Business context and reporting period
Viking Therapeutics, Inc. is a clinical-stage biopharmaceutical company developing therapies for metabolic and endocrine disorders. This unaudited Form 10-Q covers the quarter and six months ended June 30, 2020; comparisons are with the corresponding 2019 periods. The company has not generated revenue and remains dependent on financing to support development.
- VK2809: Phase 2b VOYAGE trial underway in biopsy-confirmed NASH, targeting approximately 340 patients.
- VK0214: Investigational new drug application recently filed for X-linked adrenoleukodystrophy; management expected to begin a clinical study by year-end 2020.
- VK5211: Management intended to pursue partnering or licensing before conducting further clinical studies.
Financial performance and liquidity
Amounts below are in millions of dollars except per-share data. Operating margins are not meaningful because the company reported no revenue.
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $7.780 | $7.333 | $15.766 | $11.828 |
| General and administrative expense | $2.826 | $2.236 | $5.787 | $4.547 |
| Total operating expenses | $10.606 | $9.569 | $21.553 | $16.375 |
| Net loss | $9.572 | $7.674 | $19.259 | $12.598 |
| Basic and diluted loss per share | $0.13 | $0.11 | $0.27 | $0.18 |
| Interest income, net | $1.040 | $1.925 | $2.344 | $3.839 |
- At June 30, cash and cash equivalents were $18.790 million and short-term investments were $244.212 million, totaling approximately $263.0 million. Total assets were $271.198 million; stockholders’ equity was $261.947 million.
- Total liabilities were $9.251 million, primarily current operating liabilities and lease obligations. Lease liabilities totaled $0.514 million; the filing reports no borrowings or other financial debt.
- For the six months, operating cash use was $10.968 million, versus $9.611 million in 2019. Investing activities provided $20.932 million, mainly reflecting investment maturities exceeding purchases; financing activities provided $0.449 million.
- Management said available cash, cash equivalents and investments were expected to fund operations through at least September 30, 2021. It also anticipated needing additional capital to fund operations and complete ongoing and planned trials.
Material changes versus the prior comparable period
- Q2 operating expenses rose 10.8% year over year and net loss increased from $7.674 million to $9.572 million. For the first half, operating expenses increased 31.6% and net loss rose from $12.598 million to $19.259 million.
- First-half R&D expense increased 33.3%, primarily due to higher clinical-study and drug-manufacturing costs, partly offset by lower consultant and preclinical-study costs. Q2 R&D increased 6.1%.
- First-half G&A expense increased 27.3%, mainly because of higher stock-based compensation, legal and insurance costs. Q2 G&A increased 26.4%.
- Other income declined: first-half interest income was $2.344 million versus $3.839 million in 2019, reflecting lower interest income despite substantial investment balances.
- Cash and short-term investments declined from $275.638 million at December 31, 2019 to $263.002 million at June 30, 2020. Cash and cash equivalents alone increased to $18.790 million, primarily reflecting net investment maturities.
Outlook, risks and unusual items
- Management expected R&D costs to increase as it advanced VK2809 and VK0214 and pursued other programs. It also expected G&A costs to rise to support development and public-company operations.
- COVID-19 had affected and could further delay clinical-site initiation and patient enrollment, disrupt trial operations and suppliers, and constrain access to capital. The extent of its financial impact was uncertain.
- The company expects continuing losses and may require additional equity or debt financing; financing may be unavailable or dilutive. Failure to obtain funding could force delays, reductions or termination of development programs, or licensing of rights.
- Development, regulatory and commercial outcomes remain uncertain. Key risks include clinical-trial failure or delay, safety issues, manufacturing and CRO dependence, competition, and reliance on licensed intellectual property from Ligand.
- The board authorized a program to repurchase up to $50 million of common stock and warrants over up to two years; no repurchases had occurred by June 30, 2020. No shares had been sold under the company’s $75 million ATM agreement by that date.
- The filing reported no material legal proceedings and no subsequent events requiring recognition or disclosure. Management concluded disclosure controls were effective; no material change in internal control was reported for the quarter.
Important facts for investors to verify
- Whether COVID-19 or other operational issues changed VOYAGE enrollment, timing, costs or trial execution after quarter-end.
- Progress and timing of the planned VK0214 clinical study, including any regulatory or trial-start updates.
- Whether the stated cash runway remains valid as R&D spending grows, and the timing and terms of any additional financing.
- Clinical data, safety findings, manufacturing readiness and partnering status for VK2809, VK0214 and VK5211.
- Future use of the shelf-registration and ATM capacity, and any repurchases under the authorized program.