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Viking Therapeutics(NASDAQ:VKTX)Q22020 Earnings CallJul 29, 2020, 4:30 p.m. ET

Operator

Welcome to the Viking Therapeutics 2020 second-quarter financial results conference call. [Operator instructions] As a reminder, this conference call is being recorded today, July 29, 2020. I would now like to turn the conference over to Viking's manager of investor relations, Stephanie Diaz. Please go ahead, Stephanie.

Stephanie Diaz -- Manager of Investor Relations

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, senior vice president of finance. Before we begin, I'd like to caution that comments made during this conference call today, July 29, 2020, will contain forward-looking statements within the meaning of the Securities Act of 1933, concerning the current beliefs of the company, which involve a number of assumptions, risks and uncertainties. Actual results could differ from these statements 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'll now turn the call over to Brian Lian for his initial comments. Brian?

Brian Lian -- President and Chief Executive Officer

Thanks, Stephanie, and thanks to everyone listening on the webcast or by phone. Today, we'll provide an overview of our second-quarter 2020 financial results, as well as an update on recent progress and developments related to our pipeline programs and operations. I'll begin by reviewing the status of our ongoing Phase 2b VOYAGE study. As a reminder, this trial is evaluating our small molecule thyroid hormone beta receptor agonist VK2809, in patients with biopsy-confirmed nonalcoholic steatohepatitis and fibrosis.

Enrollment in the trial continues. And despite the ongoing pandemic, more sites are open today for patients screening and enrollment, and fewer sites are reporting operational disruptions compared with two months ago. We currently anticipate completion of enrollment in this study in the first half of 2021. I'll provide more color on VOYAGE in a few minutes.

During the quarter, we also made great progress with our second small molecule thyroid receptor beta agonist, VK0214, which we're developing as a potential treatment for X-linked adrenoleukodystrophy. We're pleased to report that we recently filed an IND with the FDA to initiate the first-in-human studies of this important molecule. We plan to initiate these studies following clearance of the IND. I'll provide additional detail on our development activities after we review our second-quarter financial results.

With that, I'll turn the call over to Greg Zante, Viking's senior vice president of finance. Greg?

Greg Zante -- Senior Vice President of Finance

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 later today for additional details. I'll now go over our financial results for the second quarter and first six months ended June 30, 2020. I'll first go over the second-quarter results.

Our research and development expenses for the three months ended June 30, 2020 were $7.8 million, compared to $7.3 million for the same period in 2019. The increase was primarily due to increased expenses related to our clinical studies, manufacturing for our drug candidates, salaries and benefits, and stock-based compensation, partially offset by decreased expenses related to preclinical studies and services provided by third party consultants. Our general and administrative expenses for the three months ended June 30, 2020 were $2.8 million, compared to $2.2 million for the same period in 2019. The increase was primarily due to increased expenses related to stock-based compensation, legal expenses, and insurance expenses, partially offset by decreased expenses related to services provided by third-party consultants and travel.

For the three months ended June 30, 2020, Viking reported a net loss of $9.6 million or $0.13 per share, compared to a net loss of $7.7 million or $0.11 per share in the corresponding period of 2019. The increase in net loss and net loss per share for the three months ended June 30, 2020, was primarily due to the increases in research and development and general and administrative expenses noted previously, as well as decreased interest income due to the decline in interest rates throughout the second quarter of 2020 as compared to prevailing interest rates during the second quarter of 2019. I'll now go over our results for the first six months of 2020. Our research and development expenses for the six months ended June 30, 2020 were $15.8 million, compared to $11.8 million for the same period in 2019.

The increase was primarily due to increased expenses related to our clinical studies, manufacturing for our drug candidates, salaries and benefits, and stock-based compensation, partially offset by decreased expenses related to services provided by third-party consultants and preclinical studies. Our general and administrative expenses for the six months ended June 30, 2020 were $5.8 million, compared to $4.5 million for the same period in 2019. The increase was primarily due to increased expenses related to stock-based compensation, legal expenses, and insurance expenses, partially offset by decreased expenses related to services provided by third-party consultants, professional fees, and travel. For the six months ended June 30, 2020, Viking reported a net loss of $19.3 million or $0.27 per share, compared to a net loss of $12.6 million or $0.18 per share in the corresponding period in 2019.

The increase in net loss and net loss per share for the six months ended June 30, 2020 was primarily due to the increases in research and development and general and administrative expenses noted previously, as well as decreased interest income due to the decline in interest rates throughout the first half of 2020 as compared to prevailing interest rates during the first half of 2019. Turning to the balance sheet. At June 30, 2020, Viking held cash, cash equivalents, and short-term investments totaling $263 million and had 72,758,342 shares of common stock outstanding. This concludes my financial review, and I'll now turn the call back over to Brian.

