What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-12 compared with 2020-08-05 · 140 added, 100 removed, 103 unchanged (70% of the section changed)

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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 Quarterly Report.

We are a clinical-stage biopharmaceutical company discovering and developing proprietary RNA-targeted therapies with a specific focus on microRNAs and their role in diseases where there is a high unmet medical need.

We have three clinical-stage product candidates:

cobomarsen, remlarsen, and MRG-110.

We are developing cobomarsen for the treatment of patients with certain cancers that have elevated microRNA-155, or miR-155, including cutaneous T-cell lymphoma, or CTCL, and adult T-cell leukemia/lymphoma, or ATLL.

Cobomarsen is an inhibitor of miR-155, which is found at abnormally high levels in malignant cells of several blood cancers.

We are also developing remlarsen and MRG-229 for the potential treatment of patients with pathological fibrosis.

Both remlarsen and MRG-229 are replacements for microRNA-29, or miR-29, which is found at abnormally low levels in a number of pathological fibrotic conditions, including cutaneous, cardiac, renal, hepatic, pulmonary and ocular fibrosis, as well as in systemic sclerosis.

Remlarsen is our product candidate for local administration in cutaneous fibrosis and ocular fibrosis, while MRG-229 is our lead preclinical state compound for the potential systemic treatment of pulmonary, renal, and hepatic fibrosis.

Finally, MRG-110, an inhibitor of microRNA-92, or miR-92, is our product candidate for the treatment of heart failure, wound healing, and other ischemic disease.

We believe our experience in microRNA biology and chemistry, drug discovery, bioinformatics, translational medicine, and drug development allows us to identify and develop microRNA-targeted drugs that are designed to regulate gene pathways to return diseased tissues to a healthy state.

We believe that our drug discovery and development strategy will enable us to progress our product candidates from preclinical discovery to confirmation of mechanism of action in humans quickly and efficiently.

The elements of this strategy include identification of mechanistic biomarkers, in early-stage clinical trials to assess target engagement in humans, as well as monitoring outcomes in these early-stage clinical trials to help guide later clinical development.

Recent Developments and Anticipated Milestones

Cobomarsen is currently being evaluated for the potential treatment of patients with miR-155 elevated hematological malignancies, including CTCL and ATLL.

• Cutaneous T-Cell Lymphoma (CTCL):

As a result of the COVID-19 pandemic, we have seen an impact on clinical activities at some sites where the SOLAR trial is being conducted.

However, with a majority of patients in the SOLAR trial continue to receive uninterrupted treatment and evaluation for clinical response, the impact has been limited to a small number of patients.

As of July 17, 2020, 34 of the 37 CTCL patients are being followed for a response, and 32 have continued to receive uninterrupted treatment.

• Adult T-Cell Leukemia/Lymphoma (ATLL):

Based on the clinical data released earlier this year, during the second quarter of 2020, we requested a meeting with the FDA to discuss the development path for cobomarsen in ATLL and plan to meet with the FDA and receive guidance on our proposed clinical path in this indication before the end of 2020.

MRG-229 is a miR-29 mimic, or replacement for miR-29, a microRNA that is found at abnormally low levels in a number of pathologic fibrotic conditions.

Idiopathic Pulmonary Fibrosis (IPF):

In June 2020, we hosted a key opinion leader (KOL) webcast to discuss the current and increasing unmet medical need in treating patients with IPF and reported additional preclinical rodent safety and in vitro human efficacy data for MRG-229.

In summary, the latest preclinical observations were:

• Next-generation targeted miR-29 mimics demonstrated down-regulation of targeted genetic pathways and anti-fibrotic effects including decreased collagen secretion in diseased lung fibroblasts in vitro , highlighting functional activity in addition to molecular readouts.

• Anti-fibrotic activity of next-generation miR-29 mimics in mouse bleomycin-induced pulmonary fibrosis was observed for both intravenous and subcutaneous routes of administration.

• Next-generation targeted miR-29 mimics demonstrated efficacy in ex vivo profibrotic-induced human precision cut lung slices.

• Exploratory toxicity studies in rodents showed that MRG-229 treatment resulted in no adverse effects on organ histology, hematology, clinical chemistries, coagulation, or urinalysis.

