Viridian Therapeutics, Inc. (VRDN) Q4 2022 Earnings Report, Transcript and Summary

Welcome to the Viridian Therapeutics Fourth Quarter and Full Year 2022 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the floor over to Ms. Louisa Stone, Manager of Investor Relations at Viridian. Please go ahead.

Thank you, and welcome, everyone, to our fourth quarter and full year 2022 conference call. The press release reporting our financial results is available on the Investors page of our corporate website at www.viridiantherapeutics.com. Joining me on the call this morning are Scott Myers, our President and Chief Executive Officer; Kristian Humer, our Chief Financial and Business Officer; Dr. Deepa Rajagopalan, our Chief Product and Strategy Officer; and Todd James, Senior Vice President, Corporate Affairs and Investor Relations. Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements regarding our financial outlook, in addition to regulatory, product development and commercialization plans and research activities. These statements are subject to risks and uncertainties that could cause actual results to materially differ from those forecasted. A description of these risks can be found in our most recent Form 10-Q and 10-K on file with the SEC. I would now like to turn the call over to Scott Myers, our President and CEO.

Thank you, Louisa. Good morning, everyone. Thanks for joining us today. This is my first quarterly conference call since joining Viridian about a month ago. For those of you who are not familiar with my background, I've spent over 30 years in the pharmaceutical and medical technology space. Earlier in my career, I held senior commercial roles in the U.S. and abroad for Johnson & Johnson and UCB. Most recently, I've served as the CEO at 4 companies: AMAG, Rainier, Cascadian and Aerocrine. I also have Board member and Chairman experience from the boards of a few public and private biopharmaceutical companies. Over the past month since my appointment as CEO at Viridian, I have met with many new colleagues. I have spent time diving deeper into our data and development plans in TED and learning more about our exciting preclinical research, all of which have further strengthened my excitement and resolve for our company. I look forward to building on the company's previous plans and looking for ways to improve our processes and execution. We have a significant opportunity in front of us to bring potential best-in-class IV and subcutaneous administered medicines to patients with TED and expand our research and development efforts beyond TED. Our team has been growing rapidly in key areas to support our late-stage development efforts. We are focused on adding the right resources to support operational execution across the organization. I'm excited to lead and support our teams as we work together to achieve our vision of building Viridian into a fully integrated biopharmaceutical company. Now I'll review the important progress that Viridian made in 2022. Kristian Humer, our CFO, will discuss our financial results, and then we look forward to taking your questions. 2022 was an impactful year across our TED programs, especially for our lead program, VRDN-001 in the IV form, a humanized monoclonal antibody believed to act as a full antagonist of insulin-like growth factor I receptor, or IGF-1R. Over the past several quarters, we have announced a steady stream of positive top line clinical data from 3 dose cohorts of the ongoing Phase I and II clinical trial, evaluating the safety and efficacy of VRDN-001 in patients with active TED. In early January of this year, we reported top line data from the third low-dose cohort, showing that after just 2 infusions of VRDN-001, 3 mgs per kg, patients showed significant and rapid improvements in both signs and symptoms of TED. This data, combined with the prior 10 and 20 mg per kg results we reported in early 2022, reinforce our belief that VRDN-001 may offer a differentiated efficacy and similar safety profile relative to teprotumumab, marketed under the brand name of TEPEZZA, which is the only FDA-approved drug to treat patients with TED. The next set of data that we will provide regarding the VRDN-001 IV program will be the initial results from the proof-of-concept study evaluating VRDN-001 in patients with chronic TED. We expect to report these results in the second quarter of this year. Now moving to our ongoing and planned Phase III trials. The positive data from the Phase II trial support our ongoing global Phase III THRIVE trial, which we initiated in December of 2022, to evaluate the efficacy and safety of VRDN-001 in patients with active TED. We were proud to announce the first patient was enrolled in the study, a major milestone for Viridian and a meaningful step toward providing a new and potentially improved treatment option for patients with TED. The trial remains on track with top line results expected in the middle of 2024. Following the upcoming Phase II data in patients with chronic TED, we plan to start a second Phase III trial, known as THRIVE-2, in the middle of 2023, with top line results expected at the end of 2024. I'll turn now to our subcutaneous programs, which include VRDN-001, VRDN-002 and VRDN-003. All 3 candidates have the potential to be developed into a convenient, patient-friendly, subcutaneous, self-administered pen device, which could significantly reduce the burden of care for patients suffering from TED. The recent low-dose data of VRDN-001 support its potential as a subcutaneous program candidate. We are now planning a Phase I trial in healthy volunteers with the results expected in the fourth quarter of this year. VRDN-002 is our novel monoclonal antibody believed to act as a partial antagonist of IGF-1R. This antibody incorporates half-life extension technology, which led to a half-life of up to 43 days in our Phase I trial in healthy volunteers compared to 10 to 11 days for VRDN-001 and teprotumumab. Our team is currently planning a proof-of-concept trial to evaluate VRDN-002 in patients with active TED with data expected by the end of this year. VRDN-003 is an anti-IGF1R monoclonal antibody with the same amino acid sequences VRDN-001, except for the addition of the half-life extension technology that is incorporated in VRDN-002. We are advancing VRDN-003 quickly towards an investigational new drug application in the second quarter of 2023, with Phase I results in healthy volunteers expected in the fourth quarter of 2023. Following the clinical data, we ultimately plan to select 1 of the candidates as our lead subcutaneous program before the end of 2023. The selected lead program pivotal trial is planned for the middle of 2024. We look forward to our upcoming presentations on both VRDN-001 and VRDN-002 at this year's Annual Meeting of the North American Neuro-Ophthalmology Society, or NANOS, that's being held next week in Orlando, Florida. The team is targeting medical congresses throughout the year where we hope to present our data and further engage with the medical community, allowing us to generate awareness about Viridian and our data in TED amongst the physician and patient communities. As you can see, we have made significant progress in our research and development activities throughout our TED programs. If approved, we believe our intravenous and subcutaneous programs would represent the most complete commercial offering available for treating physicians and patients with TED. As differentiated new entrants with potentially simpler, more convenient dosing regimens, we would expect these therapies to be highly competitive in the new start market. Finally, with respect to our early-stage preclinical pipeline, we intend to expand beyond TED in the coming years into rare and autoimmune diseases. The company is currently advancing multiple preclinical programs, including VRDN-004, 005 and 006. Please stay tuned as we plan to provide additional information on at least one of these programs later this year. With that, I will turn the call over to Kristian who will provide a financial review for the fourth quarter and full year ending 2022. Kristian?

