Welcome to the Viking Therapeutics Second 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, July 26, 2023. I would now like to turn the conference over to Viking’s Manager of Investor Relations, Stephanie Diaz. Please go ahead, Stephanie.

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, July 26, 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. 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.

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 second quarter and first six months of 2023, and provide an update on recent progress with our clinical programs and operations. The first half of 2023 has been exceptional for Viking, with the company announcing positive clinical data from two programs and completing a successful financing to support the continued development of our pipeline. During the second quarter, we announced positive results from the Phase 2b VOYAGE Study of VK2809, in patients with biopsy confirmed nonalcoholic steatohepatitis or NASH. The study successfully achieved its primary endpoint, confirming VK2809's best-in-class therapeutic profile for the treatment of NASH. In the first half of the year, we also announced data from our first clinical study of VK2735, a dual GLP-1 and GIP receptor agonists, for the potential treatment of obesity. This Phase 1 single ascending dose and multiple ascending dose study demonstrated encouraging safety and tolerability and positive signs of clinical activity following 28 days of treatment. I will review these clinical results later in today's call. Along with the Phase 1 results for VK2735, we also announced the initiation of a new clinical study to evaluate a novel oral formulation of this compound. Finally, during the second quarter of the year, we announced the closing of a successful public offering of common stock, raising gross proceeds of approximately $288 million that we plan to use for the continued advancement of each of our programs through key clinical milestones. I'll provide further details on our operations and development activities after we review our financial results for the second quarter and first six months of 2023. For that, I'll turn the call over to Zante, Viking Chief Financial Officer.

Thanks, Brian. In conjunction with my comments, I'd like to recommend that participants refer to Vikings 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 second quarter and six months ended June 30, 2023, beginning with the results for the quarter. Research and development expenses for the three months ended June 30, 2023, were $13.9 million compared to $13.5 million for the same period in 2022. The increase was primarily due to increased expenses related to pre-clinical studies, manufacturing for our drug candidates, stock-based compensation, salaries and benefits of third-party consultants, partially offset by decreased expenses related to clinical studies. Our general and administrative expenses for the three months ended June 30, 2023, were $9.8 million compared to $4.1 million for the same period in 2022. The increase was primarily due to increased expenses related to legal and patent services, stock-based compensation and salaries and benefits. For the three months ended June 30, 2023, Viking reported a net loss of $19.2 million or $0.19 per share compared to a net loss of $17.4 million or $0.23 per share in the corresponding period in 2022. The increase in net loss for the three months ended June 30, 2023 was primarily due to the increase in general and administrative expenses, noted previously, partially offset by increased interest income compared to the same period in 2022. I'll now go over the results for the six months ended June 30, 2023. Research and development expenses for the six months ended June 30, 2023 were $24.9 million compared to $26.1 million for the same period in 2022. The decrease was primarily due to decreased expenses related to clinical studies, partially offset by increased expenses related to manufacturing for our drug candidates, stock-based compensation, salaries and benefits and regulatory services. Our general and administrative expenses for the six months ended June 30, 2023 were $19.4 million compared to $7.8 million for the same period in 2022. The increase was primarily due to increased expenses related to legal and patent services, stock-based compensation and salaries and benefits. For the six months ended June 30, 2023, Viking reported a net loss of $38.8 million or $0.44 per share compared to a net loss of $33.5 million or $0.43 per share in the corresponding period of 2022. The increase in net loss for the six months ended June 30, 2023 was primarily due to the increase in 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 June 30, 2023, Viking held cash, cash equivalents and short-term investments of $392.9 million compared to $155.5 million as of December 31, 2022. This concludes my financial review and I'll now turn the call back over to Brian.

