Viking Therapeutics Inc (VKTX) 2018 Q4 法說會逐字稿

Good afternoon, and welcome to the Viking Therapeutics Fourth Quarter 2018 and Year-End Earnings Conference Call.

(Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Stephanie Diaz, 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 Michael Morneau, Vice President of Finance and Administration.

Before we begin, I'd like to caution that comments made during this conference call today, March 13, 2019, 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 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, I'll provide an update of our key 2018 accomplishments as well as an update on recent progress and developments related to our pipeline programs and operations.

2018 was a pivotal year for Viking as 2 of our clinical programs yielded best-in-class data, and we raised sufficient capital to advance our pipeline to important value inflection points.

Last September, we announced the results of a Phase II study of our novel thyroid receptor beta agonist, VK2809, in patients with hypercholesterolemia and nonalcoholic fatty liver disease.

This study achieved both its primary and secondary endpoints, demonstrating statistically significant reductions in plasma lipids as well as liver fat after 12 weeks of dosing.

These data provide compelling evidence of VK2809's safety and efficacy and support our decision to proceed with further development of this program in the setting of nonalcoholic steatohepatitis, or NASH.

In 2018, we also reported additional results from a Phase II trial of our novel selective androgen receptor modulator, VK5211, in patients recovering from hip fracture.

This trial successfully achieved its primary and secondary endpoints, demonstrating VK5211's potent effect on muscle growth in this frail population.

Underscoring the importance of the data from both our VK2809 and VK5211 clinical programs, each of these 2 studies was featured in podium presentations at international conferences in their respective areas.

In addition, earlier-stage results demonstrating VK2809's promise in reducing liver fat and inflammatory markers were featured in a podium presentation at a third major conference in September.

We are proud to have received the recognition at these events as they validate our own enthusiasm for our programs and support our view that the depth, quality and productivity of our pipeline differentiates Viking from many of our competitors in the development stage biopharmaceutical space.

Based on the success of our pipeline programs, we were able to significantly strengthen our balance sheet in 2018 through offerings of common stock that resulted in total gross proceeds in excess of $315 million.

I'll provide additional comments on our 2018 accomplishments.

But first, we'd like to review our fourth quarter and full year financials.

I'll now turn the call over to Mike Morneau, Viking's Vice President of Finance and Administration, to discuss our financial results.

Mike?

Thanks, Brian.

In conjunction with my comments, I'd like to recommend that participants refer to Viking's 10-K filing with the Securities and Exchange Commission, which we expect to file later today for additional details.

I'll now go over the financial results for the fourth quarter and fiscal year ended December 31, 2018.

Our research and development expenses for the 3 months ended December 31, 2018, were $5.1 million compared to $3 million for the same period in 2017.

The increase was primarily due to increased preclinical study efforts, manufacturing expenses related to our drug candidates, use of third-party consultants and stock-based compensation, partially offset by a decrease in clinical study expenses.

Our fourth quarter general and administrative expenses were $1.9 million compared to $1.4 million for the same period in 2017.

The increase was primarily due to increased expenses related to stock-based compensation, salaries and benefits and legal and patent expenses.

For the 3 months ended December 31, 2018, Viking reported a net loss of $5.2 million or $0.07 per share compared to a net loss of $4.1 million or $0.14 per share in the corresponding period in 2017.

The increase in net loss for the 3 months ended December 31, 2018, was primarily due to the increase in research and development expenses noted previously, partially offset by an increase in other income related to the increase in interest income.

The decrease in net loss per share for the 3 months ended December 31, 2018, is primarily driven by the additional shares outstanding at December 31, 2018 versus those outstanding at December 31, 2017, given the additional shares issued by the company during 2018, primarily through public equity offerings.

Our research and development expenses for the 12 months ended December 31, 2018, were $19 million compared to $13.7 million for the same period in 2017.

The increase was primarily due to increased expenses related to the preclinical study efforts, use of third-party consultants, stock-based compensation and manufacturing related to our drug candidates, partially offset by a decrease in clinical study expenses.

Our general and administrative expenses for the 12 months ended December 31, 2018, were $7.1 million compared to $5.3 million for the same period in 2017.

The increase was primarily due to increased expenses related to stock-based compensation, salaries and benefits, professional services, use of third-party consultants, insurance, legal and patent expenses and franchise taxes.

For the 12 months ended December 31, 2018, Viking reported a net loss of $22.1 million or $0.38 per share compared to a net loss of $20.6 million or $0.79 per share in the corresponding period in 2017.

The increase in net loss for the 12 months ended December 31, 2018, was primarily due to the increase in research and development expenses and general and administrative expenses noted previously, offset by an increase in other income related to the decrease in the fair value of the debt conversion feature liability as well as an increase in interest income.

