VIRIDIAN THERAPEUTICS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

The following discussion and analysis should be read together with our condensed
consolidated financial statements and the related notes thereto included in Part
I, Item 1 of this Quarterly Report and our consolidated financial statements and
related notes thereto for the year ended December 31, 2021 included in our
Annual Report on Form 10-K filed with the SEC on March 11, 2022 ("2021 Annual
Report on Form 10-K"). This discussion and other parts of this report contain
forward-looking statements reflecting our current expectations that involve
risks and uncertainties, such as our plans, objectives, expectations,
intentions, and beliefs. See "Forward-Looking Statements" for a discussion of
the uncertainties, risks, and assumptions associated with these statements.
Actual results and the timing of events could differ materially from those
discussed in these forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those identified
below and those discussed in the section entitled "Risk Factors" included
elsewhere in this Quarterly Report.

Overview and recent developments

We are a biotechnology company advancing new treatments for patients with
serious diseases that are underserved by today's therapies. Marketed therapies
often leave room for improvements in efficacy, safety, and/or dosing
convenience. 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 that fast-follower and bio
superior competition could create significant medical benefit for patients.

We are developing two product candidates, VRDN-001 and VRDN-002, to treat
patients who suffer from thyroid eye disease ("TED"). Our most advanced product
candidate, VRDN-001, is a differentiated humanized monoclonal antibody that
binds and blocks the insulin-like growth factor-1 receptor ("IGF-1R") with
subnanomolar affinity. This mechanism of action is clinically and commercially
validated for the treatment of TED. Our ongoing first clinical trial for
VRDN-001 is a Phase 1/2 proof of concept study that includes multiple
randomized, placebo-controlled cohorts of TED patients. This clinical trial is
designed to assess the potential for VRDN-001 to provide rapid improvements of
signs and symptoms of TED at six weeks, after two intravenous ("IV") infusions
of VRDN-001. We expect to announce top line proof of concept clinical data from
two patient cohorts in the third quarter of 2022.

Dose escalation and healthy volunteer enrollment is complete, and we continue to
enroll TED patients at sites in the U.S. and Canada. Each TED cohort includes
eight patients randomized in a 3:1 ratio to receive VRDN-001 or placebo. The
first cohort is evaluating two infusions of 10 mg/kg VRDN-001; the second cohort
is evaluating two infusions of 20 mg/kg VRDN-001.

The healthy volunteer portion of the trial includes doses of 3 mg/kg, 10 mg/kg
and 20 mg/kg in 13 subjects. No drug related adverse events associated with
hyperglycemia, hearing loss or muscle spasms have been reported to date. Other
adverse events have been generally comparable to placebo; to date, there have
been no infusion reactions or serious adverse events. Interim data for plasma
levels of IGF-1, a biomarker for target engagement, show a rapid increase that
saturated after the first infusion at levels that were similar for all doses
tested, including 3 mg/kg. Based on these results we now plan to enroll a cohort
of TED patients at a dose of 3 mg/kg following the completion of the 10 mg/kg
and 20 mg/kg cohorts in this trial. We expect to report top-line data from the 3
mg/kg cohort in the fourth quarter of 2022.

VRDN-002 is a distinct, next-generation IGF-1R antibody incorporating half-life
extension technology and is designed to support administration as a convenient,
low-volume, subcutaneous injection for the treatment of TED. In March 2022, we
announced dosing of the first subject in a first-in-human Phase 1 clinical trial
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evaluating VRDN-002. This is a single ascending dose clinical trial to explore
safety, tolerability, pharmacokinetics and pharmacodynamics of intravenously
administered VRDN-002 at doses of 3 mg/kg, 10 mg/kg, and 20 mg/kg in up to 16
healthy volunteers. We have completed dose escalation and expect to announce top
line data from this Phase 1 trial in the third quarter of 2022. Results from
this Phase 1 trial will confirm the feasibility of a low-volume subcutaneous
dosing paradigm for TED patients; we are planning a subcutaneous proof of
concept trial in TED patients as the next step in VRDN-002 development. We
believe a low- volume subcutaneous injection would improve convenience for
patients and physicians, mitigate treatment burdens, and expand the settings of
care for TED therapies.

