Good day and welcome to the Viking Therapeutics Fourth Quarter 2019 and Year-End Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Stephanie Diaz of Investor Relations. Please go ahead.

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, February 26, 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 will now turn the call over to Brian Lian for his initial comments. Brian?

Thanks, Stephanie, and thanks to everyone listening on the webcast or by phone. Today, we will provide an overview of our fourth quarter and year-end 2019 financial results, as well as an update on recent progress and developments related to our pipeline programs and operations. 2019 was a year of tremendous progress at Viking, building on the momentum that followed the successful outcomes of our completed clinical studies. With respect to our lead program, VK2809, our novel thyroid receptor beta agonist we completed the important work required to support a Phase 2b study in patients with biopsy-confirmed NASH and we are pleased to announce in November the initiation of this important study. With respect to VK0214, our second thyroid receptor beta agonist, our efforts during 2019 focused on continuing the IND enabling work required to commence clinical studies of this molecule and we expect to file an IND for this program in the first half of this year. I will provide additional detail on our development activities in a few minutes, but first, we’d like to review our fourth quarter and year-end financial results. For that, I’ll turn the call over to Greg Zante, Viking’s Senior Vice-President of Finance. Greg?

Thanks, Brian. In conjunction with my comments, I'd like to recommend that participants refer to Vikings Form 10-K filing with the Securities and Exchange Commission, which was filed after the market closed today for additional details. I’ll first go over our financial results for the fourth quarter ended December 31, 2019. Our research and development expenses for the three months ended December 31, 2019 were $6.5 million compared to $5.1 million for the same period in 2018. The increase was primarily due to increased expenses related to clinical studies with the initiation of the Phase 2b VOYAGE study during the quarter, and manufacturing for our drug candidates, partially offset by decreased expenses related to our preclinical studies and services provided by third party consultants. Our general and administrative expenses for the three months ended December 31, 2019 were $2.4 million compared to $1.9 million for the same period in 2018. The increase was primarily due to increased expenses related stock-based compensation and professional fees. For the three months ended December 31, 2019, Viking reported a net loss of $7.5 million or $0.10 per share compared to a net loss of $5.2 million or $0.07 per share in the corresponding period in 2018. The increase in net loss and net loss per share for the three month ended December 31, 2019 was primarily due to increased research and development, and general administrative expenses noted previously, as well as decreased interest income due to the decline in interest rates throughout 2019, as compared to prevailing interest rates during the fourth quarter of 2018. I'll now provide our financial results for the 12 months ended December 31, 2019. Our research and development expenses for the 12-months ended December 31, 2019 were $23.6 million compared to $19 million for the same period in 2018.…

Thanks, Greg. I'll now provide an update on recent progress and activity with our lead program VK2809. As a reminder, VK2809 is an orally available small molecule agonist of the thyroid hormone receptor that possess the selectivity from liver tissue as well as the beta receptor subtype suggesting promising therapeutic potential in a range of metabolic disorders including Nash. In September 2018, we announced positive results from a 12-week Phase 2 trial of VK2809 in patients with hypercholesterolemia and non-alcoholic fatty liver disease. As we had previously discussed, this trial successfully achieved both its primary and secondary endpoints, demonstrating potent reductions in liver fat content as well as improvements in plasma lipid measures. As a brief reminder, patients receiving VK2809 experienced median relative reductions in liver fat ranging from 54% to approximately 60% compared with approximately 9% for placebo. The proportion of patients experiencing at least a 30% relative reduction in liver fat ranged from 77% to 100% with the overall average of 88%, compared with 17% for placebo patients. In addition, 70% of patients receiving VK2809 experienced at least a 50% relative reduction in liver fat content compared to baseline. VK2809 also produced significant reductions in plasma lipids, including LDL Cholesterol, triglycerides, and atherogenic proteins such as apolipoprotein B and Lipoprotein (a). This lipid lowering profile is a novel feature of thyroid receptor beta activation and is of particular interest in the setting of NASH as it may suggest long term cardiovascular benefit. In addition to the impressive advocacy observed, VK2809 has also demonstrated an encouraging safety and tolerability profile. In the Phase 2 study, no serious adverse events were reported among patients receiving VK2809 or placebo and the overall numbers of adverse events were relatively evenly distributed across treatment arms. We believe VK2809’s potent liver specific effects combined…

Thank you [Operator Instructions] Our first question comes from Joon Lee of SunTrust. Please go ahead.

