Stephanie Diaz - Manager of Investor Relations Brian Lian - President and CEO Michael Morneau - CFO.

Jason McCarthy - Maxim Group Yale Jen - Laidlaw & Company Carol Werther - H.C. Wainwright David Bautz - Zacks Investment Research.

Welcome to the Viking Therapeutics 2016 Fourth Quarter and Year End 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 remainder, today's conference call is being recorded, today, March 21st, 2017.

I would now like to turn the conference call 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 Michael Morneau, our Chief Financial Officer.

Before we begin, I'd like to caution that comments made during this call, today, March 21, 2017, 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 statements 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 participating on the call and on the webcast. Today I'll be providing an update on recent progress and developments relating to our pipeline programs and operations.

As we’ve stated previously, we intent to host conference calls as needed based on recent corporate developments and not necessarily with each earnings announcement. It's our hope that this will allow us to maintain focus on our development programs, while updating the investment community as warranted.

I would like to begin today's call with a review of our 2016 fourth quarter and year-end financial results. After which, I will provide an update of our latest corporate developments. I'll now turn the call over to Mike Morneau, Viking's Chief Financial Officer.

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 our financial results for the fourth quarter of 2016.

Our research and development expenses for the three months ended December 31, 2016 were $2.6 million compared to $3.2 million for the same period in 2015. This decrease was primarily due to decreased activities related to third party clinical manufacturing for our drug candidates.

Our fourth quarter, general and administrative expenses decreased to $1.1 million from $1.4 million for the same period in 2015. This decrease was primarily due to a decrease in stock-based compensation expenses.

For the three months ended December 31, 2016, Viking reported a net loss of $3.6 million or $0.18 per share compared to a net loss of $5.1 million or $0.56 per share in the corresponding period in 2015.

The decrease in net loss for the three months ended December 31, 2016 was primarily due to decreases in general and administrative expenses and research and development expenses previously mentioned. That concludes the fourth quarter financial review. And I’ll now go over the financial results for the year ended December 31, 2016.

Our research and development expenses for 2016 were $9 million compared to $7 million for the same period in 2015. This increase was primarily related to an increase in expenses related to clinical trial activity for our VK5211 and VK2809 programs, and pre-clinical efforts for our VK0214 program.

Our general and administrative expenses for 2016 were $4.8 million compared to $5 million for the same period in 2015. This decrease was primarily related to decrease in stock based compensation expense, which was offset by an increase in cost related to being a publicly traded company.

For the ended December 31, 2016, Viking reported a net loss of $14.7 million or $0.90 per share, compared to a net loss of $23.4 million or $3.68 per share, in the comparable period in 2015.

The decrease in net loss is primarily due to a change in fair value of accrued license fees expense of $9.4 million, which was recorded in 2015 with no comparable expense in 2016. Our balance sheet at December 31, 2016 showed us cash, cash equivalents and investments totaling approximately $13.2 million.

As of February 28, 2017, Viking had 23,825,425 shares of common stock outstanding. This concludes our financial review. And I’ll now turn the call back over to Brian..

Thanks Mike. I'd now like to give an overview of the progress we’ve made at Viking in 2016 and early 2017. I’ll first discuss our two lead programs VK5211 for hip fracture and VK2809 for fatty liver disease and hypercholesterolemia.

Following that, I’ll provide an update on our newest program VK2809 for the treatment of glycogen storage disease type Ia, a rare orphan disease, as well as our VK0214 program for X-linked adrenoleukodystrophy. VK5211 is a potentially best-in-class orally available non-steroidal small molecule selective androgen receptor modulator or SARM.

In early studies, VK5211 demonstrated a stimulatory effect on lean body mass and bone mineral density that may offer significant benefits to patients recovering from hip fracture surgery. Based on this preliminary profile, in 2015, we initiated a Phase 2 clinical trial of VK5211 in patients who’ve recently suffered hip fracture.