In addition to developing therapies for TED, we are executing a similar
strategic approach to identify opportunities to develop fast-follower therapies
in other serious and/or rare disease indications. Our pipeline expansion is
focused on additional opportunities that leverage validated mechanisms and
technologies in therapeutic areas underserved by today's available medicines.
The most advanced of these programs is VRDN-004, a therapeutic monoclonal
antibody program currently in discovery stage for an undisclosed rare disease.
VRDN-005 is a second discovery-stage program for another undisclosed indication
in which we believe patient care can be advanced with a novel therapeutic
monoclonal antibody.

The COVID-19 pandemic

The on-going COVID-19 pandemic continues to cause disruption throughout the
United States and worldwide. We could be materially and adversely affected by
the risks, or the public perception of the risks, related to the COVID-19
pandemic or any other epidemic, pandemic or public health crisis. Such risks
include, but are not limited to, potential disruptions to our supply chain that
may limit our ability to manufacture drug product for our clinical trials, and
delays to our planned or future clinical trials. The ultimate extent of the
impact of any epidemic, pandemic or other public health crisis on our business,
financial condition and results of operations will depend on future
developments, which are highly uncertain and cannot be predicted, including new
information that may emerge concerning the severity of such epidemic, pandemic
or other public health crisis and actions taken to contain or prevent the
further spread, among others. While our business has not been materially
impacted by the COVID-19 pandemic to date, we cannot predict whether our
business, financial condition and results of operations will be affected by the
COVID-19 pandemic in the future.

Overview of financial operations

Revenue

Historically, our revenues consisted primarily of upfront payments for licenses, milestone payments and payments for other research and development services earned under licensing and collaboration agreements as well as amounts earned in the some of the grants we’ve received.

In October 2020, we became party to a license agreement with Zenas BioPharma.
Since February 2021, we have entered into several letter agreements with Zenas
BioPharma in which we agreed to provide assistance to Zenas BioPharma with
certain development activities, including manufacturing. 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 in exchange for upfront
non-cash consideration and 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.

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In the future, we expect to continue to generate revenue from a combination of
license fees and other up-front payments, payments for research and development
services, milestone payments, product sales, and royalties in connection with
strategic alliances. We expect that any revenue we generate could fluctuate from
quarter to quarter as a result of the timing of our achievement of development
and commercial milestones, the timing and amount of payments relating to such
milestones, and the extent to which any of our product candidates are approved
and successfully commercialized by us or our strategic alliance collaborators,
if any. If we or our strategic alliance collaborators, if any, fail to develop
product candidates in a timely manner or to obtain regulatory approval for them,
then our ability to generate future revenue, and our results of operations and
financial position would be adversely affected.

Research and development costs

Research and development expenses include costs incurred for the research and development of our therapeutic programs and product candidates, which include:

• employee-related expenses, including salaries, severance, retention, benefits, insurance and stock-based compensation expenses;

•expenses incurred under agreements with clinical research organizations (“CROs”), investigational sites that conduct our clinical trials, and other clinical trial-related suppliers and consultants;

•the costs of acquiring, developing, and manufacturing and testing clinical and
preclinical materials, including costs incurred under agreements with contract
manufacturing organizations ("CMOs");

•costs associated with non-clinical activities and regulatory operations;

•licensing fees and milestone payments related to the acquisition and retention of certain licensed technologies and intellectual property rights; and

•installations, depreciation, market studies and other expenses, which include charges for rent and maintenance of installations, depreciation of leasehold improvements and equipment, and laboratory supplies.

We make non-refundable advance payments for goods and services that will be used
in future research and development activities. These payments are recorded as
expense in the period in which we receive or take ownership of the goods or when
the services are performed.

