Viking Therapeutics, Inc. — Q1 2019 Form 10-Q
Reporting period: Three months ended March 31, 2019. Financial statements are unaudited. Viking is a clinical-stage biopharmaceutical company developing therapies for metabolic and endocrine disorders; it has not generated revenue.
Financial performance and position
| Metric | Q1 2019 | Q1 2018 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $4.496 million | $3.043 million; up 47.7% |
| General and administrative expense | $2.310 million | $1.762 million; up 31.1% |
| Total operating expenses | $6.806 million | $4.805 million |
| Operating loss | $6.806 million | $4.805 million |
| Net loss | $4.924 million | $3.551 million |
| Net loss per share, basic | $0.07 | $0.08 |
| Net cash used in operating activities | $3.152 million | $5.303 million |
Higher R&D costs primarily reflected drug-candidate manufacturing and preclinical work; lower clinical-study costs partly offset the increase. G&A growth reflected higher stock compensation, salaries and consulting costs. Q1 2019 other income was $1.882 million, primarily interest income on cash and investments; Q1 2018 included nonrecurring effects of the Ligand convertible note, which was repaid in May 2018.
At March 31, 2019, cash and cash equivalents were $14.343 million and short-term available-for-sale investments were $284.375 million, totaling approximately $298.7 million. Total assets were $300.080 million; total liabilities were $5.506 million, mainly accounts payable, accruals and operating lease liabilities. The filing reports no outstanding debt at quarter-end. Stockholders’ equity was $294.574 million. There was no revenue base from which to assess operating margins.
Cash used in investing activities was $7.609 million, mainly net purchases of investments; financing provided $0.325 million, primarily warrant and option exercises, net of shares withheld for taxes. Cash and cash equivalents declined by $10.436 million during the quarter. Accumulated deficit was $107.842 million. The company had 72,027,657 shares outstanding at March 31 and 72,047,657 at April 30, 2019.
Changes, outlook and business developments
- Compared with Q1 2018, operating expenses and net loss increased, while operating cash use declined. Interest income was substantially higher in 2019; the prior-year period included Ligand-note accounting items and financing proceeds from the February 2018 stock offering.
- Management stated that cash, cash equivalents and short-term investments were expected to fund operations through at least Q2 2020, and that available capital covered at least the next 12 months based on the operating plan. The company nevertheless expects continuing losses and anticipates additional capital may be needed; financing may be unavailable or dilutive.
- VK2809: Following positive top-line Phase 2 NAFLD results announced in 2018, additional 5 mg results presented in April 2019 were described as consistent with the previously reported 10 mg cohorts. Management planned to initiate a trial in biopsy-confirmed NASH in 2019. The filing reports encouraging safety and tolerability in the Phase 2 study, with no serious adverse events reported.
- VK0214: The company expected, subject to completion of toxicology studies, to file an IND and begin a proof-of-concept X-ALD study in 2019. VK5211 had positive Phase 2 results in patients recovering from hip-fracture surgery; management intended to pursue partnering or licensing before further clinical studies.
- The company adopted the new lease accounting standard on January 1, 2019, recording a right-of-use asset and lease liability; management said adoption did not change operations or cash flows. The office lease runs through January 2022.
Key risks and contingencies
- Clinical and regulatory risks are substantial: candidates remain investigational, early-stage results may not predict later outcomes, and trials may be delayed, unsuccessful or affected by safety findings, recruitment, manufacturing or regulatory requirements.
- Viking depends on third-party manufacturers, CROs and clinical sites, and on intellectual property licensed from Ligand. License termination, milestone and royalty obligations, or disputes could impair development. The filing describes potential Ligand development, regulatory and sales milestones of up to approximately $1.54 billion and single-digit royalties on future worldwide net sales.
- The company has no approved products or current revenue and expects ongoing losses. Future funding needs depend on trial scope, costs, partnerships and regulatory progress; additional financing could cause dilution or require changes to development plans.
- Other disclosed risks include competition, intellectual-property protection and infringement claims, product liability, dependence on key personnel, and reimbursement and commercialization uncertainty. No material legal proceedings or subsequent events requiring financial-statement adjustment or disclosure were reported. The filing states there were no off-balance-sheet arrangements.
Important facts for investors to verify
- Progress and timing of the planned VK2809 NASH trial and VK0214 X-ALD IND and proof-of-concept study, including any subsequent clinical results or delays.
- Actual operating cash burn and investment balances against management’s stated runway; assess how trial expansion could change funding needs.
- Current financing capacity and potential dilution, including outstanding warrants, options and future equity issuance.
- Terms and continuing status of the Ligand license, including applicable development milestones, royalties and termination provisions.
- Whether the reported VK2809 safety and efficacy findings are confirmed in larger and later-stage trials; Phase 2 results do not establish regulatory approval or commercial success.