Viking Therapeutics, Inc. (VKTX) Earnings Call Transcript & Summary

All right. Good afternoon, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Ulz, one of the biotech analysts here. It's my pleasure to introduce the team from Viking Therapeutics. To my immediate left is Brian Lian, CEO. To his left is Neil Aubuchon, Chief Commercial Officer; and to his left is Greg Zante, CFO. But before we get started, I just need to read a quick disclaimer for important disclosures. Please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. [Operator Instructions] And maybe with that, Brian, I can just hand it over to you to make some introductory comments, and then we can go into Q&A.

Sure. Sure. No. Thanks a lot to Morgan Stanley for the invitation. We've got a great schedule and really happy to be here. We really appreciate it. So a lot happening at Viking this year. We have 2 ongoing -- the main program is in obesity. It's a peptide we call VK2735, completed Phase II study and showed approximately 15% weight loss from baseline after 13 weeks. We advanced it into Phase III development. We have 2 ongoing Phase III trials today. One is called VANQUISH-1 in patients with obesity and one is called VANQUISH-2, and that's in patients with obesity and Type 2 diabetes. Both trials fully enrolled and both likely to read out data toward the second half of 2027. We have -- those are weekly subcutaneous injections. We've got another formulation of the same compound. It's an oral tablet formulation, showed promising data in the Phase II trial. So we're planning to move that into 2 very similar Phase III trials in the fourth quarter. And so I think of that program as being 12 to 18 months behind the subcu program. So we'll kick those off in the fourth quarter. And we've really been focused on with the company providing products that give patients the greatest amount of optionality, whether it's subcutaneous injection, oral tablet, and we're conducting a study now that explores different dosing regimens. So following weight loss with a weekly regimen, we're transitioning people to an every other week regimen or a monthly regimen. And looking at -- we call it maintenance study, we're looking at what happens to body weight after you transition from weekly to every other week or monthly. And the goal there is to keep people roughly where they were when they made the transition to less frequent dosing. And we've guided to data from that study this quarter, and we'll maintain that guidance today.

Great. Thanks for that introduction. A lot going on and a lot to talk about here. So maybe just to start, a big picture question, and you touched a little bit on this in your prepared remarks here about differentiation in obesity, right? There's a lot of change happening and maybe where do you see your products kind of fitting into the market?

Yes. Well, we would hope that for the general population, BMI above 30 or 27 plus 1 comorbidity, we would provide a viable therapeutic option. And one thing that I think, differentiates us from other development programs and marketed programs is we have the same molecule, GLP-GIP in both the subcu and the oral formulation. So you could transition presumably from one to the other without necessarily an increase in the risk of new adverse events or anything like that. If we can successfully develop the less frequent dosing regimen, it's another opportunity to keep patients on therapy and improve persistence. Long-term persistence is a big challenge with these patients. But long-term persistence is really what's required to realize the long-term benefits of sustained weight loss. So we would hope that we're differentiated because we can provide more options to keep people on therapy for a longer period of time and maintain a healthy weight.

In terms of options, you also mentioned your oral option here, and there's been sort of some recent approvals there. Maybe talk about how you think that market is evolving and where ultimately orals might play in the market here.

Yes. We've seen the -- the way we look at the orals, it's going to probably continue to be the smaller component of the market, still a pretty substantial component of the market. But the way we see it is 75-25, something like that injectable oral. The recent launches, the peptide launch that was earlier this year has done remarkably well. The -- and it's sort of been assisted by having the same brand name for both the injectable and the oral product. The second launch, small molecule oral GLP-1 agonist, a little bit slower out of the gate, but now picking up steam. So we see both as, I think, really expanding the market, not necessarily cannibalizing the injectable market, but leading to an expansion. And ultimately, we see the orals as maybe being a little bit of a funnel to the injectable products since the orals don't match the same degree of weight loss compared to the injectables. So once someone is on an oral, they're comfortable with the side effect profile. They're excited to be losing weight and they get to maybe 8% to 10% weight loss. There's really only one way they can go to achieve higher weight loss, and that's through an injectable product. So we see conversely, the oral market is really potentially being a big expander to the subcu market.

Yes. Makes sense. And you mentioned your peptide. And just given that one of the questions that comes up frequently is just manufacturing capacity, et cetera. So I know you've done a lot of work there. So maybe just talk about the current state of...