We record up-front and milestone payments to acquire and retain contractual
rights to in-licensed technology and intellectual property rights as research
and development expenses when incurred if there is uncertainty in our receiving
future economic benefit from the acquired contractual rights. We consider future
economic benefits from acquired contractual rights to licensed technology to be
uncertain until such a drug candidate is approved by the U.S. Food and Drug
Administration ("FDA,") or when other significant risk factors are abated.

Our research and development expenses may increase if we initiate new clinical
trials. The process of conducting clinical trials and preclinical studies
necessary to obtain regulatory approval is costly and time consuming. We, or our
strategic alliance collaborators, if any, may never succeed in achieving
marketing approval for any of our product candidates. The probability of success
for each product candidate may be affected by numerous factors, including
clinical data, preclinical data, competition, manufacturability, and commercial
viability of our product candidates.

Successful development of future product candidates is highly uncertain and may
not result in approved products. Completion dates and completion costs can vary
significantly for each future product candidate and

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are difficult to predict. We anticipate we will make determinations as to which
programs to pursue and how much funding to direct to each program on an ongoing
basis in response to our ability to maintain or enter into new strategic
alliances with respect to each program or potential product candidate, the
scientific and clinical success of each future product candidate, and ongoing
assessments as to each future product candidate's commercial potential. We will
need to raise additional capital and may seek additional strategic alliances in
the future in order to advance our various programs.

General and administrative expenses

General and administrative expenses consist primarily of salaries and related
benefits, including share-based compensation, and severance and retention
benefits related to our finance, accounting, human resources, legal, business
development, and other support functions, professional fees for auditing, tax,
and legal services, as well as insurance, board of director compensation,
consulting, and other administrative expenses.

Other income, net

Other income consists mainly of interest income, net of fees, and various non-recurring income items. We earn interest income on interest-bearing accounts, money market funds and short-term investments.

Significant Accounting Policies and Estimates

There were no changes to our critical accounting policies as disclosed in our
2021 Annual Report on Form 10-K during the three months ended March 31, 2022.
Our significant accounting policies are disclosed in Note 2. Summary of
Significant Accounting Policies to our condensed consolidated financial
statements included in Part I, Item 1 of this Quarterly Report.

Operating results

Comparison of the three months ended March 31, 2022 and 2021.

                                                               Three Months Ended
                                                                    March 31,                         Increase
                                                            2022                   2021              (Decrease)
                                                                 (in thousands)
Collaboration revenue - related party                $       216               $    1,451          $     (1,235)
Research and development expenses                         17,746                   13,806                 3,940
General and administrative expenses                        8,359                    6,160                 2,199

Other income, net                                            196                       55                   141



Revenue

Revenue was $0.2 million for the three months ended March 31, 2022, as compared
to $1.5 million for the three months ended March 31, 2021. Revenue for both the
three months ended March 31, 2022 and 2021 was attributable to our collaboration
agreement with Zenas BioPharma. The $1.2 million decrease in revenue is due to
the timing of activities performed under the collaboration agreement.

Research and development costs

Research and development expenses were $17.7 million during the three months
ended March 31, 2022, compared to $13.8 million during the three months ended
March 31, 2021. The $3.9 million increase in research and development expenses
is primarily attributable to an increase of $1.3 million in personnel related
costs,
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including share-based compensation, due to an increase in headcount; an increase
of $2.3 million in license fees due to the $2.5 million fee paid to Paragon
Therapeutics, Inc. during the three months ended March 31, 2022; an increase of
$1.9 million in clinical trial expenses related to our lead product candidates,
VRDN-001 and VRDN-002; and an increase of $0.3 million in consulting expenses.
Offsetting this increases was a decrease of $2.0 million related to
manufacturing activities and IND-enabling studies for both VRDN-001 and VRDN-002
that were incurred during the three months ended March 31, 2021.