The decrease in net loss per share for the 12 months ended December 31, 2018, is primarily driven by the additional shares outstanding at December 31, 2018, versus those outstanding at December 31, 2017, given the additional shares issued by the company during 2018 primarily through public equity offerings.

Our balance sheet at December 31, 2018 showed cash, cash equivalents and investments totaling $301.5 million.

As of February 28, 2019, Viking had 71,986,022 shares of common stock outstanding.

This concludes my financial review.

I'll now turn the call back over to Brian.

Thanks, Mike.

Viking was founded with a mission of advancing a pipeline of promising small molecules.

Our goal today is the same as it has always been, and that is to maximize the value of these programs in parallel with maximizing the benefit to patients in areas of high unmet need.

With support from investors, we have been fortunate to receive the financial resources necessary to conduct the clinical studies to establish proof-of-concept with our most promising metabolic and endocrine programs.

In late 2017, we reported a positive outcome from the Phase II trial of our novel selective androgen receptor modulator, VK5211, in patients recovering from hip fracture surgery.

As previously discussed, VK5211 produced significant improvement in muscle mass in these patients as demonstrated by the successful achievement of the trial's primary and secondary outcome measures.

We were therefore excited this past year in 2018 to follow this initial success with the completion of a Phase II trial of VK2809, our novel thyroid receptor beta agonist, in patients with hypercholesterolemia and fatty liver disease.

The results of this study provide compelling evidence of VK2809's efficacy in this setting, and we are preparing for next steps to advance the program.

As a reminder, VK2809 is an orally available agonist 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 lipid disorders, including nonalcoholic steatohepatitis, or NASH.

Our Phase II trial was a randomized, double-blind placebo-controlled, parallel group study designed to evaluate the efficacy, safety and tolerability of VK2809 in patients with nonalcoholic fatty liver disease and elevated LDL cholesterol.

Patients were randomized to receive 10-milligram oral doses of VK2809 every other day or 10 milligrams of VK2809 every day or placebo for 12 weeks.

The trial's primary endpoint evaluated the effect of VK2809 on LDL after 12 weeks compared to placebo, and the secondary endpoint evaluated change in liver fat as assessed by MRI proton density fat fraction after 12 weeks.

We were very pleased to report last fall that the study successfully achieved both its primary and secondary endpoints.

With respect to the trial's primary endpoint, the results demonstrated that patients receiving VK2809 experienced statistically significant reductions in LDL compared with placebo-treated patients.

In addition, VK2809-treated patients experienced statistically significant improvement in other lipids, including triglycerides and the atherogenic proteins, apolipoprotein B and lipoprotein (a).

On the secondary endpoint, assessing change in liver fat content, the results demonstrated that patients receiving VK2809 experienced significant reduction of liver fat as assessed by MRI-PDFF.

The magnitude of the response was unprecedented among oral agents in development today.

Specifically, patients receiving VK2809 dosed at 10 milligrams every other day for 12 weeks experienced a median relative reduction in liver fat content of approximately 57% from baseline.

Patients receiving VK2809 doses of 10 milligrams daily experienced a median relative liver fat reduction of approximately 60% from baseline.

By comparison, patients receiving placebo experienced a median relative reduction in liver fat content of approximately 9%.

This level of efficacy observed at these low doses supports our view that VK2809's unique liver-targeting features provide differentiated benefit on liver fat reduction, which may provide important therapeutic effects in patients suffering from NASH.

The trial also included a responder analysis, which was intended to assess whether the observed reduction in liver fat may predict broader clinical benefit.

Patients were characterized as responders if they experienced a greater than or equal to 30% relative reduction in liver fat content.

This threshold is of interest as multiple studies have demonstrated that when liver fat is reduced by 30% or more, a corresponding increase in the odds of improved overall histology is also observed.

This analysis revealed that among patients treated with VK2809 dosed at 10 milligrams every other day, approximately 77% experienced at least a 30% reduction in liver fat content.

Among patients treated with VK2809 doses of 10 milligrams per day, approximately 91% demonstrated at least a 30% reduction in liver fat.

Turning to safety.

VK2809 was shown to be safe and well tolerated in this study.

No serious adverse events were reported among patients receiving VK2809 or placebo.

The overall numbers of adverse events were relatively evenly distributed across treatment arms, though numerically, there were slightly more among patients randomized to placebo.

On tolerability, VK2809 was shown to be extremely well tolerated in this study.

We are encouraged by the safety and tolerability displayed thus far, particularly in light of the potent pharmacodynamic effects demonstrated on the efficacy measures.

We were gratified to have the opportunity in the fourth quarter of 2018 to report these results to the medical community as a late-breaking oral presentation at the annual meeting of the American Association for the Study of Liver Diseases, or AASLD.

And we were honored to have our data selected for inclusion as part of the best of AASLD, which highlighted contributions of particular importance at this conference.

