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VKTX Raises $4.3 Million in Gross Proceeds From Registered Direct Offering…

By David Bautz, PhD


Financial Update

On June 14, 2017, Viking Therapeutics, Inc. (NASDAQ:VKTX) announced it raised gross proceeds of $4.3 million from a registered direct offering. The purchase price for one share of common stock and one warrant to purchase 0.75 shares of common stock was $1.15. Viking sold approximately 3.7 million shares of its common stock and warrants to purchase approximately 2.8 million shares of its common stock. The warrants are exercisable six months following the date of issuance at a price of $1.30 and will expire in five years. 

This financing will help to cushion the balance sheet, which we believe will be important for partnering negotiations for VK5211 after the results of the Phase 2 clinical trial are announced in late summer 2017. In addition, it extends the cash runway a bit further into the first half of 2018. Lastly, it removes most of stock available through the distribution agreement with Maxim, which may have been weighing on the stock.

Business Update

On June 6, 2017, Viking Therapeutics, Inc. (VKTX) announced promising results from an in vivo study of VK2809 in a mouse model of diet-induced non-alcoholic steatohepatitis (NASH). Animals treated with VK2809 had statistically significant reductions in a number of key measures related to the development and progression of NASH, including liver triglyceride content, liver cholesterol content, liver fibrosis, liver collagen content, and liver hydroxyproline content. VK2809 also performed better (though not all reached statistical significance) in those parameters than an undisclosed active control, which is a metabolic-targeting agent currently in late-stage development. These data are the first to demonstrate a histological benefit from a thyromimetic agent in a NASH model. We continue to expect data from a Phase 2 study of VK2809 in patients with hypercholesterolemia and fatty liver disease in the fourth quarter of 2017.

Diet-Induced Mouse Model of NASH

Several animal models have been developed to represent the various pathophysiologic changes, morphologic changes, biochemical changes, and clinical features of NASH (Sanches et al., 2015). These models can be classified as nutritional (diet-induced), genetic, or a combination of nutritional and genetic. A robust model should recapitulate all of the hallmarks of the disease, including changes in metabolic profile, steatosis, inflammation, hepatocellular ballooning, fibrosis, and tumor susceptibility. The genetic models are typically best at inducing biochemical changes seen in NASH (e.g., increases in liver triglyceride and cholesterol), while the different nutritional models typically result in histopathological changes that are consistent with NASH, but lack the biochemical changes. The following chart shows the different animal models currently utilized to study NASH, with the fructose/high-fat diet-induced model best able to recapitulate the main clinical features (CF), biochemical changes (BC), morphological findings (MF), and the occurrence of NASH. We believe it is important for investors to understand that there are a number of different NASH models, thus while some compounds may show robust activity in a certain NASH model, if that model does not best represent what is seen in the clinic it is likely of little use. 

Viking utilized a mouse model of NASH using wild-type mice fed a diet that consisted of 40% fat (18% trans fat), 40% carbohydrate (20% fructose), and 2% cholesterol (Clapper et al., 2013). This diet has previously been shown to induce steatosis, steatohepatitis with fibrosis, and cirrhosis and mimics what may be seen in individuals with poor dietary habits. Following 33 weeks on the diet, a biopsy was performed to confirm the presence of disease characteristics, including fibrosis. Mice were then treated for eight weeks with VK2809 (10 mg/kg/day), vehicle control, or an undisclosed active control that is in late-stage clinical development for NASH. Results from a study using this same model to examine the effects of treatment with liraglutide, elafibranor, and obeticholic acid were recently presented (Feigh et al., 2017), thus we believe the active comparator may be one of those compounds.   

VK2809 Shows Robust Activity in NASH Model

While we will have to wait for the full data set to be presented later this year at a scientific conference, the preliminary data that Viking disclosed is quite impressive. The following table shows the results obtained with VK2809 compared to both vehicle control and active control. For all parameters, VK2809 performed statistically significantly better than vehicle control. Compared to active control, VK2809 was statistically significantly better than for liver triglyceride and liver cholesterol content, and there were clear trends toward significance for liver collagen and hydroxyproline. A recent presentation showed that liver collagen significantly correlated with fibrosis in patients with non-alcoholic fatty liver disease (NAFLD), a precursor to NASH (Buzzetti et al., 2017). Fibrosis is a known risk-factor for adverse outcomes in patients with NAFLD (Angulo et al., 2015).  

VK2809 was also superior in a number of other outcomes. Animals treated with VK2809 experienced a 40% mean improvement in non-alcoholic fatty liver disease activity score (NAS; a composite measure of disease activity that is comprised of steatosis, ballooning, and inflammation) compared to animals treated with vehicle (P<0.0001). Fifty percent of VK2809-treated animals improved by at least two points in NAS, compared to no vehicle-treated animals (P=0.01), and no animals treated with VK2809 experienced a worsening in NAS while 60% of vehicle-treated animals did (P<0.0001). Lastly, there were no unexpected or abnormal laboratory findings for VK2809-treated animals and all animals received all scheduled doses of drug. 

VK2809 Phase 2 Clinical Trial

Viking is currently conducting a Phase 2 clinical trial of VK2809 as a treatment for both hypercholesterolemia and fatty liver disease. The company is enrolling patients with elevated cholesterol, fatty liver disease, and at least three risk factors for metabolic syndrome, which is considered a major driver for the onset of NASH. The primary endpoint will assess changes in LDL following 12 weeks of treatment, with exploratory endpoints evaluating changes in liver fat content, inflammatory markers, and histological changes. Upon conclusion, the company hopes to be in a position to move forward in either hypercholesterolemia or NASH. Thus, it could be viewed as a two-in-one study – confirmatory on LDL and exploratory for fatty liver disease. We anticipate topline results in the fourth quarter of 2017. 


As a reminder, Viking is expected to announce additional results from a long-term in vivo study of VK0214 in a model of X-linked adrenoleukodystrophy (X-ALD) in the second quarter of 2017, and results from the Phase 2 study of VK5211 in hip fracture in late summer 2017.  

The preliminary data regarding VK2809 in a diet-induced model of NASH are very encouraging, particularly since the compound was better than another drug in late stage clinical trials for NASH in a number of different parameters. We hope to learn the identity of the active comparator later in the year when the company presents the full data set at a scientific conference. Results from the ongoing Phase 2 clinical trial of VK2809 in hypercholesterolemia and fatty liver disease are expected in the fourth quarter of 2017, and if those results are similar to what was seen in the in vivo model, then the company’s valuation is likely to increase significantly from what is now a perplexingly low $25 million. Our current valuation is $7/share.  


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