Viridian: Despite Drop, Advancement Towards Phase 3 Continues

Viridian Therapeutics, Inc. (NASDAQ:VRDN) recently reported results from its ongoing phase 1/2 study using its drug candidate known as VRDN-001 for the treatment of patients with chronic thyroid eye disease [TED]. The stock fell by as much as 20% after the announcement of such data, but I believe that there is a chance for investors to be able to recover here. The reason why I believe this to be the case is because with this data, the company is still expected to initiate a phase 3 study for this program. That is, it expects to initiate the phase 3 THRIVE-2 study, using VRDN-001 for the treatment of patients with chronic TED, in Q3 of 2023.

I believe that upon the announcement of initiation of this late-stage study, the stock might trade higher because of it. In addition, it won't take long for investors to see phase 3 data either. It is anticipated that results from the phase 3 THRIVE-2 study in patients with chronic TED will be released by the end of 2024. However, before then, results from the phase 3 THRIVE study in patients with Active TED will be released in mid-2024. I still believe that this biotech has the potential to overtake Tepezza with VRDN-001 if it can achieve superior safety and efficacy data from its ongoing phase 3 studies.

Phase 1/2 Study Data VRDN-001 Warrants Further Evaluation In Chronic TED

Even though the stock price declined by as much as 20% after the release of results from the ongoing phase 1/2 study, using VRDN-001 for the treatment of patients with chronic thyroid eye disease [TED], it is still going to be advanced towards phase 3 clinical testing regardless. Thyroid Eye Disease [TED] is a type of autoimmune disease in which the muscle of the eyes and fatty tissue behind the eye end up becoming inflamed. Such inflammation is able to cause a multitude of issues such as eye bulging [eyes being pushed forward], red/inflamed eyelids, and swollen eyelids as well. In very severe cases it may even lead to double vision or blindness. Being an autoimmune disorder, it is caused by the patient's own immune system.

TED is primarily caused by an over-active thyroid gland due to Graves' Disease, but it can still happen even if there is a normal function of the thyroid gland. It is said that about 25% of patients with Graves' Disease develop TED, either before, during or after the diagnosis of a thyroid disorder. Other symptoms of TED are as follows:

• Dry eyes
• Low tolerance of very bright lights
• Baggy eyes
• Pain behind the eye
• Gritty feeling in the eyes.

As I stated above, TED is caused by an over-active thyroid gland due to Graves' Disease. The thyroid gland is very important because if it doesn't function properly it can cause problems with a multitude of organs such as the following: Heart, bones and muscles. It is a large market opportunity for sure, because of what a competing drug with the same mechanism of action has been able to achieve in TED. For instance, Horizon Therapeutics' (HZNP) Tepezza, generated as much as $1.97 billion in net revenue in fiscal 2022. Analysts believe that it could produce peak sales of more than $4 billion. Tepezza, like Viridian's VRDN-001, is an insulin-like growth factor-1 receptor inhibitor.

Tepezza was approved by the FDA in January of 2020 for the treatment of patients with TED. However, it had its label expanded in April of 2023 to include TED patients regardless of disease activity or duration. Thus, even if Viridian does eventually receive FDA approval for VRDN-001 for TED, it will have a major competitor to go up against. Where it might be able to compete is in terms of offering a safer option. Not only that, but infusion time for VRDN-001 can be done in 30 minutes compared to 60 to 90 minutes for Tepezza. Other advantages that could end up coming about once phase 3 studies are completed would be earlier symptom relief, faster onset, and possibly higher efficacy as well. Should all these come true upon the release of results from the two THRIVE studies, then it will easily compete with Tepezza.

Speaking of improving dosing schedule, that's something that the company noted in its release of results from the phase 1/2 study in chronic TED patients. It noted that it would change the phase 3 THRIVE study design in Active TED patients to a 5 dose regimen for patients, instead of an 8-dose treatment regimen. This was done based on stakeholder feedback from the TED community to have a shorter treatment length.

As I noted above, Viridian is making advancements on both fronts, with respect to using its drug VRDN-001 for the treatment of patients with both active or chronic TED. The Active TED advancement is further along, because the ongoing phase 3 THRIVE study had already been initiated for the treatment of patients with Active TED. On the other hand, the phase 3 THRIVE-2 study using VRDN-001 for the treatment of patients with chronic TED is not expected to begin until Q3 of 2023. It makes sense to advance this program into phase 3 clinical testing anyways, because of the positive results obtained from the phase 1/2 study that were just released. That is, Viridian announced positive results from this study, using VRDN-001 for the treatment of patients with chronic TED.

