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Item 1. Business

2021-03-26 compared with 2020-03-13 · 300 added, 501 removed, 203 unchanged (80% of the section changed)

Company Overview

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, which are product candidates being developed for the potential treatment of patients with pathological fibrosis, including idiopathic pulmonary fibrosis, or IPF.

These product candidates are replacements for 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.

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.

The following table summarizes our product candidate pipeline:

Anticipated Milestones

Report preclinical safety and efficacy data for MRG-229 in IPF (Q2-2020)

Meet with FDA to explore a potential expedited clinical development path for cobomarsen in ATLL (Q3-2020)

Report topline data from Phase 2 clinical trial of cobomarsen in CTCL (Q3-2020)

Report primary endpoint data from Phase 2 trial of remlarsen in cutaneous fibrosis (2H-2020)

We seek to use our expertise and understanding of microRNA biology, oligonucleotide chemistry and product development to create novel products that have the potential to transform the treatment of patients with serious diseases.

The key components of our strategy are as follows:

Continue to develop cobomarsen for blood cancers where the disease process appears to be correlated with an increase in miR-155 levels, focusing on CTCL and ATLL .

Cobomarsen is currently in development for CTCL and ATLL.

Our global Phase 2 clinical trial, SOLAR, is ongoing, though enrollment has been stopped to allow for interim data analysis.

This study is assessing the potential benefit and safety of cobomarsen in patients with mycosis fungoides, or MF , the most common type of CTCL .

In addition to CTCL, we are also developing cobomarsen in ATLL, an indication where the disease process appears to correlate with an increase in miR-155 levels, the target of cobomarsen.

In January 2020, we announced interim efficacy and safety data from the ATLL arm of our ongoing Phase 1 clinical trial of cobomarsen.

Continue to develop remlarsen and MRG-229 for pathological fibrosis, focusing on the development of MRG-229 in IPF.

Remlarsen is our most advanced product candidate in fibrosis, which is currently being evaluated in a Phase 2 clinical trial assessing its safety, tolerability, and activity in the potential prevention or reduction of keloid formation in patients with a history of keloid scars, a form of pathological scarring.

In December 2019, we reported interim data from this clinical trial, which suggest that remlarsen was generally safe and well tolerated, treatment had no reported negative effect on healing, and initial volume reductions in treated keloids compared to placebo in a subset of patients were observed.

In addition, we are developing MRG-229 for IPF.

We believe that the clinical profile of MRG-229 in our preclinical studies positions this product candidate as a potentially differentiated approach to the treatment of IPF.

Utilize rare disease development pathways at the U.S.

Food and Drug Administration, or FDA, and comparable programs at foreign regulatory agencies to accelerate progression to late-stage development and early approval.

For many of our programs, we intend to focus on rare and genetic diseases where RNA modulation may produce clinical benefit, so that we can potentially take advantage of regulatory programs intended to expedite drug development.

In 2017, the FDA granted orphan drug designation to cobomarsen for the treatment of MF and the European Commission granted orphan medicinal product designation to cobomarsen for the treatment of CTCL.

We plan to apply for orphan drug designation, fast track, breakthrough therapy designation, and/or priority review when available to potentially streamline clinical development and decrease time to commercialization.

Collaborate with biotechnology and pharmaceutical companies to develop additional product candidates.

We intend to seek out collaborations for the development of compounds in our pipeline for certain disease areas where the costs would exceed our resources or in other areas where we believe that leveraging a partner’s expertise or resources will allow us to accelerate development timelines.

Use our in-house research and translational expertise to further develop our product candidate pipeline.

Our in-house research team investigates microRNAs that have been identified as potential therapeutic targets through internal efforts and academic collaborations.

We then seek to establish evidence that modulation of the microRNAs’ activity may provide benefit in pathological conditions or diseases in which the microRNA is implicated.

We believe that this internal research and expertise could provide a foundation to develop product candidates for the treatment of a variety of diseases.

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

Marketed therapies often leave room for improvements in efficacy, safety, or dosing convenience and also for competitively priced alternatives.

We believe that first-generation drugs rarely represent optimal solutions and that the potential exists to develop alternatives that improve patient outcomes, moderate side effects, enhance quality of life, ease access, and augment market competition.

Our business model is to identify product opportunities in indications for which clinical trial data demonstrating compelling proof of concept for a targeted mechanism of action already exists, but the competitive evolution of product profiles and number of entrants appears incomplete.

We intend to prioritize indications in which marketed therapies have not had substantial time to become entrenched and for which fast-follower and biosuperior competition could create significant medical and economic benefit for patients and payors.

We intend to identify and evaluate product concepts that target clinically validated molecular targets using established therapeutic modalities and incorporating proven technologies.

We will prioritize product concepts that combine these approaches to generate clinical and commercial hypotheses that provide an attractive balance of risk and opportunity, thereby representing a compelling allocation of our resources.

To date, this approach has led us to initiate research and development programs for therapeutic monoclonal antibodies for rare diseases.

We have built relevant expertise in monoclonal antibody discovery and engineering, biologics manufacturing, and nonclinical and clinical development for our target indications.

We believe our approach enables rapid discovery and development because we can learn from predecessor programs that have established the clinical proof of concept for the targets and indications we are pursuing.

This pre-existing data informs how we design, select, and develop our product candidates, including in such critical areas as pharmacokinetics, pharmacodynamics, trial endpoints, and the selection and enrollment of patients.

We believe this approach reduces the many risks associated with discovering and developing novel therapeutics.

We have prioritized the development of therapies for thyroid eye disease (“TED”), a debilitating condition caused by an autoimmune reaction whereby the immune system attacks tissues in the orbital socket.

The resulting inflammation causes fluid accumulation and excessive proliferation of fibroblasts leading to proptosis, or displacement of the eye from the socket, and diplopia, or double vision.

Until recently, there were no approved targeted therapies for the treatment of TED.

Patients were instead treated with steroids to reduce inflammation or were treated with surgery or radiation, often with unsatisfactory outcomes.

In early 2020, teprotumumab, a monoclonal antibody that targets IGF-1R, was approved by the U.S.

Food and Drug Administration (“FDA”) for the treatment of TED and is marketed in the United States as Tepezza ® by Horizon Therapeutics.

In patients receiving teprotumumab, proptosis was decreased by greater than 2 mm with 24 weeks of treatment in over 70% of patients compared to similar reductions observed in less than 20% of placebo-treated patients.

The reported results obtained with teprotumumab provide strong clinical validation linking the targeting of IGF-1R to clinical benefit in TED.

We believe that there are multiple opportunities to develop fast-follower therapeutics that improve on teprotumumab features including dosing schedule, route of administration, and cost.

We are pursuing multiple programs in parallel to quickly bring these product candidates into clinical trials.

Our first product candidate, VRDN-001, is a humanized monoclonal anti-IGF-1R antibody that we have licensed from ImmunoGen, Inc.

(“ImmunoGen”).

VRDN-001 is the same antibody sequence as AVE-1642, which was previously in development in oncology, where it was administered to over 100 patients with solid tumors.

Despite clear evidence of target engagement, development in oncology of this and other IGF-1R antibodies, including teprotumumab, was largely suspended due to lack of efficacy in late-stage clinical trials.

The successful repurposing of teprotumumab for treatment of TED suggests that VRDN-001 has the potential to demonstrate efficacy in this indication.

We expect to have clinical drug product on hand in the third quarter of 2021 and to file an investigational new drug (“IND”) application or equivalent in the fourth quarter of 2021, with initial proof of concept data in patients expected in the second quarter of 2022.

We are also developing VRDN-002, a next-generation IGF-1R monoclonal antibody, for TED.

VRDN-002 is designed to have a prolonged half-life in circulation, which we believe may reduce the total quantity of antibody that needs to be administered to achieve a therapeutic effect and may mitigate systemic side effects.

We anticipate that this reduction, in turn, may enable administration of VRDN-002 as a subcutaneous injection instead of as an intravenous injection, the route of administration used for both teprotumumab and VRDN-001.

Manufacturing of VRDN-002 is underway, and we expect to file an IND before the end of 2021.

We expect to initiate clinical development with a Phase 1 single ascending dose trial to explore safety, tolerability,

Table of Con t ents

pharmacokinetics, and target engagement of VRDN-002 in healthy volunteers.

Data from this trial is expected in mid-year 2022, and we expect to initiate the dosing of patients later in 2022.

In addition to developing therapies for TED, we have applied criteria similar to those used to select our TED research and development programs to identify other opportunities to develop fast-follower therapies in other rare disease indications.

We intend to identify and initiate additional programs over time and plan to disclose these when we are closer to initiating clinical trials in these programs.

Our goal is to develop a portfolio of biologic product candidates that improve upon both standard-of-care therapies and offer potential advantages over candidates in development.

Our initial focus for our biologic pipeline is to develop fast followers in indications in which the initially approved products, while efficacious, are incumbent in markets we believe can benefit from new entrants.

We intend to proceed under the assumption that first-in-class products are not necessarily best-in-class products, and that by developing product candidates in areas of well-characterized biology and for which the targets have been clinically de-risked by others, we can develop a pipeline of product candidates with an attractive balance of risk and reward.

Our strategy to achieve this goal is as follows:

• Rapidly advance VRDN-001 in clinical development .

VRDN-001 is based upon AVE-1642, which was administered to over 100 cancer patients.

It was well-tolerated even when co-administered with chemotherapy drugs.

Our goals are to establish proof of concept in patients and explore dose-dependency of VRDN-001 on the clinical manifestations of TED and, if positive, advance to registrational trials.

• Validate the improved half-life of VRDN-002 in the clinic.

VRDN-002 incorporates changes in the antibody Fc region that have been shown to increase the half-lives of other antibodies.

We anticipate initiating a Phase 1 trial of VRDN-002 in healthy volunteers to explore safety, tolerability, pharmacokinetics, and target engagement.

Pending positive results, we then plan to evaluate the potential benefits of VRDN-002 in TED patients.

We believe that an IGF-1R antibody with an improved half-life may lower the dose required for clinical efficacy into the range where low volume subcutaneous dosing may be feasible and expect such administration has the potential to mitigate systemic side effects reported with teprotumumab.

• Invest in the future of IGF-1R product candidates with VRDN-003.

Current IGF-1R antibodies were all generated with the intent of developing them for use in oncology.

We are pursuing multiple hypotheses to expand the treatment paradigm for TED leveraging validated mechanisms, technologies, and modalities.

• Expand our portfolio of targets by broadly searching for new opportunities aligned with our strategy.

We have dedicated resources to seek additional opportunities to develop fast-follower therapeutics for newly validated targets.

Our multidisciplinary search process evaluates scientific and clinical validation, market potential, and feasibility of quickly developing a competitive product.

We aim to build a portfolio of novel product candidates that can match or improve upon the product profile of precedent molecules and can rely on validated targets, proven technologies, and broadly accepted modalities to reduce research and development risk.

Table of Con t ents

Thyroid Eye Disease (TED)

TED, commonly associated with Graves’ Disease, is a sight-threatening autoimmune disorder affecting the eye and tissue adjacent to the eye.

Initial symptoms include a dry and gritty ocular sensation, sensitivity to light, excessive tearing, double vision, and a sensation of pressure behind the eyes, commonly associated with ocular pain.

By the time TED is clinically diagnosed, most patients have retraction of their upper eyelids causing exposure of the cornea and ensuing dryness resulting in further inflammatory changes and increased symptomatology.

In addition, TED causes soft tissue swelling, redness surrounding the eyes and protrusion of the eyes from their normal position within the orbit – proptosis.

As these inflammatory changes progress, they lead to increased erythema, redness, edema, and hemorrhagic appearance of the tissues external to the globe, adding to the symptoms of TED and exacerbating signs.

As the fibrocytes within the orbit become further involved, changes unfold within the extraocular muscles themselves - those muscles within the orbit that move the eye and hold the globe in positions of gaze.

The size of the muscles increases further exacerbating the proptosis and causing a cascade of increasing inflammation and worsening of symptoms.

