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Viking Therapeutics (NASDAQ:VKTX) is a great speculative biotech play to look into. The reason why I state that is because I believe it has huge potential as a long-term play. I state this since it is gearing up to report final results from the ongoing phase 2b VOYAGE study, which is using its drug VK2809 for the treatment of patients with NASH, in the 1st half of 2023. This is going to be a crucial point in time for this biotech because it will release whether or not the primary endpoint of this study is achieved. However, I don’t want to just tell you to rely on this alone. There is another release of data, from a competitor by the name of Madrigal Pharmaceuticals (MDGL), which is expected in Q4 of 2022. The reason why it is important to watch this is because Madrigal has its drug resmetirom, which has a similar mechanism of action as VK2809. It’s just that Madrigal is further along in clinical testing. Matter of fact, it expects to release results from a phase 3 liver biopsy study by the name of MAESTRO-NASH in Q4 of 2022. If the primary endpoint is met in this late-stage study, then that means once Viking gets to its phase 3 study with liver biopsies, it could likely achieve the endpoint as well. The good news for Viking, though, is that unlike Madrigal, it has a pipeline of other drugs it can rely on. Madrigal doesn’t have that luxury as it is all or nothing for it. However, Viking has back up plans in place. For instance, it has VK2735 which is being explored in an ongoing phase 1 study. Primarily for safety, but some efficacy biomarkers could be shown. This is an important drug since it also indicated to treat patients with NASH, plus it could have potential in treating patients with obesity and diabetes as well. Besides this, it has VK0214, which is being developed for patients with a rare disease known as X-ALD. Despite both of these indications only being explored in phase 1 clinical studies, they both are expected to have data readouts in 2023. Hopefully, Madrigal does report success in liver biopsy data with NASH as that will translate to a surge in Viking Therapeutics as well in Q4 of 2022.
VK2809 For The Treatment Of Patients With NASH
The main clinical program in the pipeline is the use of VK2809, which is being developed for the treatment of patients with NASH. NASH stands for non-alcoholic steatohepatitis and is a liver disease. In essence, patients with NASH experience a fatty liver. The fat in essence overwhelms the liver eventually causing inflammation and damage to it. For the time being there is no cure for this disease. However, it is not even known what exactly causes it. On the other hand, there are several factors that may contribute to it such as:
- Obesity
- High Cholesterol
- Type 2 Diabetes (T2D)
Some people with a minimal amount experience no symptoms. Then there are others who have severe symptoms as follow:
The disease affects about 16 million people in the United States alone, therefore, it is a large market opportunity. Truth be told, there are many figures out there in terms of market opportunity. The max I have seen thus far is about $35 billion for the NASH market. The only thing is that there are a lot of competitors in place for this type of market.
The thing is that Viking Therapeutics had already established proof of concept in using VK2809 in a phase 2a 12-week study. In this mid-stage trial, it showed that hypercholesterolemia and NAFLD patients who were treated with VK2809, met both the pre-specified primary and secondary endpoints. That is, these patients who received Viking’s drug were able to show significant reductions in live fat. There were two notable measurements which show liver fat reduction being achieved with VK2809 treatment and they are as follows:
- 60% of patients achieved mean relative reductions in liver fat content
- 88% of patients achieved at least a 30% reduction in liver fat content
One thing to note is that this wasn’t just an initial response which was achieved. Matter of fact, it was observed that a majority of these VK2809 treated patients had continued to respond for 4 weeks after completing dosing. Things on the safety front were also very good as well. The reason why I state that is because there were no serious adverse events (SAEs) reported at all. Not only that, but it was also observed that even though nausea and diarrhea was observed in this phase 2a study, it was seen more in the placebo group. With a good tolerability profile, plus a substantial reduction in liver fat content observed, this is why Viking Therapeutics pressed on towards the phase 2b VOYAGE study.
