Viridian Therapeutics Inc

NASDAQ:VRDN

Earnings Call Transcript 2022-Q2

[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. [Operator Instructions]. 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, VP of IR]

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, 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 PI 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, Christian 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 unblended the first 10mg/kg cohort after the last patient six weeks 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, the 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 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 will show in 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 compared to Tepezza stage 3 clinical data, we see higher responses on every single measure. And 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, the overall -- the rate of overall response to Tepezza, which requires the patients respond on both proptosis and clinical activity score, meaning they improve on both the signs and symptoms of TED. 83% proptosis responder rate versus 56% of Tepezza. A larger mean change from baseline proptosis by half a millimeter.

Four times the proportion of patients achieving a cap of zero or one would mean change from baseline cap 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 a maximal exposures Tepezza leaves some residual IGF-1R activities. In contrast, and uniquely VRDN-001 acts as a full antagonist and achieves a 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.

So 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 who 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 accelerated 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 to 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 data set 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 of Thyroid Eye Disease.

[Raymond Douglas, Director of Thyroid Eye Disease]

Thank you very much, Barrett. And let's start by reviewing the baseline patient characteristics. They were quite similar to the Tepezza Phase 2 and Phase 3 clinical trials with similar levels of baseline proptosis, clinical activity score or CAS and rates of diplopia. Overall, the populations had very similar disease severity.

Time since diagnosis was slightly longer in this study, which is unsurprising since patients were eligible for the study, if their symptoms started no more than 12 months ago, age and sex characteristics were also similar. So overall, these are very similar populations. And this gives a good basis for contextualizing the study results within the field. So let's turn to those data now.

Let's start with overall response. This is the most stringent assessment of efficacy, including both signs and symptoms of TED. An overall responder is defined as a patient who has at least a two millimeter reduction from baseline proptosis and at least a two-point change in clinical activity score or CAS.

Now remember, proptosis is the key sign of TED, and was measured in standard fashion with the hotel exophthalmometer. Clinical activity score or CAS is a composite of the presence or absence of seven signs and symptoms characteristics of TED. As you can see, 83% of patients were overall responders five out of the six patients. While none of the placebo patients exhibited a response. Data for Phase 2 and Phase 3 trials of Tepezza demonstrated overall response rates of 46% and 44% respectively.

Turning now to proptosis. As shown on the left, there was a 2.4 millimeter change from baseline proptosis in the VRDN-001 group. In the placebo group, one patient had no change in proptosis, the other placebo patient did, which happens about 10% of the time. Interestingly, this placebo patient did not show any improvement on CAS, and did not report feeling better.

Now turning to the VRDN-001 treated group, which was larger with six patients. On the right, you can see the patients treated with VRDN-001 experienced significant proptosis response. Consistent with this exophthalmometer data MRI confirmed proptosis response in the VRDN-001 group when available. Of note the response in the placebo patient was not confirmed by MRI and in fact, slightly worsened by this measure.

83% of treated patients five of the six patients had a reduction in proptosis by at least two millimeters. 67% had at least 2.5 millimeter reduction and half of the patients had a reduction of at least three millimeters.

To put the VRDN-001 effect on proptosis in context, so you can compare it to the mean change from baseline proptosis for Tepezza at week six, in Phase 2, and Phase 3, which was 1.8 and 1.9 millimeters versus 2.4 millimeters for VRDN-001.

Proptosis responder rate defined as the percentage of patients who have at least a two millimeter change from baseline proptosis is shown on the right at week six. 83% of patients who received VRDN-001 were proptosis responders at week xix compared to 55% and 56% for Tepezza at week six.

Let's turn now to clinical activity score or CAS, which is -- remember a composite scale of assessments of patient’s experience, pain, redness, swelling. Here we see a 4.3-point change from baseline CAS after VRDN-001 treatment, far exceeding the placebo response of 1.5 which is similar to the placebo responses 1.1 in the two point -- in the two Tepezza trials.

Given a rapid and sizable change in CAS, it's not surprising to observe many patients with near total reduction in inflammatory signs and symptoms defined as achieving a CAS of zero or 1. 83% of VRDN-001 patients met this criteria, while no placebo patients did.

Likewise, two-thirds of patients had a five point or a higher reduction in CAS from baseline after VRDN-001 treatment, whereas no placebo patients achieved a four or five-point change.

