. And we'll look forward to updating you as our programs advance. So with that, we'll close the call.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.