Viking Therapeutics, Inc. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020; filed April 30, 2020. Viking is a clinical-stage biopharmaceutical company developing therapies for metabolic and endocrine disorders. It has not generated revenue.
Financial results and liquidity
| Metric | Q1 2020 | Q1 2019 | Change / context |
|---|---|---|---|
| Revenue | $0 | $0 | No revenue since inception |
| Research and development | $7.987 million | $4.496 million | Up 77.6% |
| General and administrative | $2.961 million | $2.310 million | Up 28.2% |
| Total operating expenses | $10.948 million | $6.806 million | Up 60.9% |
| Net loss | $9.687 million | $4.924 million | Loss per share was $0.13 vs. $0.07 |
| Operating cash used | $4.302 million | $3.152 million | Cash burn increased |
| Cash, cash equivalents and short-term investments | $269.161 million | $275.638 million at Dec. 31, 2019 | Strong liquid resources; Q1 balance includes $15.260 million cash and $253.901 million short-term investments |
Other income was $1.261 million, primarily interest income, compared with $1.882 million a year earlier. Comprehensive loss was $10.511 million, including an $824,000 unrealized investment loss. The company reported no debt; lease liabilities totaled $588,000, including current and long-term portions. Operating margins are not meaningful given the absence of revenue.
Total assets were $277.104 million and stockholders’ equity was $268.283 million at March 31, 2020. Management stated that available cash, cash equivalents and investments should fund operations through at least June 30, 2021, based on its current plan. It also said additional capital will be needed to fund operations and complete ongoing and planned trials.
Business progress and material changes
- VK2809: The Phase 2b VOYAGE trial in biopsy-confirmed NASH began in November 2019. It targets approximately 340 patients across five arms; the primary endpoint measures change in liver fat by MRI-PDFF at week 12, with liver histology assessed after 52 weeks. Q1 R&D expense increased primarily due to clinical studies, preclinical studies and manufacturing.
- VK0214: The company expected to file an IND in 2020 for a proof-of-concept X-ALD study, subject to completion of toxicology studies.
- VK5211: Following positive Phase 2 results reported in 2017, Viking said it intended to pursue partnering or licensing opportunities before additional clinical studies.
- R&D expense rose $3.491 million year over year, including increases of $2.6 million in clinical studies, $831,000 in preclinical studies and $387,000 in manufacturing, partly offset by lower consultant costs.
- G&A expense increased $651,000, primarily reflecting higher stock-based compensation. Total stock-based compensation was $1.652 million, compared with $1.034 million in Q1 2019.
Outlook, risks and unusual items
- No specific revenue or earnings guidance was provided. Management expected losses to continue and increase as development advances, with future spending dependent on trial progress, regulatory requirements, manufacturing needs and potential partnerships.
- COVID-19 could delay clinical-site initiation, patient enrollment and trial activities; disrupt suppliers, CROs and manufacturing; and restrict access to capital. The company said the pandemic’s financial impact was uncertain and could not be estimated.
- Viking authorized a repurchase program of up to $50 million of common stock and warrants over as long as two years. No program repurchases had occurred by March 31, 2020. Separately, 17,124 shares were withheld in January for employee tax obligations.
- The company had an ATM facility of up to $75 million but had sold no shares under it through March 31, 2020. Approximately $199.3 million remained available and unallocated under its shelf registration statement.
- Key risks include clinical failure or delay, dependence on third-party manufacturers and CROs, competition, financing needs and reliance on licensed technology from Ligand. The filing describes potential Ligand milestones of up to approximately $1.54 billion and single-digit royalties on future worldwide net product sales.
- No material legal proceedings or subsequent events requiring financial-statement recognition or disclosure were reported. Management concluded disclosure controls were effective at the reasonable assurance level.
Important facts for investors to verify
- VOYAGE enrollment, trial continuity and timing of the 12-week and 52-week assessments, particularly given COVID-19 risks.
- Completion and results of VK0214 toxicology work and whether the anticipated 2020 IND filing occurred.
- Whether VK5211 partnering efforts produce an agreement or lead to further company-funded trials.
- Cash burn, investment portfolio value and maturity profile, and the assumptions supporting management’s stated runway.
- Any use of the $50 million repurchase authorization, ATM facility or remaining shelf capacity, and resulting effects on liquidity and share count.
- Applicable Ligand milestone and royalty terms, and the company’s ability to retain its licensed rights.