Earnings Call Transcript - VRDN Q4 2022

Louisa Stone, Manager of Investor Relations

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.

Scott Myers, 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 four 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 three 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 two 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 three 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 supports 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 as VRDN-001, except for the addition of the half-life extension technology 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 one 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?

Kristian Humer, Chief Financial and Business Officer

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

The first question today is coming from Gavin Clark-Gantner of Evercore ISI.

Gavin Clark-Gartner, Analyst

Scott. I'm just wondering what the reason to test 001 subcutaneous in healthy volunteers? Is this just a backup in case something 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?

Scott Myers, President and CEO

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 doing with 003. It just gives us more information to make a decision at the end of the year. On the second one, we haven't spoken any more about that particular program.

Operator, Operator

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

Unknown Analyst, Analyst

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?

Scott Myers, President and CEO

So I'll unpack those several questions. On the first one, given in chronic growing, giving two doses, we certainly like to see some impact on proptosis, but at two 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 analyzed, I think there's about 57 or so where we treated with TEPEZZA; they actually got some pretty good results. So overall, we want the data all to be compelling. So we all 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.

Unknown Analyst, Analyst

Sure. Can you explain how you anticipate the efficacy will compare to active TED? I know you briefly touched on it, and I’m also interested in how the competitor data you mentioned regarding chronic TED patients might influence your clinical development strategy for these patients.

Scott Myers, President and CEO

Yes, definitely. In the plateau phase of the disease, which we know is biphasic, the numbers tend to be lower compared to the active phase. Therefore, the total effect we observe in chronic cases is likely not as pronounced. You start with a lower Clinical Activity Score (CAS) and less proptosis, so the effects may not match those seen in active cases. However, we have seen a quick onset of relief and a rapid reduction in proptosis. We will need to evaluate all the scores, including CAS, diplopia, and proptosis. Regarding the competition, we are awaiting their data, which will inform our approach. We hope they release their information before we do. Ultimately, we will analyze both our data and theirs to determine how to proceed with our study design.

Operator, Operator

The next question is coming from a representative at Jefferies.

Unknown Analyst, Analyst

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 for 003, you'll have healthy volunteer data by the end of the year?

Scott Myers, President and CEO

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. We're going to use a multitude of data to make our selection on the subcutaneous program. Obviously, the healthy volunteer data will definitely guide us on bioavailability, as well as immunogenicity. And then when we can get all that data lined up once, it will really give us a choice to make.

Unknown Analyst, Analyst

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 roadmap that you did for 001 and pursuing the kind of rare disease market with limited competition where you could do some antibody optimization? Or is there maybe some more creative options out there, too?

Scott Myers, President and CEO

Yes, that's a great question. A hallmark of Viridian is that we seek out promising markets where there has been an early entrant. For example, with teprotumumab, strong early entrants address many unmet needs, but they aren't perfect drugs due to their partial antagonist nature. In contrast, we are developing a full antagonist, which we believe will provide advantages, potentially allowing us to stand out with better efficacy, safety, or delivery convenience. We will use these considerations to identify strong markets with limited competition. We believe our engineering capabilities can help us differentiate, enabling us to efficiently bring products to market. Our current focus is on TED, but we also look forward to introducing at least one of our preclinical programs this year.

Operator, Operator

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

Laura Chico, Analyst

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?

Scott Myers, President and CEO

Thank you for the question. I was excited about the opportunity to lead the company for several reasons. First, when I look at our pipeline chart, it’s impressive to see the number of programs we have in both IV and subcutaneous, along with additional programs in development. This is somewhat uncommon among smaller companies, although I wouldn’t necessarily categorize us as small in terms of market cap. The company has around 100 employees and is running multiple clinical programs. My previous experience at J&J and UCB involved anti-TNF products, particularly with Cimzia, which was launched in my European markets. The transition from IV therapies to subcutaneous and potentially oral forms has parallels to what we're aiming for in the TED market. I was also very impressed by the team's talent and their dedication to the company and its mission. Furthermore, it's a well-funded organization. Despite the challenges in biotech over the past few years, we have late, mid, and early-stage assets that we can advance, and our Board and investors are supportive of building a fully integrated independent company. I thrive in this environment, having done it for about 12 years across four companies, and I'm really excited to be here.