General and administrative expenses

General and administrative expenses were $8.4 million during the three months
ended March 31, 2022, compared to $6.2 million during the three months ended
March 31, 2021. The $2.2 million increase in general and administrative expenses
is due primarily to an increase of $0.5 million of personnel related expenses,
including share-based compensation, due to an increase in headcount; an increase
of $0.3 million in board of directors expenses, including share-based
compensation; and increases of $1.0 million in professional expenses, including
external consulting fees, legal and auditing costs.

Other income, net

Other income, net was $0.2 million during the three months ended March 31, 2022
compared to $55 thousand during the three months ended March 31, 2021. Other
income (expense), net for both periods is comprised of interest income earned on
short-term investments as well as sub-lease income. The increase of $0.1 million
was due primarily to higher interest income earned due to a higher balance of
short-term investments, as well as an increase in sub-lease income.

Cash and capital resources

Summarized cash flows for the three months ended March 31, 2022 and 2021 are as
follows:

                                        Three Months Ended
                                            March 31,
                                       2022           2021         Increase (Decrease)
                                                       (in thousands)
Net cash provided by (used in):
Operating activities                $ (21,042)     $ (11,539)     $             (9,503)
Investing activities                    8,863         10,872                    (2,009)
Financing activities                      738          1,259                      (521)
Total                               $ (11,441)     $     592      $            (12,033)



Operating Activities

Net cash used in operating activities was $21.0 million for the three months
ended March 31, 2022, and primarily consisted of a net loss of $25.7 million,
adjusted for non-cash items of $5.0 million (primarily share-based compensation
of $4.7 million), and changes in working capital of $0.4 million.

Net cash used in operating activities was $11.5 million for the three months
ended March 31, 2021, and primarily consisted of a net loss of $18.5 million,
adjusted for non-cash items of $3.4 million (primarily share-based compensation
of $3.2 million), and changes in working capital of $3.5 million.

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Investing Activities

Net cash from investing activities was $8.9 million in the three months ended March 31, 2022and consisted mainly of $9.0 million the net proceeds from the maturities of short-term investments, and slightly offset by $0.2 million in the purchase of goods and equipment.

Net cash provided by investing activities was $10.9 million during the three
months ended March 31, 2021, and consisted of $10.9 million in net proceeds from
maturities of short term investments.

Fundraising activities

Net cash provided by financing activities was $0.7 million in the three months ended March 31, 2022and consisted mainly of $0.7 million proceeds from the exercise of stock options, and $0.1 million proceeds from the issuance of common shares under our employee stock purchase plan.

Net cash provided by financing activities was $1.3 million for the three months
ended March 31, 2021, and consisted primarily of $0.9 million of proceeds from
the exercise of common stock warrants and $0.3 million in proceeds from the
exercise of stock options.

Cash and capital resources

We have funded our operations to date principally through proceeds received from
the sale of our common stock, our Series A Preferred Stock, our Series B
Preferred Stock and other equity securities, debt financings, license fees, and
reimbursements received under collaboration agreements. As of March 31, 2022, we
had $175.4 million in cash, cash equivalents, and short-term investments. We
expect that our current resources will enable us to fund our planned operations
into 2024.

We have no products approved for commercial sale and have not generated any
revenue from product sales. Since our inception and through March 31, 2022, we
have generated an accumulated deficit of $384.0 million. Substantially all of
our operating losses resulted from expenses incurred in connection with our
research and development programs and from general and administrative costs
associated with our operations.