The reduction in CAS compared with Tepezza the same time point is shown here. The mean change in CAS score for VRDN-001 treatment at the six-week time point was robust. The percentage of patients who achieved a maximal or near maximal therapeutic effect at six weeks was also very robust and shown in comparison to that observed for Tepezza in Phase 2, and Phase 3 trial.

Keep in mind that the CAS is a seven component scale, scored for presence or absence of seven different queries of pain, redness, and swelling. So the data tells us that patients are experiencing improvement in a majority of their symptoms, and in many cases resolution of those symptoms.

The last key efficacy measure I have to share today's diplopia, double vision, which is one of the most disruptive and distressing aspects of TED to patients. And now I guess the Tepezza trials, about two-thirds of patients had diplopia at baseline. And for those that do the most relevant and stringent endpoint is resolution. The complete alleviation of double vision. In the four patients who had baseline diplopia, the average score was two. Now this is based upon a three point Gorman's subjective scale. So this is a rather severe diplopia.

Following VRDN-001 treatment, 75% of patients with baseline diplopia experienced complete resolution. Once again, a rapid and very meaningful fact for these patients. The VRDN-001 data compare favorably to Tepezza at the same six-week time point.

So to summarize, we've presented data in six treated patients and two placebo patients demonstrating a positive response for VRDN-001, and overall response proptosis response, proptosis reduction, CAS change and CAS improving to zero or one and diplopia resolution. This preliminary data is consistent and compelling, which is very encouraging for TED patients around the world.

Now let's review safety and tolerability. There were no reports of hyperglycemia or infusion reactions, some of them known on target IGF-1R effects were observed. We saw two cases of muscle spasm both mild and did not require intervention. There was also a single case of hearing changes. However, on her next visit the AE had resolved hearing was normal by audiogram. And she completed this treatment study course.

I will now turn the presentation over to Jon.

[Jonathan Violin, President and CEO]

Thank you Dr. Douglas, both for you review 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 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 and we've learned from some of our recent preclinical research that VRDN-001 is distinct and 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 receptor, as we expected based on our prior epitope characterization.

However, what's 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 this is binding to the same epitope but differently.

Contrast these antibodies to Lonigutamab which binds to a different unrelated epitope in 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 and 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 as a full antagonists 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. And 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 recurred remarkably quickly and suggests faster onset in 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. Meantime, the overall response, which as a reminder, represents improvement on both proptosis and CAS. Which for Tepezza 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. And of course, a faster response is something patients would welcome. This is something that company has incorporated into its Phase 3 plans by evaluating both a standard 8 infusion treatment course like Tepezza on and a shorter 5 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, and 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 the 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 and active TED and THRIVE-2 and 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, and 8 infusion regimen matching Tepezza, a shorter 5 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 and non-human primates, with half-life is about six days. And that VRDN-002 should have double ended at half-life and head to head non-human primate study.

As cited at the bottom of the slide. 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 with around 10 to 11 days in oncology trials.

In the middle panel, you can see VRDN-001 contain healthy volunteers. We observed a 12-day half-life for 01 similar to the PK in oncology patients. Today in the right panel, we can share initial data for VRDN-002 and 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 fusion reactions reported as of last subject last visit.

We also have today 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 and an excellent pharmacodynamic measure of IGF-1 receptor antagonism, and more the receptor is blocked, the higher IGF-1 level 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 is sustained increase in about 2.5 fold similar to Tepezza, but staying elevated throughout the 84-day study period, even at the lowest dose a single 3mg/kg infusion.

The similar magnitude of IGF-1 increase aligned with the preclinical data we just discussed. VRDN-002 closely mimics the effects of Tepezza on IGF-1 arm that was more than three-fold longer half-life and therefore duration of action.

Based on internal modeling by our research team, VRDN-002 PK to supporting low volume subcutaneous injections of 300 milligrams, either every two weeks or every four weeks. These are schedule was supported very strong commercial profile comparable to some of the best-selling subcutaneous antibodies, such as Regeneron Dupixent.

We plan to evaluate 300 milligrams of VRDN-002 in two milliliters. As every two week or every four week dosing and 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 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 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 mils -- of two milliliters contain 300 milligrams, subcutaneous injection, either every two weeks or every four weeks.

So 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 U.S. this year, almost entirely to newly diagnosed patients. And 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-US 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 the 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 Viridian 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 approval with TED therapy in Europe, which we anticipate to significantly expand a revenue opportunity, likely endpoints or other CAS or overall response. We have seen some differentiating data from us 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 market a 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 the THRIVE program. Here are some key features, it’s a global registration program will generate robust evidence in both active and chronic TED and the registration of programs designed to enable approval in the U.S. the EU and other major and emerging markets.