As some of you may recall, this study was originally designed as a 4-arm study, with patients randomized to receive VK2809 doses of 5 milligrams daily, 10 milligrams daily, 10 milligrams every other day or placebo for 12 weeks.

In an effort to expedite completion of the study, we elected in 2017 to suspend enrollment in the 5-milligram cohort and focus on the 10-milligram arms.

This allowed us to complete the study more quickly and obtain an understanding of VK2809's promising efficacy and safety.

Following completion of enrollment in the 10-milligram dosing cohorts, we were notified by certain participating sites that additional subjects had been identified for screening.

As a result, in the second half of 2018, we elected to resume enrollment in the 5-milligram dosing cohort in order to expand this cohort and collect additional efficacy and safety data.

Through the fourth quarter of 2018, we enrolled an additional 6 patients in this cohort, for a total of 12 patients randomized to 5 milligrams or placebo.

As a result, the total number of patients enrolled in this study has increased to 59 from 47 previously reported.

Randomization was allocated as follows: 17 patients were randomized to placebo, 10 were randomized to 5 milligrams daily, 16 to 10 milligrams every other day; and 16 to 10 milligrams daily.

All 59 subjects are included in the safety analyses from this study.

57 of these subjects had a baseline and a post-baseline lipid reading and are thus included in the lipid analyses.

And 45 of these subjects received a baseline and post-baseline MRI and are included in the MRI analyses.

We recently received the initial results from the 5-milligram cohort of this study, and we're pleased to see that VK2809 when dosed as low as 5 milligrams daily continued to provide a robust efficacy signal.

The data showed that all patients randomized to the 5-milligram dosing arm experienced a response as demonstrated by a relative reduction in liver fat of at least 30%.

In addition, as with the prior 10-milligram cohorts, no serious adverse events were reported among patients receiving VK2809.

ALT and AST levels were also reduced in patients receiving VK2809 relative to placebo.

The overall profile displayed in the 5-milligram cohort is consistent with our belief that VK2809 possesses best-in-class efficacy, safety and tolerability in patients with fatty liver disease.

Importantly, these data provide further evidence that VK2809's potent liver-targeting effects may allow for evaluation of even lower doses in future NASH studies, further enhancing the molecule's therapeutic profile.

We submitted the results from this cohort for presentation as a late breaker at the upcoming annual meeting of the European Association for the study of the Liver, or EASL, and we were happy to last week receive notification from the conference that our abstract has been selected for presentation as a late-breaking poster at this conference.

We look forward to this opportunity and are excited to participate.

Looking ahead, in the second half of the year, we plan to initiate a Phase IIb study with VK2809 in patients with biopsy-confirmed NASH.

As part of our preparation for this study, we intend to hold a pre-IND meeting with the FDA to discuss our clinical plans and supporting data.

While the details regarding study design have not been finalized, we anticipate that this trial will target patients with F2 and F3 fibrosis as well as a limited number with F1 fibrosis.

We expect the study to evaluate more than one dose of VK2809 for up to 12 months of dosing.

We will provide further detail about the study as we move closer to initiation.

I'll now turn to Viking's orphan disease program, which is evaluating our small molecule thyroid receptor agonist, VK0214, as a potential treatment for X-linked adrenoleukodystrophy, or X-ALD.

X-ALD is a devastating disease caused by a defect in the peroxisomal transporter, called ABCD1.

These patients are often characterized by the accumulation of very long-chain fatty acids in plasma and tissue.

The seen elevations in very long-chain fatty acids are believed to contribute to the severe cerebral and motor neuron toxicities commonly observed in the disease.

Activation of the thyroid beta receptor is believed to simulate the metabolism of very long-chain fatty acids, providing a potential therapeutic benefit.

VK0214 is an orally available small molecule thyroid receptor agonist that possesses selectivity for the beta receptor subtype and may therefore represent a potential pharmacologic approach to the disease.

In late 2017, we and our collaborators at the Kennedy Krieger Institute completed a 25-week study evaluating VK0214 in an animal model of X-ALD.

The results of this study showed promising effects on markers of disease, notably an improvement in very long-chain fatty acid levels in both plasma and tissue.

We are currently conducting IND-enabling work for this program and plan to file an IND in 2019 to initiate a proof-of-concept study in humans.

I'll now provide an update on VK5211, our novel selective androgen receptor modulator for musculoskeletal disorders.

VK5211 is designed to selectively stimulate muscle and bone formation with reduced activity in peripheral tissues, such as skin and prostate.

Following surgery to repair hip fracture, many patients experience a loss of bone and muscle at accelerated rates, placing them at increased risk of further morbidity, refracture and prolonged disability.

Multiple studies have demonstrated that VK5211 may represent an important treatment option for these patients by stimulating the formation of muscle and bone, thereby improving musculoskeletal health and facilitating recovery from the injury.