Brian Lian -- President and Chief Executive Officer

Thanks, Greg. I'll now provide an update on our recent development activities, beginning with our lead program, VK2809, for the treatment of NASH. As a reminder, VK2809 is an orally available small molecule agonist of the thyroid homeowner receptor that possesses selectivity for liver tissue, as well as the beta receptor subtype, suggesting promising therapeutic potential in a range of metabolic disorders, including NASH. As we previously discussed, in a 12-week Phase 2 trial in patients with hypercholesterolemia and nonalcoholic fatty liver disease, VK2809 produced statistically significant reductions in liver fat content, as well as improvements in LDL cholesterol, meeting the study's primary and secondary efficacy endpoints.

On exploratory efficacy measures, evaluating other plasma lipids such as triglycerides, apolipoprotein B and lipoprotein A, treatment with VK2809 also resulted in significant reductions. Importantly, the study showed VK2809 to possess an encouraging safety and tolerability profile with no serious adverse events reported among patients receiving VK2809 or placebo. The initial data from this study were highlighted at the annual meeting of the American Association for the Study of Liver Diseases, or AASLD, in 2018. Additional data, including efficacy at the low dose of 5 milligrams daily, were presented at the international liver conference, or EASL, in 2019.

As we indicated on our last quarterly call, further results from this study have been selected for oral presentation at the upcoming 2020 EASL meeting, which will be held in a virtual format from August 27 through August 29. The VK2809 presentation will occur on Friday, August 28. In our view, the data obtained thus far suggests that VK2809 possesses several differentiating characteristics relative to the current NASH development landscape. In addition to the potent reductions observed in liver fat, which we believe suggests promise for improvement in other histologic features, VK2809's broader efficacy on lipid measures suggest additional potential cardiometabolic benefits for patients with NASH.

The compound's oral route of administration, liver-targeted mode of action and encouraging safety and tolerability to date combined to place it among the most promising development programs in the NASH landscape today. Given the encouraging findings from the 12-week Phase 2 study, last year, we initiated a 52-week Phase 2b study to evaluate the safety and efficacy of VK2809 in patients with biopsy-confirmed NASH and fibrosis. This study, which we've called the VOYAGE study, is a randomized, double-blind, placebo-controlled multicenter trial designed to assess the efficacy, safety and tolerability of VK2809 in the setting of NASH. The study is targeting enrollment of approximately 340 patients across five treatment arms, including 1 milligram daily, 2.5 milligrams daily, 5 milligrams every other day, 10 milligrams every other day and placebo.

The target population includes patients with F2 and F3 fibrosis, as well as up to 25% with F1 fibrosis. F1 patients must possess additional risk factors to be eligible for enrollment. The primary endpoint of the study will evaluate the relative change in liver fat content as assessed by magnetic resonance imaging proton density fat fraction from baseline to week 12, in subjects treated with VK2809 as compared to subjects receiving placebo. Secondary objectives include evaluation of histologic changes assessed by hepatic biopsy after 52 weeks of therapy.

We are currently enrolling patients in this study in the United States, and we remain on track to open sites outside the U.S. later this quarter. As we reported in our last quarterly update, we continue to closely monitor site activities in the context of the ongoing coronavirus pandemic. To reiterate an important comment from our last update, we have never paused enrollment in this study or indicated to our sites that we plan to defer any activities required for trial execution.

Since our last update, we're encouraged that sites continue to loosen many of the restrictions put in place earlier in the pandemic. We have more sites open for in-person and virtual patient engagement today than in prior months and anticipate further expansion of site activities in the coming months. In addition, we're pleased to report that dosing in this study has now exceeded six months and we look forward to completion of the planned 52-week treatment window that will enable the evaluation of VK2809 safety and efficacy on histologic endpoints in NASH. With respect to further expansion of clinical sites, we remain on track to open sites outside the U.S.

later this year in both the third and fourth quarters and continue to target over 80 sites globally. As we've previously indicated, we continue to anticipate completion of enrollment in VOYAGE in the first half of next year. I would now like to provide an update on our VK0214 program. Like VK2809, VK0214 is an orally available small molecule thyroid hormone receptor agonist that possesses selectivity for the beta receptor subtype.

