Viking Therapeutics, Inc. — Q3 2019 Form 10-Q
Reporting period: Three and nine months ended September 30, 2019; filed November 5, 2019. Viking is a clinical-stage biopharmaceutical company developing therapies for metabolic and endocrine disorders. Financial statements are unaudited.
Financial results and liquidity
Amounts below are in millions of dollars, except per-share data. The company reported no revenue in either 2019 or the comparable 2018 periods; commercial revenue depends on future approvals and commercialization or collaborations.
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Research and development expense | $5.279 | $5.687 | $17.108 | $13.951 |
| General and administrative expense | $2.160 | $1.707 | $6.706 | $5.173 |
| Total operating expenses | $7.439 | $7.394 | $23.814 | $19.124 |
| Net loss | $5.731 | $6.600 | $18.329 | $16.823 |
| Basic and diluted loss per share | $0.08 | $0.11 | $0.25 | $0.32 |
| Cash used in operating activities | Not provided for quarter | Not provided for quarter | $13.009 | $16.076 |
Other income was $1.708 million for Q3 and $5.485 million for the nine months, primarily investment interest income; nine-month 2018 other income also included a gain from the change in fair value of the Ligand note conversion feature. With no revenue, profit margins are not meaningful.
- At September 30, 2019, cash and cash equivalents were $30.952 million and short-term investments were $257.120 million, totaling approximately $288.1 million in cash, cash equivalents and investments. Total current assets were $289.256 million.
- Total assets were $290.122 million, total liabilities $6.630 million, and stockholders’ equity $283.492 million. The filing reports no outstanding debt; the $0.733 million lease liability is not debt financing. The office lease expires in January 2022.
- Management believed available cash and investments would fund operations through at least December 31, 2020. It also expects continuing losses and says additional capital will be needed to fund operations and planned trials.
- The company used $13.009 million in operating cash during the first nine months of 2019. Investing activities provided $18.524 million, mainly reflecting investment maturities net of purchases; financing activities provided $0.658 million. Cash and cash equivalents increased $6.173 million to $30.952 million.
Changes versus comparable periods
- Q3 operating expenses were nearly flat year over year: R&D fell 7.2%, while G&A rose 26.5%. Higher Q3 G&A reflected increased stock-based compensation and professional and consulting fees.
- For the first nine months, operating expenses rose 24.5% and net loss increased 8.9%. R&D increased 22.6%, primarily due to drug-candidate manufacturing, preclinical work, consultants, and personnel; G&A increased 29.6%, primarily from stock compensation, consulting, insurance, and professional fees.
- Q3 and nine-month net losses were lower per share than in 2018, but weighted-average shares increased substantially, reflecting prior equity issuance and other share activity. The nine-month 2018 cash-flow period included $296.607 million of net proceeds from common-stock issuance; no ATM shares had been sold through September 30, 2019.
- Cash used in operations declined from $16.076 million to $13.009 million for the nine-month comparison. This should be considered alongside the larger operating loss and changes in noncash items and working capital.
Outlook, developments and risks
- VK2809: Following positive Phase 2 results in NAFLD, including statistically significant LDL-C and liver-fat reductions versus placebo, management planned to initiate a trial in biopsy-confirmed NASH in 2019. The filing also describes plans for a Phase 2b study before year-end. These are forward-looking plans, not reported completed milestones.
- VK0214: Preclinical work targets X-linked adrenoleukodystrophy. Management expected to file an IND and begin a proof-of-concept patient study in 2020, subject to completion of toxicology studies.
- VK5211: After positive Phase 2 hip-fracture recovery results, the company intended to pursue partnering or licensing before conducting further clinical studies.
- Management expected R&D and G&A costs to rise as development advances. Future capital needs depend on trial scope and results, manufacturing, regulatory requirements, collaborations, and commercialization costs. The company had an unused ATM facility allowing up to $75 million in common-stock sales, creating potential dilution.
- Key risks include clinical and regulatory failure or delays, safety findings, reliance on third-party manufacturers and research organizations, dependence on Ligand-licensed intellectual property, competition, and inability to raise capital on acceptable terms. Ligand may receive up to approximately $1.54 billion in development, regulatory, and sales milestones under the license, plus single-digit royalties on future worldwide net sales.
- The filing reports no material legal proceedings and no subsequent events requiring financial-statement recognition or disclosure. Management concluded disclosure controls were effective; no material change in internal control over financial reporting was reported for the quarter.
Important facts for investors to verify
- Whether the planned VK2809 NASH study began on the stated timeline, and the design, enrollment, and subsequent results.
- Progress on VK0214 toxicology, IND timing, and the proposed 2020 proof-of-concept study.
- Cash burn and investment balances relative to the stated runway, including whether additional financing or ATM sales occur and their dilution impact.
- Clinical, manufacturing, and regulatory developments across the pipeline, and any updates to dependence on Ligand, milestone obligations, or royalty terms.
- Whether rising R&D and G&A expenses, stock-based compensation, or share count materially change the funding outlook.