Viking Therapeutics, Inc. — Q2 2022 Form 10-Q
Business context and reporting period. This unaudited filing covers the three and six months ended June 30, 2022. Viking is a clinical-stage biopharmaceutical company developing treatments for metabolic and endocrine disorders. It has not generated revenue and reports one operating segment.
Financial results and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $13.5 million | $12.8 million | $26.1 million | $24.3 million |
| General and administrative expense | $4.1 million | $2.7 million | $7.8 million | $5.4 million |
| Total operating expenses | $17.6 million | $15.5 million | $33.9 million | $29.8 million |
| Net loss | $17.4 million | $15.4 million | $33.5 million | $29.4 million |
| Basic and diluted loss per share | $0.23 | $0.20 | $0.43 | $0.38 |
| Net cash used in operating activities | — | $24.0 million | $24.3 million |
With no revenue, profit and operating margins are not meaningful. At June 30, 2022, cash and cash equivalents were $16.2 million and short-term investments were $152.7 million, totaling $168.9 million, down from $202.1 million at year-end 2021. Total liabilities were $16.3 million, including $1.7 million in operating lease liabilities; the filing reports no debt.
Six-month investing cash inflow was $20.6 million, primarily reflecting investment maturities net of purchases. Financing cash outflow was $6.6 million, mainly due to $6.8 million of share repurchases. Management said available cash and investments were expected to fund operations through at least September 30, 2023, while also stating that additional capital will be needed to fund operations and complete ongoing and planned trials.
Material changes versus the prior comparable period
- Q2 operating expenses rose 13.4% year over year; six-month expenses rose 13.8%. R&D increased 5.8% in Q2 and 7.2% for the first half, primarily from drug manufacturing, clinical studies, compensation and related costs.
- G&A increased 49.4% in Q2 and 43.3% for the first half, driven mainly by legal services, stock-based compensation, salaries and benefits, and insurance.
- Net loss increased 13.3% in Q2 and 14.1% for the first half compared with 2021.
- The company repurchased 729,034 shares for $6.8 million under a new $50 million repurchase program during the first half. Shares outstanding declined from 78.2 million at December 31, 2021 to 76.7 million at June 30, 2022.
- Available-for-sale investments had $1.5 million of gross unrealized losses at June 30, 2022, compared with $0.5 million at year-end 2021. The company stated it did not intend, and was not likely required, to sell before recovery of amortized cost.
Outlook, programs, risks and unusual items
- Management expects losses and R&D spending to continue and increase as development advances. No formal revenue or earnings guidance is provided.
- VK2809: The Phase 2b VOYAGE study in biopsy-confirmed NASH was ongoing. Its primary endpoint evaluates liver-fat change at week 12; secondary objectives include liver-biopsy outcomes after 52 weeks.
- VK0214: The FDA placed the X-linked adrenoleukodystrophy Phase 1b study on clinical hold in January 2022, requesting an additional preclinical study. Viking submitted the requested information in Q2 and reported FDA approval to resume the study in July 2022.
- VK2735: A Phase 1 single- and multiple-ascending-dose trial was initiated in January 2022 for the dual GLP-1/GIP receptor agonist.
- Key risks include clinical and regulatory uncertainty, trial enrollment and timing, COVID-19-related operational disruption, dependence on third-party manufacturers and CROs, reliance on licensed technology from Ligand, and the need for additional financing. The filing also notes market, inflation, supply-chain and geopolitical uncertainty related to Russia’s invasion of Ukraine.
- Viking reported no material legal proceedings and no subsequent events requiring adjustment or disclosure in the financial statements. Management concluded disclosure controls were effective; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Current enrollment, timing and forthcoming results for VOYAGE and the VK2735 Phase 1 trial.
- Whether the VK0214 study resumed after the FDA’s July 2022 authorization, and its updated timeline and costs.
- Actual operating cash burn and whether the stated runway through September 2023 remains valid as programs progress.
- Future capital needs and any use of the $125 million ATM facility or the $600 million shelf registration; no ATM shares had been sold through June 30, 2022.
- Remaining authorization and subsequent activity under the $50 million share repurchase program, as well as potential dilution from equity awards and future financing.
- License obligations to Ligand, including potential development, regulatory and sales milestones and royalties, and the status of the company’s licensed intellectual property.