Earnings Call Transcript - VRDN Q2 2022

Operator, Operator

Greetings, and welcome to the Viridian Therapeutics Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to John Jordan, Vice President of Investor Relations. Thank you, you may begin.

John Jordan, Vice President of Investor Relations

Thank you, Darryl. Good morning, everyone. And welcome to the Viridian conference call to discuss the initial clinical data for VRDN-001 in patients with Thyroid Eye Disease. Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of today. Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and 10-Q and other reports on file with the SEC. I would now like to turn the call over to Jonathan Violin, President and Chief Executive Officer of Viridian.

Jonathan Violin, President and CEO

Thanks, John. And good morning, everyone. We're excited to share some remarkable data from our ongoing trial of VRDN-001 for the treatment of Thyroid Eye Disease or TED. The results are frankly outstanding. And I'm pleased that we can now share our plans for accelerating VRDN-001 as quickly as possible to Phase 3, with the aim of launching a new best-in-class intravenous therapy for Thyroid Eye Disease. We'll also share today our first data for VRDN-002. More excellent results. In this case, paving the way for us to develop a best-in-class low volume subcutaneous product, administered just every two or four weeks, to launch shortly after our IV product. We'll share our plans in a moment. I’m joined today by Dr. Barrett Katz, our Chief Medical Officer, Kristian Humer, our Chief Financial Officer and Chief Business Officer, and most gratefully, Dr. Ray Douglas, Director of the Thyroid Eye Disease program at Cedars-Sinai Hospital in Los Angeles, our lead Principal Investigator in the U.S. and internationally recognized clinician-scientist, and arguably the world's foremost authority on TED. Let's get started; we have much to share with you. I’ll start with a brief overview of the findings, and then hand it over to Barrett and Dr. Douglas to review the data for VRDN-001 in more detail. After which I'll review some new mechanistic data that we think establishes VRDN-001 as unique in its class and provide the clear scientific rationale supporting the impressive clinical efficacy data we’re reporting today. I'll also review the initial findings from our VRDN-002 program, demonstrating extended half-life we set out to achieve. Then I'll provide an update on the acceleration of our TED strategy based on today's results, including our Phase 3 program for VRN-001 which we've named THRIVE, which will be initiated before year-end. I'll also share our plans to develop a best-in-class subcutaneous TED therapy, something we now have increased confidence in based on today's data. Next, Kristian will review our second-quarter financial results, then we'll open a call for Q&A. So let's dive in. As you saw in our press release this morning, we just unblinded the first 10mg/kg cohort after the last patient’s six-week visit, and we've seen profound and consistent signs of efficacy on all endpoints measured, far exceeding our initial expectations. Keep in mind that this is after only two infusions of VRDN-001, three weeks apart, and assessing patients at week six. 83% of patients were overall responders, meaning they had at least a two-millimeter change in proptosis, the bulging of the eyes characteristic of TED, and a two-point change or greater in clinical activity score (CAS), a composite of TED symptoms. 83% of patients were proptosis responders with a 2.4-millimeter change in proptosis, and the median time to response was just three weeks. 83% achieved the maximum or near-maximal reduction in CAS to a score of zero or one. And 75% of patients who had double vision at baseline (diplopia) had complete resolution of that diplopia. Importantly, VRDN-001 demonstrated all this while showing a favorable initial safety and tolerability profile with no reported serious adverse events, no hyperglycemia, and no infusion reactions. This is honestly stunning. And when we look at how VRDN-001 data compares to Tepezza stage 3 clinical data, we see higher responses on every single measure. The differences are subtle. On every relevant endpoint in TED, VRDN-001 shows enhanced efficacy when compared against prior studies of Tepezza at a six-week time point. Doubling the rate of overall responses compared to Tepezza, which requires patients to respond on both proptosis and clinical activity score, meaning they improve on both the signs and symptoms of TED. 83% proptosis responder rate vs. 56% of Tepezza. A larger mean change from baseline proptosis by half a millimeter. Four times the proportion of patients achieving a CAS of zero or one would mean a change from baseline CAS a little more than double that of Tepezza. And double the rate of patients with baseline diplopia who have that diplopia completely resolved. This isn't something we initially expected. But as you'll see in our presentation today, recent preclinical evidence showed us that VRDN-001 has a differentiated mechanism of action. We learned that Tepezza and other IGF-1R antibodies we tested act only as partial antagonists. That means that even at maximal exposure Tepezza leaves some residual IGF-1R activity. In contrast, and uniquely, VRDN-001 acts as a full antagonist and achieves far more complete inhibition of IGF-1R. I will tell you more about that in a moment. We may have a uniquely powerful therapeutic in VRDN-001. I’ll now hand the presentation over to our Chief Medical Officer, Barrett Katz, a Neuro-Ophthalmologist with a deep understanding of and appreciation for Thyroid Eye Disease.

Barrett Katz, Chief Medical Officer

Thank you, Jon. This study was designed to investigate whether VRDN-001 can match the precedent for powerful efficacy in TED by IGF-1R blockade but also to enable our development program to advance quickly should we see positive results. We enrolled patients with active TED with a clinical activity score of four or higher and onset of TED signs and symptoms within the preceding 12 months. These criteria were intentionally similar to the Tepezza Phase 3 trials so that we can compare our results to those. Our study was randomized and double-masked. The data today are from our first cohort of 8 to 10 patients, six of whom received 10 milligrams per kilogram of VRDN-001, two of whom received placebo. The drug was infused twice, first on day zero, then again on day 21. The key efficacy endpoints were measured on day 42, that is week six. We are nearing completion in enrolling our second cohort, which is evaluating two infusions of 20 milligrams per kilogram VRDN-001. We continue to remain masked for this cohort and plan to present its data at a medical meeting in the fourth quarter of this year. Enrollment is accelerating nicely as we continue to open more sites, with the 20 milligram cohort enrolling over three times faster than the 10-milligram per kilogram cohort. And we remain on track to deliver data from a third cohort evaluating two infusions of three milligrams per kilogram in the fourth quarter of this year. We've incorporated two additional cohorts into the proof of concept portion of this study, both to evaluate VRDN-001 in chronic TED patients. We plan to begin enrolling this cohort in the fourth quarter of this year and expect to have data in the first half of '23. We also plan to incorporate chronic TED patients into our Phase 3 THRIVE pivotal program, as you shall see. For today, we have a rich and compelling dataset from this first cohort, and we will review safety and tolerability as well as efficacy measures. To review the data, I'll turn the presentation over now to Dr. Raymond Douglas, the director of the Thyroid Eye Disease program at Cedars-Sinai and the key KOL in Thyroid Eye Disease.

