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 nine months ended September 30, 2020; comparisons are with the corresponding 2019 periods.
Lead program VK2809 is in the Phase 2b VOYAGE trial for biopsy-confirmed NASH, targeting approximately 340 patients. The primary endpoint assesses liver-fat change at week 12; secondary objectives include liver-biopsy outcomes at week 52. Viking initiated a Phase 1 trial of VK0214 for X-linked adrenoleukodystrophy in September 2020. The company said it intends to pursue partnering or licensing opportunities for VK5211 before further clinical studies.
Financial results and liquidity
Amounts below are in millions of dollars except per-share data. The company reported no revenue in either comparative period. As a development-stage company, gross margins are not applicable.
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Research and development expense | $7.116 | $5.279 | $22.882 | $17.108 |
| General and administrative expense | $2.727 | $2.160 | $8.514 | $6.706 |
| Total operating expenses | $9.843 | $7.439 | $31.396 | $23.814 |
| Net loss | $9.288 | $5.731 | $28.547 | $18.329 |
| Net loss per share, basic and diluted | $0.13 | $0.08 | $0.39 | $0.25 |
| Net cash used in operating activities | Not presented for quarter | $16.291 | $13.009 |
At September 30, 2020, cash and cash equivalents were $3.870 million and short-term investments were $251.434 million, totaling $255.304 million. Current assets were $263.134 million and current liabilities were $9.715 million. Total liabilities were $9.830 million, including $0.438 million in operating lease liabilities; no borrowings are reported in the balance sheet. Stockholders’ equity was $253.793 million.
For the first nine months, investing activities provided $11.298 million net, reflecting investment maturities of $258.971 million less purchases of $247.673 million. Financing activities provided $0.486 million. Cash and cash equivalents declined by $4.507 million from year-end 2019. Management said available cash, cash equivalents and investments were expected to fund operations through at least December 31, 2021.
Material changes versus the prior comparable period
- Third-quarter R&D expense rose 34.8%; nine-month R&D expense rose 33.8%, mainly reflecting clinical-trial costs, including VOYAGE, and development and manufacturing activity. Nine-month clinical-study expenses increased $6.4 million.
- G&A expense increased 26.3% in the quarter and 27.0% for nine months, principally due to higher stock-based compensation and salaries and benefits.
- Net loss increased from $5.731 million to $9.288 million for the quarter and from $18.329 million to $28.547 million for nine months. Reduced interest income partly offset by higher operating expenses contributed to the larger losses.
- Nine-month operating cash use increased to $16.291 million from $13.009 million. Stock-based compensation was $4.776 million, compared with $2.767 million in 2019.
- Interest income was $0.576 million for Q3 and $2.920 million for nine months, down from $1.742 million and $5.581 million, respectively, in 2019.
Outlook, commentary and risks
- Management expects losses to continue and increase as it advances VK2809 and VK0214 and pursues other programs; it expects R&D spending to rise. The company states that it will need additional capital to fund operations and complete ongoing and planned trials, although it believes current resources cover at least the next 12 months.
- COVID-19 could delay clinical-site initiation, enrollment, patient participation and trial completion, and could disrupt suppliers, CROs, manufacturing and access to capital. The extent of the impact was uncertain.
- Viking had not generated revenue and had an accumulated deficit of $157.244 million. Drug development, clinical and regulatory outcomes, future financing availability and commercialization remain uncertain.
- The company’s pipeline depends substantially on technology licensed from Ligand. The filing describes potential development, regulatory and sales milestones of up to approximately $1.54 billion and single-digit royalties on future worldwide net product sales.
- A $50 million stock repurchase program was authorized in March 2020, but no program repurchases had occurred through September 30. No shares had been sold under the $75 million ATM agreement through that date.
- Management reported disclosure controls and procedures were effective at the period end, with no material change in internal control over financial reporting during the quarter. Viking reported no material legal proceedings and no subsequent events requiring financial-statement adjustment or disclosure.
Important facts for investors to verify
- Whether the stated cash runway remains supportable as trial costs, enrollment and development plans evolve, and when additional financing may be needed.
- VOYAGE enrollment and timing, COVID-19-related operational effects, and eventual VK2809 efficacy and safety results.
- VK0214 Phase 1 progress and the company’s plans for VK5211 partnering or further development.
- Potential dilution and capital-raising capacity, including available shelf and ATM capacity, outstanding warrants and equity awards.
- Ligand license obligations, milestone terms, royalty exposure and continued rights to the core programs.