Earnings Call Transcript - VRDN Q1 2023

Louisa Stone, Manager of Investor Relations

Thank you, and welcome, everyone, to our first quarter 2023 earnings conference call. The press release reporting our financial results and corporate updates is available on the Investors page of our corporate website at www.viridiantherapeutics.com. Joining me on the call this afternoon 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; Dr. Thomas Ciulla, our Chief Development 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.

Scott Myers, President and CEO

Thank you, Louisa. Good afternoon, everyone. Thanks for joining us today. We had a productive quarter, and I'm excited to report on our progress today after completing my first 3 months as Viridian's President and CEO. 2023 is an important year for Viridian, a year that includes key milestones in all of our clinical programs. I am proud of all the progress our company has made thus far and looking forward to continuing our work to bring potential best-in-class therapies to patients with thyroid eye disease and additional disease areas in the future. Our team has grown rapidly throughout the first quarter, and we made several key hires on our senior leadership team, helping to strategically position us for future success. Additional details can be found in the press release we issued earlier today, but these hires include Tony Casciano, Viridian's first Chief Commercial Officer; Dr. Tom Ciulla, Chief Development Officer; Dr. Felix Geissler, Senior Vice President of Medical Affairs; and Dr. Erik Kupperman, Vice President, Program leadership. Each of these individuals have already made valuable contributions to the organization and will be integral leaders for our company as we continue to expand our teams, mature as an organization and prepare for future success. I'll now review the progress we made in our clinical programs during the first quarter, and Kristian Humer, our CFO, will discuss our financial results before we take your questions. Let's begin with our TED programs, starting with our lead asset, VRDN-001, a humanized monoclonal antibody administered intravenously once every 3 weeks, which acts as a full antagonist of insulin-like growth factor I receptor, or IGF-1R. In the second half of 2022 and at the beginning of this year, we reported a series of positive topline clinical data announcements from 3 dose cohorts of the Phase I/II clinical trial, evaluating the safety and efficacy of VRDN-001 in patients with active TED. In December 2022, our team initiated the global Phase III THRIVE trial, which will evaluate the efficacy and safety of VRDN-001 in patients with active TED. Based on our recent discussions with key stakeholders in the TED community, there is particular enthusiasm for our shortened 5-dose 12-week treatment regimen of VRDN-001 compared with the 8-dose 21-week regimen of FDA approved TEPEZZA. Success in the 5-dose arm has the potential to provide welcome convenience to patients by shortening their treatment course and eliminating 3 trips to an infusion center. Enrollment is ongoing, and we continue to anticipate reporting top line results from THRIVE in the middle of 2024. Moving to chronic TED, we are excited to announce that our proof-of-concept study evaluating VRDN-001 IV in patients with chronic TED is fully enrolled. As a reminder, the trial design in chronic TED is similar to our proof-of-concept design that we used in active TED. Two infusions of VRDN-001, one at day 1 and the second at day 21 with evaluation of safety and clinical activity at week 6. There are 2 dose cohorts, 10 mg per kg and 3 mg per kg will target enrollment of 8 patients in each cohort. Randomized 3:1 in favor of VRDN-001 versus placebo. Inclusion criteria include any clinical activity score at baseline. We expect to report results from both dose cohorts of this proof-of-concept trial in either June or July. Following the results, we plan to start our second global Phase III trial, THRIVE-2, to evaluate the safety and efficacy of VRDN-001 in patients with chronic TED. Topline results from THRIVE-2 are expected by the end of 2024. I'd now like to move to our subcutaneous programs, which include VRDN-001, VRDN-002 and VRDN-003. All 3 candidates have the potential to be developed for delivery with a patient-friendly self-administered pen device, which could significantly increase access, reduce burden and expand treatment options for patients living with TED. We plan to select one of these candidates as our lead subcutaneous program before the end of the year. With our many learnings from VRDN-001 IV preclinical and clinical work, we believe that the differentiated mechanisms of action with full antagonism of IGF-1R achieved by VRDN-001 and VRDN-003 make either of them the most likely to bring a best-in-class subcutaneous product to patients. As a result, a trial evaluating VRDN-002 in patients with TED will only proceed in 2024 if VRDN-002 is selected as the lead subcutaneous program at the end of the year. This allows us to keep VRDN-002 as a potential backup while steadfastly focusing on advancing our efforts with VRDN-003 and VRDN-001. I will now highlight the upcoming priorities to get the subcutaneous lead program selection by year-end. For VRDN-001, Phase I results in healthy volunteers are expected in the fourth quarter of 2023. For VRDN-002, we continue to generate data from the ongoing Phase I healthy volunteer trial. For VRDN-003, our plans remain on track to file the investigational new drug application with the FDA during the second quarter. We expect Phase I results in healthy volunteers in the fourth quarter of 2023. After the lead subcutaneous candidates selected, we expect to advance the program to a pivotal Phase II/III trial, which is planned for the middle of 2024. Last month, our team was thrilled to present multiple abstracts at the 2023 Association of Research in Vision and Ophthalmology Annual Meeting. A platform presentation featured data from our Phase I/II trial of VRDN-001 in patients with active TED, while the poster presentations featured new clinical and preclinical research on VRDN-002 and VRDN-003. This marked the company's first presentation of VRDN-003 research at a medical congress, an exciting milestone for the program's development. Our team looks forward to presenting at additional medical congresses and further engaging with TED patient and physician communities throughout this year. Finally, we continue to advance our earlier-stage preclinical pipeline and will expand our disease focus beyond TED and into the rare and autoimmune space. Our preclinical programs include VRDN-004, 005 and 006. Yesterday, we announced a partnership with Enable Injections to utilize their enFuse on-body drug delivery system for one of our preclinical programs. We plan to provide additional information on at least one of the programs later this year.