The data released was positive, because it was shown that patients given VRDN-001 had greatly improved from baseline in terms of proptosis. That is, patients given 10 mg/kg of this drug had an average reduction of proptosis from baseline of -1.8 mm at week 6. Even the patients who were given a lower dose of 3 mg/kg of VRDN-001 had also achieved a good average reduction of proptosis of -1.5 mm.

To understand this clinical data, it is important to understand what proptosis is. Proptosis is bulging of the eyes, which as I explained in the beginning of this section above, occurs because of a hyperactive thyroid that causes the muscles of the eyes to become inflamed. This in turn cause the muscles to expand, causing bulging of the eyes. The goal of VRDN-001 and other therapies for TED is then thus to reduce proptosis for the eyes as much as possible.

Financials

According to the 10-Q SEC Filing Viridian Therapeutics had cash, cash equivalents and short-term investments of $373.9 million as of March 31, 2023. It believes that it has enough cash on hand to fund its operations at least into the 2nd half of 2025. The company has been able to fund itself to date through the use of selling stock, warrants and other financial instruments. Not only that, but it has also been able to find other ways to raise the cash that it needs to advance its pipeline. For example, in April of 2022 it entered into a loan and security agreement "Hercules Loan and Security Agreement" whereby it could obtain an aggregate principal amount of $75 million.

However, this was to be given in four tranches and depending upon certain milestones being reached. It still has two other tranches to tap into with respect to this loan financing. In September of 2022, Viridian entered into an Open Market Sale Agreement^SM with Jefferies, whereby it will able to offer and sell shares of its common stock with an aggregate offering price of up to $175 million from time to time. During the 3 months ending March 31, 2023 there were no sales under this September 2022 ATM agreement. This is another option for the company should it need to raise additional capital to fund its operations.

Risks To Business

There are several risks that investors should be aware of before investing in Viridian Therapeutics. The first risk to consider would be with respect to the ongoing phase 3 THRIVE study, which is using VRDN-001 for the treatment of patients with Active TED. Results from this study are expected to be released by mid-2024. Even though this clinical candidate has been able to effectively treat this patient population in a prior study, there is no guarantee that it will achieve the primary endpoint in the phase 3 THRIVE study. In addition, even if this late-stage study in Active TED patients ends up being successful, there is no guarantee that the FDA will approve VRDN-001 for the treatment of this patient population.

A second risk to consider would be with respect to the soon to be initiated phase 3 THRIVE-2 study, which is using VRDN-001 for the treatment of patients with chronic TED. Once the study is initiated, results from it won't be released until the end of 2024. There is no assurance that the primary endpoint of this study will be met either.

A third risk to consider would be with respect to a major competitor by the name of Horizon Therapeutics with its drug Tepezza for TED. That's because even if Viridian eventually receives FDA approval of VRDN-001 for the treatment of patients with Active and Chronic TED, it will have to go up against Horizon's drug. As I stated above, it might be able to compete against it if it can differentiate itself with respect to the four measures: Improved dosing schedule, earlier symptom relief, faster onset and possibly higher efficacy.

Conclusion

Viridian Therapeutics has done well to advance its clinical candidate VRDN-001 for the treatment of patients with TED. As I discussed above, it is working on using this drug for both TED populations, which are for those with Active and Chronic disease. A catalyst that might be important to watch and might cause the stock price to trade higher, would be the initiation of the phase 3 THRIVE-2 study. Again, this study is going to explore the use VRDN-001 for the treatment of patients with chronic TED and it is expected to begin Q3 of 2023.

Results from this phase 3 study are expected to be released by the end of 2024. Before then, in mid-2024, investors can expect the release of results from the phase 3 THRIVE study. This is the late-stage study program which is using VRDN-001 to treat patients with Active TED. With the expected initiation of the phase 3 THRIVE-2 study in Q3 of 2023, plus two major data readouts from the THRIVE program in 2024, I believe that Viridian Therapeutics, Inc. investors might be able to benefit from any potential gains.

This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to, I'm currently offering a two-week free trial period for subscribers to take advantage of. My service offers a deep-dive analysis of many pharmaceutical companies. The Biotech Analysis Central SA marketplace is $49 per month, but for those who sign up for the yearly plan will be able to take advantage of a 33.50% discount price of $399 per year.