This trial is a randomized, double-blind, placebo-controlled, parallel group international study designed to evaluate the efficacy, safety and tolerability of VK5211 in up to 120 patients. Patients in the study are randomized to receive VK5211 doses of 0.5 milligram, 1 milligram, 2 milligrams or placebo, once daily for 12 weeks.

The study's primary endpoint was to evaluate the effects of VK5211 on lean body mass after 12 weeks of treatment. Secondary and exploratory objectives include assessments of functional performance, quality-of-life, and activities of daily living, as well as safety, tolerability and pharmacokinetics.

As of today, we are continuing to enroll patients and currently expect to report top line data from this study around the middle of the year. More than 300,000 people each year in the U.S. are hospitalized following a hip fracture.

These patients experience losses of bone and muscles at accelerated rates, placing them at increased risk of further morbidity, refracture and prolong disability. It is our hope that results from this Phase 2 trial will demonstrate VK5211’s ability to provide therapeutic benefits to these patients, for whom there is currently no treatment.

We are also currently conducting a Phase 2 study with our VK2809 program. VK2809 is a novel orally available small molecule thyroid receptor agonist that possesses selectivity for liver tissue, as well as the beta receptor subtype.

Prior data have shown that treatment with VK2809 leads to rapid histologic improvements in animal models of hepatic steatosis, as well as significant reductions in LDL-cholesterol, triglycerides and atherogenic proteins in humans.

In 2016, we announced the initiation of a Phase 2 trial in patients with nonalcoholic fatty liver disease and primary hypercholesterolemia.

This trial is a randomized, double-blind, placebo-controlled, parallel group study designed to evaluate the efficacy, safety and tolerability of VK2809 in approximately 80 patients with nonalcoholic fatty liver disease and elevated LDL-cholesterol.

Patients are being randomized to receive once-daily oral doses of VK2809 or placebo for 12 weeks followed by a four week off-drug phase. The trial’s primary endpoint will evaluate the effect of VK2809 on LDL cholesterol after 12 weeks compared to placebo.

Secondary and exploratory endpoints include assessments of changes in liver fat content, triglycerides, and inflammatory markers. While we have expected this trial to be completed in the second quarter of 2017, we recently adjusted our timeline to the fourth quarter of 2017.

This adjustment doesn’t reflect any problems or concerns with the drug candidate, rather a combination of factors has contributed slower than expected enrollments, including competition for patients and relatively selective enrollment criteria. We are continuing to open new sites and currently expect to have 30 sites open for enrollment in April.

We believe VK2809’s unique liver targeted mechanism of action may provide differentiated benefits by simultaneously reducing hepatic steatosis, which is an important component of non-alcoholic steatohepatitis or NASH, and improving plasma lipid levels.

Last November, we presented data at the American Heart Association Scientific Sessions, highlighting the effects of VK2809 on key atherogenic proteins from a Phase 1b study and patients with mild hypercholesterolemia.

The results showed that treatment with VK2809 led the significant reductions in lipoprotein A and apolipoprotein B, two proteins associated with increased risks of cardiovascular disease. Reductions in atherogenic proteins, such are these, are important as they may suggest long-term benefits in patients with elevated cardiovascular risks.

We believe VK2809 has tremendous promise and we continue to advance this clinical development as rapidly as possible. In addition to our ongoing clinical trials, we have two exciting preclinical programs, both of which made progress during the last quarter.

Last month, we announced our newest program, which is evaluating VK2809 for the potential treatment of patients with glycogen storage disease type 1A, or GSD 1A.

GSD 1A is an open genetic disease caused by a deficiency of glucose 6 phosphate, which is an enzyme which is responsible for the endogenous production of glucose from glycogen and glycogenesis.

This disease results in an excess accumulation of glycogen and lipids in the liver, potentially leading to hepatic steatosis, hepatic adenomas, hepatocellular carcinoma and liver transplant.

Increased triglyceride production and elevated hepatic triglyceride contents are characteristic of GSD 1A, and associated with many front manifestations of the disease. There is currently pharmacologic treatment available for these patients.