Top line data from our Phase II study in patients recovering from hip fracture showed that the trial successfully achieved its primary endpoint, demonstrating statistically significant dose-dependent increases in lean body mass less head following treatment with VK5211 as compared to placebo.

In addition, though not powered for significance, endpoints assessing physical function showed numerical trends favoring treatment arms.

Importantly, VK5211 also demonstrated encouraging safety and tolerability in this study with no drug-related serious adverse events reported.

In September 2018, we were invited to present data from this study at the oral plenary session at the annual meeting of the American Society for Bone and Mineral Research, or ASBMR.

Our abstract also received the Most Outstanding Clinical Abstract Award by the ASBMR conference organizers.

We were honored to have our findings highlighted at this important event, and we believe the award speaks to the significant need for musculoskeletal preservation in this fragile population.

During the third quarter of 2018, we received feedback from the FDA regarding the potential regulatory path for VK5211 in the hip fracture setting.

We believe the expected registration endpoints make it challenging to pursue further development in hip fracture in the U.S. As such, our more recent efforts have focused on exploring the potential benefit of VK5211 in certain orphan indications where impaired muscle may play a role in disease progression and clinical disability.

Our current intent for both the orthopedic as well as potential orphan settings is to pursue partnering and licensing opportunities prior to conducting additional clinical studies.

We'll provide updates on these activities as warranted moving forward.

Moving to other corporate updates.

On the financial front, in 2018, we were able to significantly strengthen our balance sheet, in large part due to the positive clinical results we achieved with VK2809 and VK5211.

In 2018, we raised more than $315 million, providing the runway to execute our VK2809 clinical program as well as conduct earlier-stage trials with other programs.

None of our work or progress would be possible without these necessary financial resources, and we are grateful to our investors and research analysts for their continued support of Viking.

In conclusion, we are excited with the progress we made in 2018 and gratified to have data from our programs recognized in multiple peer-reviewed forums.

We are eager to continue this progress in 2019 and look forward to our upcoming presentation at the EASL conference in Vienna.

We remain on track to file an IND for VK2809 and initiate a Phase IIb study in biopsy-confirmed NASH later this year.

We also continue to make progress with our IND work for VK0214 in X-ALD.

It is our goal to file an IND in the second half of the year to allow us to bring this important potential therapy into clinical development.

As our pipeline matures, we also look forward to making progress with some of our earlier-stage programs, targeting metabolic and lipid disorders.

We will share relevant updates as they become available.

This concludes our prepared comments for today.

Thanks again for joining us, and I'd now like to open the call for questions.

Operator?

(Operator Instructions) Our first question comes from Steven Seedhouse with Raymond James.

Brian, just to clarify that I heard you correctly.

Did you say that all, as in 10 of 10 5-milligram patients were responders so had greater than 30% reduction in liver fat content?

All of them -- that is 9 of the 10.

One did not receive a second MRI.

One of the -- so when you look at the 12 who -- additional randomized, there was 1 placebo patient and 1 VK2809 who did not get a second MRI.

Okay.

That's helpful.

And I want to also just ask about adverse events in the Phase II NAFLD study of 2809.

There seems to be some uncertainty amongst investors here and actually similar scrutiny of AEs in Intercept's Phase III NASH study, so obviously pretty topical right now in this space.

I believe with the update today, you reported that there were no serious AEs, I think, across any of the arms in the study.

My question is just related to any grade treatment-emergent AEs.

Could you just clarify if there was any imbalance in treatment-emergent hepatobiliary or hepatic AEs or separately in treatment-emergent cardiovascular AEs across the treatment arms in either 5 or 10 milligrams in the Phase II study?

So we don't have the patient-by-patient data from all of the arms yet.

The 5 mg efficacy data were just recently received.

I think we'll be getting the safety data later this month, should be before EASL.

So I'm not going to be able to give a lot of granularity.

Treatment emergent -- well, there were no treatment emergent serious adverse events.

Treatment emergent, to grade them, I just don't have that off the top of my head.

There weren't any major trends associated with receiving VK2809.

And just recall, in the overall adverse event numbers, the highest number was in the placebo arm and not in the treatment arms.

Yes, so I don't know that I can get too far into the details of that -- all of the data in hand.

Okay.

Okay.

Maybe turning to 5211, the SARM.

You just mentioned at the end of the call exploring some orphan indications there.

So there are actually some recent data for an oral testosterone drug in NAFLD, but looks like it can reduce liver fat by about 30% or 40% and that mechanism also reduces ALT in patients, and yet Arun Sanyal and Stephen Harrison, just some experts or pretty high-profile folks in the field out in the related press release is essentially saying that the data and the mechanism are promising and worth pursuing further.

So you have your SARM, obviously.