Based on these results, we have initiated a non-human primate toxicology study and expect to report additional preclinical safety and efficacy data before the end of 2020.

Overview and Recent Developments

We are a biotechnology company advancing new treatments for patients with diseases that are underserved by current therapies.

Our most advanced program, VRDN-001, is a clinical-stage anti-IGF-1R monoclonal antibody in development for thyroid eye disease, a debilitating condition that can cause bulging eyes, or proptosis, as well as double vision and potential blindness.

In association with the merger described below, our business strategy transitioned to prioritizing VRDN-001 in development of thyroid eye disease and away from legacy programs developing product candidates that modulate microRNAs.

Pending feedback from regulatory authorities, we expect to initiate a Phase 2 clinical trial of VRDN-001 in TED in 2021.

This planned clinical trial will be informed by data from previous U.S.

and European Union, or EU, studies in which more than 100 oncology patients were administered the antibody under the name AVE-1642.

The pharmacokinetic, pharmacodynamic, and safety and tolerability data from these previous studies will inform our trial designs in TED.

We hold exclusive worldwide rights to develop and commercialize VRDN-001 for all non-oncology indications that do not use radiopharmaceuticals, including the treatment of TED.

Our product candidate VRDN-001 was previously licensed from ImmunoGen, Inc.

In parallel with the development of VRDN-001, we are advancing VRDN-002 with the goal of developing a convenient, at-home subcutaneous injection product.

VRDN-002 seeks to improve on first-generation IGF-1R-targeted antibodies by incorporating half-life extension technology to reduce the dose required to provide efficacy in TED.

We expect to file an investigational new drug application for VRDN-002 by the end of 2021.

Agreement and Plan of Merger

On October 27, 2020, we acquired Viridian Therapeutics, Inc., a Delaware corporation, or Viridian, in accordance with the terms of the Agreement and Plan of Merger, dated October 27, 2020, or the Merger Agreement, by and among us, Oculus Merger Sub I, Inc., a Delaware corporation and our wholly owned subsidiary, or the First Merger Sub, Oculus Merger Sub II, LLC, a Delaware limited liability company and our wholly owned subsidiary, or the Second Merger Sub, and Viridian.

Pursuant to the Merger Agreement, First Merger Sub merged with and into Viridian, pursuant to which Viridian was the surviving corporation and became our wholly owned subsidiary, or the First Merger.

Immediately following the First Merger, Viridian merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity, or such merger together with the First Merger, the Merger.

The Merger is intended to qualify as a tax-free reorganization for U.S.

federal income tax purposes.

Under the terms of the Merger Agreement, at the closing of the Merger, or the Closing, we issued or reserved for the issuance of an aggregate of 11,409,188 shares of our common stock and 203,202 shares of Series A Non-Voting Convertible Preferred Stock, or the Series A Preferred Stock (as described below) to the securityholders of Viridian.

Each share of Series A Preferred Stock is convertible into 1,000 shares of our common stock, subject to certain conditions described below.

Certain shares of our common stock outstanding immediately after the Merger are held by stockholders subject to lock-up restrictions, pursuant to which such stockholders have agreed, except in limited circumstances, not to sell or transfer, or engage in swap or similar transactions with respect to, shares of our common stock, including, as applicable, shares received in the Merger and issuable upon exercise of certain options, for a period of 180 days following the closing of the Merger.

Pursuant to the Merger Agreement, we have agreed to hold a stockholders’ meeting to submit the following matters to our stockholders for their consideration:

(i) the approval of the conversion of the Series A Preferred Stock into shares of our common stock in accordance with Nasdaq Listing Rule 5635(a), or the Conversion Proposal, and (ii), if necessary, the approval of an amendment to our certificate of incorporation to authorize sufficient shares of our common stock for the conversion of the

Series A Preferred Stock issued pursuant to the Merger Agreement and the Securities Purchase Agreement (as described below), or the Charter Amendment Proposal, and together with the Conversion Proposal, the Meeting Proposals.

In connection with these matters, we intend to file with the Securities and Exchange Commission, or the SEC, a proxy statement and other relevant materials.

Our board of directors approved the Merger Agreement and the related transactions, and the consummation of the Merger was not subject to approval of our stockholders.