Kristian Humer, Chief Financial and Business Officer

Thank you, Scott. Good afternoon, everyone. I'd like to refer you to our press release issued earlier today for a detailed summary of our financial results for the first quarter 2023 and take this opportunity to review a few items. We ended the first quarter with approximately $373.9 million in cash, cash equivalents and short-term investments compared with $424.6 million as of December 31, 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 $50.7 million during the first quarter of 2023 compared with $17.7 million for the same period last year. Research and development expenses for the first quarter of 2023 include a one-time $15 million upfront payment to Enable in consideration for the rights granted to Viridian to utilize Enable Injections' enFuse on-body drug delivery system. Other drivers for the increase in research and development expenses include higher CMC expenses in preparation for the IND application for VRDN-003 as well as development activities, higher personnel costs due to an increase in headcount, and higher preclinical costs due to early-stage collaboration expenses. As of May 1, 2023, Viridian had approximately 58 million shares of common stock outstanding on an as-converted basis. With that, I'll ask the operator to open the call for questions.

Operator, Operator

Your first question is from Derek Archila with Wells Fargo.

Derek Archila, Analyst

Congrats on the progress. Maybe just two questions from us. Maybe just first, can you just talk about the variables that could lead the chronic data coming out in July versus in the second quarter? And then also, just your thinking on the TED market opportunity given what we saw from Horizon recently in their quarter results. I mean do you think anything has changed in the market? Or do you kind of chalk that up to deal-related things going with the ongoing Amgen deal?