I'm wondering if you've just -- ever entertained the idea of running a 12-week MRI-PDFF study with that molecule to see if you have anything there on NAFLD or NASH.

Yes, it's a really interesting question.

And the answer to that is prior to those data being reported, no.

But when we saw that, I thought that was pretty interesting.

And when you actually look at the body composition in the 12-week study, you saw a gain in muscle and a reduction in the fat content, which is -- I mean, would support the thesis they activate the androgen receptor and you can see some leaning.

But we're not going to pursue that near term.

But it's really interesting.

I think that's a really cool approach to it, especially in certain subpopulations.

Okay.

Interesting.

And maybe -- I just have 2 quick ones to wrap up here.

So are you going to show the 16-week MRI measurements at EASL?

And I mean, I think that's 4 weeks after you'd stop dosing in the Phase II study.

And if so, what -- do you know what the half-life is of VK2809 in the liver after you've reached steady state?

Is it cleared pretty quickly?

Or does it hang around for a few days or weeks?

And even if you're not going to have 16-week data, I think you already presented some metrics at AASLD, so I just want to make sure I'm interpreting those data in the context of drug levels correctly.

Yes?

Yes, yes.

So I don't believe we have tissue-specific half-lives.

I don't think that was ever determined, but I could be mistaken.

I have to go back and check, but I don't recall ever seeing that.

We do have the 16-week data from the 10 mg every other day and the 10 mg daily.

I think we'll be getting the 16-week data from the 5 mg at the end of the month or early next month.

If possible, we would include that in the EASL presentation, but I'm not positive that we'll have it.

Ultimately, we will.

Okay.

Last one for me.

So you indicated, I think, that was on the last earnings call, that maybe the final report from the 6-month rodent and primate GLP tox studies and the Phase II study report for VK2809 were expected maybe late 1Q or early 2Q.

So I guess the question is, do you have those reports now?

And would the filing of your IND, I guess, upcoming be a fair indication that there were absolutely no issues that arose in those studies that concerned either you or the FDA?

Yes, yes, yes.

A critically important question, something we're spending a lot of time on.

So I'll say consistent with our prior comments, we're not going to give a lot of detail on the completed animal studies, and that's consistent with industry standards as well.

Right now, the timing is to submit all of the data, the human as well as the animal data, to the FDA and have a pre-IND meeting around midsummer.

Summertime is the timing, it looks like.

There's nothing we're aware of that will prevent us from proceeding into the next study as we've planned.

And I guess, that's as far as we should really go at this point.

But we feel good today.

The next question comes from Joe Pantginis with H.C. Wainwright.

Two questions.

On 2809, do you have any guidance?

I know with some still being decided ahead of your FDA meeting, but for the approximate size of the Phase IIb.

And then secondly, for 5211, can you disclose any potential types of indications you might be interested?

And as part of your partnering discussions, how are they going, number one?

And are you considering any potential options to co-promote as the program develops?

Yes.

Thanks, Joe.

On the size of the 2809 program, I think it will be a robust study, and we don't know exactly how many arms will be in there.

And obviously, that's going to be a critical driver of size.

But I would say on the low end, 150, and it could be up from there.

With VK5211, some of the orphan indications that might benefit from this mechanism would be some of the muscular dystrophies and some of the orphan -- other small opportunities where muscle impairment plays a role in disability, and we are having some of those conversations today.

On the hip fracture side, I think the regulatory path here in the U.S. has just made it, I think, challenging for future progress.

I think potentially in Europe, there's a little bit more flexibility on clinical endpoints.

But in the U.S., it looks very difficult today.

And just the part about optionality and your discussions for partnering, would you maybe look to have -- or have the desire to have a potential co-promote option as part of your discussions?

Yes.

It's always an option, maybe.

I mean, as we sit here today, we have 16 employees or 17 employees.

It's just not something that is feasible today.

But I guess, as we mature and progress, that could be an option, especially in the smaller indications, it's I think realistic if you -- if there's a disease that has a certain number of specialized treatment centers where everybody goes, I mean, that makes it very practical for a small company.

But larger indications, I think it would be very difficult.

The next question comes from Edward Nash with SunTrust.

This is Fang-Ke Huang for Edward Nash.

And first question is just to clarify, I remember you mentioned that the duration of the animal study is 9 months and you try to do it for 12 months, is that correct?

Well, the duration of the rodent study was 6 months, and then we did a 6-month primate study, and ongoing is a 12-month primate study.

Got it.

That's very helpful.

And second one is you mentioned that you potentially got -- have to go lower dose, down to 5-milligram in the Phase IIb.

Can you just remind us historically what's the higher doses tested maybe in other trials, not in the NAFLD trial?

But what other doses have been tested?

And how low do you see it can be?

Yes, it's a great question.