Hi. Thanks for taking my questions, and congrats on getting the podium presentation for 2809 at EASL. In addition to the additional data from the Phase 2 novel study, will you also be sharing additional preclinical tox data as well? And can you tell us where you are in submitting the full tox data to cover the entire 12 months? Is that imminent or has it already been submitted? And I have one more follow-up. Thank you.

Hey, Joon, thanks for questions. No, as part of the presentation at EASL, we won't be disclosing any of the toxicity studies that were completed in animals. The submission of the full 12-month dataset is imminent, and yes, it's very near term, I’d say our reports are completed. They're just undergoing final QC proofing.

Great. And can you tell us a little bit about the design of the X-ALD proof-of-concept study, what that would look like, and what you would hope to learn from that initial study? Thank you.

Yes. No. Good. Great question. So the -- it's sort of a two tiered clinical study. The first portion will target healthy volunteers in, you know this is called the stacked design, where you begin single ascending dose study in healthy volunteers. And during that, you begin dosing multiple saying dose study also in healthy volunteers and during that, then, you begin enrolling patients with X-ALD. We would target a 28-day treatment window, and look at very long chain fatty acid changes, after 28-days and with those data then, if they're encouraging, we would then speak with the FDA about what the next steps might look like, but that would be the proof-of-concept.

And when do we hope to get the top line? If -- I don't mean the initial study?

Yes, I would say, the most likely window for that is probably going to be first half of 2021. I mean, it's not impossible that it would be available later this year, but I would say first half of 2021 is a safe bet.

Great. Thank you very much.

Okay, thanks.

Our next question will come from Steve Seedhouse of Raymond James. Please go ahead.

Hi, good afternoon. My question is on one theme that's come up in the NASH deals in a couple of recent Phase 2 studies and also some of the recent meetings. And that is, I was hoping you could clarify generally what the biopsy reading protocol is for the phase 2b study for example, how are biopsies blinded or scrambled to the reading pathologist? How many pathologists are there? And are you going to be re-reading baseline biopsies at the end of the study? Or does the screening biopsy kind of serve as the time zero comparator?

Yes. Thanks Steve. It's a great and complex question. I don't have the answer for all of the parts of it. We are using one pathologist. That person will be reviewing the baseline and end of treatment biopsy. We will not be reshuffling and reassessing the baseline at a later date. And I think that's about all I know on the logistics of the biopsy read procedure. But we're not going to send it out to multiple people or reshuffle and produce that sort of thing.

Okay. But those details are already helpful, actually given the variance there is between studies. So thank you for that. The other thing I just wanted to ask, in terms of the enrollment with Phase 2b study. Are you willing to say, kind of what inning you're in there, or roughly how long you think it'll take you to fully enroll this study?

Yes, I think it's early to say that early innings, would be a one way to add to that, but that we're still in the ramp up process opening sites, and we're I think moving along according to schedule there. We will be adding 12 sites to 15 sites outside the U.S. And those are expected to come online in the second quarter. And it's a little early to give guidance on completion of enrollment. I'd certainly expect it to be in 2020, but tightening from there, I don't. It's hard to do right now.

Okay. Appreciate it. Thanks for taking the questions. Look forward to seeing the additional data on.

Thanks, Steve.

Our next question will come from Derek Archila of Stifel. Please go ahead.