Scott Myers, President and CEO

This is Scott. We're expecting a real high probability that we're going to see clinical activity in chronic TED because it's been confirmed by the recent Horizon data. They were able to post a 62% and very meaningful response with a 2-millimeter reduction in proptosis. Our trial is evaluating the activity with only 2 doses of VRDN-001 to establish the proof of concept, and the reduction in proptosis of less than 2 millimeters, excuse me, would still be very meaningful because we still plan to evaluate the longer doses in THRIVE-2. We're very pleased with what's happened in that trial. We've actually overenrolled the 3 mg per kg cohort. So once we get the process rolling where we bring in all the information from the CRO, from the sites, the MRIs, we're going to need some time to really look through that and make sure it's right. And then we'll be ready to announce either June or July. And then with regard to your second question, it was about what we saw in the Horizon data. We thought it was actually very good data for patients suffering from chronic TED, and there's still a very large unmet need in that population because surgical intervention is really all they have left, unless they use a systemic treatment. We look forward to seeing some more of their information when they are able to release around patient baseline characteristics, the efficacy endpoints and some of the safety because this was the first placebo-controlled data in this chronic population. And then we look forward to reporting our data in June or July of this year. And as a reminder, though, our study was set up slightly differently. It was for patients with proptosis of greater than or equal to 3 millimeters above normal values and then symptoms that had presented themselves after 1 year of study screening, excuse me, prior to study screening. And just a reminder, we did not have a cash requirement, whereas Horizon used a 0 or 1 for cash. We are enrolling 2 cohorts, as I mentioned before, with VRDN-001; there's a 10 mg per kg cohort and a 3 mg per kg cohort randomized at 3:1 versus placebo, and there was staggered enrollment. The 10 mg per kg arm enrolled first with the 3 to follow as I said it was overenrolled. So there's only 2 infusions in each of those at day 1 and then again at day 21, which is q.3 weekly. And then the results will be at day 42 and week 6. So good news from the Horizon data. We think that their result will play well in the marketplace with that 2-millimeter reduction and that will help them hopefully get more coverage decisions from insurance companies, and with their broader label that will create a really nice tailwind for the market.

Todd James, Senior Vice President, Corporate Affairs and Investor Relations

Derek, this is Todd. As far as things that could be potentially impacting sales or what was potentially driving a reduction from Q4 to Q1, we think as far as how Horizon was investing in the market regarding expanding their sales force, the direct-to-consumer advertising as well as patient and physician support around trying to expedite new market access and reimbursement for patients is absolutely great places to invest in. But I think to your point, around potential distraction around an M&A process as that was taking place in the public headlines, certainly not helpful when you're trying to make in-flight operational changes to impact the sales trajectory of a drug. The chronic data that Scott just described will certainly help as far as being able to educate and aware of physicians and payers to hopefully drive additional sales in the chronic marketplace. But I'd also just point out that integration isn't easy either. And so people should probably expect some additional impact over the next couple of quarters as Amgen is integrating the Horizon team. And then with chronic, those changes that were being made, I think we should be able to return to growth either later this year or early next year and see the TEPEZZA sales pick up again.

Operator, Operator

Your next question is from the line of Alex Thomson with Stifel.

Unidentified Analyst, Analyst

I guess a couple for me. Maybe could you talk about whether the path forward with 001 subcu to bridge PK if you have successful IV trials potentially in the market faster? And then maybe as a follow-up to Derek's question, what are your current expectations around your label? Do you expect to get sort of the old TEPEZZA label? Or do you expect the path forward for you to get the new label upon approval? And if so, how that might impact the commercial opportunity?

Scott Myers, President and CEO

So for the second one, both the THRIVE and the THRIVE-2 study are going to be supportive of the BLA. And so then we would expect then that to translate into a broad TED label similar to what you're seeing today with the TEPEZZA label. And sorry, could you repeat your first question?

Unidentified Analyst, Analyst

With the 001 subcu.

Scott Myers, President and CEO

So the current way that we're thinking about it is really separate programs of IV versus subcu. And so we're moving ahead with THRIVE and THRIVE-2 to set up for an approval with the IV, and then we're going to select the lead candidate in subcu, which based on everything that we're seeing today, 003 looks like it would have the best profile from the binding affinity of 001 along with the half-life extension of 002. If there were a way for us to bridge from 001 subcu from IV to subcu, that's certainly something we'll evaluate in the future. But currently, no plans to update you on that right now.

Operator, Operator

Your next question is from the line of Gavin Clark-Gartner.

Gavin Clark-Gartner, Analyst

I had two. First, I just wanted to make sure that if you do select 003, there's nothing else that could potentially slow you down, specifically wondering about any formulation, manufacturing, or preclinical toxicology work. And I'll come back for my second question.