Raymond Douglas, Director of Thyroid Eye Disease Program

Thank you very much, Barrett. Let's begin by discussing the baseline characteristics of the patients. They were quite comparable to those in the Tepezza Phase 2 and Phase 3 clinical trials, showing similar levels of proptosis, clinical activity scores (CAS), and incidences of diplopia. Overall, the patients had similar disease severity. The time since diagnosis was slightly longer in this study, which makes sense since only patients with symptoms starting within the last 12 months were considered eligible. Age and gender distributions were also alike. Therefore, these populations are quite similar, providing a solid foundation for understanding the study results in the broader context. Now, let's look at the data. We'll start with the overall response, which is the most stringent measure of efficacy, encompassing both signs and symptoms of TED. An overall responder is defined as a patient who achieves at least a two-millimeter reduction in baseline proptosis and at least a two-point improvement in CAS. Proptosis is a key indicator of TED and was measured using the Hertel exophthalmometer. The clinical activity score is a composite measure based on the presence or absence of seven signs and symptoms of TED. We found that 83% of patients, or five out of six, were overall responders, while none of the patients in the placebo group showed a response. In the Phase 2 and Phase 3 trials of Tepezza, the overall response rates were 46% and 44%, respectively. Regarding proptosis, there was a 2.4-millimeter change from baseline proptosis in the VRDN-001 group. In the placebo group, one patient showed no change, while the other had a change, which occurs around 10% of the time. Interestingly, the patient in the placebo group did not show any improvement in CAS and did not report feeling better. In contrast, the VRDN-001 treated group had six patients, and they experienced significant proptosis responses. The data from the exophthalmometer confirmed these findings within the VRDN-001 group. Notably, the response from the placebo patient was not corroborated by MRI and actually worsened by this measurement. A total of 83% of treated patients, five out of six, had a reduction in proptosis of at least two millimeters, with 67% achieving at least a 2.5-millimeter reduction, and half of the patients experiencing a reduction of at least three millimeters. To contextualize the effects of VRDN-001 on proptosis, the mean change from baseline proptosis for Tepezza at week six in its Phase 2 and Phase 3 trials was 1.8 and 1.9 millimeters compared to 2.4 millimeters for VRDN-001. The proptosis responder rate, or the percentage of patients with at least a two-millimeter change, was 83% for those receiving VRDN-001 at week six, compared to 55% and 56% for Tepezza. Now, let's discuss the clinical activity score (CAS), which is a composite scale assessing patient experiences such as pain, redness, and swelling. The change after VRDN-001 treatment was 4.3 points from baseline, significantly exceeding the placebo response of 1.5, which was similar to the 1.1 seen in the two Tepezza trials. The rapid and substantial decrease in CAS led to many patients achieving near-total reductions in inflammatory signs and symptoms, defined as reaching a CAS of zero or 1, with 83% of VRDN-001 patients meeting this criterion while no placebo patients did. Furthermore, two-thirds of patients had a reduction of five points or more in CAS after VRDN-001 treatment, whereas no placebo patients achieved a four or five-point change. The reduction in CAS compared to Tepezza at the same time point shows a strong mean change in CAS score for VRDN-001, with a robust percentage of patients attaining maximal or near-maximal therapeutic effects at six weeks, as compared to the results from Tepezza in its Phase 2 and Phase 3 trials. It's important to remember that the CAS is based on the presence or absence of seven different symptoms. The data indicates that patients are experiencing improvements in most of their symptoms, and in many cases, complete resolution of those symptoms. Lastly, I want to highlight the efficacy measure concerning diplopia, or double vision, which is one of the most distressing aspects of TED for patients. In the Tepezza trials, about two-thirds of the patients had diplopia at baseline. For those affected, the most relevant endpoint is resolution, meaning complete alleviation of double vision. Among the four patients who had diplopia at baseline, the average score was two, indicating severe diplopia. Following treatment with VRDN-001, 75% of those patients experienced complete resolution, demonstrating a rapid and significant effect for them. The VRDN-001 data compares favorably to that of Tepezza at the six-week mark. In summary, we presented data from six treated patients and two placebo patients that indicate a positive response to VRDN-001 in overall response, proptosis response, proptosis reduction, CAS change, and achievement of a CAS of zero or one, as well as resolution of diplopia. This preliminary data is consistent and compelling, which is promising for TED patients worldwide. Now, let's move on to safety and tolerability. There were no reports of hyperglycemia or infusion reactions. Some known on-target IGF-1R effects were noted, including two cases of mild muscle spasms that did not require intervention, and a single case of changes in hearing, which resolved by the next visit, with normal hearing confirmed through an audiogram. The patient completed the treatment study course. I will now hand over the presentation to Jon.