So in the 14-day Phase Ib study, the doses ranged from 0.25 milligrams a day up to 40 milligrams a day.

And you began to see efficacy at -- really you could kind of see something happening 1 to 2.5 milligrams, and that really kind of -- you could see it more clearly above 5. Where we see the efficacy in the liver, and this is maybe a function of the liver-targeting technology, it's I think fair to say robust at 5 mgs.

And so it would certainly suggest that below 5 mgs, you would see some efficacy.

I think, yes, it'd be hard to argue otherwise looking at the data.

Great, great.

And the next one, I want to think about -- you mentioned that you're going to -- in the Phase IIb trial, the duration can be up to 12 months.

I think other companies are demonstrating improvements in histology in the liver as shorter as 12 weeks.

Do you think -- what are your current thinking in terms of the duration of the Phase IIb?

And is it possible they're going to run that trial for shorter than 12 months?

Yes, Fang-Ke, it's a great question.

So the -- a lot of prior studies have looked at 9 months.

And you're right, with other mechanisms, there has been a histologic benefit as short as 12 weeks.

I guess, the way we're looking at this is the current guidance calls for 12-month biopsy.

Now some of our advisers are suggesting that 9 months is still likely to be sufficient, but I think this is something that we would like to ask in the pre-IND meeting what the recommended duration is.

And I think also, when you think of the thyroid beta mechanism, it may take some time to generate some of the -- a little -- more clarity around the anti-fibrotic endpoints.

And if that's true, maybe 12 months is a little bit better to establish the efficacy signal.

But we're kind of discussing and thinking about all of these questions right now.

It's a great question.

That makes sense.

Last one, I'm sorry.

So the last one is on the 0214.

Is that also a prodrug and also only target the liver?

So it's a prodrug that is cleaved in the plasma.

It's not targeted to the liver.

So it's cleaved by carboxylesterase 1. And so it's a little bit more [diffuse].

The reason we started looking at that in X-ALD is that it just feels like not as liver specific a disease, and therefore, you don't necessarily need the liver-targeted prodrug technology.

So it's a different prodrug.

And that said, we've also looked at the free phosphonic acid in different salts of that free phosphonic acid, and those also look very interesting.

So it's just got a different profile altogether.

It's a little bit more selective.

It's about anywhere from 25 to 45 to 1 beta over alpha, still single-digit nanomolar KI.

So a really, really interesting compound that I think has a potential future in X-ALD and hyperlipidemia and every place you think of VK2809 to work, I think it could also work.

The next question comes from Andy Hsieh with William Blair.

So the first question has to do with exposure and PK profile.

Could you remind us, is there a significant difference between dosing once a day 5-milligram versus every other day for the 10-milligram cohort?

Yes.

It's a great question.

They're actually pretty similar as you might expect when you look at the overall means, but the Cmax is obviously higher with the 10 mgs every other day than it is with the 5 mg daily.

But yes, anyway, does that answer your question?

Yes, yes.

So the second question has to do with VK0612.

I think The Street is probably not as familiar with this program, the fructose-1,6-bisphosphatase inhibitor.

Do you mind reminding us the scientific rationale?

I think on the website you said this is a Phase II-ready asset and also data generated to date.

Is it a prodrug designed to selectively get activated into the liver?

And what's the strategy here?

Yes.

Andy, it's a great question.

So this is what Viking -- the original license for Viking was for VK0612.

So it is a very, very special molecule to the company.

So it is a different prodrug.

It doesn't use the HepDirect technology.

It inhibits an enzyme called fructose-1,6-bisphosphatase, which is the second to the last step in endogenous gluconeogenesis.

And it is shown in 2 different studies in type 2 diabetics to result in, I think, a very robust reduction in fasting plasma glucose.

And those were a 14-day study and a 28-day study, highly statistically significant up to 59 mgs per deciliter, which if that held, it would translate into a 1.5% to 2% reduction in A1c.

We haven't been aggressively developing it.

I think when we were starting the company, there was some hesitation on the part of investors to -- for a small company to look at type 2 diabetes, but it doesn't diminish our enthusiasm for the mechanism in the prior data and the safety profile of the molecule.

And at some point, I think it would be worthwhile to explore a 12-week study to really demonstrate that it provides the A1c reduction that is predicted from the fasting plasma glucose effects.

Okay.

So from a strategic perspective -- so partnership is kind of out of the question here?

And I guess, related to that and kind of a follow-up to Steve's question earlier, would it be -- would you entertain the possibility of combining in a NASH setting with 2809 just to address kind of the metabolic syndrome aspect of the disease?

So it's -- I mean, it's a good question.

And just to go back for a second.

The door is always open here, so partnership is not off the table for any of our programs.

So we're always interested in discussing opportunities with partners.

As far as combinations, I think we've thought about a lot of different combinations with VK0612 and the potential benefits in NASH patients, I mean, that's -- might make sense.

