Viking Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Viking is a clinical-stage biopharmaceutical company developing therapies for metabolic and endocrine disorders; it has not generated revenue.
Financial and operating metrics
| Metric | Q2 2023 / June 30, 2023 | Comparable period / prior year-end |
|---|---|---|
| Revenue | $0 | $0 in Q2 2022 |
| Research and development expense | $13.9 million for Q2; $24.9 million for six months | $13.5 million and $26.1 million, respectively, in 2022 |
| General and administrative expense | $9.8 million for Q2; $19.4 million for six months | $4.1 million and $7.8 million, respectively, in 2022 |
| Net loss | $19.2 million for Q2; $38.8 million for six months | $17.4 million and $33.5 million, respectively, in 2022 |
| Basic and diluted loss per share | $0.19 for Q2; $0.44 for six months | $0.23 and $0.43, respectively, in 2022 |
| Cash, cash equivalents and short-term investments | $392.9 million | $155.5 million at December 31, 2022 |
| Operating cash flow | Cash used of $36.1 million for six months | Cash used of $24.0 million in 2022 |
| Debt and lease obligations | No borrowings reported; lease liabilities totaled $1.4 million | Lease liabilities were $1.6 million at December 31, 2022 |
Margins are not meaningful because the company reported no revenue. Interest income was $4.5 million in Q2 and $5.6 million for the first six months, compared with $0.3 million and $0.4 million in 2022.
Material changes versus prior periods
- Q2 operating expenses rose 34.7% year over year to $23.7 million. G&A increased 140.2%, primarily from legal and patent services, stock-based compensation, and salaries and benefits; R&D increased 2.8%.
- For the first six months, operating expenses increased to $44.3 million from $33.9 million, mainly due to G&A growth; R&D declined 4.5% as lower clinical-study costs more than offset increases in other categories.
- Net loss increased year over year in both Q2 and the six-month period. Higher interest income partly offset operating losses.
- The April 2023 public offering raised approximately $270 million net and issued 19.8 million shares. Shares outstanding were 100.0 million at June 30, versus 78.3 million at year-end 2022.
- Cash used in operations increased to $36.1 million from $24.0 million for the comparable six-month period. Investment purchases drove $202.3 million of investing cash outflow, while financing activities provided $271.3 million.
Outlook, pipeline, risks and unusual items
- Management said available cash, cash equivalents and investments were expected to fund operations through at least September 30, 2024, and stated it had sufficient capital for at least the next 12 months based on its operating plan. It expects continued losses and increased R&D spending, and may need additional capital; future financing may be unavailable or dilutive.
- VK2809’s Phase 2b VOYAGE study met its primary endpoint: treatment produced statistically significant reductions in liver fat versus placebo at Week 12. Biopsy results after 52 weeks of dosing were expected in 2024.
- VK2735’s subcutaneous Phase 1 study was completed; the company planned a Phase 2 obesity study in 2023. An oral-formulation Phase 1 study evaluating daily dosing for 28 days had begun.
- VK0214 was being evaluated in a Phase 1b study in X-linked adrenoleukodystrophy. The filing describes VK5211 as a potential partnering or licensing opportunity before further clinical studies.
- Key risks include clinical and regulatory failure or delay, reliance on third-party manufacturers and research organizations, competition, dependence on licensed intellectual property from Ligand, and possible future financing needs. The company may owe Ligand up to approximately $1.54 billion in development, regulatory and sales milestones, plus single-digit royalties on future worldwide net sales.
- Viking’s trade-secret and related lawsuits against Ascletis defendants were pending; the federal district court case was stayed pending a final decision in the related International Trade Commission investigation. The company said it intended to pursue its remedies but could not assure success.
- No subsequent event requiring financial-statement recognition or disclosure was reported. A July 26, 2023 amendment added BTIG as an agent to the ATM offering agreement.
- Management concluded disclosure controls were effective at June 30, 2023; no material change in internal control over financial reporting was reported for the quarter.
Important facts for investors to verify
- Timing and clinical significance of the 52-week VOYAGE biopsy results, and subsequent development plans for VK2809.
- VK2735 Phase 2 initiation and results, including safety, tolerability, and progress of the oral formulation study.
- Whether clinical spending and other cash needs remain consistent with management’s stated runway, and the potential need, terms, and dilution of future financing.
- Developments in the Ascletis litigation and any effects on operations, intellectual property, or costs.
- Share-count changes, outstanding equity awards, and potential dilution from the ATM facility and other equity compensation.