Thank you, Scott. Good morning, everyone. I'd like to refer you to our press release issued earlier today for a detailed summary of our financial results for the fourth quarter and full year of 2022 and take this opportunity to review a few items. We ended the fourth quarter and full year with approximately $424.6 million in cash, cash equivalents and short-term investments compared with $431.3 million as of September 30, 2022. We believe that our current cash, cash equivalents and short-term investments, excluding our $75 million credit facility, will be sufficient to fund our operations into the second half of 2025. Research and development expenses were $39.3 million during the fourth quarter of 2022 compared with $22.4 million for the same period last year. The increase in research and development expenses was primarily driven by an increase in CMC expenses, preclinical costs, expenses related to milestones and upfront payments as well as personnel costs. Research and development expenses were $100.9 million during the 12 months ended December 31, 2022, compared with $56.9 million for the same period last year. The increase in research and development expenses was primarily driven by clinical trial and preclinical costs, expenses related to milestones and upfront payments and CMC expenses. As of March 1, 2023, Viridian had approximately 57.7 million shares of common stock outstanding on an as-converted basis, which included 42.8 million shares of common stock and an aggregate of approximately 14.9 million shares of common stock issuable upon the conversion of 172,435 and 51,210 shares of Series A and Series B preferred stock, respectively. With that, I'll ask the operator to open the call for questions. Operator?

[Operator Instructions] The first question today is coming from Gavin Clark-Gantner of Evercore ISI.

Scott. I'm just wondering what the reason to test 001 subcu in healthy volunteers? Is this just a backup in case [indiscernible] doesn't work out for some reason? And then for the 002 subcutaneous proof-of-concept trial and testing, can you give us any more details on what this might look like in terms of how many patients and what time the endpoint may be measured at?

Yes. So thanks for the question. On the first one, I think we have the benefit of having several compounds we can look at and now that we know a lot more about 001 in the 3 mg per kg cohort. We have the opportunity to test it in healthy volunteers to look at immunogenicity and bioavailability just like we are looking at 003. And it just gives us more information to make a decision at the end of the year. On the second one, we haven't spoken anymore about that particular program.

The next question is coming from Thomas Smith of SVB Securities.

This is Mike on for Tom. Can you just discuss your expectations for the results from your own chronic TED proof-of-concept study? And how do you expect the efficacy to look versus active TED? And then just as a follow-up, how could competitor data expected in chronic TED help shape your thinking about your clinical development strategy in these patients?

