Viking Therapeutics, Inc. (NASDAQ:VKTX) Q3 2023 Earnings Call Transcript

Viking Therapeutics, Inc. (NASDAQ:VKTX) Q3 2023 Earnings Call Transcript October 25, 2023

Viking Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-0.23 EPS, expectations were $-0.22.

Operator: Welcome to the Viking Therapeutics Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will hold a Q&A session. [Operator Instructions] As a reminder, this conference call is being recorded today, October 25, 2023. I would now like to turn the conference over to Viking’s Manager of Investor Relations, Stephanie Diaz. Please go ahead, Stephanie.

Stephanie Diaz: Hello and thank you all for participating in today’s call. Joining me today is Brian Lian, Viking’s President and CEO; and Greg Zante, Viking’s CFO. Before we begin, I would like to caution that comments made during this conference call today, October 25, 2023, will contain forward-looking statements under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements about Viking’s expectations regarding its development activities, timelines and milestones. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially and adversely and reported results should not be considered as an indication of future performance.

A close up of a scientist in a labcoat admiring the progress of a biotech experiment.

These forward-looking statements speak only as of today’s date, and the company undertakes no obligation to revise or update any statement made today. I encourage you to review all of the company’s filings with the Securities and Exchange Commission concerning these and other matters. I will now turn the call over to Brian Lian for his initial comments.

Brian Lian: Thanks, Stephanie, and good afternoon to everyone dialled in by phone or listening on the webcast. Today, we’ll review our financial results for the third quarter and first nine months of 2023, and provide an update on recent progress with our clinical programs and operations. During the third quarter, Viking continued to build on the momentum established during the first half of the year. As a reminder, during the first six months of 2023, the company announced positive clinical data from our phase one trial evaluating VK2735, a dual GLP-1 and GIP receptor agonist, for the potential treatment of obesity, and from our Phase 2b VOYAGE Study, evaluating VK2809 in patients with biopsy-confirmed nonalcoholic steatohepatitis and fibrosis.

Also during the first six months, the company initiated the Phase 1 trial to evaluate a novel oral formulation of VK2735. Finally, the company closed a successful public offering of common stock, raising gross proceeds of approximately $288 million that we plan to use for the continued advancement of our pipeline programs through key clinical milestones. Building on these achievements and following the positive results from our phase one trial of VK2735, during the third quarter, the company advanced this program into Phase 2 development with the initiation of the venture study to evaluate the safety and efficacy of VK2735 in patients with obesity. We recently announced that interest in this trial exceeded our expectations, allowing us to upsize the study and complete enrollment more quickly than expected.

I’ll provide further details on our operations and development activities after we review our financial results for the third quarter and first nine months of 2023. For that, I’ll turn the call over to Greg Zante, Viking’s Chief Financial Officer.

Greg Zante: Thanks, Brian. In conjunction with my comments, I’d like to recommend that participants refer to Viking’s Form 10-Q filing with the Securities and Exchange Commission, which we expect to file today. I’ll now go over our results for the third quarter and nine months ended September 30, 2023, beginning with the results for the quarter. Our research and development expenses for the three months ended September 30, 2023 were $18.4 million, compared to $12 million for the same period in 2022. The increase was primarily due to increased expenses related to preclinical studies, clinical studies, stock-based compensation, salaries and benefits, and third-party consultants, partially offset by decreased expenses related to manufacturing for our drug candidates.

Our general and administrative expenses for the three months ended September 30, 2023 were $8.9 million, compared to $4.2 million for the same period in 2022. The increase was primarily due to increased expenses related to legal and patent services, stock-based compensation, third-party consultants, and salaries and benefits. For the three months ended September 30, 2023, Viking reported a net loss of $22.5 million, or $0.23 per share, compared to a net loss of $15.8 million, or $0.21 per share in the corresponding period in 2022. The increase in net loss for the three months ended September 30, 2023 was primarily due to the increase in research and development expenses and general and administrative expenses noted previously, partially offset by increased interest income compared to the same period in 2022.