Jonathan Violin, President and CEO

Thank you, Dr. Douglas, both for your review of the data and your participation in this trial. I'd like to start by showing this slide again to reemphasize what we've seen with VRDN-001. For every relevant measure and in particular for the more stringent measures, we’re consistently across the board seeing increased efficacy for VRDN-001 versus what was observed for Tepezza. We believe there's a solid mechanistic rationale for why VRDN-001 may be able to drive deeper and more rapid responses in TED patients. And we'd like to share some of that data with you today. We've previously shown that VRDN-001 binds to the same region of IGF-1R as Tepezza and that the binding epitopes overlap. We sought to explore this in more detail because where a drug binds is only part of the story; how it binds matters too. We've learned from some of our recent preclinical research that VRDN-001 is distinct in how it binds and how fully it can inhibit IGF-1R function. The left-hand side of this slide illustrates a set of preclinical experiments that the Viridian research team undertook to identify which IGF-1R domains, and which specific amino acids are required for binding to a panel of anti-IGF-1R antibodies. VRDN-001, Tepezza, and VRDN-002, which we'll talk about more in a minute, all rely on the same extracellular domains for binding to the receptor, as we expected based on our prior epitope characterization. However, what's interesting is that Tepezza and VRDN-002 are sensitive to changes in the same amino acids, suggesting they bind very similarly. We were surprised to learn that VRDN-001 is not sensitive to the same amino acid changes unless it's binding to the same epitope but differently. Contrast these antibodies to Lonigutamab, which binds to a different, unrelated epitope than 001, Tepezza, or 002 and it's sensitive to different domain deletions as well as different amino acid mutations. Our research team has also recently evaluated each of these antibodies in assays measuring IGF-1R function to understand how changes in binding might affect activity. The data on the right shows that VRDN-001 fully blocks IGF-1R function and is a full antagonist of the receptor. In contrast, Tepezza, VRDN-002, and Lonigutamab are all partial antagonists, each with varying magnitudes of antagonism. Even at maximum clinical exposures, these antibodies may not fully inhibit IGF-1R function. We saw very similar responses in other assays. This suggests that VRDN-001 is better at suppressing IGF-1 receptor activity than other antibodies. The unique nature of VRDN-001 as a full antagonist may explain the dramatic IGF-1 increases in healthy volunteers we presented in May. It may also explain the rapid and profound clinical improvement seen in TED patients. I'd like to point out one more feature of today's VRDN-001 proof of concept data. The 001 responses occurred remarkably quickly, suggesting a faster onset than Tepezza. On the left is the onset measure used in the Tepezza Phase 3 trial: median time to proptosis response, which for Tepezza was a little over six weeks, and for VRDN-001 was just three weeks. On the right is the onset measure used in the Tepezza Phase 2 trial: median time to overall response, which, as a reminder, represents improvement on both proptosis and CAS. For Tepezza, this was 11.2 weeks, and for VRDN-001 just 4.8 weeks. These findings are consistent with the higher magnitude of efficacy we just discussed at week six. Of course, a faster response is something patients would welcome. This is something that our company has incorporated into its Phase 3 plans by evaluating both a standard eight-infusion treatment course like Tepezza and a shorter five-infusion 12-week treatment course, which can be a lot easier for patients. We now have a clear opportunity to differentiate VRDN-001 from Tepezza. We believe we have an opportunity to offer patients a shorter course of treatment, to offer them faster symptom relief, and possibly greater efficacy, as well as an attractive safety profile. We already know that the last two infusions into Tepezza offer little additional efficacy, as shown in the left-hand panel of this slide. We just presented data suggesting VRDN-001 delivers faster, more profound efficacy. Our Phase 3 program will build on these findings. The program consists of two pivotal efficacy studies, THRIVE for active TED, and THRIVE-2 for chronic TED. They will read out in mid-year 2024 and by year-end 2024, respectively. Each of these randomized placebo-controlled trials will have three arms, with 40 patients in each arm, as illustrated here: an eight-infusion regimen matching Tepezza, a shorter five-infusion regimen which would allow patients to complete their treatment course in just three months, 43% faster than Tepezza, and a placebo arm. To further improve the treatment regimen, we plan to use a shorter 30-minute infusion time, instead of a 60- to 90-minute Tepezza infusion. We'll come back to a detailed review of our Phase 3 program in a moment. But before we do, I'd like to share our first clinical data for VRDN-002. As some of you may recall, VRDN-002 is a distinct antibody from VRDN-001, designed to recapitulate the pharmacology of Tepezza but incorporating half-life extension to dramatically improve pharmacokinetics and enable lower less frequent dosing. Shown in the left panel, we’ve known for some time that VRDN-001 and Tepezza have a very similar PK in non-human primates, with half-lives of about six days. We also know that in six different oncology trials, teprotumumab showed a half-life of around 10 to 11 days comparable to VRDN-001, which also showed a half-life of around 10 to 11 days in oncology trials. In the middle panel, you can see VRDN-001 data from healthy volunteers. We observed a 12-day half-life for 001, similar to the PK in oncology patients. Today, in the right panel, we can share initial data for VRDN-002 in healthy volunteers after a single IV dose, and it shows a preliminary half-life between 30 and 40 days, which is better than we expected—about triple the half-life of VRDN-001. The safety profile for VRDN-002 has also been favorable to date, with no serious adverse events, no hearing impairment, no hyperglycemia, no muscle spasms, or infusion reactions reported as of the last subject's visit. We also have today the plasma IGF-1 levels. This is a biomarker for systemic target engagement. When IGF-1R is blocked, plasma levels of IGF-1 increased by homeostatic mechanism. This makes plasma IGF-1 levels an excellent pharmacodynamic measure of IGF-1 receptor antagonism; the more the receptor is blocked, the higher IGF-1 levels should go. Tepezza data from an oncology study are shown on the left. Tepezza treatment resulted in a 2.5-fold elevation in plasma IGF-1 shown out to day seven. The middle panel shows IGF-1 levels after single doses of VRDN-002, which sustained an increase of about 2.5-fold similar to Tepezza, remaining elevated throughout the 84-day study period, even at the lowest dose of a single 3mg/kg infusion. The similar magnitude of IGF-1 increase aligns with the preclinical data we just discussed. VRDN-002 closely mimics the effects of Tepezza on IGF-1 while having more than a three-fold longer half-life and therefore duration of action. Based on internal modeling by our research team, VRDN-002 PK supports low volume subcutaneous injections of 300 milligrams, either every two weeks or every four weeks. These schedules are supported by a very strong commercial profile comparable to some of the best-selling subcutaneous antibodies, such as Regeneron's Dupixent. We plan to evaluate 300 milligrams of VRDN-002 in a two-milliliter dose every two weeks