Given its liver targeted activities, we believe VK2809 may represent a potential approach to reducing triglycerides, steatosis, and mitigating certain metabolic complications of GSD 1A. In the fourth quarter, we entered into a sponsored research agreement with Duke University to evaluate VK2809 in an in-vivo model of GSD 1A.

Initial results from this proof-of-concept study showed that treatment with VK2809 produced rapid and substantial reductions in liver triglyceride content, liver weight, and liver weight as a percentage of body weight, compared with vehicle treated controls.

Main liver triglyceride content was reduced by more than 60% in treated animals relative to vehicle treated controls, while average liver weight was reduced by more than 30% versus controls. Complete results from this work will be presented at a future scientific meeting.

Given our expertise with this molecule and metabolic diseases, we believe we are uniquely qualified to develop VK2809 and GSD 1A.

In order to undertake such an effort while minimizing related cash outlays, we recently announced an agreement with a dedicated healthcare investment fund to support the initial clinical developments of VK2809 in this indication.

With this funding, it is our plan to file an investigational new drug application and initiate a proof-of-concept study in humans in the second half of 2017. We also made progress with our other orphan program, VK0214, for X-linked adrenoleukodystrophy or X-ALD.

VK0214 is novel orally available fiber receptor beta agonist that selectively regulates the expression of gens believe to be relevant to the manifestation of the X-ALD. This is an orphan neurodegenerative disorder that can affect both adults and children.

As we discussed during our last earnings call, in 2016, we conducted an in-vivo proof-of-concept study in collaboration with Kennedy Krieger Institute to evaluate VK0214 in a relevant model of X-ALD. The study was designed to evaluate VK0214’s effect on very long chain fatty acids in the so called ABCD 1 knockout model.

The accumulation of very long chain fatty acids is believed to contribute to the underlying pathology of X-ALD. We’re very pleased with this study successfully achieved its primary objective, demonstrating highly statistically significant reductions in multiple very long chain fatty acids that are believed to be important in X-ALD.

In our view, these results are an indication that selective thyroid beta agonist could potentially play a role in the treatment of this disease.

Based on these findings, and again in conjunction with the Kennedy Krieger Institute, we recently initiated a follow-up study in the same ABCD1 knockout model to evaluate the effect of longer term treatment with VK0214 on very long chain fatty acids levels. We expect to announce the results of this study in the coming months.

As our pipeline advances and grows, it is important for our leadership to keep pace. To that end, we made several key hires since our last quarterly update. Amy Broidrick was recently appointed Senior Vice President of Corporate Development.

Before joining Viking, Amy served as Vice President and Head of Global Marketing, Excellence and Business Innovation at EMD Serono. Prior to EMD Serono, Amy was Vice President and Head of Marketing in Commercialization at Arena Pharmaceuticals, and previously held roles of increasing responsibility at Merck and Pfizer.

Amy is the Seasoned Industry Executive and is charged with leading our corporate development and partnering efforts. Greg Zante was recently appointed Viking's Vice President of Finance and Operations. Greg joins us with more than 20 years of accounting and financial experience at public and private life sciences companies.

At Viking, he is responsible for forecasting financing strategies, business development support and operational activities. Prior to Viking, Greg was Chief Financial Officer at Dance Biopharm, a diabetes-focused biopharmaceutical company, where he managed the company's financing strategy and positioned it for IPO.

Greg has held senior positions at several other companies, including Sangamo, Calyx and Matrix Pharmaceuticals. He is a certified public accountant in the state of California and previously served as a senior staff accountant at Ernst & Young. Finally, Catherine, or Cass Kelleher, was appointed Vice President of Clinical Development.

Cass is a skilled biopharmaceutical physician with experience across both industry and academia. Her experience in the areas of metabolic disorders and gerontology aligns with our clinical development programs, which she is charged with managing in her new role.