I’ll now go over our results for the nine months ended September 30, 2023. Our research and development expenses for the nine months ended September 30, 2023 were $43.3 million, compared to $38.1 million for the same period in 2022. The increase was primarily due to increased expenses related to preclinical studies, stock-based compensation, salaries and benefits, manufacturing for our drug candidates, regulatory service costs and third party consultants partially offset by decreased expenses related to clinical studies. Our general and administrative expenses for the nine months ended September 30, 2023 were $28.2 million, compared to $12 million for the same period in 2022. The increase was primarily due to increased expenses related to legal and patent services, stock-based compensation, salaries and benefits, and third party consultants.

For the nine months ended September 30, 2023, Viking reported a net loss of $61.3 million or $0.66 per share, compared to a net loss of $49.3 million or $0.64 per share in the corresponding period in 2022. The increase in net loss during the period was primarily due to the increase in research and development expenses and general and administrative expenses noted previously partially offset by increased interest income, compared to the same period in 2022. Turning to the balance sheet, at September 30 2023, Viking held cash, cash equivalents and short term investments of $376 million, compared to $155 million as of December 31, 2022. This concludes my financial review, and I’ll now turn the call back over to Brian.

Brian Lian: Thanks, Greg. I’ll begin today with an update on our VK2735 program, which is the newest clinical stage compound at the company. VK2735 is a dual agonist of the Glucagon-Like Peptide 1 or GLP-1 receptor and the Glucose-Dependent Insulinotropic Polypeptide or GIP Receptor that is being evaluated for the treatment of obesity. Earlier this year, we announced positive results from a Phase 1 single ascending dose and multiple ascending dose study of VK2735. The study was designed to evaluate this compounds preliminary safety, tolerability and pharmacokinetic profile as well as its potential impact on exploratory metabolic measures including body weight and liver fat. The single ascending dose portion of the study, which enrolled healthy men and women demonstrated that single doses of VK2735 were safe and well tolerated and displayed favorable pharmacokinetics.

Following single subcutaneous doses VK2735 demonstrated the half-life of approximately 170 to 250 hours and excellent therapeutic exposures. The multiple ascending dose portion of this study enrolled healthy men and women with a minimum body mass index of 30 kilograms per meter squared. These subjects received VK2735 once weekly for 28 days. In this portion of the study VK2735, demonstrating a encouraging safety and tolerability and positive signs of clinical activity. All cohorts receiving VK2735 demonstrated reductions in mean body weight from baseline ranging up to 7.8%. Cohorts receiving VK2735 also demonstrated reductions in mean body weight relative to placebo, ranging up to 6%. Statistically significant differences in body weight compared to placebo were also maintained or improved at the day 43 follow up time point 21 days after the last dose of VK2735 was administered.

In this study, the VK2735 also demonstrated encouraging safety and tolerability with 98% of observed adverse events reported as mild or moderate, and 99% of gastrointestinal related adverse events reported as mild or moderate. These results were featured earlier this month in an oral presentation at obesity week, the annual meeting of the Obesity Society. The presentation highlighted the prior safety tolerability and weight loss findings, as well as new data demonstrating VK2735s impact on liver fat and plasma lipids. Notably, after four weekly doses of VK2735 subjects in the Phase 1 trial reported liver fat reductions of up to 47% from baseline. Among subjects with non-alcoholic fatty liver disease, placebo adjusted reductions in liver fat reached approximately 59%.

Though the sample size was limited, these results may indicate VK2735s potential benefit in patients with various forms of fatty liver disease. The obesity week presentation also highlighted VK2735s effect on plasma lipids. Despite normal baseline plasma lipid levels among these healthy volunteers, treatment with VK2735 produced encouraging reductions from baseline and total cholesterol of up to 21% and reductions in LDL cholesterol of upto 23%. In addition, plasma levels of apolipoprotein B were reduced by up to 21%. Following the encouraging results from our Phase 1 study, during the third quarter Viking initiated the Phase 2 VENTURE trial to evaluate VK2735 in patients with obesity. The VENTURE trial is a randomized, double blind placebo controlled multicentre study, that is evaluating the safety tolerability, pharmacokinetics and weight loss efficacy of VK2735, administered subcutaneously once weekly for 13 weeks.

