Welcome to the Viking Therapeutic 2020 Second Quarter 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 29, 2020. 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, 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?

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 of programs and operations. I’ll begin by reviewing the status of our ongoing Phase 2B VOYAGE trial study. As a reminder, this trial is evaluating our small molecule thyroid hormone beta receptor agonists, VK2809 in patients with biopsy confirmed non-alcoholic steatohepatitis and fibrosis. Enrollment in the trial continues and despite the ongoing pandemic more sites are open today for patient 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. 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 Viking’s Form 10-Q filing with the Securities and Exchange Commission, which we expect to file later today for additional details. I will now go over our financial results for the second quarter and for six months ended June 30, 2020. I will 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…

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 agonists of the thyroid hormone 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 non-alcoholic 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 27th through August 29th. The VK2809 presentation will occur on Friday, August 28th. 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 suggest promise for improvement in other histologic features, VK2809’s broader efficacy on…

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

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’re now going beyond that in treating patients?

Hi, Joon. Yes. That’s correct.

Great. So, that pre -- put -- that pretty much puts the question at rest. Okay. That’s great to hear. And then, what -- the other question I have is, one of your peer company Intercept received a disciplining CRL last month, we’ve had when that come and 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 changed or developed -- development plans for VK2809?

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. We’re going to complete the VOYAGE study and read those data outs and then plan for 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.

In your view, if you look -- if you -- as you look at the profile of VK2809 and compare that with OCA, what can you point to as a source of your conviction that this VK2809 won’t be as nearly as concerned when it comes to review process down the line?

Yeah. Well, it’s a -- there are little bit apples to oranges. It’s a different mechanism with B folic 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.

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

Yeah. We’ll report data from the 16-week visits in that study and then we’ll also report data from some of the subsets of patients, patients with higher BMI, higher baseline LT, that sort of thing. So I think it’s an interesting data set. So it’s -- we look forward to presenting it.

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

Thanks a lot, Joon.

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

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 of 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?

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 to 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.

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

I would expect so. Well, the -- they are -- obviously they’re more U.S. sites will have more patients from the U.S. in the study. But, yeah, it should be well balanced in that regard. It’s a randomized study.

Okay. 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 to-date, do you think that there’s any chance that you will be able to run a trial that would be shorter than a 52-week Phase 3?

So it’s a good question. I -- we don’t know. We haven’t generated any data longer than 12 weeks. We have the 16-week data from the follow-up visits. 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.

Okay. Thanks for taking the question.

Thanks, Michael.

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

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 a gating factor in terms of your enrollment guidance more actually on the ex-U.S. side or is it still pulling it off patients through on the U.S. side? And then secondarily while I appreciate that it’s somewhat a move point given that we pass the six month mark. Can you just maybe comment, did 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.

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 timeframe before any subject reached that six-month threshold. So there wasn’t any sort of a check in or, okay, or anything from the FDA. We didn’t receive one. We didn’t expect one of there was never a 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 both of the contribution will come from U.S. patients at least that’s our expectation today.

Okay. And just given all of that, 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?

I think it’s early to say. We will report it as soon as we have it, but it’s early to say. We have some 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 that -- narrow down today.

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

Thanks, Matt.

The next question comes from Steve Seedhouse of Raymond James. Please go ahead.

Hi. Thank you. Just one question on X-ALD, first off, congrats on the heading towards the clinic with that program. I’m curious about the mechanism actually is VK0214 and how much we know about that, because you’ve highlighted obviously the effect on very long chain fatty acids. My understanding is in this disease, macrophage activation is a key driver of pathology as well and particularly for the cerebral phenotype and thyroid hormone signaling may influence macrophages -- is there macrophages function on. I guess I’m just wondering in addition to looking at the very long chain fatty acids, which you’ve shown a few times and they improve, if you’ve also looked at the influence of the drug on immune cell response. And if you will look at that in upcoming clinical trial and just maybe hash out the mechanism of it and optimize patient selection or something like that? Thanks.

