This Quarterly Report on Form 10-Q contains "forward-looking statements" as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in connection with the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. Such forward-looking statements include estimates of our expenses, future revenue, capital requirements and our needs for additional financing; statements regarding our ability to develop, acquire and advance drug candidates into, and successfully complete, clinical trials and preclinical studies; statements concerning new product candidates; risks and uncertainties associated with our research and development activities, including our clinical trials and preclinical studies; our expectations regarding the potential market size and the size of the patient populations for our drug candidates, if approved for commercial use, and our ability to serve such markets; statements regarding our ability to maintain and establish collaborations or obtain additional funding; statements regarding developments and projections relating to our competitors and our industry and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. These statements are often identified by the use of words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may" or "will," the negative versions of these terms and similar expressions or variations. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially and adversely from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included elsewhere in this Quarterly Report on Form 10-Q and in our otherSecurities and Exchange Commission , orSEC , filings. Furthermore, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Throughout this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “Viking”, “we”, “us” and “our” in this Quarterly Report on Form 10-Q refer to
Overview
We are a clinical-stage biopharmaceutical company focused on the development of novel, first-in-class or best-in-class therapies for metabolic and endocrine disorders.
The drug candidate in our lead clinical program, VK2809, is an orally available tissue and receptor subtype-selective agonist of thyroid hormone receptor beta, or TRß. In
The VOYAGE study is a randomized, double-blind, placebo-controlled, multicenter trial designed to assess the efficacy, safety and tolerability of VK2809 in patients with biopsy-confirmed NASH and fibrosis ranging from stages F1 to F3. 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 placebo. Secondary objectives include evaluation of histologic changes assessed by hepatic biopsy after 52 weeks of dosing. VK2809 has been evaluated in eight completed clinical studies, which enrolled more than 300 subjects. No serious adverse events, or SAEs, have been observed in subjects receiving VK2809 in these completed studies, and overall tolerability remains encouraging. In addition, the compound has been evaluated in chronic toxicity studies of up to 12 months in duration. We are also developing VK0214, which is also an orally available, tissue and receptor-subtype selective agonist of TRß for X-linked adrenoleukodystrophy, or X-ALD, a rare X-linked, inherited neurological disorder characterized by a breakdown in the protective barriers surrounding brain and nerve cells. The disease, for which there is no approved treatment, is caused by mutations in a peroxisomal transporter of very long chain fatty acids, or VLCFA, known as ABCD1. As a result, transporter function is impaired and patients are unable to efficiently metabolize VLCFA. The TRß receptor is known to regulate expression of an alternative VLCFA transporter, known as ABCD2. Various preclinical models have demonstrated that increased expression of ABCD2 can lead to normalization of VLCFA metabolism. Preliminary data suggest that VK0214 stimulates ABCD2 expression in an in vitro model and reduces VLCFA levels in an in vivo model of X-ALD. InJune 2021 , we initiated a Phase 1b clinical trial of VK0214 in patients with X-ALD. This trial is a multi-center, randomized, double-blind, placebo-controlled study in adult male patients with the adrenomyeloneuropathy, or AMN, form of X-ALD. The study is initially targeting enrollment across three cohorts: placebo, VK0214 20 mg daily, and VK0214 40 mg daily. Pending a blinded review of preliminary safety, tolerability, and pharmacokinetic data, additional dosing cohorts may be pursued. 21 -------------------------------------------------------------------------------- The primary objectives of the study are to evaluate the safety and tolerability of VK0214 administered once-daily over a 28-day dosing period. Secondary and exploratory objectives include an evaluation of the pharmacokinetics and pharmacodynamics of VK0214 following 28 days of dosing in this population. InJanuary 2022 , we announced the initiation of a Phase 1 single ascending dose, or SAD, and multiple ascending dose, or MAD, clinical trial of VK2735, a novel dual agonist of the glucagon-like peptide 1, or GLP-1, and glucose-dependent insulinotropic polypeptide, or GIP, receptors. VK2735 is in development for the potential treatment of various metabolic disorders. The Phase 1 trial is a randomized, double-blind, placebo-controlled, SAD and MAD study in healthy adults. The primary objectives of the study include evaluation of the safety and tolerability of single and multiple doses of VK2735 delivered subcutaneously and the identification of VK2735 doses suitable for further clinical development. Study investigators will also evaluate the pharmacokinetics of single and multiple doses of VK2735. Other