Thanks, Greg. I'll begin my comments with an update on our lead program, VK2809. VK2809 is an orally available, small molecule likeness to the thyroid hormone receptor that is selected for liver tissue as well as the beta isoform of the receptor. During the second quarter, the company announced positive topline results from the Phase 2b VOYAGE study evaluating VK2809 in patients with biopsy confirmed NASH and fibrosis. We were very pleased to report that this study 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 the greater likelihood of histologic benefit in NASH. Additionally, VK2809 treated patients demonstrated statistically significant reductions in low density lipoprotein cholesterol, triglycerides and atherogenic lipoproteins, all of which have been correlated with cardiovascular risk. It is important to highlight that a number of studies evaluating other NASH development programs have demonstrated elevations in these lipids following treatment. In contrast, the Phase 2b VOYAGE data indicate that VK-2809 may be unique in its potential to offer a cardiovascular protective benefit. Also important VK-2809 demonstrated encouraging safety and tolerability in this study. 94% of treatment-related adverse events among patients receiving VK-2809 were reported as mild or moderate. Discontinuations due to adverse events were low and balanced among placebo and treatment arms. As in prior studies, VK-2809 demonstrated excellent gastrointestinal tolerability in this study. Rates of nausea, diarrhea, stool frequency and vomiting were similar among VK-2809 treated…

We will now begin the question and answer session. [Operator instructions] And our first question here will come from Steve Seedhouse with Raymond James. Please go ahead.

Good afternoon. Thanks so much for taking a question. Wanted to ask first about the oral GLP-GIP tablet formulation, so you're going to have the Phase 2 obesity study underway in third quarter, and you'll get the oral data later this year. I am just curious, what then becomes sort of the next steps strategically for that molecule, if you can add it to that Phase 2 parallel Phase 2 and also specifically, are there any preclinical data necessary for the tablet formulation that you'd need to clear, like with FDA for a separate IND for instance, thanks?

Hey Steve, thanks for the questions. So the path forward would parallel the plan for the SubQ formulation. So if the oral formulation looks promising, then we would seek to move that into a Phase 2 study that would likely be similar in design to the SubQ Phase 2 study. With respect to the FDA requirements, it will likely be under a separate IND, and probably have some more CMC-related information included in it, but we don't think anything will be, I think, gaining to moving forward.

Okay, thanks, Brian, and also, there was a lot of data of course at ADA and emerging now for the oral formulations of some of the GLP-1 monoagonist and you guys have presented animal data comparing the subcutaneous version of this to semi-glutite or tirzepatide pre-clinically. Is it possible or easy to do those comparisons with sort of oral control molecules pre-clinically as well. Do you have a sense of how your tablet formulation stacks up pre-clinically against what's out there and through Phase 2 now?

Yeah, it's a good question. So we don't expect the oral efficacy to be on the same level as the SubQ efficacy. And that's just -- we just don't know that it will be able to achieve the same level of exposure as the SubQ, I doubt it, but that doesn't mean there's not a terrific opportunity for it. When we looked at the oral formulation in some of the earlier animal models, it was effective at weight loss and it does show, the efficacy probably I don't know, 50%, 60% as good as the SubQ. We didn't, pursue any specific dose ranging comparisons, but in the 14-day and 21-day models, they were -- it was very effective, but probably about probably 60%. I'm not remembering that percentage perfectly. So don't call me on that, but it is probably 60% or so as effective as the SubQ.

And are you able to get your hands on or synthesize the control molecules for some of these other clinical stage emerging oral GLP-1 candidate, do you have a sense of how it stacks up laterally as opposed to just versus your own subcutaneous formulation, pre-clinically, of course.

Oh! We've done a little bit of that, I don't want to get into the compounds we have tested against, but we have done a little bit of that, and I think from what we've seen, it looks very encouraging, but, these are animal models with a lot of pretty, pretty large air bars, but I think we're comfortable with what we've seen animals as far as exposures and weight loss thus far.

Okay. Thanks a lot for taking the question.

Our next question will come from Jay Olson with Oppenheimer. Please go ahead.

Oh, hey, congrats on all the progress and thanks for taking the questions. For the oral 2735 data expected later this year, can you just talk about what kind of data we should be looking for and how you plan to disclose that?