This leads me to the ongoing phase 2b VOYAGE study. This study is randomizing approximately 340 NASH patients to receive either VK2809 or placebo for a total of 52 weeks of dosing. These are biopsy-confirmed NASH patients and those who have stages of Fibrosis ranging from F1 to F3. F1 being a low amount of fibrosis on the liver to F3 which is a more severe type of fibrosis on the liver. The primary endpoint is that which is looking at the relative change in liver fat content of VK2809 compared to placebo. This will be measured using something known as magnetic resonance imaging, proton density fat fraction (MRI-PDFF). Patients will be measured at baseline for liver fat content and then at the end of week 12 for this primary endpoint. This is a good primary endpoint, because it deals with proof of concept data I laid out above. VK2809 has already beaten placebo when it comes to reduction of liver fat content. Why did I state that the study will be ongoing for 52 weeks? That’s because it involves another important secondary endpoint known as histologic changes observed by biopsy. The thing is that if you reduce liver fat content, then it is assumed that the liver also sees an improvement. A liver biopsy looks into a sample of the liver to see if there is an improvement in terms of fibrosis (liver scarring). As I stated up above in the beginning, Madrigal is going to have its results released first for biopsy NASH data from the MAESTRO-NASH study in Q4 of 2022 any day now. This is the first catalyst that needs to be watched closely since resmetirom is nearly identical to VK2809. From there, the hope is that the expected results from Viking’s phase 2b VOYAGE study in the 1st half of 2023 will be positive as well.
Financials
According to the 10-Q SEC filing, Viking Therapeutics had cash, cash equivalents and short-term investments of $155 million as of September 30, 2022. It believes that it has enough cash on hand to make it through all of the clinical milestones noted above. That is, there are going to be three catalysts to be released in 2023, which should bring up the value of the stock price. Of course, that is if all the catalysts to be released are positive. The estimate is that it will have enough to fund its operations for at least one year from the date of this most recent 10-Q SEC filing which was filed on October 26, 2022. That means if it does proceed to raise cash, then it will likely do so by the 1st half of 2023 at some point. In particular, I would think that it may choose to raise cash after the release of the phase 2b VOYAGE study which is ongoing. I think that this study should be successful in terms of liver fat reduction, but in terms of biopsies that remains to be seen. The point being is that if the stock surges or trades higher for whatever reason, then that’s when it will likely pull the trigger to raise funds. It does have an alternative option it can tap into from time to time. What do I mean by this? Well, back on July 28, 2021 it filed with the SEC a universal Shelf Registration Statement on Form S-3, or 2021 Shelf Registration. This allows the biotech to offer up to $600 million of securities, equity, debt and other securities from time to time. It was declared effective by the SEC itself on August 11, 2021 and it is not expected to expire until August 11, 2024. If it needs to go this route instead to raise cash, then this remains an alternative option it can tap into.
Risks To Business
There are several risk factors that investors should be aware of before investing in this biotech. The first risk factor to consider would be with respect to the upcoming readout of the phase 3 MAESTRO NASH study from Madrigal. That’s because resmetirom uses the same mechanism of action as VK2809. Therefore, a huge win for Madrigal from this late-stage study, should mean a huge win for Viking Therapeutics as well. On the flip side, if the fibrosis reduction theory is not proven, then Viking Therapeutics will likely trade lower because of it. After that, there are two possible advancements. Either Viking chooses to press on with its ongoing phase 2b VOYAGE study or it chooses to stop the study completely. This may or may not happen, but it really depends if management wants to continue exploring VK2809 for NASH if the data from Madrigal is not that stellar. It just highly depends upon how good/bad the results are when they are finally released any day now in Q4 of 2022. A second risk factor to consider would be the cash on hand that Viking has. That’s because it estimates that it will have enough cash to fund its operations until at least October 26, 2022. Again, I don’t believe it will wait that long to raise additional cash. As such, I think it will choose to raise cash by at least the 1st half of 2023. It could possibly raise cash sooner, but that depends if the stock price soars on the back of Madrigals NASH biopsy results.
Conclusion
The final conclusion is that Viking Therapeutics is a great speculative biotech play to look into. The reason why I state that is because there is a huge catalyst approaching for it in Q4 of 2022 and this will be Madrigal’s MAESTRO NASH study. Again, this is also significant for Viking, because VK2809 uses a similar mechanism of action to that of resmetirom. Both are thyroid hormone receptor beta agonists which are being used to target metabolic disorders like NASH. In essence, a proven reduction of fibrosis in liver biopsies for Madrigal’s resmetirom, then likely means a huge win for Viking’s VK2809 in the coming studies. Especially, considering that it expects to release results from its phase 2b VOYAGE NASH study in the 1st half of 2023. I want to reiterate that Viking has the luxury of other clinical candidates in the pipeline though, just in case its NASH candidate VK2809 doesn’t work out. For instance, it has VK2735 which is also being developed for the treatment of patients with NASH, obesity and diabetes. Then, it has VK0214, which is being developed for patients with a rare disease known as X-ALD as well. With a few catalysts on the way for VK2809 for the treatment of patients with NASH, plus a pipeline with a few other drugs, these are the reasons why I believe that Viking Therapeutics is a great speculative biotech play to look into.
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