Scott Myers, President and CEO

Yes. No. All three programs are right on track, and we're going to continue to evaluate them through the end of the year. And as of now, there's no issues with formulation or the preclinical work. The healthy volunteer studies will be underway and will complete by the end of the year.

Todd James, Senior Vice President, Corporate Affairs and Investor Relations

We should be on track to start a Phase II/III pivotal trial for the selected lead program in the middle of next year.

Gavin Clark-Gartner, Analyst

All right. That's super helpful. And then separately, on the partnership for the on-body system that was announced yesterday. I just wanted to clarify, was that for the next preclinical program that's going to be unveiled? Or is that for an earlier preclinical program that is still to be discussed?

Scott Myers, President and CEO

That's for one of the three programs we're currently developing, and it will have nothing to do with TED whatsoever. So it will be for one of those three.

Operator, Operator

Your next question is from the line of Thomas Smith with SVB Securities.

Thomas Smith, Analyst

A couple on our end. I was wondering if you could provide any additional color on how the THRIVE trial is enrolling at this point and how that enrollment is tracking relative to your initial modeling? And then secondly, I understand the difference between the inclusion criteria between your study and the Horizon study, but I was just wondering if you have any visibility into the baseline characteristics of the chronic character of a concept cohort and whether this is tracking towards more of a sort of a low CAS population or kind of mid CAS patient population?

Scott Myers, President and CEO

Yes. Regarding the THRIVE study, we are pleased to announce that the first placement was enrolled back in December. We have activated over 30 sites globally, but we are not providing any interim updates on the enrollment. As for the second question, we have not unblinded our baseline characteristics, though I believe they have been unblinded by others.

Operator, Operator

Your next question is from the line of Laura Chico with Wedbush Securities.

Laura Chico, Analyst

I just have two. Just kind of following up on the enFuse delivery system, understanding this is for other programs outside of TED, but just kind of curious about the rationale for the program and executing on this right now. Just any advantages or criteria you were looking for in terms of selecting this particular partner? And then secondarily, on the cash runway, just any commentary or additional color there on levers to extend that. I think R&D picked up a little bit if I'm reading things correctly here. I'm just trying to understand the expectations on the burn for the remainder of the year.

Scott Myers, President and CEO

Yes, I'll take the first question and Kristian will respond to your second question. The first one focuses on the central philosophy of our company, which is to enhance the market in areas concerning efficacy, safety, and mode of delivery. These three criteria are very important to us, and we strive to improve them. We believe this technology will play a significant role in developing the compound that will be included in our preclinical pipeline.

Kristian Humer, Chief Financial and Business Officer

We have cash just below $374 million and we project our cash runway will last into the second half of 2025. This funding supports both the THRIVE and THRIVE-2 programs through to the end of 2024, extending slightly into 2025. Our subcutaneous program is funded until the decision point at the end of this year, when we will choose which program to advance into pivotal trials. Crucially, we have funding for pivotal trial preparation, allowing us to move quickly into these trials by the end of 2023. Our non-TED pipeline is fully funded up to either candidate selection or IND filing, and we will roll out these programs individually, allowing the market to respond to what they wish to support. We are committed to unveiling at least one of the three non-TED programs from our pipeline chart by the end of 2023. Our cash operating expenses in Q1 were slightly above normal, mainly due to an enabled payment of $15 million. We expect slightly higher expenses again in Q2 as we start THRIVE-2, after which they should return to a stable range of about $35 million to $45 million.

Operator, Operator

Your next question is from the line of Kalpit Patel with B. Riley Securities.

Kalpit Patel, Analyst

Maybe one more on the market opportunity here for thyroid eye disease. I guess, based on your conversations with KOLs in the space, is there a backlog of chronic TED patients that are waiting to be treated? And do you think that it will sort of be a rapid uptake in this setting like we saw in the acute setting? Or would it be a slow build given the lower severity of the disease?