or every four weeks in a proof of concept study which will initiate by year-end, and we expect to have top-line data in the second half of next year. So let me sum up the lessons we learned from today's data. First, VRDN-001 delivered rapid and profound improvements in signs and symptoms of TED, with all efficacy endpoints surpassing prior Tepezza studies, often by twofold or more. Second, VRDN-002 produces more complete IGF-1R inhibition via a unique receptor interaction, providing a mechanistic rationale for the remarkable clinical observations we presented. Thirdly, VRDN-001 continues to be well tolerated with a strong safety profile. Fourth, VRDN-002’s half-life extension provides a longer than expected extended activity in humans, tripling the half-life of first-generation IGF-1R antibodies, and its PK-PD profile paves the way for our proof of concept study of 200 milliliters of two milliliters containing 300 milligrams subcutaneous injection, either every two weeks or every four weeks. Keeping these lessons in mind, I'd like to share our strategy in TED and next steps in our development programs. Tepezza launched two years ago, I will sell about $2 billion in the U.S. this year, almost entirely to newly diagnosed patients. Peak sales are estimated to be $3.5 billion, not including the EU. There are only so many markets of this size in biotech, $2 billion in annual sales growing and not yet including chronic patients, which Tepezza is restricted or any ex-U.S. patients. Recall, this is not a switch market where you have to attempt to take a patient off of another therapy. This is a new start only market; every single year 20,000 to 25,000 patients in the U.S. will choose the best product to treat thyroid eye disease, every year. Think about that. It's exceedingly rare to have a new start market this big, where new patients choose the best therapy for themselves each year. In light of this unique opportunity and the compelling initial clinical profile for VRDN-001 presented today, we're accelerating our plans so that most TED patients can choose one of our therapies. Beyond this established portion of the market, there are another 75,000 or more patients in the U.S. with chronic TED, who represent a major upside to this market opportunity. Because there isn't yet randomized control trial data supporting access and uptake for this population. Importantly, there's a similar picture in the EU and UK, where there are 35,000 to 40,000 patients diagnosed each year, and we estimate more than 150,000 chronic patients and no approved therapies. We're designing our Phase 3 program to support a marketing authorization application for the first approved TED therapy in Europe, which we anticipate will significantly expand our revenue opportunity. Likely endpoints will be CAS or overall response. We have seen some differentiating data in our case today. Our data enable two approaches to satisfy an unmet need in the TED market, which we're now committing to as corporate objectives. Our first goal is to sprint to market in the U.S. and the EU with a best-in-class IV product in VRDN-001, using the trial design we mentioned a moment ago. We just told you about this large incidence new start market, and we think we have an advantage. Our second parallel corporate goal is to develop and launch a durable best-in-class subcutaneous therapy. So let's look a bit closer at our development plans for VRDN-001 and the THRIVE program. Here are some key features; it's a global registration program that will generate robust evidence in both active and chronic TED. The registration program is designed to enable approval in the U.S., the EU, and other major and emerging markets. We have several potential improvements over Tepezza, an accelerated 12-week, 5 infusion course of therapy, 43% shorter than Tepezza. Shorter infusion times, 30 minutes for VRDN-001 versus 60-90 minutes for Tepezza. And as you've seen today, the potential for faster onset and higher efficacy. We're in a strong position to execute on rapid timelines to enter this large market. Our Phase 3 program will initiate by the end of this year; we already have 17 sites active with 30 expected by the end of the year, expanding beyond 50 in the first half of next year. We expect the Phase 3 active TED data by the middle of 2024 and Phase 3 chronic TED data by year-end 2024. In summary, we're designing a development program that we hope will deliver a VRDN-001 product profile with superior efficacy, quicker time to symptom improvement, fewer treatment visits, and shorter administration time with a highly attractive safety profile. We think these attributes sum up to a highly differentiated and valuable product profile. Now let's turn to our second parallel corporate objective, launching the best possible low-volume subcutaneous TED therapy as rapidly as possible. The key to this approach is half-life extension, something no other company currently has in development for an IGF-1R antibody. As we just shared, the VRDN-002 epitope binding and in vitro profile are very similar to Tepezza. The key difference is that 002 achieves a triple half-life of first-generation IGF-1R antibodies, with 30 to 40 days. We know we have in hand a compelling profile, 300 milligrams in a 2ml dose every other week, maybe even every four weeks. In addition to VRDN-002, we now have a second opportunity to deliver on our subcutaneous goals. Today we're unveiling VRDN-003, which is the half-life extended version of VRDN-001 that retains the unique VRDN-001 binding and antagonist properties while incorporating the same half-life extension technology as VRDN-002. This program isn't new; we've had 003 in our corporate presentation for a long time. Today we're accelerating this program now that we've seen the VRDN-001 TED proof of concept data. We're well into IND enabling studies and expect to file an IND in the second quarter of '23, with Phase 3 enabling healthy volunteer PK/PD data in the fourth quarter of '23. We will launch a subcutaneous product with a patient-friendly pre-filled pen, at a minimum, something like Regeneron’s Dupixent, which is 2ml, 300 milligrams every other week. We've got a lot of confidence in achieving this profile, but we may be able to go further. The upcoming efficacy data for 3mg/kg VRDN-001 will inform every four weeks or longer profile for both VRDN-002 and VRDN-003. Overall, this approach gives us two shots on goal for best-in-class subcutaneous TED products, and clinical data in the second half of '23 will tell us which of VRDN-002 or 003 is best to move forward to Phase 3, which will be ready to start early in 2024. We think this puts us in a very strong position to make good data-driven decisions to select the best possible molecule while advancing multiple options. This ensures we have the best-in-class product to launch as soon as possible after our VRDN-001 product launch. I'd like to close by summarizing where Viridian is headed next. On the basis of today's very strong data, we now have plans that advance our mission to deliver better options to patients suffering from TED and other serious diseases. We have an incredible news flow for the next few years representing major milestones for the company. We're excited to execute on these plans. And I'd like to thank everyone who's contributed to what you've heard today: the patients who volunteer for our trials, the investigators in our trials, particularly Dr. Douglas for his leadership in the TED field, his productive partnership, and for joining us today. And the Viridian team for all the hard work that's driven the progress you've heard today. Before we open the call for questions, Kristian will review our financials.