We have a number of 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 to 90 minutes for Tepezza. And as you've seen today, the potential for faster onset and higher efficacy. And 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 development program that we hope will deliver a VRDN-001 product profile with superior efficacy, faster time to symptom improvement, fewer treatment visits and shorter administration time with a highly attractive safety profile. We think these attributes sum 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 achieve triple of half-life the first generation IGF-1R antibodies, we have 30 to 40 days. We know we have in hand, a compelling profile, 300 milligrams and 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 the non-human primate data we expect 003 to match VRDN-002 PK.

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 second quarter '23, with Phase 3 enabling healthy volunteer PK PD data in the fourth quarter of '23.

We launch a subcutaneous product with a patient friendly pre-filled pen at a minimum, something like Regeneron 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 have a form in every four week 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 well 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 wherever 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, 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 and Chief Business Officer]

Thank you, Jon. And good morning everyone. I would like to give a brief summary of the Q2, 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 Hercules Capital for up to $75 million.

Under the terms of the agreement, we do 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 Instructions] Our first question is coming from the line of Chris Howerton with Jefferies. Please proceed with your question.

[Chris Howerton, Jefferies]

Great. Thank you so much for taking the question. A hearty congratulation on the excellent data. So I think maybe just two questions from me, and then I'll hop back on the queue. So first, I know that there was -- obviously, most of the profile extremely clean, but there has been some concerns around hearing loss. So just curious if you have any more thoughts on that observation and how, if anything, you're doing to monitor that further?

And then the second question that I have I think is just more of a clarification in terms of strategy. So for the subcutaneous formulation, what information specifically are you waiting for? And I guess -- like to make the final decision to move forward? It sounds like it'll be 002 information, the 3mg 001 IV formulation. And then I guess, Jonathan, just the little tack-on I'll add on there is, are you considering a 3mg/kg subcutaneous 001 dose group at this point? Thank you.

[Jonathan Violin, President and CEO]

Great. Thank you, Chris. 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 really is very strong, 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 AEs.

[Raymond Douglas, Director of Thyroid Eye Disease]

Yes. I'll just reiterate what Barrett said. It was a 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]

Then I'll answer the question on the subcutaneous strategy. So the question is what more information do we need? The short answer is nothing. We already know with VRDN-002 that we have that Dupixent-like profile in hand. The reason that we're advancing 002 and 003 in parallel is that while 002 seems to really do everything we hoped it would -- it matches the TEPEZZA profile pharmacologically in every way we've measured. It has a phenomenally increased half-life. So it gets us to a compelling subcutaneous product profile.

What we've learned recently is that 001 seems to have a unique and potentially superior pharmacologic profile. So why not take the opportunity to combine the benefits of 001 and the benefits of 002 in what we're now calling VRDN-003. And because we now know so much about sort of the PK and PD of these molecules, we can move these two programs forward in parallel, so that by the second half of next year, we'll have our subcutaneous proof-of-concept data for VRDN-002.

We'll have a healthy volunteer PK/PD for 003, which is effectively proof-of-concept, again, given everything we know about 001. And on the basis of that data, we can choose whichever molecule looks best. And we're running the programs in a way that we can then start Phase 3 early in 2024. So we really like this strategy. We think it allows us to make data-driven decisions on the basis of clinical results.

And then finally, you had asked about would we consider -- I actually missed the question about the 3mg/kg. Could you repeat your…?

[Chris Howerton, Jefferies]

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]

Oh, I think -- so you were asking about the upcoming 3mg/kg data for ID VRDN-001. So that's going to be informed with a number of ways. First, we already with high conviction know that we can achieve every other week subcu with 002 and 003. If we see that lower doses of 001 deliver a similar benefit, then that puts every 4 weeks very much not just on the table, but it would give us confidence in that profile, may be even longer.

So that's kind of the key value that we'll get from the 3mg/kg cohort coming up. But you're right. There is, of course, still the potential of 001 itself could achieve subcu. But honestly, with the outperformance of half-life extension that we saw today, we really think that 002 and 003 are our best bet to achieve a very difficult-to-beat commercial profile.