Scott Myers, President and CEO

This is Scott. I'll take the first part, and maybe Tom Ciulla will add a little color because we've actually been out in the field quite a bit lately at the different conferences and visiting with our PIs and KOLs, and learning about that. I think the belief is that there was a low-hanging fruit situation with the actives. But in the words of some of the physicians I spoke with, there are lines of chronic patients. I think the recent data that's been put out there bodes well with their broad label now, and that they can take forward, as I mentioned before, to get coverage decision. But I think we see there's a really significant opportunity out there for market potential and to grow the market, especially when we think about our 5-dose regimen that's part of our THRIVE study. The physicians are really excited about that, even versus the 8-dose that's already available. And I think we really have the opportunity to grow the market with our subcu offering. So we'll have a very broad approach to treating this disease with whether people want to use an IV or a subcu. And then there's also the future of a lot of physicians telling us around it's still 8 doses with TEPEZZA, sort of an acute treatment for what appears now to be a chronic disease because the TEPEZZA data definitely showed that these chronic patients do present themselves even after having the disease and their criteria 2 to 10 years, and we've even heard longer than that, and they are getting relief. But Tom, I don't know if you want to add some color?

Dr. Thomas Ciulla, Chief Development Officer

Sure. This is Tom Ciulla. As Scott mentioned, we've recently participated in several congresses, including the Association for Research in Vision and Ophthalmology, the North America Neuro-Ophthalmology Society, and the North American Society of Academic Orbital Surgeons, where we presented multiple times at each event. Scott has met with several investigators and key opinion leaders, and they've expressed strong enthusiasm for our multiple ascending dose proof-of-concept study in acute TED. We received a lot of positive feedback regarding that data. Additionally, we have seen favorable responses about Horizon's recent findings in chronic TED, which we believe is beneficial for patients affected by chronic TED. The investigators and KOLs have indicated that they have a backlog of patients, and many have expressed interest in participating in our clinical trial as investigators. This indicates a growing sense of optimism, not only for active TED but also for chronic TED, where there is indeed a backlog, as you inquired.

Kalpit Patel, Analyst

Can you provide more details about the selection process for the right subcu candidate and the timing for starting the pivotal trial in mid-2024? What steps still need to be completed to initiate that trial?

Scott Myers, President and CEO

Yes. So there are a couple of the 002 healthy volunteer studies currently ongoing right now, and we've even reported some of that information out at one of the more recent conferences. And then the 003 and 001 healthy volunteer studies, which will be looking at bioavailability and safety. Those will be completed early enough to have by the end of the year, and then we'll wind up all that information, make the decision about which one of the candidates we would move forward with. And then based on that information, we would then seek input from the stakeholders and plan to start the trial midyear.

Operator, Operator

Your next question is from the line of Jason Butler with JMP Securities.

Jason Butler, Analyst

Scott, you pointed to before the importance of the shortened treatment duration in the THRIVE study for the IV. Can you just talk about how that thinking rolls over to your planning for the subcu pivotal program and I guess, also the chronic TED program?

Scott Myers, President and CEO

We are gaining significant insights into the marketplace. The market has evolved considerably since the launch of TEPEZZA, particularly regarding how physicians are prescribing these medications. Currently, the treatment approach is somewhat acute, requiring eight doses as indicated on the label, after which patient response is assessed. However, it has become clear that if the thyroid condition is not properly managed and the underlying pathway is not inhibited by a TEPEZZA-like agent, the symptoms of thyroid eye disease (TED) can reemerge. The inclusion of a five-dose regimen is beneficial because it facilitates quicker patient enrollment; if patients respond positively, they can easily transition to an active treatment afterward. Physicians appreciate the possibility of effectively inducing a response to TED with fewer doses. Additionally, we highlight some side effects associated with higher doses of TEPEZZA and the benefits of a flattened response curve. We anticipate that some treatment protocols may evolve into a "treat and retreat" model, or a system of induction followed by maintenance. Our product line, once approved, positions us well for this shift, especially with our subcutaneous options which allow treatment to be administered by patients themselves after diagnosis, enhancing their experience and eliminating the need for visits to infusion centers. This represents a notable shift in treatment strategy, where an initial induction phase controls acute symptoms, leading into a maintenance phase that may allow for weekly or monthly dosing, empowering patients to manage their treatment independently without constant caregiver involvement.