Most recently, Cass served as Vice President of Clinical Development at Coherus BioSciences. Prior to that, she worked as global safety officer for inflammation and oncology and the Research Director in nephrology at Amgen.

Cass has considerable experience at a critical point in the Company's development as we approach our Phase 2 readouts later this year. I’ll close by saying that as a result of our progress and hard work in 2016, we’re poised this year to report data from two ongoing Phase II trials in indications with significant unmet medical need.

We expect to report data for VK5211 for hip fracture in mid 2017. We expect to complete our ongoing trial of VK2809 in fatty liver disease and hypercholesterolemia in the second half of the year.

Beyond our clinical programs, we have established a number of strategic partnerships with organizations such as the Kennedy Krieger Institute and Duke University, which together, provide valuable support for our two pre-clinical programs addressing GSD 1A and X-linked adrenoleukodystrophy.

Both are orphan diseases for which they are no approved pharmacologic therapies. We are eager to advance these programs into the clinic as quickly and efficiently as possible as we believe they represent significant unmet opportunities. This concludes our prepared statements for today.

Thanks for joining us, and I would now like to open the call for any questions..

[Operator Instruction] Ladies and gentlemen, at this time we'll begin the question-and-answer session [Operator Instructions]. Our first question today comes from Jason McCarthy from Maxim Group. Please go ahead with your question..

Just a couple of questions on 5211 and 2809, for 5211, assuming that you get proof-of-concept data in mid-year, can you discuss with us plans or what the size and scope of a pivotal program would look like. And for 2809, I understand that enrollments were a little bit slower than expected.

But of the 80 patients that you've enrolled, that you plan to enroll, how far along is enrollment today?.

So, with 5211, following the completion of this study, we should have data that give us a lot of insight on the drug’s effect on objective measures like lean body mass and bone mineral density; functional measures like six minute walk test and the short physical performance battery; and then the reported outcomes, all of which should be very important for informing what a Phase 3 program would look like.

So, the next steps would be to fully evaluate the data and discuss with the FDA in the second half of the year what a registration program would look like. And it's very difficult to put a size around what that program would look like without knowing the effect sizes from the ongoing study.

So, we won't be able to give a lot of guidance on that until we get to a little further into the analysis of the data and after speaking with the FDA. Regarding the enrollment for VK2809, we haven't given any guidance around that. We do think we'll be able to complete that study in the fourth quarter.

But I don't want to get into updating that exactly how many patients are in and where they’re at with respect to the timeline..

And for the GSD program, I know you're just approaching filing an IND proof-of-concept study later this year. Given that it's an orphan indication, assuming that you see -- assuming that the study would be open label.

If you see positive data, could that study potentially serve or be expanded to a registration study?.

We're not currently expecting to do that, but we are continuing to discuss with KOLs what the initial and the potential registration trial would look like. But right now, doing a roll over into a registration trial is not what we would plan.

We'd like to do a short proof-of-concept study to establish the drug’s effect in this population and then follow that with potentially a registration trial..

Our next question comes from Yale Jen from Laidlaw and Company. Please go ahead with your question..

For 5211, you mentioned that you're still recruiting patient but you also anticipated data to be available in mid-year, I know that the 12 weeks treatments.

So should we read that the data, the patient recruitment so much toward the end and you were talking that the last patient probably will be in surely before his or her treatment before you reporting the data?.

So, we are getting close to the end there. And the enrollment in this study is a little bit lumpy. So, it's hard to precisely when the last patient will come in. We have weeks where we have nearly 10 patients that we’ve got other weeks where we have no patients. So, there is large air bar on when the last patient would actually enroll.

But at this point, we do think that we’ll be able to enroll the last patient in the near term, and report data around the middle of the year. And that could push into the third quarter, but we wouldn’t expect it to push much beyond that..

Also for the GSD trials, first of all, would that characterized as Phase 1 or Phase 1/2? Or how do you characterize that?.

May be Phase 1b would be the proper term; but proof-of-concept where we will be enrolling patients in that study, and looking at PK and signs of efficacy..

