ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read together with our consolidated financial statements and the related notes thereto included in our consolidated financial statements and related notes thereto included elsewhere in this Annual Report. 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 Annual Report.

Overview and Recent Developments

We are a biotechnology company advancing new treatments for patients with diseases that are underserved by current therapies. We are developing multiple product candidates to treat patients who suffer from TED, a debilitating auto-immune disease that causes inflammation and fibrosis of the orbit and tissues surrounding the eye which can lead to proptosis, or bulging of the eyes, redness and swelling, double vision, pain, and potential blindness. TED significantly impacts quality of life, imposing a high physical and mental burden on patients. There is currently one FDA-approved treatment for TED, which is an intravenously administered monoclonal antibody that targets IGF-1R.

Our most advanced program, VRDN-001, is an intravenously administered anti-IGF-1R monoclonal antibody licensed from ImmunoGen for TED, a debilitating condition that can cause bulging eyes, or proptosis, as well as double vision and potential blindness. Manufacturing is underway, and we expect to have clinical drug product on hand in the third quarter of 2021 and to file an IND 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 distinct anti-IGF-1R antibody that incorporates half-life extension technology and is intended for subcutaneous administration. 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, 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.

Agreement and Plan of Merger

On October 27, 2020, we acquired Private Viridian. In accordance with the terms of the Agreement and Plan of Merger, dated October 27, 2020 (the “Merger Agreement”), by and among us, Oculus Merger Sub I, Inc., a Delaware corporation and our wholly owned subsidiary (the “First Merger Sub”), Oculus Merger Sub II, LLC, a Delaware limited liability company and our wholly owned subsidiary (the “Second Merger Sub”), and Viridian. Pursuant to the Merger Agreement, First Merger Sub merged with and into Viridian, pursuant to which Viridian was the surviving corporation and became our wholly owned subsidiary (the “First Merger”). Immediately following the First Merger, Viridian merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity (the “Second Merger,” and together with the First Merger, the “Merger”). The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. Our board of directors approved the Merger Agreement and the related transactions. The consummation of the Merger was not subject to approval of our stockholders.

Under the terms of the Merger Agreement, at the closing of the Merger on October 27, 2020 (the “Closing”) we issued 72,131 shares of our common stock and 203,197 shares of Series A Non-Voting Convertible Preferred Stock (the “Series A Preferred Stock”) (as described below) to the securityholders of Private Viridian. Each share of Series A Preferred Stock is convertible into 66.67 shares of our common stock, subject to certain conditions described below.

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

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

Contingent Value Rights Agreement

In accordance with the Merger Agreement, on November 4, 2020, we and the Rights Agent (as defined therein) executed and delivered a contingent value rights agreement (the “CVR Agreement”), pursuant to which each holder of our common stock as of November 6, 2020, other than former stockholders of Private Viridian, is entitled to one contractual contingent value right issued by us, subject to and in accordance with the terms and conditions of the CVR Agreement, for each share of our common stock held by such holder. Each contingent value right entitles the holder thereof to receive certain cash payments equal to 80% of the net proceeds, if any, related to the disposition of our legacy programs to develop product candidates that modulate microRNAs within five years following the date of the Merger. The contingent value rights are not transferable, except in certain limited circumstances as will be provided in the CVR Agreement, will not be certificated or evidenced by any instrument, and will not be registered with the SEC or listed for trading on any exchange.

Private Placement and Securities Purchase Agreement

On October 27, 2020, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the purchasers named therein (the “Investors”). Pursuant to the Purchase Agreement, we sold an aggregate of approximately 195,290 shares of Series A Preferred Stock for an aggregate purchase price of approximately $91.0 million (collectively, the “Financing”). Each share of Series A Preferred Stock is convertible into 66.67 shares of our common stock, as described below. The powers, preferences, rights, qualifications, limitations, and restrictions applicable to the Series A Preferred Stock are set forth in the Certificate of Designation filed in connection with the Merger. We plan to use the proceeds from the Financing to potentially advance multiple compounds through Phase 2 proof of concept studies in TED and expand our orphan disease pipeline and for general and working capital purposes.

otherwise required by law, the Series A Preferred Stock does not have voting rights. However, as long as any shares of Series A Preferred Stock are outstanding, we will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, (b) alter or amend the Certificate of Designation, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series A Preferred Stock, (d) increase the number of authorized shares of Series A Preferred Stock, (e) at any time while at least 30% of the originally issued Series A Preferred Stock remains issued and outstanding, consummate a Fundamental Transaction (as defined in the Certificate of Designation) or (f) enter into any agreement with respect to any of the foregoing. The Series A Preferred Stock does not have a preference upon any liquidation, dissolution, or winding-up of us.