Hi, Bill on for Derek. Congrats on the progress on 2019. So first from us, can you just speak to sort of what other biomarkers you're evaluating in the study, and then what will -- which of those biomarkers you'll read out at the same time as the MRI-PDFF?

Yes. So we're looking at the health panel, we're looking at Proceed 3, we're looking at TIMP 1 and several others, I don't have that full list in front of me. And I'm not sure yet, it will read out all of that with the 12-week data, sometimes those take a little longer to -- different labs are doing those evaluations that might take a little bit longer to receive, but we'll play it by a year there. But there is a whole panel of other biomarkers, we're looking at.

Great. And then can you brief -- just really briefly describe the differences between 0214 and 2809?

Yes. Yes, different structures. So, 0214 has a slightly different substitution pattern on one of the aromatic rings and as a result, it has a slightly better beta selectivity and the PD profile was just a little bit different. We always look at those guys in parallel in all of our animal studies and on some metrics, it's superior on other metrics 2809 is superior. So I think they're both tremendously effective in the in vivo models for NASH. But when you look at the X-ALD profile, VK0214 seems to be effective in X-ALD and VK2809 is not very effective there. So that was a key difference in the actual in vivo data.

Does that have to do with the liver sensitivity of 2809?

Maybe. I don't know. It was a surprise to us to see that the delta there since they're similar in virtually every other assay, but it could, it could have that. I mean, I could play a role there.

Great. Thanks a lot.

Thanks for the questions.

Our next question will come from Scott Henry of Roth Capital. Please go ahead.

Thank you and good afternoon. Just a couple of questions. First, on the modeling for 2020, how should we think about R&D spend throughout the year. Should we ramp it steadily? And then as far as magnitude, perhaps relative to 2019, are we thinking double of 2019 spending just trying to get a sense on R&D for the year?

Yes, it's a good question. Thanks, Scott. It's going to be a certainly higher than in 2019, and I would say overall, the spend will be about 50% higher skewed a little bit. Well it's going to be a gradual ramp. So 4Q is going to be higher than 1Q and 1Q is going to be higher than 4Q '19. But, when you think about overall R&D and overall OpEx, it's about 50%. Right now, we think it's going to about 50% higher. Greg, do you have any other…?

Yes. No that's right on target, I think, yes.

Okay. Great. Thank you for that color. And just one question on the trial. I realize it's not new but, we haven't had a chance to talk about it. When you look at the five doses, I was a little surprised not to see a 5 mg daily since it was relatively robust dose in the earlier trial. Any thoughts on deciding which ones to go with, and why you went with five milligrams every other day versus daily?

Yes. We definitely -- it's a great question. So we definitely wanted to have some overlap with the Phase 2a study for comparative purposes. We thought that going with the higher sort of a pulsatile dose might be advantageous. I mean, I think you could argue, 5 mg study would be advantageous based on the data. But we chose to go 10 mg just to have that -- be the overlap dose and then step down from there. We went to 5 mg every other day because we know that, when we look the last three doses in the Phase 2a, they all pretty much stacked on top of each other. As far as efficacy. So we were -- we felt right on the far right hand side of the dose response curve. So we think that coming down as we are. We should still see efficacy and we have that overlap with the very effective 10 mg every other day from the Phase 2a study.

Okay, great. Thank you for the additional color. And thank you for taking the question.

Thanks, Scott.

Our next question will come from Andy Hsieh of William Blair. Please go ahead.

Great. Thanks for taking my questions. So I think in your new slide deck you mentioned about potential weight loss. I know that from clinical trials phase -- so obviously I'm talking about 2809 here. The phase 1 and Phase 2 unfortunately dosing maximum dosing was about 12-weeks, you probably didn't really see that, but just maybe from non-human primates, did you see something like that from the compound, just given the fact that it's an agonist where with the thyroid pathway?