Just one more question on the timeline before we get to the trials there.

You say in the second half of this year, which will be a pinpointing to in the third or fourth quarter more likely to the start a study?.

Yes, I think to be safe, it would probably be late third to early fourth quarter..

And lastly, the usage of that you were looking to the efficacy or signal efficacy of what that might be.

Would that be just a temporary reduction of triglyceride or the liver pathological changes, what that might entails? And ultimately, what do you think could be approvable endpoint for this indication?.

So, we're still working through the trail design. Minimally, we’ll be looking at plasma trigs. But it would be nice to also evaluate the drug’s effect on liver fat content since that appears anyway according to Natural History studies, to suggest an elevated risk of abnormal formation and the corresponding transformation to hepatocellular carcinoma.

So, if there were way to implement that sort of an endpoint, we would like to do that and we're still working through that now. And I forgot the second part of the question..

Sure. And may be just tag on one question here, which is this indication seems to be a missing one key enzyme and the cost to be the problems.

And just curious from your advantage point, why the enzyme replacement therapy has not being used or being effective for doing this instead as there is no possibly no treatment current -- available treatment currently at this moment..

It's something that’s never discussed. And I'm not conversant enough with enzyme replacement therapies to speculate to why, I'm sure there’s a good reason for it. There is gene therapy that is in the earlier stages of development, still preclinical. But there isn’t, to our knowledge, anybody working on the enzyme replacement therapy.

It doesn’t mean there isn’t anybody working on it, but no one that we know of. So, I can't give you a lot of detail on that..

Our next question comes from [Manish Paul] from [MHP Capital Advisors]. Please go ahead with your question..

With regard to the 2809 program, obviously Viking is all alone in there with regards to demand of getting patients for NASH.

Is there anything you can do to obtain patients in a creative manner? Or is it just basically, just strictly execution with regards to your clinicians?.

This is a great question, and we think about this a lot, because it is challenging. And we are implementing certain changes to the way we are identifying patients and given the high competition for these patients, we’ll really not go into a lot of details on that. But we do expect enrollment to pick up moving forward..

And with regard to the X-ALD program, the additional data that’s going to come out in the second quarter, can you elaborate on what the -- more elaborate trial is going to look like.

Or is it with humans or is it still with animals?.

Yes, it's with same animal model, it's the ABCD1 knockout rodent. And the study is a little bit larger than the study that we did last summer. And it's running for significantly longer than the six week analysis that we did last summer. And the reason for this is to evaluate what's prolonged exposures due to very long chain fatty acids.

There was some suggestion in the prior data that the very long chain fatty acids appear to be further declining at the six week endpoint of the last study. And so we think that maybe extending the treatment window might result in some incremental benefits.

And there were also effects on earlier chain or shorter chain long chain fatty acids that’s comprise the pool of the longer chain, very long chain fatty acids.

And so, our thinking is maybe dosing a little bit longer and depletes the pool a little bit more and potentially enhanced the effect on the more problematic C24 and C26 very long chain fatty acids. So, long answer to your question, but that’s why we’re dosing longer to see what the longer term incremental benefits might look like..

Then lastly with regards to your Burn, as far as modeling goes, is your Q4 run rate representative of what Q1 and Q2 could look like?.

It's been pretty consistent over the last several months. As we get the GSD 1 study more near the initiation, there may be a slight uptick. But I would say it's been pretty consistent, and I don’t expect major changes until we get closer to that study starting..

Our next question comes from Carol Werther from H.C. Wainwright. Please go ahead with your question..

So the GSD pre-clinical model, do we have any idea of how predictive that is of what happened in humans?.

So, people haven't really looked at drugs following proof-of-concept with that model. We do know that the biochemical characteristics of those animals seem to reflect what is observed in humans. But to my knowledge, no one has looked at a drug candidate in the model and then reported corresponding human data..

And then X-ALD, are you waiting to see the results of this second study before making decision for an IND?.

