VIRIDIAN THERAPEUTICS, INC. The following discussion and analysis should be read together with our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report. This discussion and other parts of this report contain forward-looking statements reflecting our current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, intentions, and beliefs. See "Forward-Looking Statements" for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled "Risk Factors" included elsewhere in this Annual Report.
Overview
We are a biopharmaceutical company focused on discovering and developing potential best-in-class medicines for serious and rare diseases. We target under-competitive disease areas where marketed therapies often leave room for improvements in efficacy, safety, and/or dosing convenience. We believe that first-generation medicines rarely represent optimal solutions, especially in rare disease areas, and that there is potential to develop differentiated, best-in-class medicines that could lead to improved patient outcomes, reduced side effects, improved quality of life, expanded market access, and augmented market competition. Our business model is designed to identify and evaluate product opportunities in disease areas where trial data establishes proof-of-concept for a drug target in the clinic, but the competitive evolution of the product life cycle management and number of entrants appears incomplete. We intend to prioritize indications where a fast-follower and a potentially differentiated drug candidate, or overall product profile, could create significant medical benefit for patients. We are engineering medicines to address unmet medical needs for patients and further advance drug innovation.
We are developing three product candidates, VRDN-001, VRDN-002 and VRDN-003, that are being developed for intravenous or subcutaneous administration to treat patients who suffer from thyroid eye disease ("TED"). Our most advanced program, VRDN-001, is a differentiated humanized monoclonal antibody targeting IGF-1R intravenously administered for the treatment of TED.
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Global Economic Considerations
The global macroeconomic environment is uncertain, and could be negatively
affected by, among other things, increased
Financial Operations Overview Revenue
Our revenue has historically consisted primarily of up-front payments for licenses, milestone payments, and payments for other research and development services earned under license and collaboration agreements as well as for amounts earned under certain grants we have been awarded.
In
In the future, we expect to continue to generate revenue from a combination of license fees and other up-front payments, payments for research and development services, milestone payments, product sales, and royalties in connection with strategic alliances. We expect that any revenue we generate could fluctuate from quarter to quarter as a result of the timing of our achievement of development and commercial milestones, the timing and amount of payments relating to such milestones, and the extent to which any of our product candidates are approved and successfully commercialized by us or our strategic alliance collaborators, if any. If we or our strategic alliance collaborators, if any, fail to develop product candidates in a timely manner or to obtain regulatory approval for them, then our ability to generate future revenue, and our results of operations and financial position would be adversely affected.
Research and Development Expenses
Research and development expenses consist of costs incurred for the research and development of our therapeutic programs and product candidates, which include:
•employee-related expenses, including salaries, severance, retention, benefits, insurance, and share-based compensation expense;
•expenses incurred under agreements with clinical research organizations ("CROs"), investigative sites that conduct our clinical trials, and other clinical trial-related vendors, and consultants;
•the costs of acquiring, developing, and manufacturing and testing clinical and preclinical materials, including costs incurred under agreements with contract manufacturing organizations ("CMOs");
•costs associated with non-clinical activities and regulatory operations;
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•license fees and milestone payments related to the acquisition and retention of certain licensed technology and intellectual property rights; and
•facilities, depreciation, market research, and other expenses, which include allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment, and laboratory supplies.
We make non-refundable advance payments for goods and services that will be used in future research and development activities. These payments are recorded as expense in the period in which we receive or take ownership of the goods or when the services are performed.
We record up-front and milestone payments to acquire and retain contractual
rights to in-licensed technology and intellectual property rights as research
and development expenses when incurred if there is uncertainty in our receiving
future economic benefit from the acquired contractual rights. We consider future
economic benefits from acquired contractual rights to licensed technology to be
uncertain until such a drug candidate is approved by the
We expect that our research and development expenses will increase as we expand our clinical development programs and initiate new clinical trials. The process of conducting clinical trials and preclinical studies necessary to obtain regulatory approval is costly and time consuming. We, or our strategic alliance collaborators, if any, may never succeed in achieving marketing approval for any of our product candidates. The probability of success for each product candidate may be affected by numerous factors, including clinical data, preclinical data, competition, manufacturability, and commercial viability of our product candidates.
Successful development of future product candidates is highly uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each future product candidate and are difficult to predict. We anticipate we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to our ability to maintain or enter into new strategic alliances with respect to each program or potential product candidate, the scientific and clinical success of each future product candidate, and ongoing assessments as to each future product candidate's commercial potential. For example, upon receipt of topline data from our planned proof of concept trial of VRDN-002 by the end of 2023, we expect to determine which of VRDN-002 or VRDN-003 to advance into a pivotal Phase 3 trial in the first half of 2024. We will need to raise additional capital and may seek additional strategic alliances in the future in order to advance the various clinical trials that are part of our clinical development program described above.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related benefits, including share-based compensation, and severance and retention benefits related to our finance, accounting, human resources, legal, business development, and other support functions, professional fees for auditing, tax, and legal services, as well as insurance, board of director compensation, consulting, and other administrative expenses.