Thanks, Jay. Did you say the clinical data or pre-clinically? Sorry.

Clinical.

Oh, clinical. It would probably be roughly similar to what we announced with the SubQ. So we'd look at PK and safety and tolerability and preliminary effects on body weight changes. We aren't doing the MRI PDFF with the oral, but everything else I think is very parallel to the SubQ.

Okay. And is that going to be a QD dosing and are there any dietary restrictions around dosing?

It is QD dosing. We haven't disclosed dosing details on whether or not there are restrictions, but we don't think anything would be particularly problematic.

Okay, great. And then given the ongoing supply shortage for some of the competing weight loss compounds, can you just talk about the cadence of enrolment for your 2735 studies?

Yeah, it's a little lumpy with 2735. This is a single site in Australia, and it comes in fits and starts, but we think we can have data from the study by the end of the year, but you have little bursts of enrolment than a little dry spell and then a burst of enrolment. So it's similar to the SubQ enrolment pattern.

Okay, great and may be one last question. Beyond GLP-1 and GIP, are there any other mechanisms for obesity that you're interested in?

Yeah, we have a fairly robust effort in metabolic disorders and obesity in particular. I think not everything is ready for prime time right now, but we hope to talk more about those in the coming quarters, but I think we've got some exciting projects in house here.

Great. Thank you, Brian. Appreciate you taking all the questions.

Our next question will come from Joon Lee with Truist. Please go ahead.

Okay, congrats on all the progress and thanks for taking our questions. Just to follow up on from Steve's prior question, do you think you saw around 50% to 60% of the weight loss effect for your oral formulation, versus the peak formulation, and so in other words, the 3% weight loss of placebo-adjusted in a Phase 1 study, is that the bar or are there other considerations like different dosing regimen that makes that extrapolation difficult and I have a follow-up?

Yeah, thanks, Joon. Yeah, I think that extrapolation is very difficult because the animal studies are sort of sledgehammer studies you're dosing at levels that aren't really relevant to people, just to understand whether or not an effect exists. So, I wouldn't use that as a benchmark for expectations in people. We just don't know yet what the effect in people would be.

Got it. And can we remind that how many arms you're testing in the oral formulation?

Yeah, the oral formulation would be five arms. It will be placebo, and then four escalating dose arms. We do have flexibility to add arms in that study if we'd like, just like in the SubQ study at cohort

Looking forward to data and in terms of VK2809 for NASH, assuming good -- it results in first half of the next year, what are you looking for in a potential partner who can take it forward? And how quickly do you think you could find such a partner?

Yeah, well, I think its great question. I think it depends on what the data look like. We're excited to see how the biopsies turn out. And that I think will drive the interest and the speed in which we would move forward, we would hope to upon completion of the study, schedule and in a Phase 2 meeting with the FDA as soon as possible to discuss the design and outline of the Phase 3 program.

And our next question will come from Annabel Samimy with Stifel. Please go ahead with your question.

Hi. This is Stacy calling for Annabel. Congrats on the quarter and thanks for taking our question. I guess two on our end. How are you thinking about the landscape following ADA and the strengths of some of the new programs and the orals emerging? Do you feel that in your clinical trials you might find populations that might be more suited to have dual agonist than single or triple. And how do you start identifying those patients? And I guess you're seeing potential encroachment from triple G for NASH or at least that's how it's been interpreted. Can you talk about the feedback from your side on how tirzepatide might affect your opportunity?