Yeah. Thanks, Steve. The mechanism is really tied to the thyroid beta receptor having a regulatory effect on the expression of a proximal transporter called ABCD2. And that transporter is known to serve as a transport for very long chain fatty acids brings them into the process on where they’re metabolized and discarded. And what it does is it sort of fills the gap that’s left by non-functional ABCD1. All of these patients suffer from mutations in the gene for ABCD1, which renders that transporter non-functional. And so regulating ABCD2, which we’ve shown in fibroblasts from patients, should result in a reduction in very long chain fatty acids and that’s what we’ve seen in the in vivo models. We haven’t looked at the inflammatory signaling effects. I think the way we look at it -- this is an important question, the way we look at it is that the initial target here will likely be the AMN subsets of the population. And if we can show a benefit there, then we would really consider expanding into the cerebral cases, but the initial focus more on the adult side.

Okay. Okay. I appreciate that. That’s helpful. Maybe I’ll just ask one more of that and the Phase 1 is that initially in healthy volunteers and maybe just, if you could walk through sort of the initial clinical plan with the molecules, since it’s a new molecule here in the clinic?

Yeah. Yeah. Yeah. Thanks. It’s a -- so it’s going to be a -- we call it a stack design. So you start the single ascending dose study. And once your cohort or two into that study if things look clean safety-wise, you then begin the multiple-ascending dose portion at the lowest dose that the single ascending dose started. And so the single ascending obviously is one dose, multiple-ascending dose study would be 14-day study. And when we have some read on what the data look like there we will then select the doses for the second portion of the study, which will target patients with AMN. And those patients will come in later because we’ve got to get through the 14-day portion with a few cohorts first.

Terrific. Thanks Brain. I appreciate it.

Thanks, Steve.

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

Oh! Hey. Thanks for taking the questions. Maybe just to follow-up VK0214. I’ll add my congrats to moving that into the clinic. Can you remind us what are the key differences between the PKPD profiles for VK2809 versus VK0214, and how did those differences lead you to determine the respective clinical development programs in NASH versus X-ALD?

Yeah. Thanks Jay. So there are different chemical structures, the substitution pattern on the aromatic rings is different in VK0214. And VK0214 in animals anyway has a shorter half-life higher Cmax and it also has better selective which is the beta receptor. So it looks -- it’s just got a different profile together on the PD side. That said, it does work pretty well in NASH. We always run them side-by-side when we do the animal studies and it’s also very effective in NASH. When we looked at the early data for X-ALD, VK0214 just seemed to perform better than VK2809 in the ABCD1 knockout model, which is that, a common model for X-ALD. So it seemed to make more sense there and we had VK2809 already in full speed for NASH. So that’s what led to the decision to pursue X-ALD.

Okay. Great. Thank you. That’s very helpful. And then can you maybe comment on the timing of when you expect to initiate a proof-of-concept study in X-ALD and what are the registrational endpoints for X-ALD?

Yeah. So there’s no approved endpoint -- no approved therapeutic to-date. We would expect the registrational endpoints to likely focus on function. But we’ll have that discussion with the FDA once we have some data in hand. The proof-of-concept will be from the upcoming clinical work. We’ll look at changes in very long chain fatty acids at 28 days. And it’s hard to time when the data be available, but I would certainly hope to have data sometime in 2021 and sometime hopefully in the first half of 2021. But very difficult to determine that yet since we haven’t started the single and multiple-ascending dose studies just yet.

Okay. Great. Thanks again for taking the questions.

Thanks, Jay.

The next question comes from Yale Jen of Laidlaw & Company. Please go ahead.

Good afternoon and thanks for taking the questions. In terms of -- the follow-up on the VK0214, in terms of the data released, would you be as be able to talk about the healthy volunteers of PK study maybe in the first half of next year before you talking more about clinical data?