As the swelling and stiffness of the muscles increase, they exert a tethering effect upon the globe, and ocular motility is disturbed.

Commonly, gaze becomes limited as the eyes become tethered by fibrotic and thickened muscles.

As the process is not perfectly symmetric, one orbit to the other, the eyes will be limited in motility and no longer line up perfectly with each other, causing a misalignment of position that is perceived by the patient as double vision, or diplopia.

Diplopia in and of itself is a disabling condition that dramatically interferes with most activities of daily living.

Patients cannot easily read, drive, navigate ambulation, or often continue in their current work.

As the volume of tissue within the fixed bony orbit increases, the inflammatory mass squeezes upon and compresses the optic nerve, which must pass through this space from globe to optic canal and central nervous system.

This compression causes loss of central vision, color vision, and visual field and can progress to loss of acuity and eventual blindness.

TED is a disease characterized by an increase in the volume of orbital fat and the extraocular muscles, the muscles around the eye.

Factors that drive the increase include inflammation, the abnormal proliferation of fibroblasts, and the accumulation of fluid which is driven, in turn, by the secretion by fibroblasts of extracellular complex carbohydrates.

From the patients’ perspective, TED causes significant functional changes in the visual system, cosmetic distortion of the facial anatomy and tissue surrounding the eye, inflammatory changes that scar ocular tissue, disabling diplopia that interferes with most activities of daily living, and potential blindness from compression of the optic nerve.

Pathologies Leading to the Development of TED

TED develops in parallel with Graves’ Disease, an autoimmune disease in which antibodies form against the thyroid-stimulating hormone receptor (“TSHR”), which is present in the thyroid and other cells such as adipocytes and fibroblasts.

A close temporal relationship exists between the onset of Graves’ Disease and the onset of TED.

Regardless of which condition occurs first, the other condition develops within 18 months in 80% of patients.

In addition to antibodies against TSHR, patients with TED also develop antibodies against IGF-1R.

Insulin-like growth factor 1 (“IGF-1”) is a hormone similar in molecular structure to insulin with higher growth-promoting activity.

IGF-1R, the receptor for IGF-1, is highly expressed in fibrocytes, cells that are derived from the bone marrow and that have the potential to differentiate into either myofibroblasts or fat cells.

IGF-1R and TSHR function in concert to regulate the proliferation and differentiation of these cells in the orbital socket.

One potential cause of TED is autoimmune antibodies against IGF-1R that lead to the activation of IGF-1R, resulting in increased proliferation, secretion of extracellular complex carbohydrates, and differentiation into fat cells.

These antibodies, and autoimmune antibodies to TSHR, can elicit an immune attack against the fibrocytes that surround the eye triggering the development of TED.

Inflammation associated with this attack combined with activation of IGF-1R leads to the wide spectrum of pathologies seen with this disease.

Exposure to other inflammatory agents, such as cigarette smoke, leads to exacerbation of the disease resulting in more severe symptoms.

Current Treatments for TED

Prior to 2020, moderate to severe cases of TED were treated off-label with steroids - as daily doses of oral prednisone, or in more severe cases, weekly doses of intravenous methylprednisolone.

Treatment with steroids is associated with a wide range of serious complications including high blood pressure, diabetes, psychological effects, personality change, insomnia, skin thinning, immunosuppression, hyperglycemia, and increased risks of infections.

Systemic steroids showed limited efficacy for most of the signs and symptoms of TED and are not a sustainable long-range intervention given the side effects.

If steroid treatment proved to be inadequate, or could not be tolerated, the only remaining options for patients were orbital radiation or

Table of Con t ents

surgery to reduce swelling, decompress orbital contents, and protect the vision.

Again, each of these therapies was incomplete and inadequate from the perspective of both patient and treating physician.

In January 2020, teprotumumab, an antibody that blocks the activation of IGF-1R, was approved by the FDA for the treatment of TED.

In two randomized, double-blind placebo-controlled trials, infusions of teprotumumab every three weeks, for a total of eight doses, led to a greater than 2 mm decrease in proptosis in 71% and 83% of patients, respectively, compared to 20% and 10% with placebo.

Treatment with teprotumumab also led to a 53% decrease in diplopia compared to a 25% decrease when patients were treated with placebo control.

Thus the defined target and its successful blockade has been de-risked and shown to provide a clinically meaningful improvement in the quality of life for these patients, allowing them to return to the workforce and to avoid radiation therapy or orbital decompressive surgeries.

Market Potential

TED has an annual incidence of approximately 19 in 100,000 people, which corresponds to over 60,000 patients in the United States.

Of these, it is estimated that between 15,000 and 20,000 patients in the United States have acute disease that requires intravenous treatment, either with teprotumumab or steroids.

At launch, Horizon Therapeutics announced a price of $14,900 per vial of Tepezza ® which translates to a list price of approximately $343,000 for a six-month course of therapy.

Horizon Therapeutics recently reported full-year 2020 net sales for Tepezza ® of $820 million.

We believe this demonstrates that TED is a large market that will accommodate multiple entrants, with multiple dimensions of potential competition including efficacy and outcomes, safety and tolerability, patient access, and price.

Our Product Candidates

Cobomarsen is currently being evaluated for miR-155 elevated hematological malignancies, including ATLL and CTCL.

Cobomarsen is an inhibitor of miR-155 .

Data reported in the scientific literature identifies miR-155 as a cancer-causing microRNA, or oncomiR.

There are several types of cancer in which high levels of miR-155 have been observed, including, among others, CTCL , certain virally-induced lymphomas such as ATLL, which is caused by the human T-lymphotropic virus type 1, or HTLV-1 , subsets of diffuse large B-cell lymphoma, or DLBCL, chronic lymphocytic leukemia, or CLL, and other types of cancer.

Based on this literature, miR-155 is implicated in regulating the expression of a number of validated cancer-related genes, including Bruton’s tyrosine kinase, or BTK, and nuclear factor kappa-light-chain-enhancer of activated B-cells, or NF-κB.

In certain B-cell lymphomas, improvement of clinical outcomes has been associated with normalization of miR-155 levels, while poor prognosis,

resistance to treatment, and recurrence of the disease are associated with elevated levels of miR-155 .

In addition to playing a role in B-cell malignancies, miR-155 is elevated in another group of malignant white blood cells, called T-cells, found in skin lesions of patients with MF.

We screened a library of locked nucleic acid, or LNA, modified oligonucleotides and identified cobomarsen as having what we believed was the best potential efficacy and drug-like properties, including improved pharmacodynamics in human T-cell and B-cell lymphoma cell lines.

We retain worldwide rights for cobomarsen.

Adult T-cell Leukemia/Lymphoma

ATLL is a blood cell malignancy that develops in a subset of patients after prolonged infection with HTLV-1 .

Literature suggests that the infection with HTLV-1 as well as the subsequent malignancies may be associated with elevation in the expression of miR-155 , the target of cobomarsen.

ATLL is typified by abnormalities in blood counts, enlarged lymph nodes, and frequent opportunistic infections.

The disease presents in indolent and aggressive forms, but the most common and lethal include the aggressive acute, or leukemic, form and the lymphomatous version.

These two manifestations lack good treatment options, and once the diagnosis is made, average life expectancy with standard treatment regimens is approximately four to eight months for the acute leukemic form and approximately 10 months for the lymphomatous variety.

In January 2020, we announced initial efficacy and safety data from the ATLL arm of our ongoing Phase 1 clinical trial of cobomarsen.

In the trial, six patients with an aggressive subtype of ATLL who at study entry had persistent residual disease after chemotherapy or other therapy had a median survival time from diagnosis of 26 months with three patients still on treatment in October 2019.

In the clinical trial, disease stabilization was marked by an observed decrease in biomarkers of tumor cell activation and proliferation, providing evidence of the biological mechanism of cobomarsen on disease stabilization.

One patient experienced two serious adverse events deemed possibly related to the study drug and discontinued treatment.

The observed safety profile of cobomarsen in ATLL through October 17, 2019 appeared to be generally safe and well tolerated with chronic dosing.

Based on these interim results, we are focusing our cobomarsen expansion indication efforts on ATLL and will request a meeting with the FDA to explore a potential expedited development pathway for cobomarsen in ATLL.

We expect to have this meeting with the FDA in the third quarter of 2020.

Cutaneous T-Cell Lymphoma

Our global Phase 2 clinical trial, called SOLAR, is evaluating cobomarsen in patients with MF, the most common type of CTCL.

MF is a slow growing form of cancer that has been associated with elevated miR-155.

This disease occurs when certain types of T-cells become cancerous.

These malignant T-cells then form specific types of skin lesions.

Although the skin is involved, the skin cells themselves are not cancerous.

According to the National Institutes of Health, or NIH, MF usually occurs in adults over age 50, although the disease may occur at any age.

We believe the total population of patients with CTCL in the United States and Canada is approximately 30,000.

The Lymphoma Research Foundation estimated the prevalence of MF to be 16,000-20,000 cases in the United States, with 3,000 new diagnoses of MF each year.

According to the Leukemia and Lymphoma Society, or LLS, in a 2014 publication, approximately 70% to 80% of patients are diagnosed with early-stage MF that impacts mostly the skin.

In these patients, the disease typically has a slow progression, but is accompanied by considerable morbidity and quality of life detriments such as severe itchiness, pain, frequent infections of skin lesions, and disfiguration due to widespread tumors and plaques.

The five-year survival rate for newly diagnosed patients with CTCL is approximately 90%.

As CTCL progresses, the cancer may involve the lymph nodes, blood, and internal organs.

The five-year survival rate in later stage patients with CTCL (stages IIB, III, IV) is approximately 20-60% depending on the stage.

There are currently no curative therapies for CTCL, and concurrent and consecutive treatments, many with significant adverse effects, tend to be given until loss of response.

We believe there is a need for new and improved therapies in CTCL to treat the disease and reduce symptoms, such as itchiness and painful skin lesions, and to prolong survival in patients with aggressive disease.

There is no universally accepted standard of care, or SOC, for treatment of MF.

Treatment is dependent on stage of disease and responsiveness to previous therapy and is divided into skin-directed therapy and systemic treatments.

For certain patients with advanced disease, allogeneic stem cell transplantation may offer prolonged survival, but the five-year survival rate is approximately 50%.

In our Phase 1 clinical trial of cobomarsen treating MF patients, we enrolled patients with mild/moderate to severe MF (stages I-III), without blood or node involvement.

In the first part of the Phase 1 clinical trial, six patients were treated with 75 mg cobomarsen per dose injected directly into tumors.

All tumors showed a response as measured by the Composite Assessment of Index Lesion

Severity, or CAILS, score and decreased tumor cell clones.

In addition, analysis of injected tumors also indicated an increased expression of several direct targets of miR-155, suggesting that the drug may be inhibiting its intended molecular target.

The intra-tumoral administration was safe and well tolerated.

In the second part of the Phase 1 clinical trial, cohorts were dosed by multiple systemic routes of administration, including subcutaneous injection, or SQ injection, intravenous infusion, or IV infusion, and intravenous bolus injection, or IV bolus .

Efficacy and tolerability were assessed at doses of 300 mg, 600 mg and 900 mg for SQ injection and IV infusion and at 300 mg for IV bolus .

Based on the modified Severity Weighted Assessment Tool, or mSWAT score, which is a measurement of the severity of skin disease over a patient’s entire body, 33 of 36 patients (92%) showed improvements in mSWAT scores.

These improvements in mSWAT scores were observed as early as 17 days after a patient’s first dose (the first post-treatment assessment), with the greatest improvement in mSWAT scores seen after one or more months of dosing.

Responses were durable, with 77% of the 13 patients that achieved a partial response (all doses tested) maintaining a response for at least four consecutive months, or ORR4, based on mSWAT.

Additionally, five of eight patients (63%) receiving 300 mg IV infusion, which was the dose selected for the Phase 2 SOLAR clinical trial, achieved a 50% or greater mSWAT score reduction and four (50%) maintained the response for at least four consecutive months.