[Chris Howerton, Jefferies]

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

[Operator]

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

[Thomas Smith, SVB Securities]

Hey guys, good morning. Thanks for taking the questions. Let me add my congrats on the really strong early data here. Just like a first on -- to follow up on the safety. With respect to the muscle spasm and hearing impairment, can you just kind of remind us of the time course of when these AEs are typically seen with Tepezza treatment? And then I know it's not explicitly on the AE slide, but can you confirm that there haven't been any cases of hypertension seen in the TED patient cohorts 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]

Yes. So the hearing impairment occurs in 1 of 2 forms, typically a tinnitus or a plugging of the years. And 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. And we're still waiting to see how those in a much smaller segment of patients and see if those are also reversible.

The muscle spasms typically occur early in the treatment course, and again, are more of a nuisance than anything else. Typically, have not impaired continuation of treatment, and as Barrett suggested, can be highly reversible.

[Jonathan Violin, President and CEO]

And maybe -- so I can then address the adverse event question on hypertension. So for VRDN-002 first, there were only 3 adverse events for VRDN-002 that were deemed related to treatment. There was a mild transient dizziness. There was one case of asymptomatic hypotension that resolved the same day without treatment. And one case of asymptomatic hypertension that resolved the same day without treatment. These are just the kinds of things you observe in a Phase 1 study.

And then with respect to VRDN-001, there's nothing that we've seen in TED patients with respect to blood pressure.

[Thomas Smith, SVB Securities]

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 just 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 time lines you've laid out? And I guess, any early thoughts on the cost -- 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 dose. 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've long planned to go broader than that. So we'll be in the UK and Europe. We'll have 30 sites opened by year-end. So 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, SVB Securities]

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.

[Thomas Smith, SVB Securities]

Excellent. All right guys. Thanks for taking the questions, appreciated. Congrats again on the data.

[Operator]

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

[Gavin Clark-Gartner, Evercore ISI]

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 SAEs. So really going well so far.

[Gavin Clark-Gartner, Evercore ISI]

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 retreatment question is a really interesting one. Well, look, the first things -- first for us. We think we have some really exciting plans to deliver a differentiated product profile. I do think the retreatment question is important. It will take some time to answer. It also reflects the state of the field. This is a young and rapidly evolving field of clinical science, and we're excited to participate in advancing the knowledge. So questions like this, I think we'd love to be a leader in figuring out how best to treat patients and build up our commercial product profile as we do so.

[Gavin Clark-Gartner, Evercore ISI]

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. So the way we think about our products -- it's way too early to get into pricing, but just generally -- we're focused on what value we can deliver to the market. And you've seen the clinical data. You've seen our plan to deliver something that could be highly differentiated and add a lot of value above and beyond what exists now. So we think this will be really exciting for us, and we're focused on delivering that value.

[Gavin Clark-Gartner, Evercore ISI]

Yes. No, that's really helpful. Congrats again.

[Operator]

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

[Rami Katkhuda, LifeSci Capital]

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. Why don't I start, and then maybe Barrett and Dr. Douglas can comment further? So the Hertel exophthalmometer obviously is a validated measurement. Works great. We've been very pleased with it. But we do know that in a very small sample size, like two placebo patients, you do sometimes see a patient with a change despite having no active drug on board. So the interest in MRI is that this is an objective measurement. Doesn't require the kind of device and manual reading of the Hertel exophthalmometer.

We do not have all the data for MRI measurements, but we take these images and then analyze the changes pre and post treatment to get an objective measure of how much the proptosis has changed. We have 4 patients with MRI measurement pre and post treatment -- so at baseline, at Week 6 -- who received drug. So those 4 patients received drug.

In every case, the millimeter change by exophthalmometer was slightly exceeded by MRI. So the MRI is reporting a slight bigger change in proptosis, a bigger reduction in proptosis. And then as you heard, that placebo patients where we saw minus 2, so 2-millimeter improvement by the exophthalmometer, proptosis worsened by 0.58 millimeters by MRI. So it just underscores why it's so nice to have multiple measurements of the same thing.

And when we think broadly, when we think holistically about our data, it's just an incredible consistency at the direction and magnitude of response that we are outperforming both Tepezza Phase 2 and Phase 3 trials across the board. And we think the MRI is an important piece of that, and we'll be excited to have the full data sets in the future. Barrett, 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. And what we're seeing, interestingly enough, is the exophthalmometer underestimates the proptosis response of our drug. The MR measurements and the CT measurements trend to suggest that the proptosis improvement with these superior results are in fact underestimated on exophthalmometry.

[Rami Katkhuda, LifeSci Capital]

Got it. Makes sense. And then really quickly, just to confirm a point you made in the presentation. Is the more complete antagonism of IGF-1R with 001 the reason why we saw more robust PD effect and increases in IGF-1 levels in healthy volunteers versus Tepezza?