This trial was designed to enroll approximately 125 adults with obesity, or adults who are overweight with at least one weight related comorbid condition. The trial will evaluate VK2735 doses of up to 15 milligrams compared to the 10 milligram top dose evaluated in the prior Phase 1 multiple ascending dose study. The primary endpoint of the study will assess the percent change in body weight from baseline to week-13 among patients treated with VK2735 as compared to placebo. Secondary and exploratory endpoints will evaluate a range of additional safety and efficacy measures. Earlier this week, we announced that the VENTURE study is now fully enrolled. In addition, due to heightened clinician and patient interest, we announced that the trials enrollment size has been increased to 176 patients from the original target at 125 patients.

We expect to report the top line results from this study in the first half of 2024. In addition to the subcutaneous formulation of VK2735 under evaluation in the VENTURE study, we are also pursuing an oral formulation of this compound. Earlier this year, we announced the initiation of a Phase 1 clinical study to evaluate a novel tablet formulation of VK2735. This study is an extension of the Phase 1 single ascending dose and multiple same dose study discussed earlier. The oral portion of the study is a randomized, double blind placebo controlled study in healthy volunteers who have a minimum body mass index of 30 kilograms per meter squared. Subjects in this portion of the study will receive once daily oral doses of VK2735 for 28 days. The primary objective of the study is to evaluate the safety, tolerability and pharmacokinetics of VK2735 following 28 days of oral dosing.

Exploratory endpoints include changes in body weight and other pharmacodynamic markers. Enrollment in this study is continuing and we expect to report the results in the first quarter of 2024. I’ll now provide an update on our most advanced compounds VK2809 for the treatment of NASH and fibrosis. VK2809 is an orally available small molecule agonist of the thyroid hormone receptor that is selected for liver tissue as well as the beta isoform of the receptor. Earlier this year, we announced positive or top line results from the ongoing Phase 2b VOYAGE study evaluating VK2809 in patients with biopsy-confirmed NASH and fibrosis. The study successfully achieved its primary endpoint, with patients receiving VK2809 experiencing statistically significant reductions in liver fat content from baseline to week 12 as compared with placebo.

The median relative change from baseline in liver fat as assessed by magnetic resonance imaging, proton density fat fraction ranged from 38% to 55% among patients receiving VK2809. Importantly, up to 85% of patients receiving VK2809 experienced at least a 30% relative reduction in liver fat content. This level of efficacy is associated with greater likelihood of histologic improvement in NASH. Additionally, VK2809-treated patients demonstrated statistically significant reductions in LDL cholesterol, triglycerides, and atherogenic proteins, all of which have been correlated with increased cardiovascular risk. These data indicate that VK2809 has the potential to provide longer term cardio-protective benefits. The VOYAGE data also reinforced VK2809’s encouraging safety and tolerability profile.

94% of treatment related adverse events among patients treated with VK2809 were reported as mild or moderate. Discontinuations due to adverse events were low and balanced among placebo and treatment arms. Consistent with prior studies, VK2809 demonstrated excellent gastrointestinal tolerability in this study. Rates of nausea, diarrhea, stool frequency, and vomiting similar among VK2809-treated patients compared to placebo. The findings from both the Phase 2b VOYAGE study, as well as a previous Phase 2a NAFLD study are consistent with multiple prior studies that have demonstrated VK2809s lipid lowering properties, as well as its safety, tolerability and significant liver fat reduction. It is our belief that these features combined serve to establish VK2809 as a best-in-class therapeutic for the treatment of NASH.

In the third quarter, the VOYAGE study continued and we expect to report data evaluating histologic changes assessed by hepatic biopsy after 52 weeks of treatment, in the first half of 2024. I will now review progress with our third clinical candidate VK0214 which is currently being evaluated in a Phase 1b trial in patients with X-linked adrenoleukodystrophy, or X-ALD. Like VK2809, VK0214 is an orally available small molecule thyroid hormone receptor beta agonist X-ALD is a rare and debilitating metabolic disorder that is caused by genetic mutations that disable the function of a Peroxisomal transporter of very long chain fatty acids. As a result, patients are unable to efficiently metabolize very long chain fatty acids. And the accumulation of these compounds is believed to contribute to the onset and progression of X-ALD.