Yeah, thanks, Stacy. A lot of talk about some of the data from ADA and how obesity uptake, the uptake of new obesity drugs is projected and how it looks right now. It looks very exciting. And I just, as a reminder, we have an obesity drug. So to the extent those drugs are used widely, that's great, because we think we've got a phenomenal molecule in the VK2735. At this point, we haven't really seen from the obesity drugs compelling anti-fibrotic signal. So I think in that sense, some of the liver targeting agents and different mechanisms may have an edge on just an obesity type drug. I think when you look at the ADA updated guidelines that were announced at the conference ADA conference, the suggestion to screen earlier for NAFLD and Nash, we think that's a great update to the guidance. We think that'll raise awareness and I think really serve to funnel more patients into the GI specialist setting where they're probably more likely to receive a targeted agent versus just an obesity agent and so we think that increase in awareness is, I think, favorable to the more of the pure Nash drugs. But, at the end of the day, these are large markets. NASH is a pre-substantial market. There will be room for multiple modalities to coexist. If someone has morbid obesity and NASH, maybe something like retatrutide would be suitable for some period of time, but there are plenty of people who don't fit that description and very large populations that people aren't necessarily obese and they have NASH. If you look at Asians, they typically get a skinny NASH. So, we don't necessarily see obesity drugs just taking over the NASH world. I think that's an over statement.

That's really helpful. Thank you, guys.

And our next question, will come from Andy Hsieh with William Blair. Please go ahead.

Great. Thanks for taking my question. So, I have one for 2735. You mentioned about the flexibility to add another arm. I'm just curious about what considerations you'll be put in, in making that determination, especially in a context that some of when you dose escalate, especially in such short-time intervals, sometimes the magnitude of weight loss don't really separate. Instead, the difference is really where they plateau. So, I'm curious about the thinking into adding that that's original arm. And then, in terms of oral dosing versus SubQ, just curious if you have disclosed that and, it'll be helpful to kind of get an understanding of kind of the ratio between the SubQ dosing normalize to weekly versus oral dosing? Thank you.

Yeah, thanks, Andy. So, with the oral dosing, we just have the flexibility and the protocol to add cohort just not. We have to make that decision based on the data and the data would be exposure PK, tolerability data. Those would be kind of the primary drivers to understanding whether or not we want to add another cohort. With respect to the doses that are planned, I think we said previously we're looking at 2.5 milligrams per day, 5 milligrams per day, 10 milligrams per day, and then 20 milligrams per day and so, those would be the planned doses, and then if we make any changes, we have some flexibility there in the protocol.

Got it, that's very helpful.

And our next question will come from Yale Jen with Laidlaw & Co. Please go ahead.

Good afternoon, and thanks for taking the questions. I've got two here. The first one is from the meeting, the recent meeting that the GGG product, at least on the SPC side seems to be very promising. My question to you is that it was adding glucagon agonist, it was something for you guys to consider, or you feel this is probably not necessarily the best strategy forward and I have another follow-up.

Yeah, thanks, Yale. We have looked at the triple agonist here and in our hands, we couldn't get them to outperform the dual agonist, the target, the GLP1 and GIP. What we do see from some of the data on the triple agonist compounds is that the incremental benefit on weight loss is it's there, it's relatively modest given the, I think, significant change in the adverse event profile. So with elevated hypersensitivity and potentially concerns on cardiac safety, we'll see how those pan out long term, but those would be potential challenges that may or may not be worth it in every patient. So right now, we're looking at the GLP1 GIP dual agonist. There may be other mechanisms outside of glucagon that could be layered on to those two and provide a very nice enhancement of the signal.

Okay, sounds great. And that's very helpful and maybe just one more question here, which is for the Phase 2 Sub-Q study you're going to start. Any color in terms of what level of your longer duration or other aspects in the trial design you can reveal and thanks.

Yeah, thanks, Yale. So we're going up to 15 milligrams. We plan to go up to 15 milligrams in this study. It's a 13 week study and we would plan to tie trade in three week blocks to move up to the 15 milligrams dose levels. So I believe at the end of the study, if you are randomized to the 15 milligram arm, you would be on that arm for about four weeks.

Okay, great. That's very helpful and look forward to data later this year.

And our next question will come from Thomas Smith with Leerink Partners. Please go ahead.