clinical programs include VK5211, an orally available, non-steroidal selective androgen receptor modulator, or SARM. InNovember 2017 , we announced positive top-line results from a Phase 2 proof-of-concept clinical trial in 108 patients recovering from non-elective hip fracture surgery. Top-line data showed that the trial achieved its primary endpoint, demonstrating statistically significant, dose dependent increases in lean body mass, less head, following treatment with VK5211 as compared to placebo. The study also achieved certain secondary endpoints, demonstrating statistically significant increases in appendicular lean body mass and total lean body mass for all doses of VK5211, compared to placebo. VK5211 demonstrated encouraging safety and tolerability in this study, with no drug-related SAEs reported. Our intent is to continue to pursue partnering or licensing opportunities prior to conducting additional clinical studies. We were incorporated under the laws of theState of Delaware onSeptember 24, 2012 . Since our incorporation, we have devoted most of our efforts towards conducting certain clinical trials and preclinical studies related to our VK2809, VK0214, VK2735 and VK5211 programs and towards raising capital and building infrastructure. We obtained exclusive worldwide rights to VK2809, VK0214 and VK5211 and certain other assets pursuant to an exclusive license agreement with Ligand Pharmaceuticals Incorporated, or Ligand. The terms of this license agreement are detailed in the Master License Agreement with Ligand, which we entered into onMay 21, 2014 , as amended, or the Master License Agreement. A summary of the Master License Agreement can be found under the heading "Agreements with Ligand-Master License Agreement" under Part I, "Item 1. Business" of our Annual Report on Form 10-K filed with theSEC onFebruary 9, 2022 . Impact of COVID-19 Pandemic We are subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict, as the responses that we, other businesses and governments are taking continue to evolve. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic slowdown or recession. Policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain. In addition, our clinical trials have been affected by, and may continue to be affected by, the COVID-19 pandemic. Clinical site initiation and patient enrollment have been, and may continue to be, delayed due to the prioritization of hospital resources toward the COVID-19 pandemic. Some patients have not been able to, and others may not be able to, comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, any inability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact our clinical trial operations. The severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on our service providers, suppliers, contract research organizations, or CROs, and our clinical trials, all of which are uncertain and cannot be predicted, as well as the timing, rollout and availability of vaccines worldwide and the effectiveness thereof, and willingness of the general population to be vaccinated, and the potential emergence and spread of any new variants, including Omicron and sub-variants thereof. As of the date of issuance of our consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact our financial condition, liquidity or results of operations is still uncertain.
Summary of financial operations
Income
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To date, we have not generated any revenue. We do not expect to receive any income from any drug candidates we develop unless and until we obtain regulatory approval and commercialize our drug candidates or enter into collaborative agreements with third parties.
Research and development expenses
During the year endedDecember 31, 2021 , we charged$45.0 million to research and development expense primarily related to our efforts in continuing to conduct the VK2809 Phase 2b VOYAGE clinical trial, completing the VK0214 Phase 1 SAD and MAD study in healthy patients, preparing for and initiating the VK0214 Phase 1b trial and preparing for the initiation of the VK2735 Phase 1 trial. During the nine months endedSeptember 30, 2022 , we charged$38.1 million to research and development expense primarily related to our efforts in continuing to conduct the VK2809 Phase 2b VOYAGE clinical trial, efforts related to our Phase 1b clinical trial of VK0214 in patients with X-ALD, and continuing to conduct our Phase 1 SAD and MAD clinical trial of VK2735, currently in development for the treatment of various metabolic disorders. We expect that our ongoing research and development expenses will consist of costs incurred for the development of our drug candidates, including, but not limited to:
• Expenses related to employees and consultants, which will include salaries,
benefits and stock-based compensation, and certain consultant fees and
travel expenses;
• expenses incurred under agreements with investigative sites and CROs,
which will conduct a substantial portion of our research and
development activities, including studies in NASH and X-ALD, on our
behalf;
• payments to third party manufacturers, who will produce our asset
pharmaceutical ingredients and finished drug products;
• license fees paid to third parties for the use of your intellectual property;
and
• facilities, depreciation and other allocated expenses, which will
include direct and allocated expenses for rent and maintenance of
facilities and equipment, depreciation of leasehold improvements,
equipment and laboratory and other supplies.