Kristian Humer, CFO

Thank you, Jon. And good morning everyone. I would like to give a brief summary of the Q2 financials. Cash, cash equivalents, and short-term investments were $161 million as of June 30, 2022, compared with $197 million as of December 31, 2021. We believe that our current cash balance in addition to our $75 million credit facility will be sufficient to fund our operations into 2024. During the second quarter of 2022, we entered into a debt financing agreement with Hercules Capital for up to $75 million. Under the terms of the agreement, we drew an initial $5 million at closing. As of August 12, 2022, Viridian had approximately 43 million shares of common stock outstanding, and on an as-converted basis, which includes 28 million shares of common stock outstanding and an aggregate of approximately 14 million shares of common stock issuable upon the conversion of 194,000 and 23,000 shares of Series A and Series B preferred stock respectively. Please refer to our earnings press release for a more detailed Q2 financial update. With that, we can open the call up for Q&A. Thank you.

Operator, Operator

Our first question is coming from the line of Chris Howerton with Jefferies. Please proceed with your question.

Chris Howerton, Analyst

Thank you for taking my question and congratulations on the excellent data. I have two questions before I return to the queue. First, I understand that while most of the profile was very clean, there are some concerns regarding hearing loss. Can you share your thoughts on that observation and what steps you are taking to monitor it? My second question is a clarification regarding strategy. For the subcutaneous formulation, what specific information are you waiting for to make a decision? It seems that it will relate to the 002 information from the 3mg 001 IV formulation. Additionally, Jonathan, are you considering a 3mg/kg subcutaneous 001 dose group at this time? Thank you.

Jonathan Violin, President and CEO

Great. Thank you, Chris. I appreciate the questions. Why don’t we start with the adverse event question? I’ll ask Barrett to comment on our observations, and maybe Dr. Douglas can provide some additional color. And then I'll answer the other two questions.

Barrett Katz, Chief Medical Officer

Thank you for your question. I think you heard Dr. Douglas speak to the safety profile, which is really very robust, very tolerable. We did have one patient who described a ringing in their ears. This was transient. It resolved very quickly over a week or so. The audiometric analysis of this patient showed normal audiometric function at the resolution of this, and we believe it is something that we see in clinical practice and is not so terribly uncommon.

Jonathan Violin, President and CEO

And Dr. Douglas, maybe you’d like to provide your views on the hearing loss adverse events?

Raymond Douglas, Director of Thyroid Eye Disease Program

Yes. I'll just reiterate what Barrett said. It was tinnitus. And typically, we've seen those in other IGF molecules to have resolution. And as Barrett also mentioned, this patient was being followed by audiometric analysis. And I think that that's very important as we move forward of making sure that we are actually following these patients and clarifying both the type and potential issues associated with hearing. But as noted, this did resolve.

Jonathan Violin, President and CEO

I'll address the question regarding the subcutaneous strategy. The brief answer is that we don't need any additional information. With VRDN-002, we have already established a profile similar to Dupixent. We are advancing both VRDN-002 and VRDN-003 simultaneously because while VRDN-002 appears to meet all our expectations and matches the pharmacological profile of TEPEZZA in every measure, it also has an significantly increased half-life, leading to an effective subcutaneous product profile. Recently, we've discovered that VRDN-001 may possess a unique and potentially superior pharmacological profile. Therefore, we are taking the opportunity to merge the advantages of both VRDN-001 and VRDN-002 into what we are now calling VRDN-003. Given our understanding of the pharmacokinetics (PK) and pharmacodynamics (PD) of these molecules, we can advance both programs concurrently. By the second half of next year, we expect to have our subcutaneous proof-of-concept data for VRDN-002, along with a healthy volunteer PK/PD for VRDN-003, which effectively serves as proof-of-concept based on what we know about VRDN-001. With that data, we can select the molecule that appears most promising and aim to initiate Phase 3 trials early in 2024. We are pleased with this strategy as it enables us to make decisions grounded in clinical data. Lastly, I noticed I missed your question regarding the 3mg/kg; could you please repeat that?

Chris Howerton, Analyst

It's really not that important. I guess I was just like, is there any scenario where a 001 subcutaneous formulation makes sense, I guess is the real crystallized question.

Jonathan Violin, President and CEO

You were inquiring about the upcoming 3mg/kg data for the IV VRDN-001. This data will be assessed in several ways. We are highly confident that we can implement subcutaneous treatment every other week with 002 and 003. If lower doses of 001 yield similar benefits, we could confidently consider extending the treatment interval to every four weeks or even longer. This is the key insight we anticipate from the 3mg/kg cohort. However, while it is possible that 001 could also be used subcutaneously, the strong performance we observed in the half-life extension leads us to believe that 002 and 003 are our best options for achieving a competitive commercial profile.