Yes, thanks Andy. I don't think we talk about that in the slide deck. We don't see any meaningful weight changes. When you look at vital signs across the four cohorts, in the 12-week study. The placebo cohort was a little bit skinnier, and they gained about a pound and then the treated cohorts were a little heavier, and they lost about a pound. So but there was no – it didn't look like there was any dose response there, and we just -- we don't think there's any effect on weight from obvious in that study. That's the thing too. I mean everybody wants the therapies to lose weight because that also plays a role in the signal NASH. But with this mechanism, it's a little bit more problematic because the weight loss might be taken as a proxy for thyroid alpha activation, and so you really don't want to see it with a thyroid beta agonist in the early studies. So once you can establish all the safety parameters, then maybe and a longer study, but and we’re going back to the question that we didn't see any in the 12-week study.

Got it. Okay, thanks for that clarification. So and in terms of the EASL presentation obviously not compromising your ability to present just, maybe high level, what you know what should we expect and what should be -- what should we be looking for the new data?

Yes. It's really interesting, we had people come back at week-16 in the study. So the end point was that week-12 for efficacy and everybody came back for labs and MRI at week-60. And so we'll present those data as well as some deeper dives into some of the different subsets, patient characteristics in the study.

Okay, that's helpful. And so in terms of a AMN [ph] or 0214, I think one of the challenges for a lot of these rare diseases is diagnosis. And I think one is the source of that, so X-ALD is -- was will this kind of included in the screening for newborns in 2015. But obviously there's a lot of adults who potentially could be carriers, but do not know about that. So just wondering, from a trial enrollment or recruitment perspective, how do you identify these patients and what are some strategies that you can employ to maximize recruitment of this rare disease?

Yes, it's key challenge. Fortunately, many of these families understand that they do carry the defect. And there are only a few treatment centers in the U.S. and most of these families are seen at one of four or five treatment centers. We will be engaging those treatment centers in the proof-of-concept portion of the study. And we feel like there'll be a relatively small study, we'll target adults. They're easier to enroll than the childhood form, and we don't think there will be any say they may be start challenges in the first phase of the study anyway given the size and the availability of adults. There's something, I mean it's a fair question across the board in the orphan setting, but most of these families are seeing at the same treatment centers, and that they know that they've carried the gene.

Right. Okay, that makes sense. Cool. That's all I have. Thanks for answering all my questions.

Thanks, Andy.

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

Hey thank you. Appreciate you taking our questions. This is Matt [ph] on for Jay. We were wondering, I guess your thoughts on the evolving competitive landscape. For example, NGM just toppling their data from phase 2 the other day. So if you've got to take a look at that, and any thoughts you might have there, especially your mechanism compared to the others out there. And also, maybe as it co-relates, what potential other combinations with other MOAs [ph] you could imagine being potentially helpful with yours.

Yes, thanks for the question. I think it's better to direct the questions about another company's dataset to that company. I thought the data looked really exciting and I've always thought that, that compound looked very promising. I think the way we think about the competitive advantages for VK2809; number one, it's oral; it's very effective on -- in animals on fibrosis, in humans on liver fat. And key differentiator for this mechanism is that you see a reduction across the board in plasma lipids, not just LDL, but also also atherogenic proteins. And on top of that, excellent tolerability with VK2809. There's no sort of GI challenge or anything like that. It's very well tolerated across the Board. So I think we feel good about the competitive profile the more we see evolving in the space.

Okay, got you. Thank you. And we were also just wondering -- you saw this year if there's anything else that's, that's out there that you're aware of that, that you're looking forward to?

Well, yes the oral session that we're in on Friday night will have I believe the MGM data and several other company presentations. So that'll be a good session from I think it's 4:30 to 6:00 or 4:30 to 6:30 on Friday night.

Okay, great. Looking forward to that. I appreciate taking your questions.

Yes, thanks.

Our next question will come from David Bautz of Zacks. Please go ahead.