Yes. Because there were shortages in some of the earlier launches, we spent a lot of time looking at sourcing manufacturing capacity. And so right now, we have a base agreement with CordenPharma, I think a well-known party in the peptide manufacturing space. Our agreement there is for a multi-ton capacity of API, at least 100 million units of vial and syringe products, at least 100 million units of auto-injector products and then at least 1 billion tablets as well. And all of those elements are expandable at our option. We've since the CordenPharma agreement, I think we announced that in March of '25. We've added 3 additional API manufacturers, all in the sort of multi-ton range. And we will continue to build in redundancies across the supply chain for vial syringe as well as auto-injectors. So all continuing to develop there. But I think we feel pretty good about the API situation.

Great. And I wanted to touch a little bit on just your current thinking in commercialization. I know Neil joined earlier this year, and you've kind of been developing that. So maybe just talk about some of the options you're thinking about and how you think about partnering as well.

Sure. I can start. I'm sure Brian will add. So first of all, we've stated publicly that we are always open to strategic collaborations. So whatever we do is not going to get in the way of that. But at the same time, we have to plan for the business as if we're running it ourselves. So it's great to start out with a really good product. We know that the dual agonists tend to perform better than the mono-agonist in clinical trials. We're going to have the second injectable dual agonist. We're going to have the first GLP-1/GIP dual agonist oral. It's going to be -- it's the same molecule. So you'd expect it to be the same brand name. So we think that is going to give us commercial efficiency. So those are some things definitely is a good starting point. Second is, as a smaller company, one of the challenges we -- smaller companies have is access. 50% of the business now is in cash. And so from Day 1, we're going to have equal access to all of the big players. We're also seeing the Medicare Bridge program go extremely well. The uptake, at least early days has been very positive. We'd expect to have access to that. The other thing we're starting to see is companies are carving out this benefit. They're creating what they call a direct-to-employer option where they're sort of treating this like a gym membership, where they're subsidizing, let's say, $100 or $150 a month to their employees and the employees are paying the incremental, call it, whatever, $150 a month out of pocket. And in that model, patients can go to whatever product they want. There is no formulary. So we can sort of debate the exact percentage it's going to be. But unlike almost any other category, when we launch, we're going to have exposure to the vast majority of the market with no access restrictions. So that is a huge advantage for us. The other thing is that there are companies out there now that are doing direct-to-consumer engagement and marketing, frankly, better than big pharma companies are doing. And all of those companies want to work with us, and we are having conversations with many of them. And that is a very efficient path for us to get consumer engagement. So for all those reasons, we have to be humble. We have to see how the data reads out, et cetera. But for all those reasons, it gives us a lot of optimism that we can commercialize successfully ourselves.

Great. And I just wanted to shift now to VK2735 and specifically your subcu formulation. Brian, you mentioned you recently completed enrollment in the Phase III and you should have data sort of second half of next year sometime. So maybe just talk about your expectations around the profile and maybe how it might compare to treatments that are available today.

Yes. Yes. I mean hard to predict how the Phase III will perform. But in the Phase II, we had dosed up to 15 milligrams weekly. And after 13 weeks, we saw 14.7% weight loss from baseline, which feels pretty competitive versus the existing landscape, certainly competitive -- easily competitive with the GLP-1 mono-agonist class. The trial we're doing now will increase the dose at the top end to 17.5 mg and extend the dosing window to 78 weeks total. Where that leads us on efficacy, it's hard to predict. But we think overall, the trajectory from that 13-week study should be, I don't know, promising when you consider extending out 78 weeks. So the goal would be to have something that is well tolerated, low rates of nausea and vomiting, predominantly mild side effects and something that gives efficacy that's really competitive with the existing agents. I mean it's a really significant market opportunity. There's going to be increased fragmentation as the market matures. We don't need 40% market share to be successful. I think we can have a much smaller portion of the market and really, really have a successful franchise.

Can you talk a little bit more about just safety expectations? You mentioned you're dosing higher in the Phase III versus the Phase II, but I think there's some differences in titration and also where you start. How do you think that all sort of plays out in the safety profile you might see?

Yes. So in the Phase II study, we had started at 2.5 mg in 3 of the cohorts and 5 mg in one of the cohorts. And what we saw when we compare the cohort started at 5 versus the cohort started at 2.5 is we saw much lower rates of nausea in the 2.5 mg initiation versus the 5 mg. And so we've seen this across the space as well as the lower you start. So the better tolerated. So what we did in the Phase III is we've started people at 1.25 mg for 2 weeks and then go up to 2.5 for 4 and you go up in 2.5 mg increments in 4-week blocks. And so the thinking is there that maybe you have this little teaser dose, low dose, maybe that helps with some of the known GI side effects, nausea, vomiting, constipation diarrhea that are known to happen when you start a GLP-1-based therapy. So that's -- even though we're going higher at 17.5, we're hoping that, that initial 2 weeks might ease people into it a little bit more smoothly. Another advantage just intrinsically with the molecule, the Tmax is a little bit later. It's at 3 days. So even starting at 1.25, you're starting low and you've got that gradual onset, it almost serves as kind of the micro titration that we would hope would lead to an improvement in adverse event profile. We don't know yet, though.