We will continue to require substantial additional capital to continue the
development of our product candidates, and potential commercialization
activities, and to fund our ongoing operations. The amount and timing of future
funding requirements will depend on many factors, including the pace and results
of our clinical development efforts, equity financings, securing additional
license and collaboration agreements, and issuing debt or other financing
vehicles. Our ability to secure capital is dependent upon a number of factors,
including success in developing our technology and product candidates. Failure
to raise capital as and when needed, on favorable terms or at all, would have a
negative impact on our financial condition and our ability to develop our
product candidates. Changing circumstances may cause us to consume capital
significantly faster or slower than we currently anticipate. If we are unable to
acquire additional capital or resources, we will be required to modify our
operational plans to complete future milestones. We have based these estimates
on assumptions that may prove to be wrong, and we could exhaust our available
financial resources sooner than we currently anticipate. We may be forced to
reduce our operating expenses and raise additional funds to meet our working
capital needs, principally through the additional sales of our securities or
debt financings or entering into strategic collaborations.

Our material cash requirements include obligations as of March 31, 2022, as well
as resources required to fulfill our research and development activities and the
effects that such obligations and activities are expected to have on our
liquidity and cash flows in future periods. We expect that our operating losses
will fluctuate significantly from quarter to quarter and year to year due to
timing of our development activities and efforts to achieve regulatory approval.
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If we raise additional funds through the issuance of debt, the obligations
related to such debt could be senior to rights of holders of our capital stock
and could contain covenants that may restrict our operations. Should additional
capital not be available to us in the near term, or not be available on
acceptable terms, we may be unable to realize value from our assets and
discharge our liabilities in the normal course of business, which may, among
other alternatives, cause us to further delay, substantially reduce, or
discontinue operational activities to conserve our cash resources.

Loan and guarantee agreement with Hercules Capital, Inc.

On April 1, 2022, we entered into a loan and security agreement (the "Hercules
Loan and Security Agreement") among the Company, certain of our subsidiaries
from time to time party thereto (together with the Company, collectively, the
"Borrower"), Hercules Capital, Inc. ("Hercules") and certain other lenders (the
"Lenders"). Under the Hercules Loan and Security Agreement, the Lenders provided
us with access to a term loan with an aggregate principal amount of up to $75.0
million, in four tranches (collectively the "Term Loan"), consisting of: (1) an
initial tranche of $25.0 million, available through June 15, 2023; (2) a second
tranche of $10.0 million, subject to the achievement of certain regulatory
milestones, available through June 15, 2023; (3) a third tranche of $15.0
million, subject to the achievement of certain regulatory milestones, available
through March 15, 2024; and (4) a fourth tranche of $25.0 million, subject to
approval by the Lenders' investment committee(s), available through December 15,
2024. The first tranche of $25.0 million will be available to us through June
15, 2023. Upon signing we drew an initial principal amount of $5.0 million.

The Term Loan bears interest at a floating per annum rate equal to the greater
of (i) 7.45% and (ii) 4.2% above the Prime Rate, provided that the Term Loan
interest rate shall not exceed a per annum rate of 8.95%. Interest is payable
monthly in arrears on the first day of each month. We are obligated to make
interest-only payments through April 1, 2024. If certain development milestones
are met, then the interest-only period will be extended to October 1, 2024, or
under a second extension if additional development milestones are met, to April
1, 2025. The obligations of the Borrower under the Loan Agreement are secured by
certain assets of the Borrower, including substantially all of the assets of the
Borrower, but excluding the Borrower's intellectual property.

ATM Agreements

In November 2021, we entered into an Open Market Sale AgreementSM (the "November
2021 ATM Agreement") with Jefferies LLC ("Jefferies") under which we can offer
and sell, from time to time at our sole discretion, shares of our common stock
having an aggregate offering price of up to $75.0 million through Jefferies as
our sales agent in an "at the market" offering. Jefferies will receive a
commission equal to 3.0% of the gross sales proceeds of any common stock sold
through Jefferies under the November 2021 ATM Agreement. As of March 31, 2022,
we have not sold any shares under the November 2021 ATM Agreement. As described
below, we were previously a party to the April 2021 ATM Agreement (defined
below) with Jeffries and the Cowen ATM Agreement (defined below) with Cowen and
Company, LLC ("Cowen") during the years ended December 2021 and 2020, and those
agreements are no longer in effect.