Yeah. I would say, probably, Yale, I don’t want to commit to that today without having yet started the study. But, yeah, I would think that would be a pretty reasonable course of action once we have some data to talk about what the profile looks like.

Okay. Great. And then maybe just one more question yet here, which -- if I hear correctly that in the meeting you were talking about some clinical lower dose, could you elaborate a little bit more on that or I just misheard?

Oh! No. The -- well, the all three doses, yeah, we didn’t separate out lower doses or anything like that. We’ll look at the placebo and then the 5 mg and the two 10 mg cohorts as well.

Okay. Great. Okay. Thanks and again congrats moving things forward smoothly.

Thanks a lot, Yale.

The next question comes from Scott Henry of ROTH Capital. Please go ahead.

Thank you and good afternoon. I guess, first the VOYAGE trial, are you noticing any changes in dropout rate given COVID-19 or maybe nothing at all, just curious if you’re noting -- noticing anything different there?

Yeah. That’s a really interesting question. The answer is no. But you would -- you kind of expected. But we haven’t had any issues like that. And part of that maybe some of the accommodations that were allowed to make from FDA loosening some of the general operating criteria we can do phone visits when otherwise they may have been in clinic visits. We can ship the drug to someone’s house. So a lot of that stuff is just a little bit atypical and that might make it easier for patients to remain in the study. But, yeah, we were fortunate. We haven’t seen any surgeon dropouts or anything just yet.

Okay. Great. And then just shifting over to the model, R&D was pretty flat Q1 to Q2 this year. Should we start to see that trajectory increase throughout the second half? I mean, certainly as the OUS sites come on and just perhaps higher volume in general, just thinking about that line?

I will pass that over to Greg here.

Hey, Scott. Yeah. I think, it should tick-up here a little bit in the second half versus the first half, I think. We had commented, I think, at the last call that we would be up 25% to 50% OpEx wise for the year versus last year. I think it could be a little bit less than that. But I think it will tick-up in the second half relative -- versus the first half.

Okay. Great. And since I got you on the line, could you just tell me just really briefly, what’s going on in the -- going on in that other comprehensive gain loss, a number of seems to bounce all around, I don’t know what’s driving those valuation adjustments if that the case?

Yeah. It’s really just a lot of activity in churn and the investments that we have. So it’s been a lot of activity in that area, so that’s really what’s going on there.

Okay. Great. Thank you for taking the question.

Thanks Scott.

The next question comes from Andy Hsieh of William Blair. Please go ahead.

Oh! Great. Thanks for taking my questions. Hope everybody is doing well and staying healthy. So I’ve a follow up on VK0214. So in terms of healthy volunteers, with the first portion of the Phase 1 study, maybe educate us on X-ALD patients in terms of their metabolism. Do you expect any sort of significant differences between X-ALD patients and healthy volunteers in terms of PK/PD or AD/ME [ph] that could potentially kind of limit the generalizability of the initial data that you gather?

Yeah. Thanks, Andy. It really interesting question. So far in reported studies with statins for example and fibrates, there haven’t been any notable or significant differences in PK with VK0214, we don’t expect any changes in metabolism in the patient population versus healthies, but we’ll wait and see. I just don’t -- I wouldn’t expect there to be any dramatic changes. So we would think that the healthy volunteer data would be somewhat predictive for the patient population, but we have to do the study to really determine that.

Okay. Thanks for the insight. And maybe just one other question, so I guess, in the past quarter, there was a lot of new developments in the NASH space. One -- notable one is kind of data generated from the FGF21 space, just curious about things that you are potentially doing in the background, maybe preclinical research on combination rationale. I remember you mentioned about you’re interested in combining with VK0612 in your pipeline and even VK5211. So just curious about where you are in that process?

Yeah and thanks for the question. We have looked at combinations and we think there are some mechanisms that might play well with thyroid beta activation and work on different elements of NASH, that very nicely compliment VK2809. We haven’t reported any of those data. But I think when the time comes we will report data. But we’re just not in the position today to make any comments on some of that work. It is an area of interest to us though I’ll say.