We are developing VK0214 as a potential treatment for X-linked adrenoleukodystrophy or X-ALD. X-ALD is a serious degenerative neuromuscular disease for which no pharmacologic treatment exists. The disease is caused by a defect in a peroxisome transporter called ABCD1. This defect can result in increased plasma and tissue levels of very long-chain fatty acids, which are believed to contribute to the cerebral and motor neuron toxicities that are characteristic of the disease.

The thyroid beta receptor is an important potential target for therapeutic intervention in X-ALD because is believed to play a role in very long-chain fatty acid metabolism. Data from in vivo models have demonstrated that treatment with VK0214 produces reductions in very long-chain fatty acids in both plasma and tissue. These encouraging findings suggest potential benefit in the setting of X-ALD and we're eager to move VK0214 into the clinic. To this end, we are pleased to report that we recently filed an IND for VK0214 to initiate the clinical development of this important program.

Following clearance of the IND, we plan to initiate the first in-human studies of VK0214, to be followed by initiation of a proof-of-concept study in patients with X-ALD. We will provide more details on trial design upon study initiation. As we advance both VK2809 and VK0214, we continue to carefully manage our cash resources and maintain a strong financial position. As Greg stated earlier, we ended the second quarter with approximately $263 million in cash, which we currently expect will provide sufficient runway to achieve a number of the key clinical milestones that we believe will drive value creation in the future.

In conclusion, we continue to make exciting progress with both our VK2809 and VK0214 programs. With respect to our Phase 2b VOYAGE trial, evaluating VK2809 in patients with biopsy-confirmed NASH and fibrosis, we've increased the number of sites that are open and actively enrolling and look forward to adding new sites, both within and outside the U.S. in the coming months. We're also happy to report that we passed the six-month dosing milestone and continue to treat subjects for the planned 52-week trial duration.

We currently anticipate completion of enrollment in the first half of 2021. With respect to VK0214 for the treatment of X-linked Adrenoleukodystrophy, we recently filed an IND for this program, and we expect to initiate clinical development in the third quarter. Finally, during the second quarter, we continued to carefully manage our cash to ensure that we have the resources to optimally advance our key programs through their critical milestones. This concludes our prepared comments for today.

Thanks again for joining us. And now, we'll open the call for questions. Operator?

Operator

[Operator instructions] The first question comes from John -- Joon Lee, excuse me, of SunTrust. Please go ahead.

Joon Lee -- SunTrust Robinson Humphrey -- Analyst

Hi. Good afternoon and thanks for taking my questions. Brian, did I hear correctly that in your VOYAGE study, you have passed the six-month threshold? And you are now going beyond that in treating patients?

Brian Lian -- President and Chief Executive Officer

Hi, Joon. Yes, that's correct.

Joon Lee -- SunTrust Robinson Humphrey -- Analyst

Great. So that pretty much puts the question at rest. OK. That's great to hear.

And then the other question I have is one of your peer companies, Intercept, received a disciplining CRL last month without an AdCom. And then the FDA stated that they did not believe the risk-benefit justified approval. What are your thoughts on that CRL? And how does this, if at all, change your development plans for 2809?

Brian Lian -- President and Chief Executive Officer

Yeah. Thanks, Joon. It's really a complicated question. And I don't have a lot of insight on the nature of the CRL or any discussions Intercept may or may not have had with the FDA.

As far as our plans, our plans are unchanged. So we're going to complete the VOYAGE study and read those data out and then plan for a Phase 3 trial. And currently, the guidance is unchanged with the registration endpoints. So we are not altering our strategy at all.

We look forward to completing the VOYAGE study. That's the main focus right now.

Joon Lee -- SunTrust Robinson Humphrey -- Analyst

In your view, if you look -- as you look at the profile of 2809 and compare that with OCA, what can you point to as a source of conviction that this 2809 won't be as nearly as a concern when it comes to review process down the line?

Brian Lian -- President and Chief Executive Officer

Yes. Well, it's a -- they're a little bit apples to oranges. It's a different mechanism with obeticholic acid. They did a longer, larger study.

We're focused now on a Phase 2b study. We're looking at both the registration endpoints as secondary endpoints at 12 months. But it's tough to make that comparison just because they're just different molecules targeting different receptors and different mechanisms.

Joon Lee -- SunTrust Robinson Humphrey -- Analyst

Yeah. Understand. And then the last question is, when you report the additional data at EASL next month, what should we be focusing on?

Brian Lian -- President and Chief Executive Officer

Yes. We'll report data from the 16-week visit in that study. And then we'll also report data from some of the subsets of patients. Patients with higher BMI, higher baseline ALT, that sort of thing.

So I think it's an interesting data set. So we look forward to presenting it.