Cobomarsen treatment by SQ injection or IV bolus routes of administration was generally safe and well tolerated.

In April 2019, we advanced cobomarsen into the global Phase 2 SOLAR clinical trial in patients with MF.

SOLAR is an open-label, randomized, controller, parallel group study designed to evaluate the safety and efficacy of 300 mg of cobomarsen, given by IV infusion, versus Zolinza (vorinostat) as an active control.

SOLAR is designed to enroll patients with moderate to severe MF (stages Ib-III), without node or blood involvement.

In December 2019, we announced plans to stop the enrollment of new patients in SOLAR and conduct and interim analysis.

This analysis will provide top line, controlled data to assess the observed benefit of cobomarsen based on disease response in the skin in comparison to vorinostat.

A total of 37 patients have been enrolled and will continue to be evaluated for safety and clinical response.

We are amending the SOLAR protocol to change the planned futility analysis to an interim analysis after the last patient enrolled has completed approximately six months of treatment and follow up.

We plan to assess the rate of an objective response only in the skin, that is durable for four months, defined as 50% or greater improvement in the severity of a patient’s skin disease over the entire body as measured by mSWAT.

This change from assessing overall response to skin response was driven by the fact that patients allowed into the study only have skin disease and are verified not to have blood, nodes, or visceral involvement at study entry.

Improvements in skin disease are thus intended to reflect efficacy of the drug whereas progression in skin disease reflect lack of efficacy.

Follow up analysis for blood, nodes or visceral disease may be conducted based on the results obtained using mSWAT.

We believe that evaluation of data from this set of patients could provide important evidence regarding the safety and efficacy of cobomarsen for the treatment of CTCL in a shorter period of time and require fewer resources.

We believe that obtaining controlled clinical data from this cohort of patients may allow for a better assessment of the clinical potential of cobomarsen as compared to data from our Phase 1 trial.

We intend for this controlled clinical data to form the basis of determining what additional clinical investigation of cobomarsen in CTCL is warranted, if any, and what would be required to potentially obtain regulatory approval.

Topline data from this trial is expected to be announced in the third quarter of 2020.

microRNA-29 Mimics, including Remlarsen and MRG-229

We are developing miR-29 mimics, or replacements, for miR-29, a microRNA that is found at abnormally low levels in a number of pathological fibrotic conditions.

Our lead miR-29 mimics are remlarsen and MRG-229.

Remlarsen is our most advanced product candidate in fibrosis and is intended for local or compartmental applications.

Remlarsen is currently being evaluated in a Phase 2 clinical trial assessing its safety, tolerability, and activity in the potential prevention or reduction of keloid formation in patients with a history of keloid scars, a form of pathological scarring.

In December 2019, we reported interim data from this clinical trial, which suggests that remlarsen was generally safe and well tolerated, no negative effect on healing was reported, and initial reductions in keloid volume from remlarsen-treated wounds compared to placebo-treated wounds were observed in a subset of patients.

Based on these data, we decided to continue our analysis of patient data at the one-year primary endpoint of the study and expect to report data in the second half of 2020.

We are also evaluating remlarsen in ocular fibrotic indications, such as corneal injury and keratitis.

In April 2019, we presented data in pre-clinical studies testing remlarsen for its ability to penetrate the injured cornea and reduce fibrosis after an injury.

Topical administration of remlarsen to an injured rat cornea resulted in faster healing of the cornea and reduced scarring/hazing.

Remlarsen has also been in in vitro studies to regulate miR-29 pharmacodynamic biomarkers in the cornea.

With this data, we expect to seek a collaboration partner for remlarsen.

In addition, we are developing MRG-229 for IPF.

MRG-229 is a second-generation miR-29 mimic, which can be administered systemically.

We believe that the preclinical efficacy and preliminary nonclinical safety profile of MRG-229 positions this product

candidate as a potentially differentiated approach to the treatment of IPF.

In October 2019, we announced the first preclinical efficacy results for MRG-229.

Specifically, second generation, targeted miR-29 mimics appeared to show antifibrotic activity in normal human lung fibroblasts, or NHLFs, and human precision cut lung slices.

MRG-229, a stabilized, conjugated miR-29 mimic, was also observed to block fibrosis in bleomycin-induced pulmonary fibrosis in mice, with increased potency as compared to first generation miR-29 mimics.

MRG-229 appeared to demonstrate activity by both intravenous and subcutaneous routes of administration.

We expect to report additional preclinical safety and efficacy data during the second quarter of 2020.

This program is supported by a grant in collaboration with the NIH and Yale University.

We initially discovered the role of miR-29 in pathological cardiac fibrosis.

Since this initial discovery, miR-29 has been implicated in pathological fibrosis in multiple organs including the skin, eye, lung, liver, tendon, muscle, and kidney.

miR-29 is understood by the scientific community to play a role in the regulation of certain processes that contribute to fibrosis, including the initiation and maintenance of fibrosis through transforming growth factor beta, or TGF-ß, signaling and the deposition of the components that make up fibrotic tissue, including collagen and extracellular matrix, or ECM, proteins.

Furthermore, both fibrotic ECM and TGF-ß are believed to down-regulate miR-29 levels, leading to continuously increased TGF-ß expression and uncontrolled ECM production.

miR-29 levels are abnormally low in multiple fibrotic indications, and lower levels of miR-29 are correlated with increased severity of fibrosis.

As such, we believe that increasing the levels of miR-29 by administration of a miR-29 mimic could be beneficial in the treatment of several pathological fibrotic conditions.

Although various fibrotic indications are potentially distinct, they share a number of features, including the activation of the cells that initiate the deposition of fibrotic tissue or fibroblast activation, excessive deposition of collagen and other fibrosis-associated pathways, and resulting organ dysfunction.

We believe the signaling pathways and genes regulated by miR-29 might be shared among multiple fibrotic indications and that increasing miR-29-like activity may provide potential benefit in any of these.

To demonstrate mechanistic proof-of-concept and as a potential initial indication, we initially focused on skin fibrosis.

We believe data derived from skin fibrosis trials may also facilitate development of a product candidate intended for the treatment of patients who suffer from IPF, ocular fibrosis, tendon fibrosis, and other major organ pathological fibrosis.

Pathological Fibrosis

Fibrosis describes the development of fibrous connective tissue as a response to injury or damage.

Fibrosis may refer to the deposition of connective tissue that occurs as part of normal healing or to the excess tissue deposition that occurs as a disease process.

When fibrosis occurs in response to injury, the term “scarring” is used.

Pathological fibrosis can occur in many tissues of the body, either as a primary event or as a result of inflammation or damage.

In every case, regardless of the trigger, collagen build up occurs, which can result in scarring of vital organs such as the skin, lung, liver, eye, kidney, tendon, muscle, and heart, leading to irreparable damage and eventual organ failure.

We believe there is a significant need for additional clinical therapeutic approaches to treating pathological fibrosis.

Below is a description of several types of pathological fibrosis for which we may seek to develop a product candidate based on a replacement for miR-29:

Type of Pathological Fibrosis

Skin Fibrosis

Scarring is a result of an overproduction of collagen in a healing wound.

Scarring may continue to thicken for up to six months or may overgrow the site of the wound, even after the wound has healed.

Hypertrophic scars and keloids are abnormal wound responses and represent an excessive connective tissue response to skin trauma, inflammation, surgery, or burns.

Hypertrophic scars and keloids are characterized by local fibroblast proliferation and overproduction of collagen.

Both hypertrophic scars and keloids are diseases that tend to be painful and itchy, restrict mobility, and are resistant to treatment.

Pulmonary Fibrosis

Pulmonary fibrosis, also known as lung fibrosis, is caused by accumulation of scar tissue surrounding the air sacs (interstitial space) in the lung.

As a result, the lung tissue becomes stiff and loses the ability to expand.

The scar tissue also prevents normal transport of oxygen.

The result is a progressive respiratory failure, with symptoms that include persistent cough, chest pain, difficulty breathing and fatigue.

Pulmonary fibrosis leads to cardiac failure and death.

Pulmonary fibrosis may occur as a secondary condition in various other diseases, but in many cases the underlying cause is not clear and is referred to as “idiopathic” pulmonary fibrosis or IPF.

IPF is a chronic, progressive lung disease which ultimately leads to death in many of the patients.

This condition causes scar tissue to build up in the lungs, which makes the lungs unable to transport oxygen into the bloodstream effectively.

Liver Fibrosis

Liver fibrosis refers to the scar tissue and nodules that replace liver tissue and disrupt liver function.

Major causes of liver fibrosis are alcohol consumption, chronic hepatitis B virus infection, hepatitis C virus infection, and metabolic disorders, including non-alcoholic fatty liver disease and non-alcoholic steatohepatitis.

Liver fibrosis is a major global problem driven by increasing rates of obesity and diabetes.

Infection or inflammation of the eye results in impairment of visual function.

Chronic inflammation can ultimately lead to fibrosis.

Eye fibrosis diseases include retinal fibrosis (such as diabetic retinopathy, diabetic vitreoretinopathy, age macular degeneration), corneal fibrosis (such as post-traumatic or infections corneal fibrosis and Fuch’s endothelial corneal dystrophy), and other indications (such as prevention of fibrosis complications in glaucoma trabeculotomy).

Remlarsen Clinical Development

In 2017, we announced the data from a single-center, Phase 1, double-blind, placebo-controlled, single and multiple dose-escalation clinical trial for remlarsen that enrolled 54 healthy volunteers.

In the trial, we observed mechanistic proof-of-concept for remlarsen, based on a statistically-significant reduction in fibroplasia, or scar tissue deposition, with no adverse effects on incisional wound healing when remlarsen was given locally by intradermal injection.

In July 2018, we announced the initiation of a Phase 2 double-blind, randomized clinical trial of remlarsen, which is designed to treat fibrotic diseases, in patients with a predisposition for keloid formation.

This clinical trial is designed to assess the safety, tolerability, and activity of remlarsen in the prevention or reduction of keloid formation in patients with a history of keloids.

Keloids are a common condition that is disfiguring and can be painful, itchy, and emotionally troubling to those that experience them.

They are typically smooth, hard, benign growths that form when scar tissue grows excessively.

Enrollment has been completed, and 14 patients who were historically predisposed to keloid formation after trauma to the skin have been dosed and are being followed at multiple clinical sites in the United States.

Patients received small, matching excisional wounds that were sutured and then injected with either remlarsen or placebo.

In this design, patients are serving as their own control, which increases the statistical power of the clinical trial.

The lesions will be observed for up to 12 months to determine the presence or absence of keloid formation.

Based on this data, we have decided to continue our analysis of patient data at the one-year primary endpoint of the study and expect to report data in the second half of 2020.

With this data, we expect to seek a collaboration partner for remlarsen.

In October 2018, we announced data from our preclinical studies investigating the antifibrotic effects of remlarsen in corneal ulceration of rats.

We believe the results obtained in the study suggest that topical application of remlarsen may be an effective treatment to preserve vision in patients suffering from multiple conditions resulting in corneal scarring, which remains one of the leading causes of blindness worldwide.

MRG-110 is an inhibitor of miR-92, a microRNA expressed in endothelial cells, which has been observed in preclinical studies to be a regulator of new blood vessel creation and other wound healing processes.

We believe that MRG-110 may have the potential to be used for the treatment of heart failure and other conditions where patients may benefit from increased vascular flow and accelerated healing, such as complicated lacerations in high risk patients or burns.

We have completed two Phase 1 clinical trials in normal human volunteers.

A single and multiple ascending dose study with intradermal administration and a single ascending dose study with systemic administration were completed in 2019.

A total of 65 subjects were exposed for up to three weeks.

MRG-110 was observed to be generally safe and well tolerated, with no evidence of unwanted distal angiogenesis, acute inflammatory toxicities, or significant abnormalities in liver, kidney, or blood, with no injection site reactions.

We have historically developed MRG-110 under a license and collaboration agreement, or the Servier Collaboration Agreement, with Les Laboratoires Servier and Institut de Recherches Servier, or collectively, Servier.