Support Agreements

In connection with the execution of the Merger Agreement, we and Viridian entered into stockholder support agreements, or the Support Agreements, with our directors and officers.

The Support Agreements provide that, among other things, each of the stockholders has agreed to vote or cause to be voted all of the shares of our common stock owned by such stockholder in favor of the Meeting Proposals at our stockholders’ meeting to be held in connection therewith.

Lock-up Agreements

Concurrently and in connection with the execution of the Merger Agreement, certain Viridian securityholders as of immediately prior to the Merger, and our directors and officers as of immediately following the Merger entered into lock-up agreements with us and Viridian, pursuant to which each such stockholder will be subject to a 180 day lockup on the sale or transfer of shares of our common stock held by each such stockholder at the closing of the Merger, including those shares received by Viridian securityholders in the Merger, or the Lock-up Agreements.

Contingent Value Rights Agreement

The Merger Agreement contemplates that within 30 days following the Closing, we and the Rights Agent (as defined therein) will execute and deliver a contingent value rights agreement, or the CVR Agreement, pursuant to which each holder of our common stock as of November 6, 2020, other than former stockholders of Viridian, shall be entitled to one contractual contingent value right issued by us, subject to and in accordance with the terms and conditions of the CVR Agreement, for each share of our common stock held by such holder.

Each contingent value right shall entitle the holder thereof to receive certain cash payments from the net proceeds, if any, related to the disposition of our legacy programs to develop product candidates that modulate microRNAs within five years following the Closing.

The contingent value rights are not transferable, except in certain limited circumstances as will be provided in the CVR Agreement, will not be certificated or evidenced by any instrument and will not be registered with the SEC or listed for trading on any exchange.

Private Placement and Securities Purchase Agreement

On October 27, 2020, we entered into a Securities Purchase Agreement, or the Purchase Agreement, with the purchasers named therein, or the Investors.

Pursuant to the Purchase Agreement, we agreed to sell an aggregate of approximately 195,290 shares of Series A Preferred Stock for an aggregate purchase price of approximately $91.0 million, or collectively, the Financing.

Each share of Series A Preferred Stock is convertible into 1,000 shares of our common stock, as described below.

The powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series A Preferred Stock are set forth in the Certificate of Designation filed in connection with the Merger.

We plan to use the proceeds from the Financing to potentially advance multiple compounds through Phase 2 proof of concept studies in TED and expand our orphan disease pipeline.

Holders of Series A Preferred Stock are entitled to receive dividends on shares of Series A Preferred Stock equal, on an as-if-converted-to-Common-Stock basis, and in the same form as dividends actually paid on shares of our common stock.

Except as otherwise required by law, the Series A Preferred Stock does not have voting rights.

However, as long as any shares of Series A Preferred Stock are outstanding, We will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, (b) alter or amend the Certificate of Designation, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series A Preferred Stock, (d) increase the number of authorized shares of Series A Preferred Stock, (e) prior to the stockholder approval of the Conversion Proposal or at any time while at least 40% of the originally issued Series A Preferred Stock remains issued and outstanding, consummate a Fundamental Transaction (as defined in the Certificate of Designation) or (f) enter into any agreement with respect to any of the foregoing.

The Series A Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of us.

Following stockholder approval of the Conversion Proposal, each share of Series A Preferred Stock is convertible into shares of our common stock at any time at the option of the holder thereof, into 1,000 shares of our common stock, subject to certain

limitations, including that a holder of Series A Preferred Stock is prohibited from converting shares of Series A Preferred Stock into shares of our common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be established by the holder between 4.99% and 19.99%) of the total number of shares of our common stock issued and outstanding immediately after giving effect to such conversion.

Registration Rights Agreement

On October 30, 2020, we entered into a Registration Rights Agreement, or the Registration Rights Agreement, with the Investors.

Pursuant to the Registration Rights Agreement, we will prepare and file a resale registration statement with the SEC within 90 calendar days following October 30, 2020, or the Filing Deadline.

We will use our reasonable best efforts to cause this registration statement to be declared effective by the SEC within 30 calendar days of October 30, 2020 (or within 60 calendar days if the SEC reviews the registration statement).

We have also agreed to, among other things, indemnify the Investors, their officers, directors, members, employees and agents, successors and assigns under the registration statement from certain liabilities and pay all fees and expenses (excluding any legal fees of the selling holder(s), and any underwriting discounts and selling commissions) incident to our obligations under the Registration Rights Agreement.