So I'll unpack those several questions. On the first one, given in chronic growing, giving 2 doses, we certainly like to see some impact on proptosis, but at 2 doses, it may be in the level of negative 1 millimeters or so. We don't want to overshoot that. We expect Horizon's data to come out about midyear, and they're using a full course of therapy. So theirs might be higher. If you look back at the case reports in chronic patients that have been looked at, I think there's about 57 out there odd and where we treated with TEPEZZA, they actually got some pretty good results. So in all, we want the data all to be compelling. So all of us can use that when we get a final approval, and we can go make a lot of noise with the insurance companies so we can get that covered and people can get access to it. And if you could repeat the second and third question, that would be helpful.

Sure. Just in terms of -- first of all, how you expect the efficacy to look versus active TED? I know you kind of just walk through it a little bit and then how the competitor data that you mentioned in chronic TED patients could help shape your thinking about your clinical development strategy in these patients?

Yes, definitely. If chronic level -- when they level out in the plateau phase of the disease as we know it's a biphasic disease, the numbers are usually not quite as high. And so seeing the -- total effect like you would see an active probably won't happen. You start off with lower CAS potentially and you start off with lower proptosis. So you may not see the magnitude of effective -- of active. What we like to talk about is we see a rapid onset to relief and the proptosis reduced quicker. And then we'll have to look at the totality of all the scores, whether it's CAS, diplopia and proptosis. And with regard to the competition, I will have to see what their data looks like, and that's going to help guide us. Hopefully, they will release their information before us. But we're going to look at our own data and their data and make some decisions on the -- this schema of the study going forward.

The next question is coming from [indiscernible] of Jefferies.

Could you maybe discuss the rationale for dose selection for the second chronic type cohort at 3 milligrams? And then how will you select between your subcutaneous assets given that you'll have some kind of Phase II results for 002, while like for 003, you'll have healthy volunteer data by the end of the year?

Yes. On the first one, I mean, we've done some dose ranging in all the cohorts we were testing both 10 mgs per kg and 3 mgs per kg. We saw such good results in January, our 3 mg per kg cohort that we wanted to try it again in this setting. These patients tend to be at a steady state as the previous question asked. So to see if a lower dose could work, it's always better to understand that, and it also continues to inform our subcutaneous programs because we did see such good data at such low dosage. And we're going to use a multitude of data to make our selection on the subcu program. Obviously, the health, as I mentioned, I think, in an earlier question, the healthy volunteer data will definitely guide us on bioavailability, excuse me -- as well as immunogenicity. And then we see the -- when we can get all that data lined up once, it will really give us a choice to -- a better choice to make.

Excellent. And maybe as one follow-up, what are kind of some attractive markets for your non-TED assets? Are you going to follow the same road map that you did for 001 and pursuing the kind of a rare disease market with limited competition where you could do some antibody optimization? Or is there maybe some more creative options out there, too?

Yes, it's a great question. Really, there's a hallmark of Viridian. We look for great markets that there's been an early entrant, maybe -- and as we even -- we've seen with teprotumumab, very good entrants fix a lot of unmet needs, but not a perfect drug because of it's -- potentially it's a partial antagonist, we're a full antagonist, and we believe that's going to be beneficial on maybe you can differentiate based on efficacy or safety or convenience of delivery. So we're going to use those type of analysis to pick a good market where there's limited competition. We feel like through our engineering, we can differentiate and then bring to bear rapid development to market. And by that point, we also completely built our commercialization efforts and market access and all those things. So it's -- our focus right now is TED, but we really look forward to unveiling at least one of the preclinical programs coming out this year.

The next question is coming from Laura Chico of Wedbush Securities.

Scott, one for you. I would love to hear a little bit more about what you were most excited about with respect to the opportunity of Viridian? And if there's perhaps one program that stands out to you as most compelling? And then a follow-up question for Kristian. Just wondering if you could speak a little bit more to the cash runway guidance and just trying to think about the pace of operating expense spend in '23 relative to the rate we're seeing exiting in the fourth quarter?

Yes. No, thanks for the question. So I did -- but I was pitched the concept of becoming the leader of the company. I was really excited by multiple things. First and foremost, when you look at our pipeline chart, the number of programs we have going in both IV and subcu and then a pipeline behind that, I think that's a bit rare in smaller companies, although I would not say we're necessarily smaller in market cap, but the company is just about 100 people with multiple clinical programs going on. My history has been at both J&J and UCB, where we -- I was part of the anti-TNF businesses, a little less directly to J&J, but I -- my countries in Europe were the first to launch Cimzia, which is anti-TNF. And as you look at the analog of that market, where you go from an IV to a subcu and maybe even oral, there's a lot of similarities between that analog and what we're doing, and I think how the TED market could actually evolve over time. And then you look at -- I met a lot of the team, I was very impressed with their intellectual horsepower as well as their sort of commitment to the company and the commitment to these areas. And finally, it's a well-capitalized company. I mean it's been a couple of rough years in biotech and to find companies that have late-stage assets, middle stage assets and even early-stage assets that you can move forward and the willingness of our Board and a lot of the investors they want us to build an independent company and be fully integrated. And that's what I do thrill in. I've done it for -- about 12 years across 4 companies, and I'm really excited to be here.