Following stockholder approval of the conversion of the Series A Preferred Stock into shares of Common Stock in December 2020, each share of Series A Preferred Stock is convertible into shares of our common stock at any time at the option of the holder thereof, into 66.67 shares of our common stock, subject to certain limitations, including that a holder of Series A Preferred Stock is prohibited from converting shares of Series A Preferred Stock into shares of our common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be established by the holder between 4.99% and 19.99%) of the total number of shares of our common stock issued and outstanding immediately after giving effect to such conversion.

On October 30, 2020, we entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which we agreed to register for resale the shares of common stock sold to Investors in the Financing. The registration statement that was filed pursuant to the Registration Rights Agreement was declared effective by the SEC on December 22, 2020.

Reverse Stock Split

On November 12, 2020, we effected a reverse stock split of our shares of common stock at a ratio of 1-for-15, and trading of our common stock began on a split-adjusted basis on November 13, 2020. Our common stock is traded on the Nasdaq Capital Market under the ticker symbol “VRDN,” under CUSIP number 92790C104.

As a result of the reverse stock split, every 15 shares of our pre-reverse split common stock were combined and reclassified into one share of our common stock. No fractional shares were issued in connection with the reverse stock split, and in the case the stock split resulted in any stockholders owning a fractional share, then such stockholders received a cash payment in lieu of such fractional share. The reverse stock split did not modify any rights of our common stock. The reverse stock split reduced the number of shares of our common stock issuable upon the conversion of our outstanding shares of Series A Preferred Stock to a ratio of 66.67 and the exercise or vesting of outstanding stock options and warrants in proportion to the ratio of the reverse stock split and caused a proportionate increase in the conversion and exercise prices of such preferred stock, stock options, and warrants. The accompanying consolidated financial statements and notes to the consolidated financial statements in this Annual Report give retroactive effect to the exchange ratio for all periods presented.

The COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of Coronavirus, a global pandemic. To date, the COVID-19 pandemic continues to spread 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 an epidemic, pandemic or other public health crisis, such as the COVID-19 pandemic, including but not limited to potential delays in our 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. Accordingly, we cannot predict the extent to which our business, financial condition and results of operations may be affected by the COVID-19 pandemic, but we are monitoring the situation closely.

Financial Operations Overview

Revenue

Our revenue has historically consisted primarily of up-front payments for licenses, milestone payments, and payments for other research and development services earned under a license and collaboration agreement (the “Servier Collaboration Agreement”), with Les Laboratoires Servier and Institut de Recherches Servier (collectively, “Servier”) for the research,

development, and commercialization of RNA-targeting therapeutics in cardiovascular disease. We also recognize revenue for amounts received or receivable under certain grants we have been awarded.

In August 2019, Servier terminated the Servier Collaboration Agreement, with such termination becoming effective in February 2020. We completed certain activities under the Servier Collaboration Agreement through the effective termination date in February 2020. The activities eligible for reimbursement under the Servier Collaboration Agreement were considered a research and development performance obligation and revenue was recognized through the termination date.

In October 2020, we became party to a 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. 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. 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.

In the future, we may generate revenue from a combination of license fees and other up-front payments, payments for research and development services, milestone payments, product sales, and royalties in connection with strategic alliances. We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing of our achievement of preclinical, clinical, regulatory, and commercialization milestones, the timing and amount of payments relating to such milestones, and the extent to which any of our products are approved and successfully commercialized by us or our strategic alliance collaborators, if any. If our strategic alliance collaborators do not elect or otherwise agree to fund our development costs pursuant to our strategic alliance agreements, or 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 Expenses

Research and development expenses consist of 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 share-based compensation expense;

•expenses incurred under agreements with CROs, investigative sites that conduct our clinical trials, and other clinical trial-related vendors, and consultants;

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

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

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

•facilities, depreciation, market research, and other expenses, which include allocated expenses for rent and maintenance of facilities, 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 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 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.