In August 2019, Servier terminated the Servier Collaboration Agreement effective in February 2020.

As a result, we regained rights to MRG-110 in all indications and all territories globally, including rights in the US and Japan, which we already controlled under the Servier Collaboration Agreement.

We have completed two Phase 1 clinical trials of MRG-110 and plan to continue to explore potential collaborations to support the future development of MRG-110.

Chronic Heart Failure Physiopathology

The imbalance between oxygen demand and supply to cardiomyocytes, or cells in the heart responsible for pumping blood, plays an important role in the pathophysiology of heart failure.

CHF is associated with a decrease of myocardial blood flow that begins at the early stages of the heart failure.

The preservation of the small blood vessels of the heart is able to increase blood flow in case of increased demand.

In CHF, this coronary flow reserve was shown to be reduced secondary to capillary dysfunction and a decrease in density of these vessels, limiting oxygen supply to cardiomyocytes.

Analysis of heart tissue from patients suffering from CHF revealed a reduction of coronary microvascular density.

Sixty percent of cases of CHF patients with reduced ejection fraction, or HFrEF, have an ischemic origin.

Progressive loss of cardiomyocytes and increase in fibrosis decrease capillary density.

Compensatory elongation and hypertrophy of remaining cardiomyocytes further increase capillary length and inter-capillary distance reducing oxygenation.

CHF is one of the leading causes of mortality and morbidity in the world.

The prognosis remains poor with 45-60% mortality five years after diagnosis.

Quality of life in patients is impaired, from mild to severe limitations in daily life.

To date, SOC treatment slows down the progression of disease by inhibiting the neuro-hormonal activation and reducing vascular bed congestion.

Coronary revascularization, with percutaneous coronary intervention or coronary arterial bypass grafting, have been shown to improve patient prognosis when the obstruction is located in the epicardial coronaries but is generally of no benefit in cases when the flow is limited downstream in the microcirculatory network.

We believe that new reparative/regenerative solutions are needed for improving patient cardiac function that could consequently make a difference in daily quality of life with a further reduction in morbidity and mortality.

The restoration of the microcirculation appears to be a potentially innovative therapeutic way to improve cardiac function.

MRG-110 was observed to reduce infarct size in multiple preclinical models of acute myocardial infarction, leading to an improved cardiac function.

The cardioprotective effects were correlated with reduced cell death, reduced inflammation, and improved neovascularization of the affected myocardium.

Similarly, improved vascularization and cardiac function were observed after MRG-110 treatment in a porcine model of heart failure induced by chronic myocardial ischemia.

Cutaneous wounds

In preclinical studies, we observed MRG-110 accelerating wound healing in normal, healthy farm pigs.

In induced excisional wounds in healthy pigs, MRG-110 appeared to result in increased perfusion, measured by laser Doppler imaging on Day 14, and more rapid wound closure compared to wounds in control animals treated similarly with vehicle control or SOC.

Within the dermal portion of the wound bed, there was a dose dependent increase in granulation tissue and in vascularization on day 49, five weeks after the last dose, in the wounds treated with MRG-110 compared with SOC-treated wounds.

We believe the effects on wound

healing seen in animal models support further evaluation of MRG-110 for its potential to improve wound healing by increasing revascularization and granulation tissue formation, and ultimately wound closure in acute settings.

The potential indications include acceleration and improvement of wound healing in indications such as burns, skin flaps, grafts, or laparotomy or sternotomy incisions in patients with high risk of poor wound closure.

Background on microRNAs

microRNAs are transcribed from the genome and unlike messenger RNA, or mRNA, they do not encode proteins.

microRNAs function by preventing the translation of mRNAs into proteins and/or by triggering degradation of these mRNAs.

Studies have shown that gene regulation by microRNAs is often not a decisive on and off switch but a subtle function that fine-tunes cellular phenotypes and becomes more pronounced during stress or disease conditions.

microRNAs were first discovered in 1993 and have since been found in nearly every biological system examined since that time.

They are highly conserved across species, demonstrating their importance to biological functions and cellular processes.

According to the Sanger Institute, over 2,000 microRNAs have been identified in humans.

A body of evidence has shown that inappropriate levels of particular microRNAs are directly linked to a range of serious diseases, many of which are poorly served by existing therapies.

microRNAs can affect the balance of protein expression and serve as “command and control” nodes that directly coordinate multiple critical systems simultaneously.

This effect on systems biology is a naturally occurring homeostatic process that becomes disrupted in certain disease states.

As a result, developing microRNA-based therapeutics is fundamentally different from the single-protein, single-target approach that is the foundation of traditional small and large molecule drugs.

Our Approach to Drug Discovery and Development

Our research and development strategy is designed to accelerate timelines and reduce development risk.

The goal of our translational medicine strategy is to progress rapidly to first-in-human trials once we have adequately established mechanistic proof-of-concept, consisting of pharmacokinetics, pharmacodynamics, safety, and manufacturability of the product candidate in preclinical studies.

Programs that progress into human trials are designed to be accompanied by a validated set of pharmacodynamic biomarkers that allow us to verify the mechanism of drug action in humans and to potentially stratify and enrich the study population.

Through this approach, we seek to reduce the risk of our programs by quantifying target engagement and identifying the likely efficacious dose prior to progression to Phase 2 clinical trials.

Although there are over 2,000 identified human microRNAs, not all of them have been shown to be causal in disease.

Our approach to drug discovery and development begins with the identification of potentially pathological microRNAs.

We apply three general approaches to the identification of potentially pathological, or disease-causing, microRNAs:

(i) profiling of microRNA expression in diseased tissue versus normal tissue to identify microRNAs that are found at abnormally high or low levels;

(ii) identification of microRNAs that are located within genes (typically in non-protein coding segments) of validated disease-relevant genes and thus simultaneously expressed with the disease associated gene;

and (iii) evaluation of microRNAs that are predicted to directly modulate the expression of specific, disease-relevant genes.

We believe that the microRNA inhibitor candidates face lower delivery hurdles compared to microRNA mimics and have better drug-like properties in regard to affinity for their targets, stability, drug distribution, and pharmacodynamics.

To improve their therapeutic potential, we chemically modify these compounds with changes such as LNA substitution of the ribose sugar in many of the nucleosides, and deoxyribonucleoside, or DNA, substitution of other nucleosides.

In conditions where a deficit in microRNA expression has been identified as disease causing, microRNA replacements, which are modified, often double-stranded RNA structures that are recognized by the RNA-induced silencing complex, can serve as chemically-synthesized replacements for microRNAs.

Historically, the delivery of double-stranded RNAs, such as microRNA mimics, or replacements, has been a significant hurdle to overcome for drug development because these molecules are very rapidly degraded and because uptake into cells can be inefficient.

To prevent the rapid degradation of our microRNA mimics, we have used chemical modification of the nucleotides and inter-nucleotide bonds that make them resistant to the enzymes that normally degrade natural nucleic acids.

Our delivery approach for double-stranded microRNA replacements is to append a conjugate to the molecule to enhance cellular uptake.

The selection of the conjugate is dependent upon the intended therapeutic use.

We have deployed hydrophobic conjugates, such as cholesterol, that are able to improve pharmacokinetics and allow for enhanced cellular uptake.

We are also exploring a range of conjugates that help

in targeting specific tissues and cells.

Our strategy with microRNA replacements has centered on opportunities for efficient delivery of the molecules with an emphasis on local and topical applications, such as injections in the skin or eye.

For organs where topical or local applications are not feasible, such as the liver or lung, we have employed conjugates that have demonstrated successful delivery after systemic administration.

Our approach to translational medicine is focused on rapidly testing the molecular hypothesis in human cell lines and animal models to demonstrate safety and measure pharmacokinetics and pharmacodynamics, and finally designing and conducting small, efficient, and targeted human Phase 1 clinical trials.

We typically select an initial indication that is genetically defined or is a rare disease where abnormal levels of a microRNA have been implicated.

These early-stage Phase 1 clinical trials are designed to test the mechanistic relevance and develop mechanistic proof-of-concept in humans in a setting that provides the opportunity to develop a biomarker toolkit for a mechanism of action that we believe has broader disease relevance.

The mechanistic proof-of-concept studies are designed to provide relevant information that helps to reduce development risks in humans.

Our aim is to demonstrate that the expression levels of the microRNA could potentially serve as a diagnostic indicator that allows for better patient selection for later clinical trials and in additional indications.

At the same time, we seek to confirm molecular activity of the drug.

By measuring the pharmacodynamics of target engagement, we are able to show that the product candidate effectively enters the appropriate cell and binds to its intended target.

This process is particularly important for oligonucleotide drugs.

We can also measure the effects on gene expression downstream of the intended target that create a plausible link between target engagement and a mechanism of disease.

Exploratory endpoints can provide us with verification of the pharmacodynamic effects of the drug based on biomarker readouts and morphological alterations.

This translational strategy allows us to answer many questions about the drug target pair and provides improved confidence that the molecular basis of drug action is relevant in humans.

Having built confidence in the drug mechanism and demonstrated an acceptable safety profile, later-stage clinical trials will be designed to establish appropriate dose and therapeutic efficacy.

Strategic Collaborations and License Agreements

Strategic Alliance and Collaboration with Servier

In October 2011, we entered into the Servier Collaboration Agreement with Servier for the research, development, and commercialization of RNA-targeting therapeutics in cardiovascular disease.

Under the Servier Collaboration Agreement, we granted Servier an exclusive license to research, develop, manufacture, and commercialize RNA-targeting therapeutics for certain microRNA targets in the cardiovascular field.

In accordance with the terms of the Servier Collaboration Agreement and based on the notice we received from Servier in August 2019, the Servier Collaboration Agreement was terminated in February 2020.

As a result, we regained rights to MRG-110 in all indications and all territories globally, including rights in the United States and Japan, which we already controlled under the Servier Collaboration Agreement.

We are currently evaluating development strategies for MRG-110, which may include seeking new development and licensing collaborators.

Any future development of MRG-110 is subject to the availability of sufficient capital resources to continue such development, including possible collaboration agreements

During the years ended December 31, 2019 and 2018 , we recognized revenue under the Servier Collaboration Agreement of $4.3 million and $7.4 million , respectively.

License Agreement with the University of Texas

As of December 31, 2019 , we had one exclusive patent license agreement, or the UT License Agreement, with the Board of Regents of The University of Texas System, or the University of Texas.

Under the UT License Agreement, the University of Texas granted us exclusive and nonexclusive licenses to certain patent and technology rights.

At the time the UT License Agreement was entered into, the University of Texas was a minority stockholder.

In consideration of rights granted by the University of Texas, we are required to:

(i) pay a nonrefundable up-front license documentation fee in the amount of $10 thousand ;

(ii) pay an annual license maintenance fee in the amount of $10 thousand starting one year from the date of the agreement;

(iii) reimburse the University of Texas for actual costs incurred in conjunction with the

filing, prosecution, enforcement, and maintenance of patent rights prior to the effective date;

and (iv) bear all future costs of and manage the filing, prosecution, enforcement, and maintenance of patent rights.

During the years ended December 31, 2019 and 2018 , we incurred immaterial up-front fees and immaterial maintenance fees, which were recorded as research and development expense.

All costs related to the filing, prosecution, and maintenance of patent and technology rights are recorded as general and administrative expense when incurred.

Under the terms of the UT License Agreement, we may be obligated to make the following future milestone payments for each licensed product candidate:

(i) up to approximately $0.6 million upon the initiation of defined clinical trials;

(ii) $2.0 million upon regulatory approval in the United States;

and (iii) $0.5 million per region upon regulatory approval in other specified regions.

Additionally, if we or any of our sublicensees successfully commercialize any product candidate subject to the UT License Agreement, we are responsible for royalty payments in the low-single digits based upon net sales of such licensed products and payments at a percentage in the mid-teens of any sublicense income, subject to specified exceptions.

The University of Texas’s right to these royalty payments will expire upon the expiration of the last patent claim subject to the UT License Agreement.