I'm not going to say anything more than that right now.

The next question comes from Yale Jen with Laidlaw & Company.

You guys are going to present a 5 mg data at the EASL, and you suggest that that is sort of robust also.

My question to you is that should the data be robust enough that you guys can contemplate any sort of possibilities such as you'll have a higher-dose loading dose and subsequent with a maintenance dose type kind of a regimen?

How would you think about these things in general?

Yes, yes.

We thought a lot about that.

That's a great question, Yale.

So if -- for example, if you start for 3 months on a higher dose and then reduced somebody to a very low maintenance dose, given the potency and the liver selectivity, that might make sense.

And so it's just one of the elements that we're thinking about for the upcoming Phase IIb study.

Haven't made any final decisions there.

We do want to keep the study manageable and small enough to complete in a timely fashion.

But you've asked an important question, and it's possible that you can answer that question with a smaller or shorter study rather than putting it into a longer Phase IIb.

Okay.

That's helpful.

And in that regard, what do you see the potential sort of economical or, let's put it this way, patient benefit or a payer -- any payer benefit on that if that potential sort of a regimen can be used or can be considered?

Well, I think the patient benefit, I think generally people would favor low doses.

I think, generally, people would favor not initiating polypharmacy, if it's at all possible.

So the benefits of a single agent that can be effective at the very low dose, I think, would resonate well with both clinicians and patients.

When you talk about payers, it sounds like the initial payer receptivity is going to be highest in the fibrotic patients.

And this is something that a lot of people sort of overlook when they think of the thyroid beta mechanism.

There are anti-fibrotic benefits to activation of the thyroid beta receptor.

It's in the literature.

We've shown it in multiple studies of our own.

We presented this at AASLD in 2017.

We see a reduction in collagen load.

We see a reduction in fibrosis.

We see a reduction in a whole range of genes associated with fibrotic signaling.

So the notion that a thyroid beta agonist is just a metabolic agent, I think, is -- it's incorrect.

And the data show that there's a lot broader effect than just a metabolic benefit.

And if you can show a benefit on fibrosis, that looks like the first place the payers are going to be most eager to reimburse.

Okay.

Great.

And maybe one more question here, which is VK0241 (sic) [VK0214] in X-ALD.

Do you have a sort of general picture regarding the Phase I study that you're probably going to start early next year or late this year in terms of patient size?

Can you start to look into having patients to gauge some sort of signal -- efficacy signal?

So anything you can talk about the potential Phase I study or I/II?

Yes.

On the patient side, so what we've considered there is sort of a single-ascending dose that blends into or transitions into a multiple-ascending dose study that transitions into a 28-day study in patients.

And so as you get far enough along in your SAD, you can begin the multiple-ascending dose cohorts.

And as you get far enough along there, you can start to roll some patients in.

And I think that sort of one-stop study would be very efficient and very capital efficient, really.

We would look at very long-chain fatty acid changes at 28 days.

And if we see something, then we would consider what the next study might look like, which could potentially be a registration study there.

Where does patients -- will the patient sample from the plasma or from other tissues?

It would be -- well, just to show the proof of concept, we look at plasma.

That would be probably the easiest and most efficient way to demonstrate proof of concept.

The next question comes from Scott Henry with Roth Capital.

Just a couple questions.

First on VK2809, as we start to get some parameters around the Phase IIb, obviously, that could change post the FDA meeting.

But how should we think about the enrollment time period to enroll 150 patients?

Yes.

So the -- we'll adjust the number of sites commensurate with any changes in enrollment there.

So we would hope that that would be close to a wash with the larger trial size.

And I think when you look at some of the other studies of similar size, the precedent is out there for the enrollment time line and the time line to the initial liver data followed by histology data.

So there have been some recent examples there in the competitive landscape that allow you to map that out.

Okay.

So I mean, it sounds like we should be thinking about, granted things could change, about a 2-year process from start to finish.

Is that a reasonable way to think about the timetable?

Well, I think it's possible maybe to go more quickly than that.

Hard to know.

But for example, one recent Phase II study took about 5 quarters from initiation to the initial reading on liver fat and then around 6 to 7 before the histology data were available.

I don't think that's an unreasonable time frame, but again, very hard to predict until we get the size and enrollment criteria identified.

Okay.

Great.

That color is very helpful.

And then just a modeling question.

When we think about R&D, obviously, the biggest lever for 2019, I mean, it sounds like it should track kind of similar to Q4 for the beginning of the year and perhaps spike up in Q4, maybe a little bit in Q3.

Is that how we should think about the R&D trajectory in 2019?

Yes.

I don't think that's unreasonable.

That's -- I think that's a fair statement.

It's relatively flattish for the first half of the year, and then it should begin to tick up in the second half.