In a prior Phase 1 study in healthy subjects VK0214 demonstrated dose dependent exposures, no evidence of accumulation and the half-life consistent with anticipated once daily dosing. Subjects who received VK0214 experienced reductions in LDL cholesterol, triglycerides, apolipoprotein B and lipoprotein A. VK0214 also demonstrated an encouraging safety and tolerability profile, with no serious adverse events reported, and no treatment or dose related signals observed for GI side effects, vital signs or cardiovascular measures. Viking is currently enrolling a Phase 1b study evaluating VK0214 in patients with the adrenomyeloneuropathy or AMN, form of X-ALD, which is the most common form of the disorder. This trial is a randomized, double-blind, placebo controlled multicenter study in adult male patients with AMN.

The primary objectives of the study are to evaluate the safety, tolerability and pharmacokinetics of VK0214 administered orally once daily for 28 days. The study also includes an exploratory assessment of changes in plasma levels very long chain fatty acids. This study continues to enroll, and we expect to complete enrollment by year-end. In conclusion, the first nine months of the year have been extraordinarily busy at Viking. Our newest program, evaluating VK2735 for the treatment of obesity was announced less than two years ago, and the program has matured quickly in 2023. During the first nine months of the year, we reported the results of the first Phase 1 trial of VK2735, which demonstrated encouraging safety and tolerability and exciting early signals of efficacy.

We also initiated the complimentary Phase 1 trial evaluating a novel oral formulation of VK2735, which we believe may expand the market opportunity for this therapeutic. In the third quarter, we initiated the VENTURE Phase 2 trial to evaluate VK2735s longer term clinical benefits. We are very excited with the progress we’ve made with this program during 2023. And we look forward to reporting additional data for both the subcutaneous and oral formulations in the coming quarters. With respect to VK2809, the top line data from the VOYAGE study announced earlier this year, once again demonstrated best-in-class data from this program. The results reaffirmed VK2809’s ability to drive significant reductions in liver fat, along with potentially cardioprotective benefits through robust reductions in plasma lipids.

The VOYAGE study is continuing, and we expect to report data on histologic changes assessed by hepatic biopsy after 52-weeks of treatment in the first half of 2024. And with respect to our third clinical program VK0214 the Phase 1b study evaluating VK0214 in patients with adrenomyeloneuropathy continues, and we anticipate completing enrollment by year-end. Importantly, as we aggressively advance our pipeline, we continue to carefully manage our finances and maintain a strong balance sheet of approximately $376 million, which we believe extends our operating runway beyond the value creating milestones ahead for each of our programs. This concludes our prepared comments for today. Thanks very much for joining us, and we’ll now open the call for questions.

Operator?

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Q&A Session

Operator: [Operator Instructions] Our first question comes from Joon Lee of Truist Securities. Please go ahead.

Joon Lee: Hey, congrats on the progress and thanks for taking our questions. For the VK2735, based on the completion of Phase 2 VENTURE trial enrollment disclosed earlier this week, we’d expect a top line from the 13-week study to come sometime in the February or March time frame. So, first quarter of next year. Any reason why we shouldn’t expect data in first quarter of 24? And I have a quick follow-up.

Brian Lian: Hey, Joon, thanks. We’re guiding really to the first half. Hard to put a more precise date on it than that because you never know if there are extra things to clean up in the database or things like that. Your timeline doesn’t seem crazy, but I would be cautious to guide too detailed right now. We just completed enrollment.

Joon Lee: Yes. And congrats on the enthusiasm that met the over enrollment. And, on the Oral VK2735, can you elaborate on the reasons why it may be delayed to first quarter of next year? Is that due to an addition in possibly another cohort or those? Or just wondering what the delay could be due to? Thank you.