During the year ended December 31, 2019 , we did not incur any expenses related to milestone payments.

During the year ended December 31, 2018 , we incurred $0.1 million of expenses for milestone payments.

The license term extends on a product-by-product and country-by-country basis until the expiration of the last to expire of the licensed patents that covers such product in such country.

Upon expiration of the royalty payment obligation, we will have a fully paid license in such country.

We may also terminate the UT License Agreement for convenience upon a specified number of days’ prior notice to the University of Texas.

The University of Texas also has the right to earlier terminate the UT License Agreement after a defined date under specified circumstances where we have effectively abandoned our research and development efforts or have no sales.

The UT License Agreement will terminate under customary termination provisions including automatic termination upon our bankruptcy or insolvency, upon notice of an uncured material breach, and upon mutual written consent.

All charges incurred under the UT License Agreement have been expensed to date due to the uncertainty as to future economic benefit from the acquired rights.

License Agreement with Roche Innovation Center Copenhagen A/S (formerly Santaris Pharma A/S)

We are party to a license agreement with Santaris Pharma A/S, which subsequently changed its name to Roche Innovation Center Copenhagen A/S, or RICC, which was acquired by F.

Hoffmann-La Roche Ltd, or Roche, in 2014.

The agreement was entered into in June 2010, amended in October 2011, amended and restated in December 2012, and further amended in August 2019, or the RICC License Agreement.

At the time the RICC License Agreement was entered into, Roche was a minority stockholder.

Under the RICC License Agreement, we received exclusive and nonexclusive licenses from RICC to use specified technology of RICC, or the RICC Technology, for specified uses including research, development, and commercialization of pharmaceutical products using this technology worldwide.

Under the RICC License Agreement, we have the right to develop and commercialize the RICC Technology directed to four specified targets and the option to obtain exclusive product licenses for up to six additional targets.

The acquisition of Santaris Pharma A/S by Roche was considered a change-of-control under the RICC License Agreement, and as such, certain terms and conditions of the RICC License Agreement changed, as contemplated and in accordance with the RICC License Agreement.

These changes primarily relate to milestone payments reflected in the disclosures below.

If we exercise our option to obtain additional product licenses or to replace the target families, we will be required to make additional payments to RICC.

Under the terms of the RICC License Agreement, milestone payments were previously decreased by a specified percentage as a result of the change of control by RICC referenced above.

We are obligated to make milestone payments for each licensed product of up to $5.2 million , which is inclusive of a potential product license option fee.

Certain of these milestones will be increased by a specified percentage if we undergo a change of control as defined under the RICC License Agreement.

If we grant a third party a sublicense to the RICC Technology, we are required to remit to Roche up to a specified percentage of the up-front and milestone and other specified payments that we receive under its sublicense, and if such sublicense covers use of the RICC Technology in the United States or the entire European Union, or EU , we will not have any further obligation to pay the fixed milestone payments noted above.

During the years ended December 31, 2019 and 2018, we incurred $0.1 million and $0.7 million , respectively, of expense related to a milestone reached under the RICC License Agreement, which is included in research and development expense in our consolidated statements of operations and comprehensive loss.

If we or our sublicensee successfully commercializes any product candidate subject to the RICC License Agreements, then RICC is entitled to royalty payments in the mid-single digits on the net sales of such product, provided that if such net sales are made by a sublicensee under the RICC License Agreement, RICC is entitled to royalty payments equal to the lesser of a percentage in

the mid-single digits on the net sales of such product or a specified percentage of the royalties paid to us by such sublicensee, subject to specified restrictions.

We are obligated to make any such royalty payments until the later of:

(i) a specified anniversary of the first commercial sale of the applicable product or (ii) the expiration of the last valid patent claim licensed by RICC under the RICC License Agreement underlying such product.

Upon the occurrence of specified events, the royalty owed to RICC will be decreased by a specified percentage.

The RICC License Agreement will terminate upon the latest of the expiration of all of RICC’s royalty rights, the termination of the last miRagen target or the expiration of its right to obtain a product license for a new target under the RICC License Agreement.

We may also terminate the RICC License Agreement for convenience upon a specified number of days’ prior notice to RICC, subject to specified terms and conditions.

Either party may terminate the RICC License Agreement upon an uncured material breach by the other party and RICC may terminate the RICC License Agreement upon the occurrence of other specified events immediately or after such event is not cured within a specified number of days, as applicable.

All charges incurred under the RICC License Agreement have been expensed to date due to the uncertainty as to future economic benefit from the acquired rights.

During the year ended December 31, 2019 , we made no payments to RICC for raw materials to be used in our drug manufacturing process.

During the year ended December 31, 2018 , we made $0.3 million in payments to RICC for raw materials.

Subcontract Agreement with Yale University

We are party to a subcontract agreement that began in October 2014 and a subaward agreement that began in March 2015, or the Yale Agreements, with Yale University, or Yale, which were subsequently amended.

Under the Yale Agreements, we are providing specified services regarding the development of a proprietary compound that targets miR-29 in the indication of IPF.

Yale entered into the Yale Agreements in connection with a grant that Yale received from the NIH for the development of a miR-29 mimic as a potential therapy for pulmonary fibrosis.

In consideration of our services under the Yale Agreements, Yale has agreed to reimburse us up to a specified amount over five years, subject to the availability of funds under the grant and continued eligibility.

Under the terms of the Yale Agreements, we retain all rights to any and all intellectual property developed solely by us in connection with the Yale Agreements.

Yale has also agreed to provide us with an exclusive option to negotiate in good faith for an exclusive, royalty-bearing license from Yale for any intellectual property developed by Yale or jointly by the parties under the Yale Agreements.

Yale is responsible for filing, prosecuting, and maintaining foreign and domestic patent applications and patents on all inventions jointly developed by the parties under the Yale Agreements.

Through December 31, 2019 , we received $0.9 million under the Yale Agreements.

The Yale Agreements terminate automatically on the date that Yale delivers its final research report to the NIH under the terms of the grant underlying the Yale Agreements.

Each party may also terminate the Yale Agreements upon a specified number of days’ notice in the event that the NIH’s grant funding is reduced or terminated or upon material breach by the other party.

License Agreements with the t2cure GmbH

We are party to a license and collaboration agreement, or the t2cure Agreement, that began in October 2010 with t2cure GmbH, or t2cure, which was subsequently amended.

Under the t2cure Agreement, we received a worldwide, royalty bearing, and exclusive license to specified patent and technology rights relating to miR-92.

In consideration of rights granted by t2cure, we paid an up-front fee of $46 thousand and we are obligated to:

(i) pay an annual license maintenance fee in the amount of €3 thousand ($3 thousand as of December 31, 2019 ) and (ii) reimburse t2cure for costs incurred in conjunction with the filing, prosecution, enforcement, and maintenance of patent rights.

Under the terms of the t2cure Agreement, we are obligated to make the following future milestone payments for each licensed product, as defined in the t2cure Agreement:

(i) up to approximately $0.7 million upon the initiation of certain defined clinical trials;

(ii) $2.5 million upon regulatory approval in the United States;

and (iii) up to $1.5 million per region upon regulatory approval in the EU or Japan.

Additionally, if we or any of our sublicensees successfully commercializes any product candidate subject to the t2cure Agreement, we are responsible for royalty payments equal to percentages in the low-single digits upon net sales of licensed products, and under specified circumstances, sublicense fees equal to a percentage in the low twenties of sublicense income received by us.

We are obligated to make any such royalty payment until the later of:

(i) the tenth anniversary of the first commercial sale of the applicable product or (ii) the expiration of the last valid claim to a patent licensed by t2cure under the t2cure Agreement covering such product.

If such patent claims expire prior to the end of the ten -year term, then the royalty owed to t2cure

will be decreased by a specified percentage.

We also have the right to decrease our royalty payments by a specified percentage for royalties paid to third parties for licenses to certain third-party intellectual property.

The license term extends on a country-by-country basis until the later of:

(i) the tenth anniversary of the first commercial sale of a licensed product in a country, and (ii) the expiration of the last to expire valid claim that claims such licensed product in such country.

Upon expiration of the royalty payment obligation, we will have a fully paid license in such country.

We have the right to terminate the t2cure Agreement at will, on a country-by-country basis, after 60 days’ written notice.

The t2cure Agreement will also automatically terminate upon our bankruptcy or insolvency or upon notice of an uncured material breach.

All charges incurred under the t2cure Agreement have been expensed to date, due to the uncertainty as to future economic benefit from the acquired rights.

License Agreement with The Brigham and Women’s Hospital

We were party to an exclusive patent license agreement, or the BWH License Agreement, with The Brigham and Women’s Hospital, or BWH.

The BWH License Agreement began in May 2016 and provided us with an exclusive, worldwide license, including a right to sublicense, to specified patent rights and a nonexclusive, worldwide license, including a right to sublicense, to specified technology rights of BWH, each related to certain microRNAs believed to be involved in various neurodegenerative disorders.

In December 2019, we delivered notice of termination to BWH of the BWH License Agreement, effective March 8, 2020.

Per the terms of the BWH License Agreement, we are responsible to pay to BWH any unreimbursed, accrued, or due patent costs due to BWH as of the termination date.

Upon termination of the BWH License Agreement, we ceased all use of any licensed patent rights under the BWH License Agreement.

Manufacturing

We do not own or operate clinical or commercial manufacturing facilities for the production of cobomarsen, remlarsen, MRG-110, or other product candidates that we develop, nor do we have plans to develop our own manufacturing operations in the foreseeable future.

We currently depend on third-party contract manufacturers for all of our required raw materials, active pharmaceutical ingredients, and finished product candidates for our clinical trials.

We do not have any current contractual arrangements for the manufacture of commercial supplies of cobomarsen, remlarsen, MRG-110, or any other product candidates that we develop.

We currently employ internal resources and third-party consultants to manage our manufacturing contractors.

Sales and Marketing

We have not yet defined our sales, marketing, or product distribution strategy for cobomarsen, remlarsen, MRG-110, or any of our other product candidates because our product candidates are still in preclinical or early-stage clinical development.

Our commercial strategy may include the use of strategic partners, distributors, a contract sale force, or the establishment of our own commercial and specialty sales force.

We plan to further evaluate these alternatives as we approach approval for one of our product candidates.

The clinical results from teprotumumab serve to validate the role of anti-IGF-1R antibodies in the treatment of TED.

The results reported for clinical trials of teprotumumab in TED highlight the opportunity for us to rapidly develop product candidates that work through a similar mechanism.

First, the majority of TED patients in a clinical trial of teprotumumab responded to treatment, which implies that, in clinically testing of a different IGF-1R antibody, it should be possible to detect clinical signs of improvement in a relatively small cohort of patients.

Second, significant improvements in proptosis were observed within six weeks of dosing, providing the potential to quickly determine if a product candidate is likely to be effective.

In addition, clinical trials for teprotumumab in TED did not explore the dose-dependency of the clinical response with the single teprotumumab dosing regimen selected based on data generated in oncology clinical trials, providing an opportunity to alter the dosing schedule, dosing duration, or route of administration while maintaining or improving efficacy, safety, and/or tolerability.

Teprotumumab led to significant reductions in proptosis in as early as six weeks of dosing.

Improvements continued beyond the completion of dosing at 24 weeks.

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

This antibody had previously been developed

Table of Con t ents

in oncology as AVE-1642 and studied in over 100 patients.

However, development in oncology was stopped in 2009 due to its failure to meet the primary efficacy endpoints in multiple myeloma.

We are developing this antibody sequence as VRDN-001 in TED and anticipate filing an IND with the FDA in the fourth quarter of 2021.

A clinical trial conducted by Aventis investigated the safety and efficacy of AVE-1642 in 27 patients with solid tumors when dosed in combination with docetaxel.

In the first treatment cycle, AVE-1642 was administered as monotherapy, allowing assessment of its pharmacokinetics and tolerability.

In this trial, no Grade 3 or above drug-related adverse events were reported with AVE-1642 as monotherapy.

