Viking Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Amounts below are in U.S. dollars; financial statement figures are converted from thousands to millions where appropriate.
Business context
Viking is a clinical-stage biopharmaceutical company developing therapies for metabolic and endocrine disorders. It reported no revenue and remains dependent on external financing while advancing its drug candidates.
- VK2809: Phase 2b VOYAGE trial enrollment was completed in January 2023; the company expected to report primary-endpoint data in Q2 2023.
- VK2735: The subcutaneous Phase 1 trial was completed in March 2023. Viking planned to begin a Phase 2 obesity study in mid-2023 and had initiated a Phase 1 study of an oral formulation.
- VK0214: Phase 1b study in X-linked adrenoleukodystrophy was ongoing.
- VK5211: Viking said it intended to pursue partnering or licensing before conducting additional clinical studies.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / comparator |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $11.0 million | $12.6 million |
| General and administrative expense | $9.5 million | $3.7 million |
| Total operating expenses | $20.5 million | $16.2 million |
| Net loss | $19.5 million | $16.1 million |
| Basic and diluted net loss per share | $0.25 | $0.21 |
| Net cash used in operating activities | $24.6 million | $10.5 million |
Interest income, net was $1.0 million, compared with $0.2 million a year earlier. No revenue was recorded, so revenue margins are not meaningful.
- Liquidity: Cash, cash equivalents and short-term investments totaled $135.7 million at March 31, 2023, versus $155.5 million at December 31, 2022. This comprised $18.4 million of cash and equivalents and $117.3 million of short-term investments.
- Balance sheet: Total assets were $150.9 million; total liabilities were $16.8 million, including $1.5 million of operating lease liabilities. The balance sheet shows no conventional borrowings.
- Cash flows: Investing activities provided $2.2 million net, primarily as investment maturities exceeded purchases. Financing activities provided $4.2 million net, including option exercises and $2.0 million net proceeds from the ATM offering, partly offset by employee tax withholding.
- Equity: 79.3 million common shares were issued and outstanding at March 31, 2023. Stock-based compensation expense was $3.6 million, compared with $2.4 million in Q1 2022.
Material changes versus the prior-year quarter
- Operating expenses increased 26% and net loss increased 21% year over year. R&D expense declined 12%, primarily due to lower clinical-study, preclinical-study and consultant costs; G&A expense rose 158%, principally due to legal services, stock-based compensation, and salaries and benefits.
- Operating cash use increased to $24.6 million from $10.5 million. The filing attributes cash-flow movements partly to working-capital changes, including decreases in accounts payable and accrued expenses.
- Interest income rose substantially, reflecting income on cash and investments.
Outlook, risks and unusual items
- Management stated that March 31 cash, equivalents and investments were expected to fund operations through at least June 30, 2024. Viking anticipated continued losses and expected R&D and G&A expenses to increase as development programs advanced. It also said additional capital would be needed to fund operations and complete ongoing and planned trials.
- Subsequent financing: On April 3, 2023, Viking completed an offering of 19,828,300 shares at $14.50 per share, raising $287.5 million gross and $270.0 million net. This materially increased capital after quarter-end; the filing does not provide a revised cash-runway estimate reflecting the offering.
- Clinical and business risks: Results, timing, patient recruitment, safety, regulatory review, manufacturing supply, competition, and reliance on third-party CROs and manufacturers could affect development. Most licensed program technology is dependent on Ligand; the license includes potential milestones of up to approximately $1.54 billion and single-digit royalties on future net sales.
- Legal contingency: Viking’s trade-secret, contract and related claims against Ascletis entities were pending in federal court and the International Trade Commission; the federal action was stayed pending the ITC investigation. Viking stated there was no guarantee of success and no other legal proceeding expected to have a material adverse effect.
- Other uncertainty: The filing discusses possible clinical-trial disruptions from COVID-19 and broader economic, market, inflation, and capital-access risks. No specific quantitative estimate of their Q1 financial impact was provided.
Important facts for investors to verify
- Whether VK2809’s VOYAGE primary-endpoint results were reported as expected in Q2 2023, and the results and safety profile.
- Whether the planned VK2735 Phase 2 obesity study began on schedule and what data were disclosed from the oral-formulation study.
- Cash use and operating-expense trends, including the drivers of sharply higher G&A expense and operating cash burn.
- Post-offering share count, dilution, net cash position and any updated management estimate of cash runway.
- Progress and potential outcomes of the Ascletis litigation and ITC investigation, as well as any implications for intellectual property or development plans.