Brian Lian: Yes, thanks, Joon. No it’s really just going more slowly than we’d like. Nothing more than that. We haven’t reached the point. The protocol is flexible in that we can add additional cohorts, but we’re not to the point of making any of those decisions at this point.

Joon Lee: All right. Thank you.

Brian Lian: Thanks, Joon.

Operator: Our next question comes from Steve Seedhouse from Raymond James. Please go ahead.

Steven Seedhouse: Great. Thank you. On the Oral 2735 study, I just wanted to ask if you have a sense of whether the pharmacology of the oral formulation is really translating clinically as you’d expect and if the relative potency versus the injectable formulation is sort of holding up. Can you comment on your updated or current conviction there?

Brian Lian: Well we think, thanks Steve. We think the mechanism should hold if the drug is well absorbed and we get good exposures. We’re blinded to the study right now. So it’s just ongoing. We don’t have any further comment really on efficacy or tolerability or any of those metrics just yet.

Steven Seedhouse: Okay. Thanks for that, Brian. And just following up on the progress of the study, can you comment just generally on sort of where you are relative to the planned overall number of cohorts, like where you are in terms of dose levels? Has your thinking evolved at all? And specifically, obviously, the VENTURE Study enrolling the way it did, does that sort of change your urgency or your strategy with how you’re executing this Phase 1 Oral study?

Brian Lian: No. It’s a good question. No. The VENTURE Study enrolled really quickly, a really high interest and enthusiasm there. But it’s a different study. It’s a parallel cohort study and multi-center as opposed to the Phase 1 where it’s a single site and it’s a sequential cohort type of study. And in that type of a study, if, for example, the cohorts are not completely filled on a specific day and you have to have a patient or subject come in in staggered timeframes, it just delays the entire execution of the study. And that’s really the reason for the delay there. It’s just slower to move forward than we’d like. VENTURE, I think, is moving along really well.

Steven Seedhouse: Got it. And just lastly, I mean, obviously this space is hot right now and everyone is aware of these types of drugs. So I guess it’s not totally shocking that the trial wouldn’t enroll so fast. But there’s also a lot of competing studies and commercially available products, of course. So anything you wanted to expand on just in terms of what you learned in the past six or seven weeks, just how that exceeded expectations so much? And is there anything specific you would call out? Or is it just what I noted, the general awareness of the mechanism?

Brian Lian: Yes, no, thanks. It’s a great point. And we were surprised with the enthusiasm from the sites and everybody, all the investigators, had more people available than we could enrol. I think it’s partly due to the extensive media coverage of weight loss drugs today. And I’m sure some contribution is there from the shortages that we see from semaglutide and Tirzepatide supplies. So I think both of those sort of combined here, that hyper-awareness and the commercial shortages.

Steven Seedhouse: Is it too early? Because it’s an experimental product. Do you have a sense that the investigators or even the patients just don’t really distinguish between the drugs? In other words, if this is as big of a market as we all suspect, like there’s going to be plenty of room for a lot of different players and that leaves room for you guys of course. Because it just seems like that would be implied by the speed with which you enrolled an experimental product.

Brian Lian: Yes, I think the investigators are aware of the differences in mechanisms certainly. On the patient side, I’m not so sure that awareness is there. There is a general awareness of GLP-1 agonists being attractive weight loss agents. And this drug has GLP in the part of the mechanism description. So to that extent, I’m sure it excited some candidate patients. But I don’t think the patients necessarily view a dual as different from a single at this point. I think over time that will evolve as we get more data from the duals versus the singles. But today I just think it’s sort of a high-level awareness in general from media coverage.

Steven Seedhouse: Great. Thanks so much for taking the questions.

Brian Lian: Thanks, Steve.

Operator: The next question comes from Jay Olson of Oppenheimer. Please go ahead.

Jay Olson: Oh, hey. Thanks for the update and thanks for taking the questions. Maybe to shift gears over to NASH for a moment. Can you share any thoughts on the failure of Akero’s FGF21 drug and F4 NASH patients and talk about it? If you would consider studying cirrhotic NASH patients similar to the way Madrigal is doing with an outcome study?