Kristian Humer, Chief Financial and Business Officer

Thank you, Laura. So Laura, in terms of cash guidance, we had around $425 million in cash at the end of 2022. In terms of cash runway, it's structured to fund our operations through the second half of 2025. On a program-by-program basis, it funds both THRIVE and THRIVE-2, two data readouts at the end of 2024 and a little bit into 2025. Our subcutaneous programs are funded up to the point we have what we call a data decision point where we select one of our subcutaneous 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. 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 get 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 subcutaneous program.

Operator, Operator

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

Jason Butler, Analyst

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

Kristian Humer, Chief Financial and Business Officer

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

Deepa Rajagopalan, Chief Product and Strategy Officer

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

Operator, Operator

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

Samuel Slutsky, Analyst

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?

Scott Myers, President and CEO

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, with a CAS of 0 or 1.

Deepa Rajagopalan, Chief Product and Strategy Officer

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

Samuel Slutsky, Analyst

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?

Scott Myers, President and CEO

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

Operator, Operator

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

Kalpit Patel, Analyst

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 subcutaneous formulation of 3 milligrams 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?

Scott Myers, President and CEO

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 the question?

Kalpit Patel, Analyst

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

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

001 will be the molecule that goes ahead for THRIVE-2, and we currently expect it to mirror the current proof-of-concept Phase II design, 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 specific to CAS.

Kalpit Patel, Analyst

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

Scott Myers, President and CEO

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

Operator, Operator

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

Douglas Tsao, Analyst

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

Scott Myers, President and CEO

I think putting two assets into the same marketplace would be very difficult. There's no real way to know, other than looking retrospectively at which protocol is being used. What you see in our active study, which is quite unique, could eventually be used there is doing an eight-dose regimen and a five-dose and see if we can achieve 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. The subcutaneous strategy in chronic, I think, is a marvelous way to go so that patients can take control of their own administration of the therapeutic at home, not have to go to caregivers. We think that's a great idea moving forward, and that's why we're pursuing it.

Operator, Operator

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

Michael Higgins, Analyst

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, etc.?

Scott Myers, President and CEO

Yes, absolutely. We will be working with 16 patients across two cohorts, which is quite similar to our previous trial designs. We are administering 10 milligrams per kilogram, given three times, twice. There will also be a placebo group for both the 10 milligrams per kilogram and the 3 milligrams per kilogram treatments. We have discussed this before, but essentially, because we are only employing two doses compared to TEPEZZA's full regimen of eight doses, we are hopeful to observe an effect on proptosis. While we can't predict how significant that effect will be after just two doses in this specific patient population, we do anticipate seeing some level of improvement. We are also gathering data on diplopia and CAS scores. Our inclusion criteria feature a broader range for CAS, from 0 to 7, unlike TEPEZZA's which focuses on just 0s and 1s. We are optimistic about observing a positive impact there, although the outcomes tend to be somewhat reduced in chronic cases. Notably, as I previously mentioned, there is a valuable collection of case studies regarding patients with chronic TED who received retreatment with TEPEZZA and demonstrated a significant effect after redosing, which gives us hope for similar results. With Amgen potentially supporting Horizon, upon closing that deal, we should be positioned to utilize that data to influence coverage decisions regarding chronic cases, thereby expanding our market reach. Our overall strategy is to be the second player in this space, and we intend to fully leverage that opportunity.

Michael Higgins, Analyst

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

Scott Myers, President and CEO

Yes. Actually, I think you said THRIVE-2 started; it’s actually the THRIVE study that started late last year, and THRIVE-2 will start later this year.

Deepa Rajagopalan, Chief Product and Strategy Officer

Yes, mid-year.

Scott Myers, President and CEO

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

Kristian Humer, Chief Financial and Business Officer

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

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

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. That's just an operational execution thing, see the data, get some stakeholder feedback, finalize the protocol, and open the study. So getting data in Q2 and having that Phase III opens in the middle of the year is actually pretty solid execution. So just a slight change there.

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

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.

Operator, Operator

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