Okay. Fair enough. Great. Well, thanks for taking all the questions and congratulations on the progress. Good luck.

Yeah. Thanks a lot, Andy.

[Operator Instructions] The next question comes from Julian Harrison of BTIG. Please go ahead.

Hi. Thanks for taking my question and congrats on the study progress here. Just one for me. Looking ahead at your 12-week readout for VOYAGE, which looks on track for next year. Beyond MRI-PDFF, can we possibly get a glimpse of potential anti-fibrotic activity of VK2809 to biomarkers like Pro-C3 and ELF or is that readout most likely just going to be limited to steatosis? Thanks.

Yeah. Thanks Julian. Right now the plan would be to focus on the MRI. But I think we’ll look at the data when it comes in and decide what to communicate. But right now really the focus of MRI-PDFF is the primary endpoint for the study. We think that’s the most important at least at that 12-week timeframe. But if we have other interesting things to share, we’ll do that. But thanks for the question.

Got it. Thanks very much.

Thanks.

The next -- thank you. The next question comes from Mayank Mamtani with B.Riley FBR. Please go ahead.

Thanks for taking my questions and congrats on the progress. Just two quick questions on VOYAGE and then I have a quick data question. So on -- just taking a step back and given the overwhelming evidence, we now have of liver fat correlating with histology, not just a [inaudible] but also NGM. I mean is there a scenario after your PDFF, you don’t really wait for histology and start planning for your pivotal? Any comments on that?

Yeah. Well, that actually is our plan. But we would want to begin planning for that Phase 3 as soon as we have data to identify dosing and start to think about the sizing, once we have the magnitude of the effect, that sort of thing. So we -- that’s certainly a part of the plan once the 12-week data are available. But you can’t do too much given that the guidance requires long-term histology data prior to Phase 3. So we’ll need to collect those data prior to going into Phase 3. But laying on that groundwork is definitely an important part of our planning for next year.

Got it. And then on the site, how many sites, what proportion of sites are in the south for VOYAGE?

Yeah. That’s a good question. I do not have the layout in front of me. It’s a fair portion. I have -- just I don’t have that proportion in front of me. We do have a lot in the Midwest. We’ve got a lot on the West Coast. We have some in the sort of mid-Atlantic region. So we’ve got a -- the plan is to have 60 total. And so I think and what’s interesting is even in these states where there do appear to be resurgences, we haven’t seen the rapid contraction of site availabilities. I think the contraction is more on a patient’s willingness to show up at -- to signup for NASH study if they live in Houston, for example. But the sites have been a far more open and available in some of these newer hotspots than they were, say, in the March timeframe. But, sorry, I just don’t have the number. So I think that the sites are pretty well diversified geographically though.

Got it. And then my last question, as you think about the off treatment data, any color on the ALT declines that, is it going to be fairly consistent with what you saw on the drug? Anything you’d comment on that? And then also the preclinical docs work, any findings that you could comment on that beyond just the liver specific, anything on intestine or the cardiac that was filed with the corresponding, anything you could comment there would be helpful?

Sure. So we submitted the full 12 months datasets, which obviously, included a lot of detailed analysis of all tissue types. And we’ve always been comfortable with the profile, comfortable with the margins and there was nothing of notes to really highlight there. So I don’t know. Yes, there is not a lot of color to add there. With respect to your other question, oh, the 16-week day, yeah. So we’ll have some date on the markers as well. I don’t want to get too much into what the data are, but, yes, we’ll have a number of different looks at subpopulations markers, the 16-week liver fat data, all of that.

Okay. Great. Thanks for taking my question and look forward to that data.

Thanks a lot, Mayank. This concludes our question-and-answer session. I would like to turn the conference back over to Stephanie Diaz for any closing remarks.

Thank you again for participation and continued support of Viking Therapeutics. We look forward to updating you again in the coming months. You can all disconnect today. Thank you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.