Chris Howerton, Analyst

I tend to agree. And thanks again for just taking the questions and an excellent data set. Congratulations.

Operator, Operator

Our next questions come from the line of Thomas Smith with SVB Securities. Please proceed with your question.

Thomas Smith, Analyst

Good morning, everyone. Thank you for your questions. I want to congratulate you on the impressive early data. To follow up on safety, can you remind us about the typical timeline for when muscle spasms and hearing impairments are observed with Tepezza treatment? Additionally, while it's not specifically mentioned in the adverse events slide, can you confirm that there have been no reported cases of hypertension in the TED patient groups to date?

Jonathan Violin, President and CEO

Great. Thanks, Tom. Barrett, why don't you address the muscle spasm question and then the time course of adverse events first?

Barrett Katz, Chief Medical Officer

Certainly. The muscle spasms are common in real-life situations. In fact, there's a way to mitigate them by giving volume and magnesium. Dr. Douglas has shown that and shared it with the rest of us. They can occur at any time. They occur early. The hearing loss is something we thought occurred later. That was the experience that has increased with Tepezza. We recognize that the hearing loss can occur at any time. The truth of the matter seems to be that the hearing impairment is usually reversible. The interesting thing as you talk to these patients, and even the ones that complain of hearing impairment, they say, oh, gosh, I want the drug. I'd much rather go deaf than change what I'm having done to me because the efficacies are so strong. And that's been our experience as well so far.

Jonathan Violin, President and CEO

Maybe Dr. Douglas can comment a little further.

Raymond Douglas, Director of Thyroid Eye Disease Program

Yes. So the hearing impairment occurs in 1 of 2 forms, typically tinnitus or a plugging of the ears. That appears to be 100% reversible. Typically, it can occur mid-treatment during this course of therapy and then resolves either during or after therapy. Then some notes of audiometric and high-frequency hearing impairments. Not loss completely, but just impairments. We're still waiting to see how those in a much smaller segment of patients and see if those are also reversible.

Jonathan Violin, President and CEO

I can address the question regarding adverse events related to hypertension. For VRDN-002, there were only three adverse events considered related to treatment. These included mild transient dizziness, one case of asymptomatic hypotension that resolved the same day without treatment, and one case of asymptomatic hypertension that also resolved the same day without treatment. These types of events are typical in a Phase 1 study. Regarding VRDN-001, we have not observed any issues related to blood pressure in TED patients.

Thomas Smith, Analyst

Okay. Great. That's super helpful context. And then just a couple of questions on the Phase 3 plans, and then we'll hop back in the queue here. But can you talk about the need for FDA engagement to confirm how you're thinking about the THRIVE program? And then can you also elaborate a little bit on how you're thinking about enrollment here, specifically with respect to how you're thinking about patient targeting relative to Tepezza? And some of the other companies who are contemplating TED pivotal studies, what specifically gives you confidence in meeting the enrollment timelines you've laid out? And I guess, any early thoughts on the anticipated cost of the Phase 3 program?

Jonathan Violin, President and CEO

Great. Yes. Thanks, Tom. So first, the regulatory question. So we'll formally meet with the FDA later this year, but based on conversations to date, we think our plan will actually exceed what the FDA needs. Keep in mind that Horizon had two studies with a narrow population and only ever studied one dose for approval. We have a lot more than that. We'll have acute patients, chronic patients. We're studying two different courses of treatment, different total cumulative doses. And we've also done some dose ranging. So we think we're going to have a very, very strong package. And that first study, the THRIVE study is very much following the precedent that Tepezza set. So we really don't see a lot of risk here. And then with respect to enrollment, the THRIVE study, the active disease Phase 3 is leveraging the flexibility that we built into the current study. So we're adding cohorts directed to be registrational using sites we already have open. We already have 17 sites open; we’re expanding that quickly. We've been in the U.S. and Canada for Phase 3. We long planned to go broader than that. So we’ll be in the UK and Europe. We’ll have 30 sites open by year-end. This is a very robust plan to enroll patients. Interestingly, we've seen once sites are open, we are enrolling at the rate that we had projected. And that was before we had any clinical data. With today's data, you can imagine how excited we are about this data. We think that that's going to be shared by the investigator community, as well. So we're actually really confident that this can move forward quite briskly.

Thomas Smith, Analyst

Okay. Great. And then just, yes, any early thoughts on how you're thinking about costs for the registrational program?

Jonathan Violin, President and CEO

Oh, I'm not going to go into details of costs, but as Kristian said, we're very well capitalized, and we know what we need to do and are poised to execute.

Operator, Operator

Our next questions come from the line of Gavin Clark-Gartner with Evercore ISI. Please proceed with your question.

Gavin Clark-Gartner, Analyst

Good morning. Congrats on the great data. And thanks for taking the question. I just had a couple. First, on the 20mg/kg 001 safety data that you're still blinded to, do you know how many doses have been given?

Jonathan Violin, President and CEO

So we are nearly done enrolling. So I guess the answer is most, but I don't have the exact number before me. But the safety data was as of August 9, so a recent safety read for that cutoff. And as you saw, very promising so far, but data collection is ongoing. We're pleased that we're not seeing any hyperglycemia, no hearing impairment, no muscle spasms, no infusion reactions, and of course, no serious adverse events. So really going well so far.

Gavin Clark-Gartner, Analyst

Yes. Got it. And then do you plan to pursue any studies showing the benefit of retreatment, meaning Tepezza responders who have kind of relapsed months or years later?