Hey, Brian. Thanks for the update today. Now that you've got the Phase 2b trial underway, I'm curious if that has affected your partnering discussions at all?

It's a good question. No not really. I think that everybody is kind of watching everybody else right now. But it hasn't had any impact on any discussions.

Okay. And to I guess follow up on the previous question about the data that came out this week. I guess, I'm curious then what general terms, when you talked to KOLs. What is their view about seeing injectable drug versus an oral drug treatment for NASH?

I think generally, you know all things equal, an oral is preferred. And I think that having something that hits other lipids is generally well received in our conversations with clinicians. But I think the FGF19 and FGF21 mechanisms are very powerful, and they've shown really exciting data, so I’m not going to take anything away from them. I think that there is room for a lot of different mechanisms and a lot of different combinations of different mechanisms and we think that we will play a really significant role in both single agent and combination settings.

Okay. Thanks for taking the questions.

Thanks, David.

Our next question will come from Mayank Mamtani of B.Riley FBR. Please go ahead.

Hi, team, thanks for taking my question, and congrats on the progress. Just maybe piggybacking on the previous comments where the 16-week follow up at EASL. So I'm assuming, is it just PDFF or will there be other markers also you would look at? And the reason I ask is, I think there is some data, where taking away the drug -- the liver fat drug actually brings back the fat and maybe other markers don't move as much. So I'm just curious what mechanistically could be informative to you seeing that drug wear off [ph] data at EASL.

Yes. Thanks Mayank. Well, we'll look at a PDFF primarily and then look at some of the other subsets at both weeks 12 and 16. I'm not sure what you're referring to in some of the other parts of your question, but that's...

That’s really the…

Oh yeah, yeah. I probably have that in there as well. I think, yes, yes, we'll probably have that in there as well. I was wondering if we reported that earlier, but I don't think that was at the ASLD presentation.

That's right. Okay. And then on the design of phase 2b VOYAGE, just curious like what I -- like obviously you've powered it for the primary end point, but you said there's obviously a lot of other markers you're looking at. So could you maybe talk to like maybe an assumption on how you're thinking what the placebo there on liver fat, but also on the histology and then like for the different doses, how you thought of bottling the study?

Yes. Yes we -- well we're we're extraordinarily well powered on liver fat with the 75 seeing what we thought. And if 10 in the prior study we do -- we are I think reasonably well powered on the histology endpoints, particularly resolution of NASH. I don't think we want to talk in more granularity about what those assumptions were, but we are on powering, I think, we're assuming around 20% background rate of NASH resolution, and we're we're powered to show a delta over that.

Okay, great. And just maybe one more on the just the background, like what of others medications are you allowing on the study as part of the protocol? Because I mean, there are difference that as you know CA is going to be available starting June. I mean the GLP1 ones already, so is the protocol allowing background therapies where you can maybe learn some combination data also.

Yes. This is another important question. Right now, we're not allowing anything that we believe might play a role in efficacy, an efficacy signal for NASH resolution or fibrosis. So any of the like [Indiscernible] and PPAR agonists are excluded. GLP1 agonists are excluded, anything that might affect trigs, we’ve experiment, may not – maybe do allow a little bit of trigs, medications for trigs, but for the most part we're excluding anything that might modulate triglycerides, liver fat content and has shown efficacy in other prior studies.

Okay, great. And final question on the process for after you submit this dual mandate. Like how does it work from here? Is it just a simple review, and then they respond within a 30, 75-day time period? Like what’s the process from here on?

Yes. There isn't an established process like when you file an IND or anything or an NDA, we will be submitting the report and then circling back after an appropriate time to check the status. But, it's a little different here, there isn't sort of a guideline for hearing a response. We do have a pretty wide window between the submission and when anybody would cross the six month treatment threshold, and we would certainly expect to understand the FDA stance before anybody crosses that six month treatment threshold.