Other Income, net
Other income, net consists primarily of interest income, net of fees, and various income items of a non-recurring nature. Interest expense consists of cash and non-cash interest expense on our long-term debt. We earn interest income from interest-bearing accounts, money market funds, and short-term investments.
Critical Accounting Policies and Estimates
This discussion and analysis of financial condition and results of operations is
based on our consolidated financial statements, which have been prepared in
accordance with
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Clinical Trial and Preclinical Study Accruals
We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on certain facts and circumstances at that time. Our accrued expenses for preclinical studies and clinical trials are based on estimates of costs incurred for services provided by external service providers and for other trial-related activities. The timing and amount of expenses we incur through our external service providers depend on a number of factors, such as site initiation, patient screening, enrollment, delivery of reports, and other events. In accruing for these activities, we obtain information from various sources and estimate the level of effort or expense allocated to each period. Adjustments to our research and development expenses may be necessary in future periods as our estimates change.
Results of Operations
Comparison of the Years Ended
Year Ended
December 31,
2022 2021
(in thousands) Increase (Decrease)
Revenue $ 1,772 $ 2,963 $ (1,191)
Research and development expenses 100,894 56,886 44,008
General and administrative expenses 35,182 25,805 9,377
Other income (expense), net 4,430 315 4,115
Net loss $ (129,874) $ (79,413) $ (50,461)
Revenue
Revenue was
Research and Development Expenses
Research and development expenses were
We expect our research and development expenses to increase as we work to progress our clinical and preclinical programs.
General and Administrative Expenses
General and administrative expenses were
Other Income, net
Other income, net was
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Loan and Security Agreement. Other income, net for the year ended
Liquidity and Capital Resources
We have funded our operations to date principally through proceeds received from
the sale of our common stock, our Series A Preferred Stock, our Series B
Preferred Stock and other equity securities, debt financings, license fees, and
reimbursements received under collaboration agreements. As of
We have no products approved for commercial sale and have not generated any
revenue from product sales. Since our inception and through
We will continue to require substantial additional capital to continue the development of our product candidates, and potential commercialization activities, and to fund our ongoing operations, including our clinical development plan described above. The amount and timing of future funding requirements will depend on many factors, including the pace and results of our clinical development efforts, equity financings, securing additional license and collaboration agreements, and issuing debt or other financing vehicles. Our ability to secure capital is dependent upon a number of factors, including success in developing our technology and product candidates. Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and our ability to develop our product candidates. Changing circumstances, such as changes in the scope and timing of our clinical studies, may cause us to consume capital significantly faster or slower than we currently anticipate. If we are unable to acquire additional capital or resources, we will be required to modify our operational plans to complete future milestones. We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our available financial resources sooner than we currently anticipate. We may be forced to reduce our operating expenses and raise additional funds to meet our working capital needs, principally through the additional sales of our securities or debt financings or entering into strategic collaborations.
Our material cash requirements include obligations as of
If we raise additional funds through the issuance of debt, the obligations related to such debt could be senior to rights of holders of our capital stock and could contain covenants that may restrict our operations. Should additional capital not be available to us in the near term, or not be available on acceptable terms, we may be unable to realize value from our assets and discharge our liabilities in the normal course of business, which may, among other alternatives, cause us to further delay, substantially reduce, or discontinue operational activities to conserve our cash resources.
Loan and Security Agreement with Hercules Capital, Inc.
On
The Term Loan bears interest at a floating per annum rate equal to the greater
of (1) 7.45% and (2) 4.2% above the Prime Rate, provided that the Term Loan
interest rate shall not exceed a per annum rate of 8.95%. Interest is payable
monthly in arrears on the first day of each month. Per the terms of the Hercules
Loan and Security Agreement, we were originally obligated to make interest-only
payments through
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period was extended to
ATM Agreements
In
In
In
Underwritten Public Offerings
In
In
Purchase Agreements
In
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In
Summarized cash flows for the year endedDecember 31, 2022 and 2021 are as follows: Year Ended December 31, 2022 2021 (in thousands) Net cash provided by (used in): Operating activities$ (93,838) $ (54,581) Investing activities (115,126) (74,292) Financing activities 322,244 125,275 Total$ 113,280 $ (3,598) Operating Activities
Net cash used in operating activities was
Net cash used in operating activities was
Investing Activities
Net cash used in investing activities was
Net cash used in investing activities was
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Financing Activities
Net cash provided by financing activities was
Net cash provided by financing activities was
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