We spend all research and development costs that are incurred.
The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming and the successful development of our drug candidates is highly uncertain. Our future research and development expenses will depend on the clinical success of each of our drug candidates, as well as ongoing assessments of the commercial potential of such drug candidates. In addition, we cannot forecast with any degree of certainty which drug candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements. We expect to incur increased research and development expenses in the future as we continue our efforts towards advancing our VK2809, VK2735 and VK0214 programs and seek to advance our additional programs.
General and adminsitrative expenses
Our general and administrative expenses have generally increased year-over-year as we have hired additional employees, issued additional equity awards, which has resulted in increased stock-based compensation expense, implemented certain systems to increase efficiency, and incurred additional costs for insurance, legal and accounting related to operating as a public company. We expect that our general and administrative expenses will continue to increase in the future in order to support our expected increase in research and development activities, including increased salaries and other related costs, stock-based compensation and consulting fees for executive, finance, accounting and business development functions. We also expect general and administrative expenses to increase as a result of additional costs associated with being a public company, including expenses related to continued compliance with the rules and regulations of theSEC andThe Nasdaq Stock Market LLC , additional insurance expenses, investor relations activities and other administration and professional services. Other significant costs are expected to include legal fees relating to patent and corporate matters, facility costs not otherwise included in research and development expenses, and fees for accounting and other consulting services. Other Income (Expense)
Other income (expense) includes interest income earned on our cash, cash equivalents and short-term investments.
InMarch 2020 , theSEC released final rules amending the definitions for accelerated and large accelerated filers. In addition, these final rules also exclude from these definitions of accelerated and large accelerated filers an issuer that is eligible to be a smaller 23 -------------------------------------------------------------------------------- reporting company and non-accelerated filer. As our public float onJune 30, 2022 was less than$700 million and our annual revenues were less than$100 million , we continue to be deemed a smaller reporting company and a non-accelerated filer until at leastDecember 31, 2023 . As a non-accelerated filer and in accordance with these new rules, we are not required to provide an auditor's attestation report on our internal control over financial reporting in our annual reports on Form 10-K as otherwise required by Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended. In addition, as a smaller reporting company, we have the ability to take advantage of several "scaled disclosure" accommodations in accordance with the smaller reporting company rules. We will need to reassess, as ofJune 30, 2023 , whether we continue to qualify as a smaller reporting company and a non-accelerated filer for filings beyond the fiscal year endingDecember 31, 2023 .
Critical Accounting Policies and Estimates
Our management's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted inthe United States . The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments related to our preclinical, nonclinical and clinical development costs and drug manufacturing costs, which we consider as a critical accounting estimate. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are more fully described in Note 1 and Note 3 to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Results of Operations
Comparison of the three months ended
Research and development expenses
The following table summarizes our research and development expenses for the three months endedSeptember 30, 2022 and 2021 (in thousands, except % change). $ % Three Months Ended September 30, Change Change 2022 2021
Research and development expenses
10.8 % The increase in research and development expenses during the three months endedSeptember 30, 2022 as compared to the same period in 2021 was primarily due to increased expenses related to manufacturing for our drug candidates, clinical studies, salaries and benefits, pre-clinical studies and stock-based compensation, partially offset by the receipt of funds in connection with the Australian research and development tax incentive program and decreased expenses related to our third-party consultants.
General and adminsitrative expenses
The following table summarizes our general and administrative expenses for the three months endedSeptember 30, 2022 and 2021 (in thousands, except % change). $ % Three Months Ended September 30, Change Change 2022 2021
General and administrative expenses $4,237 $
2,608$ 1,629 62.5 % The increase in general and administrative expenses during the three months endedSeptember 30, 2022 as compared to the same period in 2021 was primarily due to increased expenses related to legal services, stock-based compensation and salaries and benefits. Other income (expense) 24
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The following table summarizes our other income (expenses) for the three months ended
$ %
Three Months Ended September 30, Change Change
2022 2021
Other income (expense) $ 423 $ 160 $ 263 164.4 %
Other income (expense) recognized during the three months ended
Other income (expense) recognized during the three months ended
Comparison of the Nine Months Ended
Research and development expenses
The following table summarizes our research and development expenses for the nine months endedSeptember 30, 2022 and 2021 (in thousands, except % change). $ % Nine Months Ended September 30, Change Change 2022 2021
Research and development expenses
8.3 % The increase in research and development expenses during the nine months endedSeptember 30, 2022 as compared to the same period in 2021 was primarily due to increased expenses related to our manufacturing for our drug candidates, clinical studies, salaries and benefits and stock-based compensation, partially offset by the receipt of funds in connection with the Australian research and development tax incentive program and decreased expenses related to our pre-clinical studies and third-party consultants.