In April 2021, we entered into an Open Market Sale AgreementSM (the "April 2021
ATM Agreement") with Jefferies under which we could offer and sell, from time to
time at our sole discretion, shares of our common stock having an aggregate
offering price of up to $50.0 million through Jefferies as our sales agent in an
"at the market" offering. Jefferies received a commission equal to 3.0% of the
gross sales proceeds of any common stock sold through Jefferies under the April
2021 ATM Agreement. During the year ended December 31, 2021, we sold an
aggregate of 2,551,269 shares of common stock pursuant to the terms of the April
2021 ATM Agreement, at a volume weighted-average price of $13.13 per share, for
aggregate net proceeds of approximately $32.4 million, including initial
expenses for executing the "at the market offering" and commissions to Jefferies
as sales agent.

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Underwritten Public Offerings

In September 2021, we entered into an underwriting agreement (the "2021
Underwriting Agreement") with Jeffries, SVB Leerink LLC and Evercore Group, LLC
(collectively, the "Underwriters") for the sale and issuance of 7,344,543 shares
of common stock, which includes 1,159,089 shares of common stock issued in
connection with the exercise in full by the underwriters of their option to
purchase additional shares, at a public offering price of $11.00 per share and
23,126 shares of Series B Non-Voting Convertible Preferred Stock at a public
offering price of $733.37 per share (the "2021 Public Offering"). Our aggregate
gross proceeds from the 2021 Public Offering were approximately $97.7 million,
before deducting underwriting discounts and commissions and estimated offering
expenses payable by us.

In February 2020, we entered into an underwriting agreement with Oppenheimer &
Co., Inc. for the sale and issuance of 1,000,000 shares of our common stock and
warrants to purchase 500,000 shares of our common stock (the "2020 Public
Offering"). Each warrant has an exercise price of $16.50 per share, was
exercisable immediately and expires on the fifth anniversary of the date of
issuance. The 2020 Public Offering resulted in approximately $13.9 million of
net proceeds to us after deducting underwriting commissions and discounts and
other estimated offering expenses payable by us and excluding the proceeds from
the exercise of the warrants.

Purchase Agreements

In October 2020, we entered into a securities purchase agreement (the "Purchase
Agreement") with the purchasers named therein (the "Investors"). Pursuant to the
Purchase Agreement, we agreed to sell an aggregate of approximately 195,290
shares of Series A Preferred Stock for an aggregate purchase price of
approximately $91.0 million. Each share of Series A Preferred Stock is
convertible into 66.67 shares of our common stock, subject to specified
conditions. The powers, preferences, rights, qualifications, limitations, and
restrictions applicable to the Series A Preferred Stock are set forth in the
applicable certificate of designations. During the three months ended March 31,
2022, 47,871 shares of Series A Preferred Stock were converted into 3,191,555
shares of common stock.

In December 2019, we entered into a common stock purchase agreement with Aspire
Capital (the "Aspire Purchase Agreement"), which provides that, subject to the
terms, conditions, and limitations set forth therein, Aspire Capital is
committed to purchase up to an aggregate of $20.0 million of shares of our
common stock over the 30-month term of the Aspire Purchase Agreement. Upon
execution of the Aspire Purchase Agreement, we sold to Aspire Capital 106,564
shares of common stock at $9.38 per share for proceeds of $1.0 million as the
Initial Purchase Shares (as defined in the Purchase Agreement). During the year
ended December 31, 2020, we sold to Aspire Capital 412,187 shares of our common
stock at a weighted-average price of $21.35 per share for aggregate net proceeds
of $8.8 million. As of March 31, 2022, we have the ability to sell an additional
$10.2 million of shares of our common stock to Aspire Capital.

Contractual obligations and commitments

We are a smaller reporting company, as defined by Rule 12b-2 under the Exchange
Act and in Item 10(f)(1) of Regulation S-K, and are not required to provide the
information under this item.

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