Hey, guys. Good afternoon. Thanks for taking the questions. Just a couple on the obesity program, I think you've alluded to obesity week. This directly is a reasonable venue for presenting the detailed Phase 1 data. Can you just comment on whether that's still your expectation. And I guess what additional datasets we should be looking forward to with the detailed presentation beyond the top line?

Yeah, thanks, Tom. We did submit an abstract as a late breaker and I don't know when those notifications will be sent out. We haven't notified yet. And we would hope to have -- we did collect a lot of different and we looked at plasma lipids. I'm sorry, plasma lipids and plasma glucose is what I meant to say. And we also looked at liver fat. So maybe some more color around some of those things as well as a little bit more on the PK side. We haven't talked a lot about PK, but probably expect to have a little bit more PK data.

Okay, great. And so wondering if you could just elaborate a little bit on the regulatory progress with 2735 in the US and I guess specifically, if you could comment on whether you filed the IND and if you have, I guess, what the gating factors to filing the IND would be?

Yeah, thanks, Tom. We have recently filed the IND. And we hope to be able to start the study in the third quarter, but we have not -- we're still in that window right now. So there aren't any gating factors that we're aware of today that would preclude that, but we haven't heard back yet.

Got it. Okay, great. And just one last question if I could on the voyage trial and I know you've commented previously about using one pathologist, the screen patients for entry. And I guess if they're on the border of F2, F3 or if they have a NASH equal to four, they get referred on to a second pathology review. Maybe you could just comment or give us your latest thoughts on how you're thinking about the biopsy evaluation for the 52-week biopsy. Are you considering adding additional pathologists or maybe changing to a consensus review methodology or just what are your latest thoughts on the histology efficacy evaluation?

Yeah, thanks, Tom. It's obviously a lot of evolved since we initiated the study. We think we're best served now to sort of keep the two reader approach where you have a primary reader that sends things to a secondary reader when they are on the cusp of different gradations, F2 versus F3 or anybody with an NAS of four would still go to the second read and they -- those two pathologists much must reach consensus and I'm not aware any time thus far that they haven't reached consensus. So, I think that it's working for us now. In a Phase 3 trial, we would probably move to maybe a three reader approach, but right now we're going to stick with what's currently in the protocol.

Got it. That's helpful. Great. Thanks for taking the question guys. Appreciate it.

[Operator instructions] Our next question here will come from Justin Zelin with BTIG. Please go ahead.

Thanks for taking the question and congrats on the progress here. So Brian, we recently saw an acquisition in the obesity space. Could you give us the latest thinking on the BD strategy at Viking, either bringing things into the company or likewise out?

Oh, yeah, thanks, Justin. Our plan today is to develop things really as far as we can. We don't see ourselves launching either a NASH or an obesity product, but we will continue as aggressively as possible with the clinical development of our programs and be open minded to opportunities as they arise things that make sense for the company and our shareholders, but that's what folks on is our own internal programs. Right now, I'd say, bringing new things into the company probably a lower priority given that we have our hands full.

Great. That makes sense to me. Thanks so much for taking the question.

And our next question, will come from Dylan Dupuis with Roth MKM. Please go ahead.

Hi, thank you for taking my question. Just one quick question on the Phase 2 obesity study that you guys are planning to start. Just around the dosing cohorts and at what point you think you'll need to start implementing dose? Thank you.

Yeah, thanks, Dylan. Yeah, we do plan to titrate the lowest dose in the Phase 2 study would be a 2.5 mg fixed dose, but subsequent doses would be higher and will titrate into those doses in three week blocks. So, for example, second cohort is a five milligrams cohort we plan to do three weeks at 2.5 mgs and then the remainder of the trial at the 5 milligrams dose. So that's how we anticipate the titration scheme working.

Thanks, Dylan.

And this concludes our question-and-answer session. I'd like to turn the conference back over to Stephanie Diaz for any closing remarks.

Thank you all for your participation and continued supportive of Viking Therapeutics. We look forward to updating you again in the coming months. Thank you.

The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.