Jonathan Violin, President and CEO

Yes. The question about retreatment is quite intriguing. First and foremost, we have exciting plans to offer a unique product profile. The retreatment question is significant and will take time to address. It also mirrors the current state of our field, which is young and rapidly evolving. We are enthusiastic about contributing to the advancement of knowledge in this area. We aspire to be a leader in determining the best ways to treat patients while enhancing our commercial product profile in the process.

Gavin Clark-Gartner, Analyst

Yes. Got it. And just the last one for me. How are you thinking about the pricing of 001, given that it could have 5 infusions in a course of treatment instead of 8 with Tepezza?

Jonathan Violin, President and CEO

Yes. We believe it's too early to discuss pricing specifically, but our main focus is on the value we can provide to the market. You've seen the clinical data and our strategy to offer something that is significantly different and adds considerable value compared to current options. We are genuinely excited about this and are committed to delivering that value.

Operator, Operator

Our next questions come from the line of Rami Katkhuda with LifeSci Capital. Please proceed with your question.

Rami Katkhuda, Analyst

Hey guys, congrats on the data. And thanks for taking my question as well. Dr. Douglas touched upon this briefly, but can you talk to the differences between MRI and Hertel exophthalmometer measurements when looking at proptosis in these patients? And how do these measurements kind of compare for the patient in the placebo arm that had the 2-millimeter reduction in proptosis as well as those treated with 001?

Jonathan Violin, President and CEO

Sure, I can start, and then perhaps Barrett and Dr. Douglas can provide additional insights. The Hertel exophthalmometer is a recognized measurement tool that has performed very well, and we are satisfied with it. However, in small sample sizes, such as with two placebo patients, there can occasionally be changes observed even without active treatment. The value of MRI lies in its objective nature; it eliminates the need for a physical device and the manual interpretation required by the Hertel exophthalmometer. While we don't have all the MRI data yet, we capture images and assess the variations before and after treatment to objectively measure the changes in proptosis. We currently have four patients with MRI measurements taken both pre- and post-treatment, at the baseline and at Week 6, who were administered the drug. In each instance, the measurement change observed with the exophthalmometer was slightly less than what was reported by the MRI, indicating that MRI detected a marginally greater reduction in proptosis. Moreover, for the placebo patient who exhibited a 2-millimeter improvement according to the exophthalmometer, the MRI showed a deterioration of 0.58 millimeters. This highlights the advantage of having multiple methods of measurement for the same parameter. Overall, our data is remarkably consistent in terms of direction and magnitude, showing that we are performing better than both the Tepezza Phase 2 and Phase 3 trials. We believe MRI will play a crucial role in our findings, and we are eager to analyze the complete data set later on. Barrett, do you have anything to add?

Barrett Katz, Chief Medical Officer

If you think about the measurement of proptosis, as we use the Hertel exophthalmometer, we're having the site investigator in each of the sites do that measurement. The power of the MRI scan, or a CT scan for that matter, is that the scan is done with the same section at each site and then sent to a central reading center and read in a masked fashion. So you have one center reading the entirety of the data set for these orbital scans. And in fact, it should be more objective. What we're seeing, interestingly enough, is that the exophthalmometer underestimates the proptosis response of our drug. The MRI measurements and CT measurements trend to suggest that the proptosis improvement with these superior results are in fact underestimated on exophthalmometry.

Jonathan Violin, President and CEO

Yes. So obviously, the pathophysiology is not totally understood here. But we can start to connect the dots. So we have a couple of partial antagonists in Tepezza, VRDN-002. They increase IGF-1 by about 2.5-fold, and we know the Tepezza clinical efficacy results. And then with 001, we've got more full antagonism in multiple different in vitro systems. And then in terms of IGF-1, we see almost twice as high an IGF-1 increase – a 6-fold or so increase in plasma IGF-1 levels compared to 2.5-fold for Tepezza. And then you saw the clinical results, the outperformance compared to prior Tepezza data on all these different measurements. So it’s starting to look like a pretty nice correlation and is something that we hope to build on. And again, I think it highlights that with VRDN-001, we might have something truly special on our hands.

Rami Katkhuda, Analyst

Awesome. Thanks so much, guys, and congrats again.

Operator, Operator

Our next questions come from the line of Laura Chico with Wedbush Securities. Please proceed with your question.

Laura Chico, Analyst

Hi, good morning. I actually have one or two for Dr. Douglas first. Dr. Douglas, I am curious, in light of this data, could you just remind us in practice with your TED patients today, how are you evaluating proptosis response? And do you actually incorporate MRI data in assessing that? And also, could you speak to kind of defining disease severity in practice? Are you using primarily CAS scores? Or how are you categorizing patients as moderate/severe? And then I have a follow-up.

Jonathan Violin, President and CEO

Thanks, Laura. Please go ahead, Dr. Douglas.

Raymond Douglas, Director of Thyroid Eye Disease Program

Great. In practice, it's important to find a balance between what's practical and what's robust. I typically use exophthalmometry data, but when treating patients with surgery or Tepezza, I usually rely on before and after scans, typically MRIs or CT scans. This approach provides a comprehensive view of the orbit in an objective manner. I am very enthusiastic about the MRI data and use it to complement my exophthalmometry measurements with Hertel. In terms of severity, I define it as the extent of disease burden for patients when considering treatment options. For instance, if a patient has significant proptosis above normal limits, usually 3 millimeters or more, along with either active or quiescent disease, I often choose Tepezza therapy and IGF-1R therapy. Our data shows that both active and chronic patients experience substantial improvements in their proptosis and overall disease. So, in guiding my therapeutic use of Tepezza, I base my decisions on the patients' disease burden. Moderate to severe is generally considered to be 3 millimeters or more, which serves as a criterion for their disease burden.