Importantly, there was only a single report of Grade 1/2 hyperglycemia among this group of patients.

However, at least 50% of patients experienced hyperglycemia in subsequent cycles when patients received corticosteroids as premedication for docetaxel.

Adverse events due to hyperglycemia have been reported for other IGF-1R antibodies, including in 10% of patients treated with teprotumumab.

We intend to more fully assess the association of VRDN-001 monotherapy and hyperglycemia in upcoming clinical trials.

Evidence of target engagement was obtained by assessing the serum levels of biomarkers previously shown to be induced by IGF-1R inhibition.

A common effect of IGF-1R inhibition is the elevation of IGF-1 serum levels.

In this Aventis oncology trial, IGF-1 serum concentrations increased subsequent to administration of AVE-1642, and these serum concentrations remained elevated through repeat doses.

No obvious dose-concentration relationship was observed, suggesting that IGF-1 levels reached their plateau at the lowest dose of AVE-1642 administered.

Serum levels of IGF-1 increased by over 300% after AVE-1642 administration.

Clinical Trial Design for VRDN-001

Clinical trials of teprotumumab in TED reported to date used a single dosing regimen, providing little guidance as to the optimal dosing required for clinical activity in TED.

Our goal is to explore dose-dependency of VRDN-001 on proptosis in TED.

Dose selection will be informed by VRDN-001 pharmacokinetics and pharmacodynamics reported in previous oncology studies.

We are focused on rapidly determining a minimum effective dose.

If this trial is successful, we plan to quickly move to pivotal studies.

VRDN-002, a Potential Biosuperior IGF-1R Antibody

VRDN-002 is an anti-IGF-1R monoclonal antibody engineered to improve half-life, the duration of exposure in circulation, compared to standard therapeutic antibodies.

Extending antibody half-life may deliver several benefits including subcutaneous administration, less frequent intravenous administration, lower doses, or increased efficacy due to the ability to provide sustained higher drug levels in the body.

VRDN-003, an IGF-1R Antibody Product Specifically Designed for TED

Current IGF-1R antibodies were all generated with the intent of developing them for use in oncology.

We are developing a proprietary antibody product candidate specifically designed for use in treating TED.

Multiple hypotheses are currently being investigated.

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Intellectual Property

We are actively building an intellectual property portfolio around our clinical-stage product candidates and discovery programs.

A key component of this portfolio strategy is to seek patent protection in the United States and in major market countries that we consider important to the development of our business worldwide.

As of December 31, 2019 , we have a portfolio of 298 patents and applications of which 216 are issued or allowed and 82 are pending applications.

This portfolio includes methods of use and composition patents, and patent applications on our four lead product candidates, cobomarsen, remlarsen, MRG-229, and MRG-110.

Our success depends in part on our ability to obtain and maintain proprietary protection for our product candidates and other discoveries, inventions, trade secrets and know-how that are critical to our business operations.

Our success also depends in part on our ability to operate without infringing the proprietary rights of others, and in part, on our ability to prevent others from infringing our proprietary rights.

A comprehensive discussion on risks relating to intellectual property is provided under “ Risk Factors ” under the subsection “ Risks Related to our Intellectual Property.

We have filed patent applications directed to compositions of matter and methods of use covering cobomarsen in the United States and under the Patent Cooperation Treaty, or PCT, to access foreign countries.

patent application issued as U.S.

9,771,585 on September 26, 2017, which will expire in June of 2036 if we continue to pay the maintenance fees and annuities when due, with the possibility of Patent Term Extension that may be granted by the USPTO due to administrative delays in the FDA.

We also filed an U.S.

application directed to compositions of matter through the PCT, as U.S.

15/714,671, and this application issued

9,994,852 on June 12, 2018, which will expire in June of 2036 if we continue to pay the maintenance fees and annuities when due.

Prior to the issue of this application, we filed a continuation application in May 2018 as U.S.

15/976,333, and this application issued as US 10,316,318 on June 11, 2019.

Prior to the issue of this application, we filed a continuation application in April 2019 as US 16/382,883, and this application is currently pending.

We expect these pending applications will issue as U.S.

patents in the next one to three years, with a projected expiration year of 2036 if we continue to pay the maintenance fees and annuities when due, with the possibility of additional terms from the USPTO prosecution delays and from patent term extensions that may be granted due to administrative delays in the FDA.

We also have pending applications that cover methods of use of cobomarsen and related compositions.

Collectively, these applications, if they issue, would have patent expirations from 2036 if we continue to pay the maintenance fees and annuities when due, not including any possible additional terms for patent term adjustments or patent term extensions.

We do not know if any patent will issue from any of these applications and, if any issue, we do not know whether the issued patents will provide significant proprietary protection or commercial advantage against our competitors or generics.

Even if they are issued, our patents may be circumvented, challenged, opposed, and found to be invalid or unenforceable.

We have filed patent applications directed to compositions of matter and methods of use covering MRG-110 in the U.S.

and under the PCT, to access foreign countries.

A patent directed to compositions of matter and methods of use of MRG-110 issued as U.S.

9,803,202, on October 31, 2017, and will expire in June 2033 if we continue to pay the maintenance fees and annuities when due, with the possibility of Patent Term Extension that may be granted by the USPTO due to administrative delays in the FDA.

We also have issued patents and pending applications that cover various therapeutic uses and generic compositions of matter comprising MRG-110.

Collectively, these patents and patent applications, if they issue, would have patent expirations ranging from 2028 to 2036 if we continue to pay the maintenance fees and annuities when due, not including any possible additional terms for patent term adjustments or patent term extensions.

We do not know if any patent will issue from any of the pending applications and, if any issue, we do not know whether the issued patents will provide significant proprietary protection or commercial advantage against our competitors or generics.

Even if they are issued, our patents may be circumvented, challenged, opposed, and found to be invalid or unenforceable.

We have filed patent applications directed to compositions of matter and methods of use covering remlarsen in the United States and under the PCT to access foreign countries.

patent application issued as U.S.

9,376,681 on June 28, 2016, which will expire in September of 2035 if we continue to pay the maintenance fees and annuities when due, with the possibility of Patent Term Extension that may be granted by the USPTO due to administrative delays in the FDA.

Prior to the issue of this application, we filed a continuation application in June 2016 also directed to compositions of matter in the United States, as U.S.

15/175,636, and this application issued as U.S.

9,994,847 on June 12, 2018, which will expire in September of 2035, if we continue to pay the maintenance fees and annuities when due.

Prior to the issue of this application, we filed a continuation application in June 2018, as U.S.

16/002,845, and this application is currently pending.

We also have issued patents and pending applications that cover various therapeutic uses and generic compositions comprising remlarsen.

Collectively, these patents and patent applications, if they issue, would have patent expirations ranging from 2028 to 2035 if we continue to pay the maintenance fees and annuities when due, not including any possible additional terms for patent term adjustments or patent term extensions.

Even if they are issued, our patents may be circumvented, challenged, opposed, and found to be invalid or unenforceable.

For our earlier stage product candidates, we have filed compositions of matter and methods of use patent applications in the United States, and under the PCT to access foreign countries.

In addition to patent protection, we seek to rely on trade secret protection, trademark protection and know-how to expand our proprietary position around our chemistry, technology and other discoveries and inventions that we consider important to our business.

We also seek to protect our intellectual property in part by entering into confidentiality agreements with our employees, consultants, scientific advisors, clinical investigators, and other contractors and also by requiring our employees, commercial contractors, and certain consultants and investigators, to enter into invention assignment agreements that grant us ownership of any discoveries or inventions made by them.

Further, we seek trademark protection in the United States and internationally where available and when we deem appropriate.

We have obtained registrations for the miRagen trademark, which we use in connection with our pharmaceutical research and development services as well as our clinical-stage product candidates.

We currently have such registrations for miRagen in the United States, Canada, Japan, and the EU .

As of December 31, 2020, with regard to our VRDN-001 and VRDN-002 product candidates, we have one U.S.

provisional patent application directed to methods of using VRDN-001 and/or VRDN-002 for the treatment of TED.

A patent, if one were to issue, that claims priority to such provisional would be expected to expire no earlier than 2041, without taking potential patent term extensions or disclaimers into account.

The biotechnology and pharmaceutical industries are characterized by intense and rapidly changing competition to develop new technologies and proprietary products.

Our clinical and preclinical product candidates may address multiple markets.

the diseases our product candidates target for which we may receive marketing authorization will determine our competition.

Our product candidates may address multiple markets.

Ultimately, the diseases our product candidates target for which we may receive marketing authorization will determine our competition.

We believe that for most or all of our product development programs, there will be one or more competing programs under development by other companies.

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In many cases, the companies with competing programs will have access to greater resources and expertise than we do and may be more advanced in those programs.

We believe that our current and future competition for resources and eventually for customers can be grouped into three broad categories:

companies working to develop microRNA-targeted products, including Regulus Therapeutics Inc.

and InteRNA Technologies B.V.;

companies working to develop other types of oligonucleotide therapeutic products, including Ionis Pharmaceuticals, Inc., Alnylam Pharmaceuticals, Inc., Arrowhead Pharmaceuticals, Inc., Dicerna Pharmaceuticals, Inc., STELLAS Life Sciences Group, Inc., Silence Therapeutics AG, and Translate Bio, Inc.;

companies with marketed products and development programs for therapeutics that treat the same diseases for which we may also be developing potential treatments.

The following companies have therapeutics marketed or in development for CTCL:

Argenx, Bristol-Myers Squibb Company, Celgene Corporation, Helsinn Group, innate Pharma, Kyowa Hakko Kirin, Merck & Co., Inc., Mylan Pharmaceuticals Inc., Novartis International AG, Spectrum Pharmaceuticals, Inc., Seattle Genetics, Inc., Takeda Pharmaceutical Company Ltd, and Valeant Pharmaceuticals International, Inc.

The following companies have marketed therapeutics for pulmonary fibrosis:

Boehringer Ingelheim GmbH, F.

Hoffmann-La Roche Ltd.

In TED, Horizon Therapeutics’ Tepezza ® is the only FDA-approved medication.

In addition to Tepezza ® , other therapies, such as corticosteroids, have been used on an off-label basis to alleviate some of the symptoms of TED.

Immunovant, Inc.

is also conducting clinical trials of a therapeutic candidate for the treatment of TED.

We expect further entrants to increase competition in this field over time.

We believe that the key competitive factors that will affect the success of any of our product candidates, if commercialized, are likely to be their efficacy, safety, convenience, price, and the availability of reimbursement from government and other third-party payors relative to such competing products.

Our commercial opportunity could be reduced or eliminated if our competitors have products that are superior in one or more of these categories.

Government Regulation

License Agreements

License Agreement with Zenas BioPharma

In October 2020, Viridian Therapeutics, Inc.

(“Private Viridian”) entered a license agreement with Zenas BioPharma (Cayman) Limited (“Zenas BioPharma”) to license technology comprising certain materials, patent rights, and know-how to Zenas BioPharma.

On October 27, 2020, in connection with the closing of the Private Viridian acquisition, we became party to the license agreement with Zenas BioPharma.

In February 2021, we entered into a letter agreement with Zenas BioPharma in which we agreed to provide assistance to Zenas BioPharma with certain manufacturing activities.

The license agreement and letter agreement (collectively, the “Zenas Agreements”) were negotiated with a single commercial objective.

Under the terms of the Zenas Agreements, we granted Zenas BioPharma an exclusive license to develop, manufacture, and commercialize certain IGF-1R directed antibody products for non-oncology indications in the greater area of China.

As consideration for the Zenas Agreements, we received upfront non-cash consideration and we may receive in the future payment reimbursements for goods and services provided and milestone payments due upon the achievement of specified events.

Under the Zenas Agreements, we can receive non-refundable milestone payments upon achieving specific milestone events during the contract term.

Additionally, we may receive royalty payments based on a percentage of the annual net sales of any licensed products sold on a country-by-country basis in the greater area of China.

The royalty percentage may vary based on different tiers of annual net sales of the licensed products made.

