Representing one of the top performers on Monday, shares of Viridian Therapeutics (NASDAQ:VRDN) skyrocketed as much as 60%. The biotechnology firm released encouraging results for its therapeutic focusing on thyroid eye disease (TED), a rare autoimmune disease. As well, Viridian disclosed results for its second quarter. While the clinical data bolstered VRDN stock, it remains a volatile trade.
To provide background information, TED is a “condition in which the eye muscles, eyelids, tear glands and fatty tissues behind the eye become inflamed,” per the British Thyroid Foundation. “This can cause the eyes and eyelids to become red, swollen and uncomfortable and the eyes can be pushed forward (‘staring’ or ‘bulging’ eyes).”
Under a double-blind, placebo-controlled Phase 1/2 clinical trial, Viridian’s tested its key therapeutic VRDN-001 on patients with active TED. Efficacy measurements included proptosis (bulging eyes), Clinical Activity Score (CAS) and diplopia (double vision).
Per the company’s press release, researchers observed an “83% proptosis responder rate.” Additionally, Veridian declared “83% of patients achieved maximal or near-maximal therapeutic effect on CAS.” As well, scientists reported a “75% complete resolution of diplopia.”
According to Veridian chief medical officer Barrett Katz, MD, MBA, the data “exceeded our expectations and compare very favorably to Tepezza, the only approved therapy in TED. The significant improvement in signs and symptoms observed after only two infusions of VRDN-001 is remarkable.”
Naturally, Wall Street responded positively to the announcement, sending VRDN stock higher. Nevertheless, investors need to take significant precautions.
VRDN Stock on a Wild Ride This Year
Although the lion’s share of the spotlight concentrated on VRDN-001’s clinical results, Viridian also reported its Q2 earnings report. According to a separate press statement, the company reported a net loss of $29.5 million. This metric compared unfavorably to the year-ago result of a net loss of $18 million. Management stated that increased operating costs contributed to the red ink.
Specifically, research and development expenses increased to $21.7 million in Q2 compared to $12.6 million in the year-ago quarter. The leadership team explained that the rising expense stemmed from “personnel related costs, license fees and clinical trial costs for VRDN-001 and VRDN-002, as well as costs related to our preclinical programs.” VRDN-002 is a novel monoclonal antibody that incorporates half-life extension technology. It represents a “convenient, low-volume, subcutaneous (SC) injection for the treatment of TED patients.”
On a positive note, Viridian disclosed a cash and equivalents position of $161.2 million. The company believes this account balance “will be sufficient to fund its operations into 2024.”
For now, Viridian generates very limited revenue, posing risks for VRDN stock. While Monday’s price action presents an encouraging backdrop, on a year-to-date basis, shares are up only 11%. Prior to the rally, VRDN was down about 29% for the year.
Why It Matters
According to the National Organization for Rare Disorders, experts estimate that the prevalence for TED is 16 per 100,000 women and 2.9 per 100,000 men in the general population. With very limited treatment options – the only current alternative being Tepezza — VRDN-001 has considerable potential.
Still, prospective investors of VRDN stock should exercise caution, as the biotech sector is incredibly volatile — as Viridian itself demonstrates.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