Reverse Stock Split

We plan to effect a reverse stock split of our shares of common stock at a ratio of 1-for-15.

We anticipate the stock split will be effective as of November 12, 2020, and trading of our common stock will begin on a split-adjusted basis on November 13, 2020.

Our common stock will continue to trade on the Nasdaq Capital Market under the ticker symbol "MGEN," although a new CUSIP number (60463E 202) has been assigned.

Our stockholders approved the reverse stock split, and granted our board of directors the authority to effect a reverse stock split, at our annual meeting of shareholders held on May 21, 2020.

As a result of the reverse stock split, every 15 shares of our pre-reverse split common stock will be combined and reclassified into one share of our common stock.

No fractional shares will be issued in connection with the reverse stock split, and if the stock split results in any stockholders owning a fractional share, then such stockholders will receive a cash payment in lieu of such fractional share.

The reverse stock split will not modify any rights of our common stock.

The reverse stock split will reduce the number of shares of our common stock issuable upon the conversion of our outstanding shares of Series A Preferred Stock to a ratio of 66.67 and the exercise or vesting of its outstanding stock options and warrants in proportion to the ratio of the reverse stock split, and cause a proportionate increase in the conversion and exercise prices of such preferred stock, stock options and warrants.

Our transfer agent, VStock Transfer, LLC, will act as exchange agent for the reverse stock split.

The COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of Coronavirus, a global pandemic.

This outbreak is causing major disruptions to businesses and markets worldwide as the virus spreads.

We cannot predict what the long-term effects of this pandemic and the resulting economic disruptions may have on our liquidity and results of operations.

The extent of the effect of the COVID-19 pandemic on our liquidity and results of operations will depend on a number future developments, including the duration, spread and intensity of the pandemic, and governmental, regulatory and private sector responses, all of which are uncertain and difficult to predict.

The COVID-19 pandemic may make it more difficult for us to enroll patients in any future clinical trials or cause us to delay enrollment or announcement of results from our ongoing clinical trials.

The economic uncertainty surrounding the COVID-19 pandemic may also dramatically reduce our ability to secure debt or equity financing necessary to support our operations.

We are unable to currently estimate the financial effect of the pandemic.

If the pandemic continues to be a severe worldwide crisis, it could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Financial Operations Overview

Our revenue has historically consisted primarily of up-front payments for licenses, milestone payments, and payments for other research and development services earned under a license and collaboration agreement, or the Servier Collaboration Agreement, with Les Laboratoires Servier and Institut de Recherches Servier, or collectively, Servier, for the research, development, and commercialization of RNA-targeting therapeutics in cardiovascular disease.

commercialization of RNA-targeting therapeutics in cardiovascular disease.

We also recognize revenue for amounts received or receivable under certain grants we have been awarded.

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We completed certain activities under the Servier Collaboration Agreement through the effective termination date in February 2020, which included finalizing two Phase 1 clinical trials of MRG-110, for which we previously reported data.

The activities eligible for reimbursement under the Servier Collaboration Agreement are considered a research and development performance obligation and revenue was recognized through the termination date.

The activities eligible for reimbursement under the Servier Collaboration Agreement were considered a research and development performance obligation and revenue was recognized through the termination date.

In the future, we may 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.

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We consider future economic benefits from acquired contractual rights to licensed technology to be uncertain until such a drug candidate is approved by the FDA, or when other significant risk factors are abated.

Our research and development expenses may increase for the foreseeable future as we continue to conduct our ongoing clinical trials, initiate new clinical trials, and advance our preclinical research programs.

Our research and development expenses may increase if we initiate new clinical trials.

The process of conducting clinical trials and preclinical studies necessary to obtain regulatory approval is costly and time consuming.

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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.

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.

We will need to raise additional capital and may seek additional strategic alliances in the future in order to advance our various programs.

General and administrative expenses

General and administrative expenses consist primarily of salaries and related benefits, including share-based compensation, 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, and other 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 (expense)

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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.