Well it's going to help inform us. And there're two schools of thought; one is that it would be preferable to see a tissue effect on the long chain fatty acids, before moving forward with an IND; the other is that that's not necessarily requirement before moving into a proof-of-concept study.

And once we get these data, we'll have some tissue data and we'll be able to make a more informed decision. But I don't think a lack of a tissue effect would be a reason not to go into patients..

And then if you wouldn’t mind just, I'm not sure about the POC financial terms?.

So, that was up to -- so it was an agreement whereby POC Capital would cover up to €1.8 million in clinical expenses in exchange for €1.8 million in common stock, and it was pretty -- no other warrants or anything like that..

Okay, that’s it. Okay, fine. I just wanted to check on that.

They don't have any rights to the product or any say in this clinical development program?.

No, that's correct..

And then I didn't really hear any financial guidance for next year or in this year, actually 2017. So, I seem to always think you’re going to spend more money than you're going to Brian. So I was just wondering….

We haven't given any guidance. But for Manish's question a moment ago, I think the recent run rate is not unreasonable to extrapolate at this point..

Our next question comes from David Bautz from Zacks Investment Research. Please go ahead with your question..

I got a question about 2809. So, I'm wondering and you're going after fatty liver, which is potentially a huge indication. On the other hand, you're looking at GSD, which is an orphan indication. So being optimistic and thinking if you get positive results on both.

I was wondering if you could talk a little bit about what would -- could factor into which way you decide to go, because I don't think you can go both indications?.

It's a great question and it's a great point. I think the way to look at that is that GSD is an area of high unmet need. There's nothing approved there. And these patients experience an elevated risk of transitioning to a liver cancer. And that's an indication that I think represents a nice additional opportunity for the drug candidate.

So, in the event that we complete the ongoing VK2809 trail in fatty liver and hypercholesterolemia and we don’t receive terms that would be attractive to us to move forward with the partner in the larger NASH indication, GSD 1A would represent an indication that we could potentially move forward with alone in the absence of the partner..

Do you think going after GSD is going to interfere with potential partnering in fatty liver?.

No, I don’t think it really has an impact either way. I think it’s a large partner. We're more interested in the large market, which is move in that direction. I mean, I don’t think they impact each other. Now, if you went parallel in both, I think that would represent potential problem. But that’s not what our intention is..

[Operator Instructions] Our next question is from [Darren Evans] from [PSC Capital]. Please go ahead with your question..

So just wanted to talk about the business development side, can you guys just comment on the efforts there. And I know you can’t mention specific partners.

But I was just wondering if you could dig into how deep is the diligence? And if Phase 3 trials that are currently underway, we solve the clinical development or commercialization questions with those partners we have?.

So we did hire, as I noted in my prepared comments, we hired someone to really focus fulltime on corporate development and business development. And I don’t think, we're unique by any stretch. We’ve got two Phase 2 trials ongoing in areas that represent significant revenue opportunities.

And so like any company in that situation, there is partnering interest. We have their representation just last week at the BioAsia Conference in the Tokyo. I think we received a fair amount of interest at that conference. But as we you know, timing these sorts of things it's impossible and it's not something that why we see guidance around.

But I'll say that there is interest on really all the programs..

Then follow up a question on the 2809.

So, given R$ there is parallel track of a NASH indication both in for dosing paradigm different enough, so you could almost do a Pfizer like play into where the current indication PH in addition to the main indication?.

Yes, the dosing will be slightly different. And so if someone were to want to pursue that, may be that would offer the opportunity. But I think probably that situation, if you know, it would probably be a larger partner interested in NASH and ourselves or a different partner interested in the orphan indication.

But yes, the dosing regimens are different..

And ladies and gentleman, at this time, I'm showing no additional questions. I would like to turn the conference call back over for any closing remarks..

Thank you. Thanks again for your participation and continued support at Viking Therapeutics. We look forward to updating you again in the coming months. Thanks..

Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending. You may now disconnect your lines..