[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 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, starting to look like a pretty nice correlation and is something that we hope to build on. And again, I think highlights that with VRDN-001, we might have something truly special on our hands.

[Rami Katkhuda, LifeSci Capital]

Awesome. Thanks so much guys, and congrats again.

[Operator]

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

[Laura Chico, Wedbush Securities]

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]

Great. So in practice, I think one thing to bear in mind is in practice, it's always a balance between what's practical and what is most robust. So in practice, I tend to use exophthalmometry data. But when I treat patients either with surgery or Tepezza, I usually use a before and after scan of some type, typically either MRI or CT scan.

It's kind of like the difference between a very crude point diagram versus an entire painting. The MRI and CT can give you an entire painting of what that orbit looks like in a very objective manner. So I'm very excited about the MRI data. And I do, to answer your question very directly, do you use it as a supplement to my exophthalmometry measurements with Hertel.

In regards to severity, severity is actually defined as the amount of disease burden for patients that I use when thinking about treatment for patients. And so for example, if a patient has profound proptosis above normal limits, typically 3 millimeters or more, and disease that either is active or is quiescent, I will often opt for Tepezza therapy and IGF-1R therapy. Because what I've seen over our data, and we've published in both active and chronic patients, is that they have a dramatic improvement of their proptosis and of their disease. So severity for me in guiding my therapeutic use of Tepezza thus far has been based upon their disease burden. And moderate to severe is often 3 millimeters or more, as was -- as a criteria for their disease burden.

[Laura Chico, Wedbush Securities]

Okay. That's helpful. And then maybe for the Viridian team, could you remind us -- you briefly touched on the ex-U.S. market and you're seeking patients outside the U.S. Can you remind us on how you're planning to approach commercialization ex-U.S.? I guess in light of the data you're seeing, would this be a market that you can commercialize on your own?

[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.

[Laura Chico, Wedbush Securities]

Sounds good. Congratulations on the data.

[Operator]

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

[Kalpit Patel, B. Riley Securities FBR]

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]

Yes. So I think one thing that we've observed with Tepezza, and it really speaks to IGFR therapies in general, is that what we've seen in the clinical trials has translated exceptionally well to real world experience. So my real world experience -- and we just published a large review has been -- that we're achieving on means much greater than 3 millimeters reduction in proptosis in the majority of patients. So it all depends on their disease burden when patients present. But what you're seeing I think from the clinical trials translates exceptionally well to real-world experience.

[Jonathan Violin, President and CEO]

Thank you, Dr. Douglas -- maybe I'll just add to remind everyone, the changes we're seeing are just 2 infusions at Week 6. And the Tepezza course of treatment is 8 infusions over 24 weeks. So when we think about magnitude of effect, we're looking very early on in the course of treatment. So just want to make sure everyone keeps that in mind.

[Kalpit Patel, B. Riley Securities FBR]

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. And then given the data we've seen today, the speed of onset, the magnitude of efficacy, what we know about the PK/PD of the drug, we landed on 5 as the sweet spot. So we really like this regimen. We think that a 3-month course of treatment is going to be truly compelling for patients.

[Kalpit Patel, B. Riley Securities FBR]

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 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. And by testing both the 5 infusion and 8 infusion regimens, we're still testing 2 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, B. Riley Securities FBR]

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]

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

[Jason Butler, JMP Securities]

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 -- I guess a follow-up to that retreatment question. Would you allow patients who had previously been treated with Tepezza into the chronic trial?

[Jonathan Violin, President and CEO]

Thanks, Jason. So the chronic study is -- we're using 15 months since diagnosis as the cutoff between active and chronic. So that means that the THRIVE program in total will enroll patients, regardless of how long ago their symptoms began. In the chronic study, we will allow any CAS score to enter. Now chronic patients tend to have lower CAS scores, so we expect the population to have lower CAS, but it will be quite a broad population. We will not allow a prior treatment with IGF-1R therapy in the study. So it'll be naive to IGF-1Rs.

[Jason Butler, JMP Securities]

Great. Thanks.

[Operator]

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

[Trevor Allred, Oppenheimer]

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, so 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.

[Trevor Allred, Oppenheimer]

Right. Thanks guys.

[Operator]

Our next question comes from the line of Michael Higgins with Ladenburg Thalmann. Please proceed with your question.

[Michael Higgins, Ladenburg Thalmann]

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]

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]

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