Joon Lee -- SunTrust Robinson Humphrey -- Analyst

Great. Looking forward to it. And congrats and thanks so much.

Brian Lian -- President and Chief Executive Officer

Thanks a lot, Joon.

Operator

The next question comes from Michael Morabito of Chardan Capital Markets. Please go ahead.

Michael Morabito -- Chardan Capital Markets -- Analyst

Hi, guys. Thanks for taking the questions. I was wondering if you could go into any more detail on the ex U.S. sites that you plan to open.

You said about 80 sites globally. Do you know, once all is said and done, how many of those will be ex U.S. versus in the U.S.? And what do you think the mix of U.S. versus non-U.S.

patients will be by the time the study is finished?

Brian Lian -- President and Chief Executive Officer

Yeah. The mix should be about three to one, at least, maybe closer to four to one, but at least three to one. And we had originally targeted around 12 ex U.S., and we'll be potentially moving that up closer to 15. But that's sort of the broad mix there, primarily U.S.

but a little tranche of ex-U.S. as well.

Michael Morabito -- Chardan Capital Markets -- Analyst

And so when you enroll patients in the ex U.S. sites, do you expect the U.S. versus ex-U.S. next to be relatively equal in all five arms of the study?

Brian Lian -- President and Chief Executive Officer

I would expect so. Well, obviously, there are more U.S. sites, so we'll have more patients from the U.S. in the study.

But yes, it should be well balanced in that regard. It's a randomized study.

Michael Morabito -- Chardan Capital Markets -- Analyst

OK. And some of your competitors have hinted that they may be able to run registrational trials at -- with an endpoint of less than 52 weeks based on some of their data. From the data that you've seen today, do you think that there's any chance that you would be able to run a trial that would be shorter than a 52-week Phase 3?

Brian Lian -- President and Chief Executive Officer

So it's a good question. We don't know. We haven't generated any data longer than 12 weeks. We have the 16-week data from the follow-up visit, but the patients only received 12 weeks of therapy.

So we'll make that determination once we have our 12-month data in hand, but it's just hard to answer right now.

Michael Morabito -- Chardan Capital Markets -- Analyst

OK. Thanks for taking the question.

Brian Lian -- President and Chief Executive Officer

Thanks, Michael.

Operator

The next question comes from Matt Luchini of BMO Capital. Please go ahead.

Matt Luchini -- BMO Capital Markets -- Analyst

Hi. Good afternoon, and thanks for taking my question. And congrats on the progress. So it sounds like from an enrollment -- VOYAGE enrollment perspective, you're pretty optimistic on how things are progressing.

And so I'm just wondering, is the gating factor in terms of your enrollment guidance more actually on the ex U.S. side? Or is it still pulling enough patients through on the U.S. side? And then secondarily, while I appreciate that it's somewhat a moot point given that we passed the six-month mark. Can you just maybe comment, did the FDA actually come back and sort of bless VOYAGE to continue dosing? Or was it more a continuation of the no-news-is-good-news commentary that we saw last quarter? Thank you.

Brian Lian -- President and Chief Executive Officer

Yeah. Thanks, Matt. So on the second question, there was never any requirement that we check in with the FDA at six months. The trial that was cleared to proceed was a 52-week trial, and we were requested to submit our 12-month tox data at some time frame before any subject reach that six-month threshold.

So there wasn't any sort of a check in or OK or anything from the FDA. We didn't receive one. We didn't expect one, and there was never one outlined for us. With respect to enrollment, the modeling that we do for completion enrollment, it encompasses the time to get the U.S.

and ex-U.S. sites onboard. And then we have enrollment assumptions in each of those sites and model it out from there. So it's a combination of U.S.

and ex-U.S., and they're both going to be important contributors. But bulk of the contribution will come from U.S. patients, at least that's our expectation today.

Matt Luchini -- BMO Capital Markets -- Analyst

OK. And just given all the -- in terms of the initial PDFF data, should we be expecting that closer to, say, the tail end of the first half? Or do you think, really, it's a second-half event? Or is it still too early to say?

Brian Lian -- President and Chief Executive Officer

I think it's early to say. We'll report it as soon as we have it, but it's early to say. We have some -- a pretty broad window in there, and that reflects a lot of the uncertainty in the current clinical environment. But I don't think we're going to narrow it down today.

Matt Luchini -- BMO Capital Markets -- Analyst

Understood. Just thought I would ask. Thanks for taking the questions.

Brian Lian -- President and Chief Executive Officer

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Viking Therapeutics (VKTX) Q2 2020 Earnings Call Transcript - Motley Fool

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