Laura Chico, Analyst

Okay. That's helpful. For the Viridian team, could you remind us about the ex-U.S. market and your plans for seeking patients outside the U.S.? How do you intend to approach commercialization outside the U.S.? Given the data you're seeing, do you think this is a market you can commercialize independently?

Jonathan Violin, President and CEO

Yes. It's too early to really go into details on our commercial strategy. Obviously, we're thinking about that, but for competitive reasons, just don’t want to get into it yet.

Operator, Operator

Our next questions come from the line of Kalpit Patel with B. Riley Securities. Please proceed with your question.

Kalpit Patel, Analyst

Good morning. Congrats on the data. And thanks for taking the question. Maybe just a quick one for Dr. Douglas. And I think you touched on this a little bit, but how common is it to get greater than 3 millimeters of proptosis reduction in the real world with Tepezza?

Jonathan Violin, President and CEO

Thanks, Kalpit. Yes, Dr. Douglas, please go ahead.

Raymond Douglas, Director of Thyroid Eye Disease Program

Yes. One observation we've made with Tepezza, which reflects on IGFR therapies as a whole, is that the results we witnessed in clinical trials have translated remarkably well into real-world scenarios. My real-world experience, supported by a recent comprehensive review we published, indicates that we are achieving an average reduction of more than 3 millimeters in proptosis for most patients. This outcome is contingent on the severity of their condition at the time of presentation. Overall, the findings from clinical trials align very closely with what we see in real-world practice.

Jonathan Violin, President and CEO

Thank you, Dr. Douglas. I just want to remind everyone that the changes we are observing involve only two infusions at Week 6. The Tepezza treatment consists of eight infusions over 24 weeks. Therefore, when we consider the magnitude of effect, we are looking very early in the treatment course. I want to ensure everyone keeps that in mind.

Kalpit Patel, Analyst

Okay. And then a couple of questions on the design of the registrational studies. I guess, what went into the decision-making for selecting 5 doses of 001 versus maybe 4 or 6 for one of the cohorts?

Jonathan Violin, President and CEO

Sure. Yes. Well, we already knew based on the Tepezza data that the last 2 infusions, the 7th and 8th, are not delivering much, if any, additional benefit. Given the data we've seen today, the speed of onset, the magnitude of efficacy, we landed on 5 as the sweet spot. We really like this regimen. We think that a 3-month course of treatment is going to be truly compelling for patients.

Kalpit Patel, Analyst

Okay. And John, just to be clear here, can you confirm that the THRIVE-2 study will only include that 10 milligram per kilogram dose and results for the other 3 and 20 milligram per kilogram doses will not necessarily inform the design of that trial?

Jonathan Violin, President and CEO

Yes. So we're moving forward with the 10 mg per kg in the THRIVE program. We think the data is outstanding. The dose is half. It's a 50% reduction from the Tepezza dose. By testing both the 5-infusion and 8-infusion regimens, we're still testing two different cumulative doses with the upside of this dramatically shorter treatment period. So we think this is a really great place to be.

Kalpit Patel, Analyst

Okay. Thanks so much for taking the questions.

Jonathan Violin, President and CEO

Thank you. I just want to point out, we are running a little short on time, so we'll try to keep our answers brief, and maybe we could ask for just one question from whoever is still in the queue.

Operator, Operator

Our next question comes from the line of Jason Butler with JMP Securities. Please proceed with your question.

Jason Butler, Analyst

Thanks for taking the question. Let me add my congrats. I'll keep it brief. Just on the chronic trial, can you just give us some initial thoughts on how you think about patient baseline characteristics here compared to the acute treatment population? And then on the retreatment question, would you allow patients who had previously been treated with Tepezza into the chronic trial?

Jonathan Violin, President and CEO

Thank you, Jason. In the chronic study, we are defining the cutoff for active vs. chronic as 15 months since diagnosis. This means that the THRIVE program will include patients regardless of how long their symptoms have been present. In the chronic study, we will allow any CAS score for entry. While chronic patients typically have lower CAS scores, we anticipate a diverse population. However, we will not permit any previous treatment with IGF-1R therapy in the study, so participants will be naive to IGF-1Rs.

Operator, Operator

Our next question comes from the line of Trevor Allred with Oppenheimer. Please proceed with your question.

Trevor Allred, Analyst

Hey guys, good morning, and my congrats as well. So yes, just real quick for me. With VRDN-001 being a full antagonist, do you have any thoughts on why you've also shown apparent safety profile seen thus far?

Jonathan Violin, President and CEO

Yes. Well, what we're learning is that the biology has some subtleties to it. What we can say is that between the TED patients and the healthy volunteers, we've exposed more than 20 people to VRDN-001 at these doses, even higher doses with 20mg/kg, and the safety profile looks great. So we think we're in a really good position.

Michael Higgins, Analyst

Thanks. Good morning, guys. Congrats from me as well to impressive results. A question for you on the use of methotrexate in these Phase Is or before the BLA filing. Do you have any comments to that if you've used it or plan to?

Jonathan Violin, President and CEO

Thanks, Michael. Barrett, go ahead, please.

Barrett Katz, Chief Medical Officer

We do have inclusion criteria that disallow for any recent such intervention. So it's not part of our plan to change that going forward.

Operator, Operator

Thank you. There are no further questions at this time. I would now like to turn the call back over to Jonathan Violin for any closing comments.

Jonathan Violin, President and CEO

Great. Thank you, everyone, and thanks for the good questions. Data like this really doesn't come along every day. And it doesn't happen without the support of a large multidisciplinary team dedicated to the success of these programs. I’d like again to thank the investigators who worked on our studies, the patients who volunteered, and the Viridian employees who've worked diligently, tirelessly, and with purpose to build the opportunity we have before us. And thanks again to Dr. Douglas for joining us. We really appreciate it. And thank you, everyone, for joining us this morning. With that, we'll close the call.

Operator, Operator

This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.