Great. Well actually one more for Greg. Is there a breakdown on preclinical spend you could give. 2018, 2019 and maybe 2020. Like how you how to think about that?

Yes Mayank, I don't think we're -- we the guidance Brian gave earlier, I think is all we're comfortable with. We will see pickup in this, in the spend in both preclinical and clinical round numbers about 50% again over last year. But I think that's about all the granularity we can give right now.

Much more heavily slanted to clinical excellence.

Excellent. Thanks guys. Congrats on the progress again.

Thanks Mayank.

Our next question will come from Thomas Smith of SVB Leerink. Please go ahead.

Hi guys. Thanks for taking my questions. Brian, can you just remind us, I know the VOYAGE trials started in November, but when was the first patient dosed in the study? And then, I guess just following up on the last question around FDA timelines recognizing that there's no I guess established process or established timeline that you're looking for, but when you do hear back from the agency, I guess if you could just let us know how you plan to communicate this that'll be really helpful? Thanks.

Yes. Thanks Tom. We’ll probably give those updates on quarterly calls or at conference presentations. As far as you know meaningful communications we received from the FDA. But it wouldn't be a separate standalone announcement. With respect to dosing patients, we haven't provided that sort of patient by patient detail. We are actively enrolling and that's it, that’s about all the information that we can to provide at this point.

Okay. And then you mentioned Brian, bringing the U.S. trial sites online. What's your expected enrollment mix looking like between U.S. and ex-U.S. patients?

Well we would expect the vast majority to be in the U.S. And it's probably a 4:1 mix right now. The way we have a plan for U.S. versus ex-U.S. sites, but maybe the ex-U.S. sites might outperform the U.S. if there's less competition. But right now, we would assume the vast majority are going to be from the U.S. sites.

Okay. Great. Thanks for taking my questions.

Thanks for questions.

Our next question will come from Julian Harrison of BTIG. Please go ahead there.

Hi, there. Thanks for taking my question, and congrats on all the recent progress. Just curious if a cardiovascular risk reduction label is in the back in your mind at all for 2809, would that be practical and may be helpful in the long run? Definitely understand, [Indiscernible] are not small undertakings, but it's hard to ignore that you're likely seeing more triglyceride lowering than Vascepa LDL-C lowering comparable to bempedoic acid, great tolerability and virtually no alpha engagement on top of NASH specific activity. Thanks.

Yes, thanks. So we're not going to do a dedicated cardiovascular outcome study unless we're asked and there a reason to think that we would. But I think the overall outcomes portion of all of these NASH studies includes a cardiovascular component all-cause mortality. But we, at this point won't be seeking something like this, the way we sit today.

Great. Thank you.

Thanks.

[Operator Instructions] Our next question will come from Jason McCarthy of Maxim Group. Please go ahead.

Hi, everyone it's Dave [ph] on the line for Jason. Thanks for taking my question. I just wanted to quickly circle back to the comment you guys made regarding potential increase in R&D and OpEx expenses. So just for additional clarity. You guys mentioned that you believe it will be about 50% higher, now is that for year-end 2020 compared to year-end 2019 or is that more of a like a quarter-by-quarter sort of basis?

It's for the full year.

Okay.

And it's -- the first quarter is going to be higher than the fourth quarter. Every quarter will be a touch higher than that prior quarter.

Okay. But the general expectations at OpEx and R&D will be about 50% higher for full-year 2020 versus full-year 2019.

Yes, that's what our current estimates are. Yes.

Okay, great. Thanks for the additional clarity. Appreciate it.

Okay, thanks a lot.

This will conclude our question-and-answer session. At this time, I'd like to turn the conference back over to Stephanie Diaz for any closing remarks.

Thank you again for your participation and continued support of Viking Therapeutics. We look forward to updating you again in the coming months. You can disconnect. The call will now end. Thank you.

The conference is now concluded. And we thank you for attending today’s presentation. You may now disconnect your lines.