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 Three Months Ended June 30, 2020 and 2019

Comparison of the Three Months Ended September 30, 2020 and 2019

Three Months Ended

September 30,

(in thousands)

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General and administrative expenses 2,299 2,898

Other income (expense), net (61) 46

Other expense, net (84) —

Net loss $ (5,494) $ (11,230)

Revenue decreased to $0.2 million during the three months ended June 30, 2020, from $2.5 million during the three months ended June 30, 2019.

Revenue decreased by $0.7 million during the three months ended September 30, 2020, compared to the three months ended September 30, 2019.

The decrease in revenue was primarily due to a decrease in research and development activities r eimbursable to us by Servier under the Servier Collaboration Agreement.

Research and Development Expenses

Research and development expenses were $3.8 million during the three months ended June 30, 2020, compared to $8.6 million during the three months ended June 30, 2019.

The $4.8 million decrease in research and development expenses was primarily attributable to a decrease in clinical and related manufacturing development activities associated with the Phase 2 SOLAR clinical trial of cobomarsen, personnel-related costs, and other miscellaneous expenses during the second quarter of 2020.

Research and development expenses were $3.1 million during the three months ended September 30, 2020, compared to $9.0 million during the three months ended September 30, 2019.

The $5.9 million decrease in research and development expenses was primarily attributable to a decrease in clinical and related manufacturing development activities associated with the Phase 2 SOLAR clinical trial of cobomarsen, personnel-related costs, and other miscellaneous expenses during the third quarter of 2020.

General and Administrative Expenses

General and administrative expenses were $2.7 million during the three months ended June 30, 2020, compared to $2.9 million during the three months ended June 30, 2019.

The decrease in general and administrative expenses was due primarily to decreased personnel-related costs, which were partially offset by increased legal costs during the second quarter of 2020.

General and administrative expenses were $2.3 million during the three months ended September 30, 2020, compared to $2.9 million during the three months ended September 30, 2019.

The decrease in general and administrative expenses was due primarily to decreased personnel-related costs and decreased professional-related costs during the third quarter of 2020.

Results of Operations

Comparison of the Six Months Ended June 30, 2020 and 2019

Six Months Ended

Comparison of the Nine Months Ended September 30, 2020 and 2019

Nine Months Ended

September 30,

(in thousands)

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Net loss $ (19,973) $ (31,755)

Revenue was $1.0 million during the six months ended June 30, 2020, compared to $2.9 million during the six months ended June 30, 2019.

Revenue decreased by $2.6 million during the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019.

The decrease in revenue was primarily due to a decrease in research and development activities r eimbursable to us by Servier under the Servier Collaboration Agreement.

Research and Development Expenses

Research and development expenses were $9.9 million during the six months ended June 30, 2020, compared to $17.4 million during the six months ended June 30, 2019.

The $7.5 million decrease in research and development expenses was primarily attributable to a decrease in clinical and related manufacturing development activities associated with the Phase 2 SOLAR clinical trial of cobomarsen, personnel-related costs, and other miscellaneous expenses during the six months ended June 30, 2020.

Research and development expenses were $13.1 million during the nine months ended September 30, 2020, compared to $26.4 million during the nine months ended September 30, 2019.

The $13.3 million decrease in research and development expenses was primarily attributable to a decrease in clinical and related manufacturing development activities associated with the Phase 2 SOLAR clinical trial of cobomarsen, personnel-related costs, other preclinical research and development costs, and other miscellaneous expenses during the nine months ended September 30, 2020.

General and Administrative Expenses

General and administrative expenses were $5.4 million during the six months ended June 30, 2020, compared to $6.2 million during the six months ended June 30, 2019.

The decrease in general and administrative expenses was due primarily to decreased personnel-related costs and legal costs, which were partially offset by increased other miscellaneous expenses during the six months ended June 30, 2020.

General and administrative expenses were $7.7 million during the nine months ended September 30, 2020, compared to $9.1 million during the nine months ended September 30, 2019.

Liquidity and Capital Resources

We have funded our operations to date principally through proceeds received from the sale of our common stock and other equity securities, debt financings, and from amounts received under the Servier Collaboration Agreement.

As of June 30, 2020, we had $30.6 million in cash and cash equivalents.

Based on our current operating plans, we believe that our cash and cash equivalents will be sufficient to fund our operations for the period one year following the issuance of the accompanying condensed consolidated financial statements in this Quarterly Report.