Thank you, Laura. So Laura, in terms of cash guidance, we had around $425 million in cash at the end of 2022. It's in terms of cash runway, the runway is baked into the second half of 2025. On a program-by-program basis, it funds both THRIVE and THRIVE-2, 2 data readouts, at the end of 2024 and a little bit into 2025. Our subcu programs are funded through to kind of what we call the data of decision point where we select one of our subcu programs to move forward into a pivotal trial at the end of 2023. Importantly, pivotal trial prep is funded so that we can move swiftly from selecting the program to a pivotal trial. And we will unveil, as Scott mentioned, one of our non-TED programs over the course of 2023. All of these programs are funded either through IND filing or candidate selection. And once we unveil these programs, we'll let the market decide how these programs can be funded. In terms of operating expenses, you should assume, as we move closer to commercialization that, those expenses will increase as we kind of cure up to being ready for commercialization. And in terms of R&D expenses, that will also increase as we ramp up and move closer to a pivotal trial with our subcu program.

The next question is coming from Jason Butler of JMP Securities.

Scott, let me add my congrats on your joining. Wondering if you could give us an update on where you're at with the subcu pen device? And when you think you can incorporate a potential go-to-market device into the clinical program?

I'm -- Actually, Deepa is here, and she's overseeing that effort. I'm going to pitch that one to her.

Thanks, Scott. Thanks for the question. So we are looking at a number of auto-injector devices to support our subcu program. We're in early stages of assessing those options, and we look forward to selecting that device and integrating it into our subcu program as we move into patient studies following the subcu bake off later this year.

The next question is coming from Sam Slutsky of LifeSci Capital.

This is Sam on for Ami. Just on the chronic TED study, can you just remind us of the inclusion criteria of patients being enrolled? And then how that compares to the ongoing Phase IV study of TEPEZZA?

Yes. So on the chronic study, the inclusion criteria are CAS that ranges from 0 to 7. Proptosis, it's greater than or equal to 3 millimeters, and onset of TED symptoms greater than 12 months. I believe the chronic study for TEPEZZA is greater than 15 months, a CAS of 0 or 1.

And inclusion of times and diagnosis from between 2 years to 10 years.

Got you. Okay. That's helpful. And then I guess do you suspect any kind of differences just based on those baselines and so forth as we think about interpreting results?

Not particularly. I think we're going to have to see how our drug works, and we expect probably lower CASs. And because we're only using 2 doses, we'll have to see the magnitude of our effect. I think if we see any effect after 2 doses, that would be really good news. And we'll just have to see how their 8 dose regimen works.

The next question is coming from Kalpit Patel of B. Riley Securities. .

Maybe one for 001. Can you give us a sense of the dosing frequency and the number of infusions you're planning to initially test with that subcu formulation of 3-milligram per kilogram? Is it going to be the same as the IV formulation? And then one for 002 in the planned THRIVE-2 study, have you disclosed if that will include patients with all CAS scores?

I don't believe we've identified what the subcu dosing regimens will be. So that's not been disclosed. On the 001 and on 002, could you repeat question?

For 002, the THRIVE-2 study, have you disclosed if that will include all patients with all types of CAS scores?

001 will be the molecule that goes ahead for THRIVE-2, and that we would currently expect it to mirror the current proof-of-concept Phase II design within being inclusive of all CAS, albeit chronic patients tend to be 0, 1, 2s and 3s relative to active patients being greater than or equal to 4. We'll have to wait to see our data to make a final protocol decision on that design and how inclusive it is on specific to CAS.

Okay. Yes, I meant for 001 for THRIVE-2.

Thank you. We were a little confused because we weren't studying 002 in chronic. Thanks for clearing that.

The next question is coming from Douglas Tsao of H.C. Wainwright.

Just curious, do you think there may be or have you contemplated sort of the strategic value of potentially advancing 2 different assets for chronic TED versus active TED just from a striking -- from a pricing standpoint, some potential strategic advantages?