Yes. Makes sense. And maybe similar sort of line of questioning for your oral formulation, maybe highlight what you saw in your Phase II study and maybe how that profile compares to currently available agents.

Yes. The profile for the oral, we had seen, I think, about 12% weight loss in the high dose, which was 120 mg. We're coming down a little bit in dose in the Phase III study. One thing we learned in the Phase II is we had dosed people with 4 tablets, and they were a little bit larger tablets. That wasn't a great experience for some people. So we focused on reducing the tablet size, reducing the tablet count and really kind of on the middle of that dose response curve from the Phase II, which had gone up to 120 mg. So we haven't disclosed the design yet. We'll disclose that when we start the studies in the fourth quarter. But overall, similar population, study would be in obesity, study in obese diabetics, shorter studies, smaller studies, a lot less expensive than the subcu. And like I said earlier, probably 12 to 18 months behind the subcu studies.

Why are you confident in sort of shorter, smaller studies?

Yes, yes. So we had asked the FDA since it's the same molecule, both the subcu and the oral, we asked in an end of Phase II meeting, can we leverage the human data, safety data that will be generated in the subcu Phase III program for the oral Phase III program. And the FDA indicated if everything works out, yes, that's -- I mean they always point out risks if something behaved unexpectedly, but under a normal set of circumstances that should be acceptable. So we are able then to leverage the safety data. We knew we could do it with the animal tox data, so we didn't have to redo the animal tox. So we're leveraging the subcu human data, and that allows us to shrink the sizes of the studies from a total of about 5,600, 5,700 in the Phase III subcu down to 75% lower than that. And because we don't titrate as long, we can shorten the overall. You got to be 52 weeks at the post-titration dose, but the titration window is shorter, so it makes the whole trial shorter. So the expense of the oral Phase III is quite a bit lower than the subcu Phase III.

Makes sense. Okay. Great. And maybe now we can shift to the maintenance study. You mentioned 3Q. I know everyone wants to talk about this, so let's get into it. We're all waiting. But maybe just at a high level, unmet need for maintenance right now and kind of the advantages of your approach maybe.

Yes. I mean the goal is to provide options that allow people to conveniently stay on therapy. And so when people reach their target weight range, we'd like to provide a more convenient means of staying at that target weight range. And so a lot of ways to do it, you can just reduce your weekly dose, but that isn't really a convenience advantage. We thought if -- because our half-life is around 9 days, and one old rule of thumb is you dose every 4 to 5 half-lives, we thought, well, maybe you can dose once a month. And the PK from the Phase II indicated, yes, maybe that's possible. So we designed the study to look at from weekly dosing to every other week dosing and monthly dosing. And with the monthlies, we've gone up from 17.5 mg per month to 22.5 mg per month is the top dose there. And then in the -- every other week, we're looking at 5 mg, 7.5 mg and 10 mg every other week. And so completed the study earlier in the summer, and we're waiting for the data. But what we'd like to see there on the big picture, we'd like to see at week 21, which is when people transition from weekly to less frequent, we'd like to see negative slopes through that window without a plateau. When you transition to the less frequent dosing, we'd like to see moderate side effect profile. Big question is when you dose less frequently, do you reinitiate the adverse events because you haven't had a dose in a little while and the plasma levels have gone down. So that's a big question. Because if you maintain, but everybody vomits, no one is going to want to take the drug. So if we can show a decent tolerability profile through the maintenance window, that's a really important thing to show in the study. We have an arm that goes 17.5 mg all the way through 33 weeks. Will it be important regardless of the magnitude at week 33, what does the slope look like? Is the slope continuing negative without evidence of a plateau at 33 weeks. And so that's another really, really important element to look at. And then how do you define maintenance? That's an open question. But when we look at the emerging literature, it seems like if you can keep people within 75% of their initial weight loss, you're likely to retain the cardiometabolic benefits that were achieved in the initial weight loss. So in the maintenance period, if we can, after 12 weeks, keep people within 75% of the weight loss that they had achieved at week 21, I think that would be of interest as well. And what we'll do with the data then, our VANQUISH Phase III study is going to be entering into a 52-week extension study that will happen late this year or early in 2027. We'd like to -- if we see interesting data in the maintenance study, bring 1, 2, 3 arms into that extension study and explore maintenance then over a longer dosing window, which would be 52 weeks.