General and adminsitrative expenses
The following table summarizes our general and administrative expenses for the nine months endedSeptember 30, 2022 and 2021 (in thousands, except % change). $ % Nine Months Ended September 30, Change Change 2022 2021
General and adminsitrative expenses
49.5 % The increase in general and administrative expenses during the nine months endedSeptember 30, 2022 as compared to the same period in 2021 was primarily due to increased expenses related to legal services, stock-based compensation, and salaries and benefits. Other income (expense)
The following table summarizes our other income (expenses) for the nine months ended
$ %
Nine Months Ended September 30, Change Change
2022 2021
Other income (expense) $ 764 $ 538 $ 226 42.0 %
Other income (expense) recognized during the nine months ended September 30,
2022 consisted primarily of interest income, partially offset by a realized loss
on investments and expense relating to the amortization of certain financing
costs.
Other income (expense) recognized during the nine months ended September 30,
2021 consisted primarily of interest income, partially offset by expense
relating to the amortization of certain financing costs.
Liquidity and Capital Resources
25 -------------------------------------------------------------------------------- We have incurred losses and negative cash flows from operations and have not generated any revenues since our inception. As ofSeptember 30, 2022 , we had cash, cash equivalents and short-term investments of$155.0 million . As such, we believe our cash, cash equivalents and short-term investments will be sufficient to fund our operations through at leastDecember 31, 2023 , which is more than one year after the date of our filing of this Form 10-Q. Our primary use of cash is to fund operating expenses, which to date have consisted of the cost to obtain the license of intellectual property from Ligand, certain research and development expenses related to furthering the development of VK2809, VK0214, VK5211 and VK2735, and general and administrative expenses. Since we have not generated any revenues to date, we have incurred operating losses since our inception. Cash used to fund operating expenses is impacted by the timing of payment of these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses. OnJuly 28, 2021 , we filed with theSEC a universal Shelf Registration Statement on Form S-3 (File No. 333-258231), or the 2021 Shelf Registration Statement. The 2021 Shelf Registration Statement initially provides us with the ability to offer up to$600.0 million of securities, including equity, debt and other securities as described in the 2021 Shelf Registration Statement. The 2021 Shelf Registration Statement was declared effective by theSEC onAugust 11, 2021 and will expire onAugust 11, 2024 . Pursuant to the 2021 Shelf Registration Statement, we may offer additional securities from time to time and through one or more methods of distribution, subject to market conditions and our capital needs. OnJuly 28, 2021 , we entered into an At-The-Market Equity Offering Sales Agreement, or the ATM Agreement, withStifel, Nicolaus & Company, Incorporated ,Truist Securities, Inc. andH.C. Wainwright & Co. LLC , or, collectively, the Agents, pursuant to which we may offer and sell, from time to time, through or to the Agents, as sales agent or principal, or the ATM Offering, shares of our common stock having an aggregate offering price of up to$125.0 million , or the ATM Shares. Any ATM Shares offered and sold in the ATM Offering are to be issued pursuant to the 2021 Shelf Registration Statement and the 424(b) prospectus supplement relating to the ATM Offering datedAugust 11, 2021 . No shares of our common stock were sold under the ATM Agreement from its inception throughSeptember 30, 2022 . OnMarch 17, 2020 , our board of directors authorized a stock repurchase program, whereby we could purchase up to$50.0 million in shares of our common stock and outstanding warrants to purchase our common stock, over a period of up to two years (the "Repurchase Program"). The Repurchase Program could be carried out at the discretion of a committee of the Company's Board of Directors through open market purchases, one or more Rule 10b5-1 trading plans, block trades and in privately negotiated transactions. ThroughMarch 17, 2022 , the termination date of the Repurchase Program, we repurchased an aggregate of 1,464,217 shares of our common stock under the Repurchase Program. These shares repurchased by us under the Repurchase Program are being held in treasury until such time as we reissue or retire them. OnMarch 10, 2022 , our board of directors authorized a new stock repurchase program effectiveMarch 18, 2022 , whereby we may purchase up to$50.0 million in shares of our common stock and outstanding warrants to purchase our common stock, over a period of up to two years (the "New Repurchase Program"). The New Repurchase Program may be carried out at the