We expect that our current resources will be sufficient to fund our current operations into the third quarter of 2021.

We have funded our operations to date principally through proceeds received from the sale of our common stock, our preferred stock, and other equity securities, debt financings, and from amounts received under the Servier Collaboration Agreement.

As of September 30, 2020, we had $30.1 million in cash and cash equivalents.

We expect that our current cash and cash equivalents, including approximately $91.0 million we received on October 30, 2020 from the sale of shares of our Series A Preferred Stock in the Financing, together with the cash held by Viridian at the time of the acquisition, will enable us to fund our operating expenses and capital expenditure requirements through the end of 2023.

We plan to use the proceeds from the Financing to potentially advance multiple compounds through Phase 2 proof of concept studies in TED and expand our orphan disease pipeline.

If our stockholders do not timely approve the conversion of our Series A Preferred Stock, then the holders of our Series A Preferred Stock may elect to require us to settle their shares of Series A Preferred Stock for cash at a price per share equal to the fair value of the Series A Preferred Stock, as described in our certificate of designation relating to the Series A Preferred Stock.

If we are required to settle a significant amount of the Series A Preferred Stock, we expect that we would not have sufficient liquidity to settle the Series A Preferred Stock.

We have no products approved for commercial sale and have not generated any revenue from product sales.

Since our inception and through September 30, 2020, we have generated an accumulated deficit of $188.1 million.

Substantially all of our operating losses resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

We will continue to require substantial additional capital to continue our clinical development, to continue our potential commercialization activities, and to fund our ongoing operations.

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 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.

We expect that our operating losses will fluctuate significantly from quarter to quarter and year to year due to timing of clinical development programs and efforts to achieve regulatory approval.

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.

In March 2017, we entered into a Common Stock Sales Agreement, or the ATM Agreement, with Cowen and Company, LLC, or Cowen, under which we may offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million through Cowen as our sales agent.

Cumulative net proceeds received from the sale of 2,846,449 shares of our common stock through July 31, 2020 were approximately $11.6 million, after giving effect to commissions to Cowen as sales agent and initial expenses for executing the “at the market offering.”

In August 2018, we and the Leukemia and Lymphoma Society, Inc., or LLS, entered into a Common Stock Purchase Agreement, or the LLS Stock Purchase Agreement, for the sale of up to $5.0 million of shares of our common stock, or the LLS Offering, to LLS and its affiliates under the LLS Purchase Agreement.

Cumulative net proceeds received from the sale of 2,846,449 shares of our common stock through October 30, 2020 were approximately $11.6 million, after giving effect to commissions to Cowen as sales agent and initial expenses for executing the “at the market offering.”

In October 2019, the LLS Stock Purchase Agreement was assigned to LLS TAP Miragen, LLC, or LLS TAP.

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Since the initial closing in August 2018, we issued 757,351 shares of our common stock to LLS under the LLS Stock Purchase Agreement for net proceeds of $1.4 million.

As a result of the modifications of the SOLAR trial we announced in December 2019, we do not anticipate meeting the milestones under the LLS Stock Purchase Agreement and as such, do not expect we will receive the remaining proceeds available under the LLS Stock Purchase Agreement unless the agreement is amended, which we can provide no assurances will occur.

We do not anticipate meeting the milestones under the LLS Stock Purchase Agreement and as such, do not expect we will receive the remaining proceeds available under the LLS Stock Purchase Agreement unless the agreement is amended, which we can provide no assurances will occur.

In December 2019, we entered into a common stock purchase agreement, or the Aspire Agreement, with Aspire Capital Fund, LLC, or Aspire Capital, which provides that, subject to the terms, conditions, and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $20.0 million of shares of our common stock over the 30-month term of the Aspire Agreement.

Upon execution of the Aspire Agreement, we sold to Aspire Capital 1,598,465 shares of common stock at $0.63 per share for proceeds of $1.0 million as the Initial Purchase Shares.

In January 2020, we sold to Aspire Capital 2,200,000 shares our common stock at a weighted-average price of $1.84 per share for proceeds of $4.1 million.

In July 2020, we sold to Aspire Capital an additional 3,532,806 shares of our common stock at a weighted-average price of $1.25 for proceeds of $4.4 million.