Acquired In-process Research and Development Expense

Acquired in-process research and development (“IPR&D”) expense resulted from the acquisition of Private Viridian in October 2020. The acquisition cost allocated to acquire IPR&D with no alternative future use was recorded as expense at the acquisition date.

Other Income (Expense)

Other income (expense) consists primarily of interest income, interest expense, and various income or expense items of a non-recurring nature. We earn interest income from interest-bearing accounts, money market funds, and short-term investments. Interest expense is comprised of interest incurred under prior notes payable.

Critical Accounting Policies and Estimates

This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses. On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. We believe that the accounting policy discussed below is critical to understanding our historical and future performance, as this policy relates to the more significant areas involving our judgments and estimates.

Clinical Trial and Preclinical Study Accruals

We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on certain facts and circumstances at that time. Our accrued expenses for preclinical studies and clinical trials are based on estimates of costs incurred for services provided by external service providers and for other trial-related activities. The timing and amount of expenses we incur through our external service providers depend on a number of factors, such as site initiation, patient screening, enrollment, delivery of reports, and other events. In accruing for these activities, we obtain information from various sources and estimate the level of effort or expense allocated to each period. Adjustments to our research and development expenses may be necessary in future periods as our estimates change.

Acquisition of Private Viridian

On October 27, 2020, we completed our acquisition of Private Viridian in accordance with the terms of the Merger Agreement. We concluded that the acquisition of Private Viridian did not result in the acquisition of a business, as substantially all of the fair value of the non-monetary assets acquired was concentrated in a single identifiable asset, the exclusive license agreement with ImmunoGen. We considered several pertinent factors and identified the Company as the accounting acquirer in the transaction. Significant judgment was required in evaluating the terms of the Merger Agreement and in identifying, valuing, and recording the acquired assets at fair value, including acquired IPR&D, and determining the acquirer for accounting purposes..

Results of Operations

Comparison of the Years Ended December 31, 2020 and 2019

Year EndedDecember 31,

(in thousands)

Acquired in-process research and development expense 69,861 —

Other income (expense), net (335) 106

Revenue

Revenue was $1.1 million for the year ended December 31, 2020, compared to $4.5 million for the year ended December 31, 2019. The $3.4 million decrease in revenue was primarily due to a decrease in research and development activities related to the legacy microRNA programs reimbursable to us under a prior collaboration agreement.

Research and Development Expenses

Research and development expenses were $28.3 million during the year ended December 31, 2020, compared to $34.8 million during the year ended December 31, 2019. The $6.5 million decrease in research and development expenses was primarily attributable to an $5.8 million decrease in clinical and related manufacturing development activities associated with our legacy microRNA programs and a $5.5 million decrease in personnel-related costs, including restructuring charges. These decreases were partially offset by a $6.0 million increase in licensing fees primarily attributable to the Xencor License Agreement.

Acquired In-process Research and Development (IPR&D) Expense

Acquired IPR&D expense was $69.9 million during the year ended December 31, 2020. Acquired IPR&D expense resulted from the acquisition of Private Viridian in October 2020. The acquisition cost allocated to acquire IPR&D with no alternative future use was recorded as an expense at the acquisition date. No acquired IPR&D expenses were incurred in 2019.

General and Administrative Expenses

General and administrative expenses were $13.3 million during the year ended December 31, 2020, compared to $11.6 million during the year ended December 31, 2019. The $1.6 million increase in general and administrative expenses was due primarily to a $1.3 million increase in professional and personnel-related costs, including consulting and contract labor.

Liquidity and Capital Resources

We have funded our operations to date principally through proceeds received from the sale of our common stock, our preferred stock, and other equity securities, debt financings, and from amounts received under a prior collaboration agreement. As of December 31, 2020, we had $127.6 million in cash, cash equivalents, and short-term investments. We expect that our current resources will enable us to fund our planned operations into the second half of 2023.

We have no products approved for commercial sale and have not generated any revenue from product sales. Since our inception and through December 31, 2020, we have generated an accumulated deficit of $278.9 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.

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.