I think putting 2 assets into the same marketplace would be very difficult. I think because there's no real way to know other than looking retrospectively at which protocol is being used. I think what you see in our active study, which is quite unique and could eventually be used there is doing an 8-dose regimen and a 5-dose and see if we can with the same efficacy amounts because it would be a great benefit to patients, providers and even the infusion centers to have a shorter course of therapy. So that's certainly a possibility. And then the subcu strategy in chronic, I think, is a marvelous way to go, so that patients can take control of their own admission of the therapeutic at the home, not have to go to caregivers. And we think that's a real great idea moving forward, and that's why we're doing it.

The next question is coming from Michael Higgins of Ladenburg Thalmann.

Congratulations, Scott, on joining Viridian as CEO. A couple of questions on near-term events for 001 in chronic TED patients. Looks like you're planning to share initial proof-of-concept results in Q2. What should we be looking for there, how many patients, et cetera?

Yes, sure. So that's going to be 16 patients over 2 cohorts. It's very similar to our other trial designs. It's 10 mgs per kg, q3 x 2. And there'll be a placebo arm in both the 10 mgs per kg and the 3 mgs per kg. And I think we spoke about this already. But basically, since we're only 2 doses versus TEPEZZA's full course of 8 doses, we expect to see -- like to see an effect in proptosis. How high that will be after 2 doses in this population? We can't really say, but we definitely like to see some effect there. And actually, we're collecting all the -- other the diplopia and CAS scores as well. So we have a much broader CAS range in the inclusion criteria, 0 to 7, versus TEPEZZA's, which is 0s and 1s. So we hope to see an effect there, but those tend to be a little lower in the chronic population. But if you look at, as I mentioned, and there's a great series of case studies on patients that had chronic TED and were retreated with TEPEZZA and they actually did see a pretty good effect after redosing. So we're hoping that works out for them. And in the sense of now with Amgen behind Horizon, if that deal closes, the ability to take that data and really go out and convince coverage decisions on chronic, which will really broaden the market. And our whole strategy is to be the second entrant and hopefully we can take full advantage of that.

Makes a lot of sense. Look forward to it. And then one follow-up here on THRIVE-2. I believe the screen started in November, but we're seeing the start of the trial delayed from first half to mid-'23. So any feedback for us and what drove that?

Yes. So actually, I think you said THRIVE-2 started, it's actually the THRIVE study that started late last year and THRIVE-2 would start -- Later this year.

Yes, mid-year.

So just to be clear, that's not -- the THRIVE-2 study has not started yet.

We're not providing any guidance on enrollment around THRIVE.

Michael, it's Todd. On the THRIVE-2 starting in the middle of this year, that will really be informed when we generate and see the proof-of-concept chronic data here in the second quarter. And so that's just operational execution thing, see the data, see -- get some stakeholder feedback, finalize the protocol and open the study. And so to get data in Q2 and have that Phase III opened in the middle of the year is actually pretty solid execution. So just a slight change there.

[Operator Instructions] The next question is coming from Serge Belanger of Needham.

Also wanted to congratulate and welcome, Scott. Two questions for us. First one on the Phase III THRIVE trough. Just where you are in terms of site openings? And I think you just mentioned you don't want to discuss enrollment, but maybe just talk about the target mix between U.S. and ex U.S.? And whether you think the presence of TEPEZZA could affect enrollment? And the second question is, remind me again, should we expect week-12 data for any of the other 2 cohorts of the 001 proof-of-concept trial?

Yes. So on the first question, we're targeting 50 clinical sites in North America and Europe that would roll out 120 patients. Currently we have 31 sites opened. Majority are in the U.S. and then smattering across a couple of the big 5, the U.K. and a couple of mid-sized countries in Europe. And could you repeat the second question, please?

Second question was whether we should expect week-12 data for the other 2 cohorts of the proof-of-concept trial?

Yes, great question. We are in the process of analyzing those data, and we look forward to sharing those data at a scientific conference soon. we want to make sure that we share the totality of that data and bring that to you in a scientific form.

And Serge, this is Todd. I'll just remind everybody that patients don't receive additional dosing after day 0 and day 21 doses. And so really, when we look at data past week 6 at longer time periods, it's about follow-up safety and potential duration of that response that the patient gets from just the 2 doses, the patients aren't being actively dosed longer. And so expectations for further efficacy should be pretty much 0.

At this time, we have reached the conclusion of the question-and-answer session. I would now like to turn the call back over to Viridian's President and CEO, Scott Myers, for closing remarks.

Great. Thank you, Donna, and thanks to everyone for your time this morning. Our team looks forward to interacting with everyone at upcoming conferences this spring. Please feel free to reach out to Todd James or Louisa Stone, if you have any follow-up questions, and we are happy to touch base with you. Thanks, again, and have a wonderful day.

Ladies and gentlemen, this concludes today's conference call. You may disconnect your lines. Thank you for participating.