Jason Butler, Analyst

Got it. And I guess just a follow-up to that then. Are you hearing from physicians yet that there they're employing that treat and retreat with TEPEZZA? So patients are getting treatment in the acute phase and then either retreated in a chronic phase? Or is it just too early to say that?

Scott Myers, President and CEO

I believe you have accurately identified the situation. We've been hearing from multiple physicians treating patients during the pandemic that they were unable to administer the full 8 doses due to TEPEZZA being set aside for COVID vaccines. They would provide a limited number of doses, monitor the results, and have patients return for additional doses. In some cases, they might give patients up to 5 doses and advise them to stay in touch, so that if they started feeling positive effects, they could return for more treatment. One physician referred to it as administering a few doses and then using a PRN approach based on the patient's needs. We're gathering this information, and we have the advantage of being able to anticipate trends rather than just reflecting on past events, which will help us adapt our market strategy.

Operator, Operator

Your next question is from Rami Katkhuda with LifeSci.

Rami Katkhuda, Analyst

Two quick ones for me. I guess, first, is there anything specific that you're looking out for in the proven concept chronic TED study that can influence the THRIVE-2 protocol? And then secondly, in your conversations with physicians and payers, have market access or reimbursement considerations changed with TEPEZZA after the chronic data?

Todd James, Senior Vice President, Corporate Affairs and Investor Relations

Yes. Regarding the chronic data and its potential impact on the THRIVE-2 Phase III design, we have some initial thoughts on how that design may look before analyzing the data. Recently, we received some preliminary topline results from Horizon, which have been useful for us to assess clinical activity. We will also take into account the results from our trial. While there isn't a specific aspect I want to highlight today, we will be fully guided by that data and will adjust our preliminary thoughts accordingly. We will make any necessary changes to the trial design and seek feedback from key opinion leaders or health authorities before starting the trial if needed. In terms of market access decisions related to the chronic data from Horizon obtained about four weeks ago, it’s too early for us to gather insights on that. We will certainly monitor intelligence from the marketplace and the surveys we conduct. If we start to make progress, it will be appropriate to update you with real-time information.

Operator, Operator

Your next question is from the line of Gavin Clark-Gartner.

Gavin Clark-Gartner, Analyst

I just wanted to circle back on the extended duration or retreatment dynamic that you just mentioned. Because today, a lot of the payer policies explicitly don't allow for more than 8 TEPEZZA doses. I'm wondering how you approach pricing and also what clinical data you need to show to allow for this dynamic in the future?

Scott Myers, President and CEO

Yes, our approach will clearly focus on post-approval strategies. When considering a shift from treatment to retreatment and maintenance, the pricing may vary significantly since you might be using the subcutaneous formulation continuously. Currently, the price is set at 8, but with our broader labeling and the option for retreatment, we can resubmit for reimbursement in the next bidding cycle. Many physicians are indicating that this is a chronic condition, and the label now allows treatment with the drug at any point during TED. There seems to be difficulty in accepting the idea of multiple doses of 8, and with the high dosage, there could be potential benefits from using smaller doses, similar to our full antagonism, which is around one-third of the 5-dose cohort and less than half of what they will reach with 150 mg per kg. Consequently, the ability to administer various dosing regimens, whether subcutaneous or through retreatment with fewer infusion doses, appears to be a more favorable strategy.

Operator, Operator

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.

Scott Myers, President and CEO

Thank you, operator, and thanks, everyone, for your time this afternoon. Please feel free to reach out to Todd or Louisa if you have any follow-up questions, and we are happy to touch base with you. Thanks again, and have a great evening.

Operator, Operator

This concludes the conference call today. You may now disconnect your lines. Thank you for participating.