If we raise additional funds through the issuance of debt, the obligations related to such debt could be senior to rights of holders of our capital stock and could contain covenants that may restrict our operations. Should additional capital not be available to us in the near term, or not be available on acceptable terms, we may be unable to realize value from our assets and discharge our liabilities in the normal course of business, which may, among other alternatives, cause us to further delay, substantially reduce, or discontinue operational activities to conserve our cash resources.

In March 2017, we entered into the ATM Agreement, with Cowen under which we may offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million through Cowen as our sales agent. Cumulative net proceeds received from the sale of 189,763 shares of our common stock through December 31, 2020 were approximately $11.6 million, after giving effect to commissions to Cowen as sales agent and initial expenses for executing the “at the market offering.” We are not obligated to make any sales of our common stock under the ATM Agreement. The offering of shares of our common stock pursuant to the ATM Agreement will terminate upon the earlier of: (i) the sale of all Common Stock subject to the ATM Agreement or (ii) termination of the ATM Agreement in accordance with its terms.

In December 2019, we entered into the Common Stock Purchase Agreement with Aspire Capital, which provides that, subject to the terms, conditions, and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $20.0 million of shares of our common stock over the 30-month term of the Common Stock Purchase Agreement. Upon execution of the Common Stock 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. 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 December 31, 2020, we may sell an additional $10.2 million of shares of our common stock to Aspire Capital.

In February 2020, we entered into the 2020 Underwriting Agreement with the Underwriter 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.

In October 2020, we entered into the Purchase Agreement with 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 in the Financing. 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 Certificate of Designation.

Cost Restructuring Plan

In August 2019 we initiated a cost restructuring plan to streamline the organization, reduce costs, and direct resources towards prioritized initiatives and product candidates, which provided a reduction of approximately 50% of workforce in place at that time, primarily associated with research and development functions. Through December 31, 2020, we had recorded cumulative restructuring expense of approximately $2.4 million. As of December 31, 2020, the restructuring plan was completed and no additional expense under the restructuring plan is expected.

Summarized cash flows for the year ended December 31, 2020 and 2019 are as follows:

Year EndedDecember 31,

(in thousands)

Net cash provided by (used in):

Operating Activities

Net cash used in operating activities was $29.8 million for the year ended December 31, 2020, compared to $36.1 million for the year ended December 31, 2019. The $6.3 million decrease was primarily the net result of a $68.8 million increase in net loss reduced by non-cash expenses related to IPR&D expense of $66.0 million that resulted from the acquisition of Private Viridian in October 2020, a $6.0 million non-cash charge related to the issuance of common stock as payment for certain licensing fees, and a $2.8 million net decrease related to changes in other working capital.

Investing Activities

Net cash used in investing activities was $50.5 million during the year ended December 31, 2020 compared to net cash provided by investing activities of $28.2 million during the year ended December 31, 2019. The change in cash flow from investing activities was driven primarily by a $59.0 million decrease in the related maturities of short-term investments and a $49.1 million increase in purchases of short-term investments during 2020 compared to 2019. This decrease was partially offset by $29.4 million of cash acquired in the acquisition of Private Viridian in October 2020.

Financing Activities

Net cash provided by financing activities was $101.3 million for the year ended December 31, 2020, compared to $0.1 million during the year ended December 31, 2019. During the year ended December 31, 2020, we received net proceeds from the issuance of preferred stock of $86.1 million, received increased net proceeds from the sale of our common stock and warrants and exercise of warrants of $21.4 million, and made increased net repayments on notes payable of $6.2 million.

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.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements and do not have any holdings in variable interest entities.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplemental data required by this item are set forth on the pages indicated in Part IV, Item 15(a)(1) of this Annual Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Under the supervision and with the participation of our principal executive officer, principal financial officer, and other senior management personnel, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report.

Management’s Report on Internal Control Over Financial Reporting

Internal control over financial reporting refers to the process designed by, or under the supervision of, our principal officer and principal financial officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP, and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of the end of the period covered by this Annual Report. Management used the framework set forth in the report entitled “Internal Control — Integrated Framework (2013 Framework)” published by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the effectiveness of our internal control over financial reporting. Based on its evaluation, management concluded that our internal control over financial reporting was effective at a reasonable level of assurance as of December 31, 2020, the end of our most recent fiscal year.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially effect, our internal control over financial reporting.