discretion of a committee of our board of directors through open market purchases, one or more Rule 10b5-1 trading plans, block trades and in privately negotiated transactions. ThroughSeptember 30, 2022 , we repurchased an aggregate of 729,034 shares of our common stock under the New Repurchase Program. These shares repurchased by us under the New Repurchase Program are being held in treasury until such time as we reissue or retire them. The following table summarizes our cash flows for the periods indicated below (in thousands): Nine Months Ended September 30, 2022 2021 Cash used in operating activities$ (37,471 ) $ (35,236 ) Cash provided by (used in) investing activities $ 47,493 $ 10,550 Cash provided by (used in) financing activities $ (6,586 )
$6,833
Cash used in operating activities
During the nine months endedSeptember 30, 2022 , cash used in operating activities of$37.5 million primarily reflected our net losses for the period, adjusted by non-cash charges such as stock-based compensation, amortization of investment premiums, amortization of right of use assets, amortization of financing costs, and interest expense related to operating lease liabilities as well as changes in our working capital accounts, primarily consisting of an increase in accounts payable, accrued expenses, lease liability, accrued interest, net of interest received on maturity of investments and other assets, partially offset by an increase in prepaid expenses and right-of-use asset. 26 -------------------------------------------------------------------------------- During the nine months endedSeptember 30, 2021 , cash used in operating activities of$35.2 million primarily reflected our net losses for the period, adjusted by non-cash charges such as stock-based compensation, amortization of investment premiums, amortization of right of use assets, amortization of financing costs, and interest expense related to operating lease liability as well as changes in our working capital accounts, primarily consisting of an increase in accounts payable, accrued expenses and accrued interest, net of interest received on maturity of investments, partially offset by an increase in prepaid expenses and other assets and lease liability.
Cash provided by (used in) investing activities
During the nine months that ended
During the nine months that ended
Cash provided by (used in) financing activities
During the nine months that ended
During the nine months that ended
Future Funding Requirements
As of the date of this Quarterly Report on Form 10-Q and based upon our current operating plan, we believe that we have sufficient capital to fund our operating and capital requirements for at least the next 12 months. We anticipate, however, that we will continue to generate losses for the foreseeable future, and we expect the losses to increase materially as we continue the development of, and seek regulatory approvals for, our drug candidates, and seek to commercialize any drugs for which we receive regulatory approval. We will need to raise additional capital to fund our operations and complete our ongoing and planned clinical trials. Although we expect to finance future cash needs through public or private equity or debt offerings, funding may not be available to us on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.
Our future capital requirements will depend on many factors, including but not limited to:
• the scope, rate of progress, results and costs of our clinical trials,
preclinical studies and other related activities;
• our ability to establish and maintain strategic collaborations, licenses
or other arrangements and the financial terms of such arrangements;
• the timing and costs involved in obtaining regulatory approvals
for any of our current or future drug candidates;
• the number and characteristics of drug candidates we seek to develop
or market;
• the cost of manufacturing clinical supplies and establishing a business
supplies, of our drug candidates;
• the cost of marketing activities if any of our current or future
drug candidates are approved for sale, including marketing, sales and
distribution costs;
• the expenses needed to attract and retain skilled personnel;
• the costs associated with being a public company;
• the amount of revenue, if any, received from commercial sales of our drug
candidates, in the event that any of our drug candidates receive marketing approval;
• the impacts that the global COVID-19 pandemic may have on our business,
financial condition and results of operations, including interruptions
our operations and clinical trials, as well as interruptions or delays with
regarding the operations of our service providers, vendors and CROs;
and
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• the costs involved in the preparation, presentation, processing, maintenance,
defend and enforce potential patent claims, including litigation costs
and the outcome of any such litigation.
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