After giving effect to these sales, we may sell an additional $10.5 million to Aspire Capital.

Under the Aspire Agreement, we have the right, in our sole discretion, on any trading day selected by us, and within certain specified limitations, to present Aspire Capital with a purchase notice, directing Aspire Capital (as principal) to purchase up to 200,000 shares of our common stock per business day, up to $20.0 million of our common stock, in the aggregate and inclusive of the Initial Purchase Shares and subsequent purchases, including those sold in July 2020, at a per share price equal to the lesser of (i) the lowest sale price of our common stock on the purchase date or (ii) the average of the three lowest closing sale prices for our common stock during the 10 consecutive business days ending on the business day immediately preceding the purchase date.

During the nine months ended September 30, 2020, we sold to Aspire Capital 6,182,806 shares of our common stock at a weighted-average price of $1.42 per share for aggregate net proceeds of $8.8 million.

As of September 30, 2020, we may sell an additional $10.2 million of shares of our common stock to Aspire Capital.

Under the Aspire Agreement, we have the right, in our sole discretion, on any trading day selected by us, and within certain specified limitations, to present Aspire Capital with a purchase notice, directing Aspire Capital (as principal) to purchase up to 200,000 shares of our common stock per business day, up to $20.0 million of our common stock, in the aggregate and inclusive of the Initial Purchase Shares and subsequent purchases at a per share price equal to the lesser of (i) the lowest sale price of our common stock on the purchase date or (ii) the average of the three lowest closing sale prices for our common stock during the 10 consecutive business days ending on the business day immediately preceding the purchase date.

We also have the right to require Aspire Capital to purchase up to an additional 30% of the trading volume of the shares for the next business day at a purchase price, or the VWAP Purchase Price, equal to the lesser of:

(i) the closing sale price of the shares on the purchase date, or (ii) ninety-seven percent (97%) of the next business day’s volume weighted average price, or each such purchase, a VWAP

(i) the closing sale price of the shares on the purchase date, or (ii) ninety-seven percent (97%) of the next business day’s volume weighted average price, or each such purchase, a VWAP Purchase.

We have the right, in our sole discretion, to determine a maximum number of shares and set a minimum market price threshold for each VWAP Purchase.

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The combined price to the public in the 2020 Public Offering for each share of common stock and accompanying one-half warrant was $1.00, which resulted in approximately $13.9 million of net proceeds to us after deducting underwriting commissions and discounts and other estimated offering expenses payable by us and excluding the proceeds, if any, from the exercise of the warrants.

In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of Coronavirus, a global pandemic.

This outbreak is causing major disruptions to businesses and markets worldwide as the virus spreads.

We cannot predict what the long-term effects of this pandemic and the resulting economic disruptions may have on our liquidity and results of operations.

The extent of the effect of the COVID-19 pandemic on our liquidity and results of operations will depend on a number of future developments, including the duration, spread and intensity of the pandemic, and governmental, regulatory and private sector responses, all of which are uncertain and difficult to predict.

The COVID-19 pandemic may make it more difficult for us to enroll patients in any future clinical trials or cause us to further delay enrollment or announcement of results from our ongoing clinical trials.

The economic uncertainty surrounding the COVID-19 pandemic may also dramatically reduce our ability to secure debt or equity financing necessary to support our operations.

We are unable to currently estimate the financial effect of the pandemic.

If the pandemic continues to be a severe worldwide crisis, it could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

We have no products approved for commercial sale and have not generated any revenue from product sales.

Since our inception and through June 30, 2020, we have generated an accumulated deficit of $182.7 million.

We will continue to require substantial additional capital to continue our clinical development and potential commercialization activities.

Accordingly, we will need substantial additional capital to continue to fund our operations.

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 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 expect to incur significant expenses and increased operating losses for at least the next several years as we continue the clinical development of, and seek regulatory approval for, our product candidates.

We expect that our operating losses will fluctuate significantly from quarter to quarter and year to year due to timing of clinical development programs and efforts to achieve regulatory approval.

In October 2020, we entered into the Purchase Agreement with the Investors.

Each share of Series A Preferred Stock is convertible into 1,000 shares of our common stock, subject to specified conditions.

The powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series A Preferred Stock are set forth in the Certificate of Designation.