The next question comes from David Bautz with Zacks Investment.

So from a competitive standpoint, you are a little bit behind some of the other players in the field in NASH.

So I'm wondering what ultimately made you decide to go with the Phase IIb and not do a combined Phase IIb/III trial.

Yes, yes, it's a great question.

I don't think the lag in timing is as big an issue as maybe it's being made out to.

And there are multiple examples of the best therapy coming in second, third, fourth or fifth and taking a large share of the market.

So I think the history of drug development is rife with those sorts of examples.

For us, in comparing the Phase II/III to the Phase II stand-alone, the feedback from clinicians and KOLs and really vendors was unanimous in favor of the Phase II relative to the Phase II/III.

And so despite the fact that you can put on paper this very streamlined and presumably less expensive trial that rolls from Phase II to Phase III, if no one wants to enroll a patient in that type of study, it takes away the time line and the cost savings.

And we heard that multiple times.

We heard NASH docs saying if I've got several trials to choose for enrolling my NASH patients, this would be my last choice.

And that was really important feedback, and that helped to push us toward a Phase IIb.

The next question comes from Mayank Mamtani with B. Riley FBR.

Just a couple for me.

At the highest level, just taking a step back, just about the mechanism, thyroid hormone receptor agonist, I mean, you have 2 INDs that are different indication and I'm assuming different groups in the FDA.

And then obviously, we have the end of Phase II meeting also for a more advanced asset.

Is there anything from a framework standpoint that FDA looks for when it looks for the class?

And then more specifically, your agent, have you ever disclosed the safety margin?

Or in other words, how high the animal studies you may have tested your dose and relative to that what do you have in humans, maybe that ratio?

Have you talked about that?

We haven't.

I'll say that in the prior 13-week studies in animals, the doses didn't go high enough to really determine a safety margin.

And that was -- really, it was a little bit of an issue because whenever you propose a study design, you have to discuss your proposed exposure levels in humans and how those exposure levels relate to the exposes in animals where adverse events were observed.

The top dose in both the prior rodent and primate studies was deemed to be the no adverse effect level.

So it's just impossible to test what that margin.

We are dosing, I would say, substantially higher to eliminate that question in any future evaluation of the margin.

And so I think we'll answer that question for the next study.

Okay, great.

And any comment on the class and how maybe FDA historically has looked at it and maybe how that view may have evolved at the FDA level?

Yes.

We know that the FDA has looked at the class with particular focus on the known issues associated with the less selective thyroid agonist, and those are issues related to cardiovascular safety and bone and cartilage safety.

And so we know those are areas of particular interest to them, and those are areas that we look particularly closely at in all of our studies.

Okay, great.

And then just one minor question about the Phase II study.

As you think about the therapeutic window, it looks like the 5 mg gets you very close to the every other day dosing.

So is sort of the thinking, and you commented on that before, just go lower dose and if you're getting this similar therapeutic benefit, that would sort of be the way to go?

Or do you think fibrotic -- to get an anti-fibrotic benefit, which is where the system will pay for the value, you want to dose as high as you could potentially?

Yes.

It's -- no, this is an excellent question, and I don't know the answer.

No.

Is there some difference in dose response between fibrosis and liver fat?

I don't know the answer to that.

If it -- if there is, you might argue for a higher dose.

But if you're causing all of the downstream effects that impact fibrosis and fat reduction with the same dose, then you wouldn't have to.

But I don't know.

We didn't see in prior animal studies any sort of a separation there between fibrotic benefit and liver fat benefit.

And we know that when you reduce a person's body weight by, for example, 10%, that NASH resolves and fibrosis improves.

And I think we're in that range.

So -- but is there some different effects?

I don't know.

It's a good question.

The next question comes from Caroline Palomeque with Maxim Group.

I was just wondering if you could give any more color on the Phase IIb protocol for 2809 as far as, is it safe to assume that you'll be focusing the endpoints on the approvable fibrosis resolution?

Yes, yes.

So I think we would look at a whole host of exploratory endpoints there.

Fibrosis -- I mean, I'm sorry, I'm sorry, NASH resolution without worsening fibrosis and the proportion of patients who experienced some improvement in fibrosis without worsening of NASH.

Yes, all of the above would be explored in the study, yes.

Okay.

Great.

And then just a question on your pipeline.

Just for VK2809 in the glycogen storage disease, just wondering if that will be moving into the clinic anytime soon.

No.

It's a great question, and I think there's a lot of promise in that indication.

We decided toward the end of last year to really focus on NASH for the near term.

Maybe at some future date, we could revisit GSD.

But right now, I think the company's resources and focus are, in our view, most effective in the NASH indication today.

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 your participation and continued support of Viking Therapeutics.

We look forward to updating you again in the coming months.

Thanks very much, and have a great afternoon.

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