Zenas BioPharma is obligated to make royalty payments to us for the royalty term in the Zenas Agreements.

The Zenas Agreements may be considered related party transactions because Tellus BioVentures, a 5% or greater stockholder of our Company (on an as-converted basis, assuming that only the shares of convertible preferred stock held by Tellus BioVentures are converted into shares of our common stock), is also a 5% or greater stockholder of Zenas BioPharma and has a seat on Zenas BioPharma’s board of directors.

License Agreement with ImmunoGen, Inc.

On October 12, 2020, Private Viridian entered into a license agreement with ImmunoGen (the “ImmunoGen License Agreement”), under which we obtained rights to an exclusive, sublicensable, worldwide license to certain patents and other intellectual property rights to develop, manufacture, and commercialize certain products for non-oncology and non-

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radiopharmaceutical indications.

In consideration for rights granted by ImmunoGen, we are obligated to make certain development milestone payments of up to $48.0 million.

Additionally, if we successfully commercialize any product candidate subject to the ImmunoGen License Agreement, we are responsible for royalty payments equal to a percentage in the mid-single digits of net sales and commercial milestone payments of up to $95.0 million.

We assumed the ImmunoGen License Agreement in the Merger.

License Agreement with Xencor, Inc.

On December 16, 2020, we entered into a license agreement with Xencor, Inc.

(“Xencor”) (the “Xencor License Agreement”), under which Xencor granted us rights to an exclusive, worldwide, sublicensable, non-transferable, royalty-bearing license to use specified Xencor technology for the research, development, manufacturing, and commercialization of therapeutic antibodies targeting IGF-1R.

In consideration for rights granted by Xencor, we issued 322,407 shares of our Common Stock in December 2020.

The shares were valued at $6.0 million and recorded as research and development expense in 2020.

Under the terms of the Xencor License Agreement, we are obligated to make future development milestone payments of up to $30.0 million.

Additionally, if we successfully commercialize any product candidate subject to the Xencor License Agreement, we are responsible for royalty payments equal to a percentage in the mid-single digits of net sales and commercial milestone payments of up to $25.0 million.

Government Regulation and Product Approvals

FDA Drug Approval Process

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Failure to comply with applicable U.S.

requirements at any time during the product development process may subject a company to a variety of administrative or judicial sanctions, such as imposition of clinical hold, FDA refusal to approve pending new drug applications, or NDAs, warning or untitled letters, withdrawal of approval, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.

requirements at any time during the product development process may subject a company to a variety of administrative or judicial sanctions, such as imposition of clinical hold, FDA refusal to approve pending new drug applications (“NDA”) warning or untitled letters, withdrawal of approval, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.

We cannot market a drug product candidate in the United States until the drug has received FDA approval.

The steps required before a drug may be marketed in the United States generally include the following:

completion of extensive preclinical laboratory tests, animal studies, and formulation studies in accordance with the FDA’s good laboratory practices, or GLP, regulations;

approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated at that site;

submission to the FDA of an investigational new drug application, or IND, for human clinical testing, which must become effective before human clinical trials may begin;

performance of adequate and well-controlled human clinical trials in accordance with good clinical practice, or GCP, requirements to establish the safety and efficacy of the drug for each proposed indication;

• completion of extensive preclinical laboratory tests, animal studies, and formulation studies in accordance with the FDA’s good laboratory practices (“GLP”) regulations;

• approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated at that site;

• submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin;

• performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the drug for each proposed indication;

• submission to the FDA of an NDA after completion of all pivotal clinical trials;

• satisfactory completion of an FDA advisory committee review, if applicable;

satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the active pharmaceutical ingredient, or API, and finished drug product are produced and tested to assess compliance with current good manufacturing practices, or cGMPs;

• satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the active pharmaceutical ingredient (“API”) and finished drug product are produced and tested to assess compliance with current good manufacturing practices (“cGMPs”);

• FDA review and approval of the NDA prior to any commercial marketing or sale of the drug in the United States.

Satisfaction of FDA pre-market approval requirements typically takes many years, and the actual time required may vary substantially based upon the type, complexity, and novelty of the product or disease.

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Preclinical tests include laboratory evaluation of product chemistry, formulation, and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product.

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An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or may impose other conditions.

Information about certain clinical trials must be submitted within specific timeframes to the NIH for public dissemination on their www.clinicaltrials.gov website.

Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health for public dissemination on their www.clinicaltrials.gov website.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap.

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These fees are typically increased annually.

Under the Prescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.

This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.

Under the Prescription Drug User Fee Act (“PDUFA”) guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.

This review typically takes twelve months from the date the NDA is submitted to the FDA because the FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.

Once the submission is accepted for filing, the FDA begins an in-depth review.

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The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged, or held meets standards designed to assure the product’s continued safety, quality, and purity.

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The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory committee, which is typically a panel that includes clinicians and other experts, for review, evaluation, and a recommendation as to whether the application should be approved.

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The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.

Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings, or precautions be included in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a Risk Evaluation and Mitigation Strategy, or REMS, to ensure that the benefits of the drug outweigh the potential risks.

Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings, or precautions be included in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure that the benefits of the drug outweigh the potential risks.

A REMS can include a medication guide, a communication plan for healthcare professionals and elements to assure safe use, such as special training and certification requirements for individuals who prescribe or dispense the drug, requirements that patients enroll in a registry, and other measures that the FDA deems necessary to assure the safe use of the drug.

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Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States for which there is no reasonable expectation that the cost of developing and making available in the United States a drug or biologic for this type of disease or condition will be recovered from sales in the United States for that drug or biologic.

Orphan drug designation must be requested before submitting an NDA or a biological license application, or BLA.

After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed

publicly by the FDA.

Orphan drug designation must be requested before submitting an NDA or a biological license application (“BLA”).

After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

The orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.

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Orphan drug exclusivity does not prevent FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition.

Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the application fee.

Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the marketing application fee.

A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation.

In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

In addition, exclusive marketing rights in the United States may be lost if the FDA

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later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Expedited Development and Review Programs

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The sponsor of a new drug may request that the FDA designate the drug as a Fast Track product at any time during the clinical development of the product.

For a Fast Track-designated product, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted.

If the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.

For a Fast Track-designated product, the sponsor may provide a schedule for the submission of the sections of the application, and the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted.

The sponsor pays any required user fees upon submission of the first section of the application.

The FDA may choose not to perform an earlier review even if it agrees to accept sections of the application in advance.

The PDUFA date for regular or priority review, including two months for the filing determination, is set based on the date when the FDA receives the complete application.

Any product submitted to the FDA for marketing, including under a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.

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Requests for breakthrough therapy designation will be reviewed within 60 days of receipt, and the FDA will either grant or deny the request.

Fast Track designation, priority review, accelerated approval, and breakthrough therapy designation do not change the standards for approval but may expedite the development or approval process by allowing for approval based on a surrogate endpoint likely to predict clinical benefit of the underlying drug, rather than through a direct measure of clinical benefit.

Even if we receive one

of these designations for our product candidates, the FDA may later decide that our product candidates no longer meet the conditions for qualification.

In addition, these designations may not provide us with a material commercial advantage.

Fast Track designation, breakthrough therapy designation, and priority review do not change the standards for approval but may expedite the development or approval process by allowing more frequent and timely interactions with the FDA review team and/or the potential for a more efficient or more rapid application review.

Similarly, products granted accelerated approval must meet statutory standards for safety and effectiveness although they may be approved based on a surrogate endpoint likely to predict clinical benefit of the underlying drug, rather than through a direct measure of clinical benefit.

Even if our product candidates are deemed eligible for one or more of these programs for expedited product development and approval, the FDA may later decide that our product candidates no longer meet the conditions for qualification.

In addition, these programs may not provide us with a material commercial advantage.

Post-Approval Requirements

Once an NDA is approved, a product may be subject to certain post-approval requirements.

For instance, the FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities, and promotional activities involving the internet and social media.

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the internet and social media.

Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling.

Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA.

Adverse event reporting and submission of periodic reports are required following FDA approval of an NDA.

The FDA also may require post-approval testing, known as Phase 4 testing, REMS, surveillance to monitor the effects of an approved product, or restrictions on the distribution or use of the product.

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Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions.

Some countries outside of the United States have a similar process that requires the submission of a clinical trial application, or CTA, much like the IND prior to the commencement of human clinical trials.

Some countries outside of the United States have a similar process that requires the submission of a clinical trial application (“CTA”) much like the IND prior to the commencement of human clinical trials.

In Europe, for example, a CTA must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and IRB, respectively.

Once the CTA is approved in accordance with a country’s requirements, a clinical trial may proceed in that country.

To obtain regulatory approval to commercialize a new drug under EU regulatory systems, we must submit a marketing authorization application, or MAA.

To obtain regulatory approval to commercialize a new drug under European Union (“EU”) regulatory systems, we must submit a marketing authorization application (“MAA”).

The MAA is similar to the NDA, with the exception of, among other things, country-specific document requirements.

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Although we currently do not have any products on the market, our current and future business operations may be subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business.

Such laws or regulations include, without limitation, state, federal, and foreign anti-kickback,

fraud and abuse, false claims, privacy and security, price reporting, and physician sunshine laws or regulations.

Such laws or regulations include, without limitation, state, federal, and foreign anti-kickback, fraud and abuse, false claims, privacy and security, price reporting, and physician sunshine laws or regulations.

Some of our pre-commercial activities are subject to some of these laws.

The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer or a party acting on its behalf, to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is intended to induce the referral of business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid.

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payment may be made under a federal healthcare program, such as Medicare or Medicaid.

The term “remuneration” has been broadly interpreted to include anything of value.

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Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances.

The government often takes the position that to violate the Anti-Kickback Statute, only one purpose of the remuneration need be to induce referrals, even if there are other legitimate purposes for the remuneration.

Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated.

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Persons and entities can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label.

Pharmaceutical companies have been prosecuted under the False Claims Act for engaging in a variety of different types of conduct that caused the submission of false claims to federal healthcare programs.

Under the Anti-Kickback Statute, for example, a claim resulting from a violation of the Anti-Kickback Statute is deemed to be a false or fraudulent claim for purposes of the False Claims Act.

The False Claims Act imposes mandatory treble damages and per-violation civil penalties up to approximately $23,000.

In addition, our future activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state, and third-party reimbursement for our products, and the sale and marketing of our products are subject to scrutiny under this law.

Penalties for federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and, although the federal False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes.

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items, or services.

The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items, or services.

Like the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

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Additionally, to the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical, and technical safeguards to protect such information.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their implementing regulations, mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical, and technical safeguards to protect such information.

Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, defined as independent contractors or agents of covered entities that create, receive, or obtain protected health information in connection with providing a service for or on behalf of a covered entity.

HITECH also increased the civil and criminal penalties that may be imposed against covered entities and business associates and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.

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associated with pursuing federal civil actions.

In addition, certain state laws govern the privacy and security of health information in certain circumstances, some of which are more stringent than HIPAA, and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

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Certain states also mandate implementation of compliance programs, impose restrictions on drug manufacturer marketing practices, and/or require the tracking and reporting of gifts, compensation, and other remuneration to physicians or drug pricing, and certain states and localities require the registration of pharmaceutical sales representatives.

If we intend to commercialize products that could be reimbursed under a federal healthcare program and other governmental healthcare programs, we would develop a comprehensive compliance program that establishes internal control to facilitate adherence to the rules and program requirements to which we will or may become subject.

If we intend to commercialize products that could be reimbursed under a federal healthcare program and other government healthcare programs, we would develop a comprehensive compliance program that establishes internal control to facilitate adherence to the rules and program requirements to which we will or may become subject.

Although the development and implementation of compliance programs designed to establish internal control and facilitate compliance can mitigate the risk of investigation, prosecution, and penalties assessed for violations of these laws, the risks cannot be entirely eliminated.

