Vertigo3d
Vertigo3d
I did well with Viridian Therapeutics, Inc. (NASDAQ:VRDN) the first time I bought it, but in April, I said that I was trying to get a better price before buying once more. The stock did go up briefly after that, but I guess I did the right thing not buying it then, seeing that the stock has taken a downward turn ever since, after announcing some poor data in July.
My profitable exit a few months into my initial purchase was due to positive phase 1/2 trial data for VRDN-001, a drug targeting Thyroid Eye Disease ("TED"). The data indicated better results than the approved drug Tepezza by Horizon Therapeutics. Viridian's VRDN-001 has advantages, including shorter infusion times and subcutaneous forms, potentially offering once-monthly doses.
The TED market is substantial, with a significant number of potential patients, and the recent acquisition of Horizon by Amgen (AMGN) for $27.7 billion validates the market's potential. Viridian's phase 3 data for VRDN-001 is expected in 2024, representing a crucial catalyst.
Despite these promising factors, the stock has declined steadily since February. The drop is attributed to events such as the release of low-dose data from the TED trial in January, a CEO change in February, and the March earnings report.
The stock declined another 30% since April mostly because in July they announced tepid data from the same ongoing phase 1/2 trial whose earlier data had made me money last year.
The July data is complex in many ways. First, they used two measures, exophthalmometry and MRI. Now, exophthalmometry is a simpler and quicker method suitable for routine monitoring and initial assessments of TED, while MRI offers a more detailed anatomical evaluation, especially when a more comprehensive assessment is needed or when there are complex or atypical cases. Broadly, if exophthalmometry readings are refuted by MRI readings, it is standard clinical practice to go with the MRI readings.
Second, this is what happened here. There were two placebo responders for proptosis reduction with exophthalmometry, however MRI data did not find them responding. The company refused to divulge the exophthalmometry data for these two placebo patients, which the market took as a bad thing.
Third, the trial size was really small, with just 6 patients in each of the 3mg/kg and 10mg/kg cohorts. Such small trial populations actually amplify bad outlier data, giving them color they may not actually have.
Fourth, in the trial, the smaller dosage cohort performed better than the higher dose cohort. With exophthalmometry data, the higher dose did marginally better, but under MRI, it turned out that the lower dose did significantly better.
Fifth, and this is really interesting, but based on these results where the lower dose cohort did better than the higher one, the company has decided to amend its ongoing phase 3 THRIVE trial protocol. Shifting from an extensive eight-infusion protocol, the emphasis is now on a condensed five-dose regimen. Sixty patients will be administered a 10mg/kg dose every three weeks, and the primary evaluation, focused on the proptosis responder rate, will be conducted at the 15-week mark.
As an explainer for this decision, here's what the company said:
In an interview with FierceBiotech, Viridian executives chalked up the better results in the 3-mg/kg dose group to the fact that those patients had larger eye protrusion on average. The mean baseline of proptosis in the patients receiving the smaller amount was 23.4 mm compared to 21.1 mm for patients in the 10-m/kg arm. The execs affirmed their intention to use the 10-mg/kg dose in a future phase 3 trial.
"We know as clinicians, we know in real-world conditions, the amount of response in proptosis is partially a function of the extent of the proptosis at baseline entry," said Chief Medical Officer Barrett Katz, M.D.
Sixth, although the trial so far has still done marginally and numerically better than Tepezza, lacking a cross trial comparison or even complete placebo data, no comparison can be really drawn for efficacy. What is more interesting though is the fact that VRDN-001 has a better safety profile than Tepezza. The trial reported no cases of hearing impairment or hyperglycaemia, which are among Tepezza's poorer safety concerns. If efficacy is similar but safety is better, VRDN-001 has a fighting chance against its much bigger competitor.
Seventh, note that while MRI is a more robust method of measuring proptosis, exophthalmometry has been successfully used for years as a primary endpoint in clinical trials, including in the Tepezza trials. Tepezza does not appear to have MRI data in its pivotal trial; which adds another complexity to comparing these two molecules.
Lastly, Tepezza appears more effective in managing diplopia (double vision). While almost half of the 12 patients treated with VRDN-001 experienced diplopia, none of them saw a complete resolution at Week 6 post-treatment. In contrast, Tepezza studies demonstrated that over 50% of patients with diplopia achieved full resolution by Week 24.
So these are some of the complexities of the July data, and while the market decisively punished VRDN for not publishing placebo data, the assessment, I think, should be more nuanced.
VRDN has a market cap of $933mn and a cash balance of $313mn as of September. On November 1, 2023, the company closed a private placement financing that resulted in gross proceeds of approximately $185 million, which brings their cash balance to $498mn. Research and development expenses were $30.4 million during the third quarter of 2023, while general and administrative expenses were $20.9 million. At that rate, they have a cash balance of 8-9 quarters. They will publish top line phase 3 data next year, so approval should happen in late 2025, which gives them enough cash to last until then.
77% of the stock is held by institutions, followed by PE/VC firms; there is a small retail presence. Comparing this to what I said last time, obviously, smart money has become more interested in VRDN in the last few months, despite the market's disapproval. This is a positive development.
Viridian Therapeutics, Inc. is the kind of stock that makes biopharma investing interesting. Assessing such a company differently from the market requires subject matter expertise, which very few people have, and a bit of luck, which even fewer people have. Considering everything I discussed today, as well as my previous coverage, I rate Viridian Therapeutics, Inc. a cautious buy with chances of a windfall if the market is wrong and I am right. However, I would not hold this beyond approval, because I do not find its chances of success in the market as convincing as its chances with the phase 3 trial.