Cost Restructuring Plan

In August 2019 we began implementing two phases of a cost restructuring plan to streamline the organization, reduce costs, and direct resources to advance cobomarsen and miR-29 mimics, including remlarsen and MRG-229, while reducing investments in new discovery research.

The restructuring plan identified approximately 44 positions for elimination, or approximately 50% of our then total workforce.

The eliminated positions were primarily related to research and development and corresponding project, general, and administrative support.

Through June 30, 2020, we had recorded cumulative restructuring expense of approximately $2.3 million and we expect to incur approximately $0.1 million in additional restructuring expense, primarily related to retention, during the remainder of 2020.

Summarized cash flows for the six months ended June 30, 2020 and 2019 are as follows:

Six Months Ended

In August 2019 we initiated a cost restructuring plan to streamline the organization, reduce costs, and direct resources towards prioritized initiatives and product candidates, which provided a reduction of approximately 50% of workforce in place at that time, primarily associated with research and development functions.

Through September 30, 2020, we had recorded cumulative restructuring expense of approximately $2.4 million and expect to incur approximately $0.1 million in additional restructuring expense, primarily related to retention, during the remainder of 2020.

Summarized cash flows for the nine months ended September 30, 2020 and 2019 are as follows:

Nine Months Ended

September 30,

(in thousands)

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Operating Activities

Net cash used in operating activities was $15.2 million for the six months ended June 30, 2020, compared to $19.0 million for the six months ended June 30, 2019.

The $3.8 million decrease in the six months ended June 30, 2020 was primarily the result of a $6.0 million decrease in net loss, partially offset by a $2.0 million decrease in payments of current liabilities and receipts associated with accounts receivable and prepaid expenses and other assets and a $0.2 million decrease in non-cash expenses during the six months ended June 30, 2020 compared to the six months ended June 30, 2019.

Net cash used in operating activities was $20.3 million for the nine months ended September 30, 2020, compared to $28.3 million for the nine months ended September 30, 2019.

The $8.0 million decrease in the nine months ended September 30, 2020 was primarily the result of a $11.8 million decrease in net loss, partially offset by a $3.4 million decrease in payments of current liabilities and receipts associated with accounts receivable and prepaid expenses and other assets and a $0.4 million decrease in non-cash expenses during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Investing Activities

Net cash provided by investing activities was $2.0 million during the six months ended June 30, 2020 compared to $10.2 million during the six months ended June 30, 2019.

The change in cash flow from investing activities was driven primarily by a $37.0 million decrease in the related maturities of short-term investments and a $28.7 million decrease in purchases of short-term investments during the six months ended June 30, 2020 compared to the six months ended June 30, 2019.

Net cash provided by investing activities was $1.9 million during the nine months ended September 30, 2020 compared to $21.2 million during the nine months ended September 30, 2019.

The change in cash flow from investing activities was driven primarily by a $52.0 million decrease in the related maturities of short-term investments and a $32.7 million decrease in purchases of short-term investments during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Financing Activities

Net cash provided by financing activities was $19.0 million for the six months ended June 30, 2020, compared to $0.2 million during the six months ended June 30, 2019.

During the six months ended June 30, 2020, we received net proceeds from the sale of our common stock and warrants in a public offering of $13.9 million.

Additionally, during the six months ended June 30, 2020, compared to the same period in 2019, we received higher net proceeds from other sales or issuances of common stock by $4.2 million, we received higher proceeds from notes payable by $1.7 million, and we made higher payments of principal of a notes payable by $1.0 million.

Net cash provided by financing activities was $23.6 million for the nine months ended September 30, 2020, compared to net cash used of $0.7 million during the nine months ended September 30, 2019.

During the nine months ended September 30, 2020, we received net proceeds from the sale of our common stock and warrants in a public offering of $13.9 million.

Additionally, during the nine months ended September 30, 2020, compared to the same period in 2019, we received higher net proceeds from other sales or issuances of common stock by $8.7 million and from notes payable by $1.7 million.

Contractual Obligations and Commitments

As of June 30, 2020, we had no material commitments other than the liabilities reflected and commitments disclosed in our condensed consolidated financial statements.

As of September 30, 2020, we had no material commitments other than the liabilities reflected and commitments disclosed in our condensed consolidated financial statements.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis