Viking Therapeutics, Inc. — FY 2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019; this is an annual report, not a standalone fourth-quarter filing. Filed February 26, 2020. Viking is a clinical-stage biopharmaceutical company and reported no product or other revenue.
Financial position and results
| Metric | FY 2019 / Dec. 31, 2019 | FY 2018 / Dec. 31, 2018 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $23.6 million | $19.0 million |
| General and administrative expense | $9.1 million | $7.1 million |
| Operating loss | $32.7 million | $26.2 million |
| Other income, net | $6.9 million | $4.1 million |
| Net loss | $25.8 million | $22.1 million |
| Basic and diluted loss per share | $0.36 | $0.38 |
| Cash used in operating activities | $24.8 million | $18.8 million |
| Cash, cash equivalents and short-term investments | $275.6 million | $301.5 million |
- With no revenue, conventional gross and operating margins are not meaningful.
- R&D expense increased 23.7%, principally due to drug-candidate manufacturing, clinical studies, consultants, and personnel. G&A expense rose 28.2%, including higher stock-based compensation and professional costs.
- 2019 other income was primarily $7.1 million of interest income, partly offset by financing-cost amortization. The 2018 comparison included a $1.4 million gain from a decline in the fair value of Ligand-note conversion features; the note was repaid in May 2018.
- Year-end assets were $284.3 million, liabilities $7.1 million and stockholders’ equity $277.1 million. No convertible notes or other borrowing debt was reported at year-end; lease liabilities totaled $0.7 million.
- Financing cash flow was $0.9 million in 2019, versus $300.3 million in 2018, when three public offerings generated substantial proceeds. No shares were sold under the $75 million at-the-market facility in 2019.
Business developments and comparison
- Viking initiated the Phase 2b VOYAGE study of VK2809 in biopsy-confirmed NASH in November 2019. The trial targets approximately 340 patients; its primary endpoint is change in liver fat at week 12, with liver-biopsy assessments after 52 weeks.
- Prior Phase 2 results for VK2809 in NAFLD showed statistically significant reductions in LDL-C and liver fat versus placebo. The filing reports median relative liver-fat reductions of 56.5% and 59.7% for the two listed dosing groups; these are earlier trial results, not 2019 VOYAGE outcomes.
- VK0214 remained preclinical for X-linked adrenoleukodystrophy (X-ALD). Management expected to file an IND and begin a proof-of-concept patient study in 2020, subject to completion of toxicology work.
- VK5211’s Phase 2 hip-fracture study results, announced in 2017, showed dose-dependent gains in lean body mass. Viking said it intended to pursue partnering or licensing before further clinical studies.
- VK0612 was described as Phase 2b-ready for type 2 diabetes; DGAT-1 and EPOR programs remained preclinical.
Outlook, risks and unusual items
- Management expected year-end cash, cash equivalents and investments to fund operations through at least the first quarter of 2021, based on its then-current plan. It also expected continued losses, increasing R&D spending, and a need for additional capital to fund operations and planned trials.
- The $75 million ATM program and an effective universal shelf registration provide potential financing capacity, but future issuance could dilute shareholders; access to funding on acceptable terms is not assured.
- Key risks include clinical-trial failure or delay, regulatory uncertainty, competition, dependence on third-party manufacturers and CROs, and reliance on Ligand-licensed assets. The Ligand agreement includes potential development, regulatory and sales milestones of up to approximately $1.54 billion in aggregate, plus tiered single-digit royalties.
- Viking reported no material pending legal proceedings, no off-balance-sheet arrangements, and no subsequent events requiring financial-statement adjustment or disclosure. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an internal-control attestation under the emerging-growth-company exemption.
- The company had an accumulated deficit of $128.7 million and had not generated revenue since inception. Clinical and commercial success, and eventual profitability, remain uncertain.
Most important facts for investors to verify
- Current cash runway and spending against the filing’s projection through at least Q1 2021; determine whether later financing was required.
- VOYAGE enrollment, timing, safety, and week-12 and 52-week results, distinguishing trial outcomes from prior VK2809 studies.
- Whether VK0214’s toxicology package, IND filing, and planned patient study proceeded as expected.
- Any VK5211 partnering or licensing arrangement and the resulting development economics and obligations.
- Potential dilution from warrants, equity awards, and the ATM facility, as well as milestone and royalty exposure under the Ligand license.