Foreign data protection laws, including, without limitation, the EU ’s General Data Protection Regulation, or GDPR, and EU member state data protection legislation, also apply to health-related and other personal data that we process, including, without limitation, personal data relating to clinical trial participants in the EU .

Foreign data protection laws, including, without limitation, the EU’s General Data Protection Regulation (“GDPR”) and EU member state data protection legislation, also apply to health-related and other personal data that we process, including, without limitation, personal data relating to clinical trial participants in the EU.

The United Kingdom and Switzerland have also adopted data protection laws and regulations.

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These laws or governmental regulations could require us or our collaborators to incur additional costs to achieve compliance, limit our competitiveness, necessitate the acceptance of more onerous obligations in our contracts, restrict our ability to use, store, transfer, and process data, impact our or our collaborators’ ability to process or use data in order to support the provision of our products or services, affect our or our collaborators’ ability to offer our products and services in certain locations, or cause regulators to reject, limit, or disrupt our clinical trial activities.

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Health Reform

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federal and state levels that seek to reduce healthcare costs.

In particular, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the Affordable Care Act, has had a significant impact on the healthcare industry.

The Affordable Care Act was designed to

expand coverage for the uninsured while at the same time containing overall healthcare costs.

In particular, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (the “Affordable Care Act”), has had a significant impact on the healthcare industry.

The Affordable Care Act was designed to expand coverage for the uninsured while at the same time containing overall healthcare costs.

With regard to pharmaceutical products, among other things, the Affordable Care Act revised the definition of “average manufacturer price” for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and imposed a significant annual fee on companies that manufacture or import certain branded prescription drug products.

There remain judicial and Congressional challenges to certain aspects of the Affordable Care Act.

In January 2017, Congress voted to adopt a budget resolution for fiscal year 2017, or the Budget Resolution, that authorizes the implementation of legislation that would repeal portions of the Affordable Care Act.

In January 2017, Congress voted to adopt a budget resolution for fiscal year 2017 (the “Budget Resolution”) that authorizes the implementation of legislation that would repeal portions of the Affordable Care Act.

Further, on January 20, 2017, an Executive Order was signed, directing federal agencies with authorities and responsibilities under the Affordable Care Act to waive, defer, grant exemptions from, or delay the implementation of any provision of the Affordable Care Act that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.

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While Congress has not passed comprehensive repeal legislation, several bills affecting the implementation of certain taxes under the Affordable Care Act have been signed into law.

The legislation informally titled the Tax Cuts and Jobs Act of 2017, or the Tax Act, included a provision which repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the Affordable Care Act-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax.

The legislation informally titled the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) included a provision which repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the Affordable Care Act-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax.

On December 14, 2018, a Texas U.S.

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Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act are invalid as well.

On November 10, 2020, the Supreme Court heard oral arguments on the case and a decision is expected by the spring 2021.

It is unclear how such litigation and other efforts to repeal, replace or otherwise modify the Affordable Care Act will impact reimbursement of pharmaceutical products.

It is unclear how this decision, future decisions, subsequent appeals, and other efforts to repeal and replace the Affordable Care Act will impact the Affordable Care Act.

In the coming years, additional legislative and regulatory changes could be made to governmental health programs that could significantly impact pharmaceutical companies and the success of its product candidates.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.

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Further, manufacturers will have drug product investigation, quarantine, disposition, and notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death.

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Further, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.

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Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

In addition, the Trump administration’s budget proposal for fiscal year 2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs.

In addition, the Trump administration released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers.

The Department of Health and Human Services has started soliciting feedback on some of these measures and, at the same time, is implementing others under its existing authority.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological

product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

In October 2020, the FDA issued guidance describing procedures for manufacturers to facilitate the importation of FDA-approved biologics manufactured abroad and originally intended for sale in a foreign country into the United States.

Previously, the Trump administration released a “Blueprint,” or plan, to lower drug prices and reduce out of pocket costs of drugs that contained proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out-of-pocket costs of drug products paid by consumers.

Additionally, on November 20, 2020, the Center for Medicare & Medicaid Services (“CMS”) issued an interim final rule implementing a Most Favored Nation (“MFN”) model that would cap the price Medicare can pay for a drug to the lowest price paid in an economically comparable country within the Organization for Economic Cooperation and Development.

The rule was slated to take effect on January 1, 2021, but federal courts have temporarily enjoined implementation of this rule, and the CMS has indicated that the MFN model will not be implemented without further rulemaking proceeding.

It is unclear whether or how the Biden administration will move forward with the rule.

But if the new administration implements the rule in its current form and the rule survives judicial scrutiny, the MFN model will subject certain physician-administered drugs or biologicals identified by CMS as having the highest annual Medicare Part B spending to an alternative payment methodology based on international reference prices, with the list of products to be updated annually to add more products and products not to be removed absent limited circumstances.

The Department of Health and Human Services (“HHS”) has solicited feedback on some of these measures and has implemented others under its existing authority.

For example, in May 2019, CMS issued a final rule to allow Medicare Advantage plans the option to use step therapy for Part B drugs beginning January 1, 2020.

This final rule codified CMS’s policy change that was effective January 1, 2019.

Further, in December 2019, the FDA issued draft guidance describing procedures for drug manufacturers to facilitate the importation of FDA-approved drugs and biologics manufactured abroad and originally intended for sale in a foreign country into the United States.

President Trump’s administration has also proposed to establish an international pricing index that would tie domestic prices for certain drugs and biologics to the prices in other countries.

Although the Biden administration has stayed the effective dates of some last-minute drug price regulations issued by the Trump administration.

Congress and the Biden administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

For example, after some pharmacy benefit managers and insurers adopted policies stating that the amount of a copay coupon would not be applied to the enrollee’s deductible or out-of-pocket maximum (referred to as “accumulator adjustment programs”), some states passed legislation banning these policies.

On January 31, 2020, CMS released its proposed 2021 Notice of Benefit and Payment Parameters rule, which provides that insurers would no longer be required to count any coupons from drug manufacturers towards a consumer’s out-of-pocket limit.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates, if approved.

In addition, the Trump administration’s budget proposal for fiscal year 2021 included a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs.

Although the Biden administration has stayed the effective dates of some last-minute drug price regulations issued by the Trump administration, Congress and the Biden administration have each indicated that they will continue to seek new legislative and/or administrative measures to control drug costs.

Coverage and Reimbursement

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In particular, in the United States, private health insurers and other third-party payors often provide reimbursement for products and services based on the level at which the government (through the Medicare or Medicaid programs) provides reimbursement for such treatments.

Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs.

Patients who are prescribed treatments for their conditions and providers performing the prescribed

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services generally rely on third-party payors to reimburse all or part of the associated healthcare costs.

Patients are unlikely to use products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of such products.

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In addition, state and federal healthcare reform measures have been and will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products once approved or additional pricing pressures.

Manufacturing

We do not own or operate clinical or commercial manufacturing facilities for the production of our product candidates that we develop, nor do we have plans to develop our own manufacturing operations in the foreseeable future.

We currently depend on third-party contract manufacturers for all of our required raw materials, active pharmaceutical ingredients, and finished product candidates for our clinical trials.

We do not have any current contractual arrangements for the manufacture of commercial supplies of our product candidates that we develop.

We currently employ internal resources and third-party consultants to manage our manufacturing contractors.

Historically, we have relied on third-party contract development and manufacturing organizations (“CDMOs”), to manufacture and supply our preclinical and clinical materials used during the development of our product candidates.

Over the last twelve months, demand for biological therapeutic manufacturing has increased and supply has been constrained, in part due to the displacement caused by efforts to manufacture COVID-19 vaccines.

We initially pursued three separate manufacturing paths to supply investigational product for our planned clinical trials in order to mitigate delays and uncertainties.

We currently rely on a single-source CDMO for such manufacturing, although other avenues remain if our current manufacturer were to be negatively impacted.

We maintain a long-term master services agreement with our CDMO pursuant to which the CDMO provides biologics development and manufacturing services on a per project basis and a related cell line license.

We may terminate the master services agreement at any time for convenience in accordance with the terms of the agreement.

We may also terminate the master services agreement in the event that the CDMO does not obtain or maintain any material governmental license or approval in accordance with the terms of the agreement.

The agreement includes confidentiality and intellectual property provisions to protect our proprietary rights related to our product candidates.

We do not currently have arrangements in place for redundant supply.

While any reduction or halt in supply from the CDMO could limit our ability to develop our product candidates until a replacement CDMO is found and qualified, we believe that we have sufficient supply to support our current clinical trial programs.

Any reduction or halt in supply from the CDMO could limit our ability to develop our product candidates until a replacement CDMO is found and qualified, although we believe that we have supply on hand that can partially support our current clinical trial programs until a replacement CDMO is secured.

Sales and Marketing

We have not yet defined our sales, marketing, or product distribution strategy for our product candidates because our product candidates are still in preclinical or early-stage clinical development.

Our commercial strategy may include the use of strategic

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partners, distributors, a contract sale force, or the establishment of our own commercial and specialty sales force.

We plan to further evaluate these alternatives as we approach approval for one of our product candidates.

As of December 31, 2020, we employed 27 employees, 26 of which were full-time employees.

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We consider our employee relations to be good.

Corporate Information

We were founded in New York as a Delaware limited liability company in January 2010 under the name Myeloma Health LLC.

Signal Genetics LLC was formed as a Delaware limited liability company in December 2010.

Effective January 1, 2011, substantially all of the member interests in Myeloma Health LLC were exchanged for member interests in Signal Genetics LLC and Myeloma Health LLC became a subsidiary of Signal Genetics LLC.

Immediately prior to the pricing of our initial public offering, on June 17, 2014, Signal Genetics LLC converted from a Delaware limited liability company to a Delaware corporation, or the Corporate Conversion.

In connection with the Corporate Conversion, each unit of Signal Genetics LLC was converted into a share of our common stock, the members of Signal Genetics LLC became our stockholders and we succeeded to the business of Signal Genetics LLC and its consolidated subsidiaries.

On February 13, 2017, we acquired a privately-held company named Miragen Therapeutics, Inc.

and, immediately following the acquisition, we changed our name to “Miragen Therapeutics, Inc.” Our common stock began trading on The Nasdaq Capital Market under the ticker symbol “MGEN” on February 14, 2017.

Our principal executive office is located at 6200 Lookout Road, Boulder, CO 80301, and our telephone number is (720) 643-5200.

Our corporate website address is www.miragen.com .

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act , will be made available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S.

Securities and Exchange Commission, or the SEC.

The contents of our website are not incorporated into this Annual Report and our reference to the URL for our website is intended to be an inactive textual reference only.

This Annual Report contains references to our trademarks and to trademarks belonging to other entities.

Our Corporate Information

We were initially founded as a Delaware limited liability company in January 2010 and subsequently incorporated as a Delaware corporation in June 2014.

On January 20, 2021, pursuant to the Merger Agreement (as defined below) under which miRagen Therapeutics, Inc.

acquired Viridian Therapeutics, Inc., we changed our name to from Miragen Therapeutics, Inc.

to Viridian Therapeutics, Inc.

Our common stock currently trades on The Nasdaq Capital Market under the ticker symbol “VRDN.” Our principal executive office is located at 6200 Lookout Road, Boulder, CO 80301, and our telephone number is (720) 643-5200.

Our website address is www.viridiantherapeutics.com.

The information contained on, or that can be accessed through, our website is not part of this Annual Report.

We have included our website in this Annual Report solely as an inactive textual reference.

This Annual Report contains references to our trademarks and trademarks belonging to other entities.

Solely for convenience, trademarks and trade names referred to in this Annual Report, including logos, artwork, and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names.

We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company.

Available Information

Our Annual Reports, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are available free of charge on our website located at www.viridiantherapeutics.com as soon as reasonably practicable after they are filed with the SEC.

The reports are also available at the SEC’s internet website at www.sec.gov.

A copy of our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters of the Audit Committee, Compensation Committee, and Nominative and Corporate Governance Committee are posted on our website, www.viridiantherapeutics.com, under “Corporate Governance.”

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-K

Item 1. Business