Stephanie Diaz - IR, Vida Strategic Partners Brian Lian - President and CEO Michael Morneau - CFO.

Jason McCarthy - Maxim Group Scott Henry - ROTH Capital Partners David Bautz - Zacks Investment Research.

Good day and welcome to the Viking Therapeutics 2017 Fourth Quarter and Year-End Financial Results Conference Call. At this time, all participants are in listen-only mode. Following management's prepared remarks, we will hold a Q&A session. [Operator Instructions] As a reminder, this conference call is being recorded today, on March 7, 2018.

I would now like to turn the conference 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 conference call, today, March 7, 2018, 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 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 related to our pipeline programs and operations. 2017 was a pivotal year for Viking.

During the year, we announced positive clinical data for our lead program, VK5211 for hip fracture, advanced our Phase 2 clinical trial evaluating VK2809 for liver disease, and achieved several important milestones with our earlier-stage programs targeting glycogen storage disease and X-linked adrenoleukodystrophy.

I'd like to begin today's call with a review of our fourth quarter and year-end financial results, after which I'll provide an update on our most recent corporate developments. I'll now turn the call over to Mike Morneau, Viking's Chief Financial Officer, 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 our financial results for the fourth quarter of 2017.

Our research and development expenses for the three months ended December 31, 2017 were $3 million, compared to $2.6 million for the same period in 2016. The increase was primarily due to increased activities related to our VK2809 clinical program.

Our fourth quarter general and administrative expenses were $1.4 million, compared to $1.1 million for the same period in 2016. The increase was primarily due to increases in salaries and benefits-related expense.

For the three months ended December 31, 2017, Viking reported a net loss of $4.1 million, or $0.14 per share, compared to a net loss of $3.6 million, or $0.18 per share, in the corresponding period in 2016.

The increase in net loss for the fourth quarter of 2017 was primarily due to an increase in research and development expenses and general and administrative expenses noted previously. That concludes the fourth quarter financial review and I'll now go over the financial results for the year ended December 31, 2017.

Our research and development expenses for the twelve months ended December 31, 2017 were $13.7 million, compared to $9 million for the same period in 2016.

The increase in research and development expenses was primarily related to increases in expenses related to clinical trial activities for our VK5211 and VK2809 programs, our preclinical efforts for our VK0214 program, third party manufacturing of our clinical-stage drug candidates, as well as regulatory and other services provided by certain third-party consultants.

Our general and administrative expenses for the twelve months ended December 31, 2017 were $5.3 million, compared to $4.8 million for the same period in 2016. This increase was primarily due to increases in salaries and benefits-related expense, offset by a decrease in non-cash stock compensation expense.

For the twelve months ended December 31, 2017, Viking reported a net loss of $20.6 million, or $0.79 per share, compared to a net loss of $14.7 million, or $0.90 per share, in the comparable period in 2016.

The increase in net loss for the full year 2017 was primarily due to the increase in research and development expenses and general and administrative expenses noted previously as well as a decrease in change in fair value of debt conversation feature liability.

Our balance sheet at December 31, 2017 showed cash, cash equivalents and short-term investments totaling $20.6 million. In February 2018, Viking sold an aggregate of 12,650,000 shares of its common stock, resulting in gross proceeds of $63.3 million before deducting underwriting discounts and commissions and other offering expenses.

As of February 28, 2018, Viking had 50,898,802 shares of common stock outstanding. This concludes my financial review. I'll now turn the call back over to Brian..

Thanks Mike. Since the Company's inception, we have worked diligently to advance our two lead programs, VK5211 and VK2809. During 2017 we completed and announced the results from a successful Phase 2 trial of VK5211 in patients recovering from hip fracture.

We also made progress with our Phase 2 trial of VK2809 for non-alcoholic fatty liver disease and hypercholesterolemia. In addition to these two Phase 2 programs, in 2017 we generated positive data supporting the continued development of our earlier-stage orphan disease programs addressing glycogen storage disease and X-linked adrenoleukodystrophy.

I'll now provide more detail for each program. VK5211 is Viking's lead program for muscle and bone disorders. It is an orally available non-steroidal selective androgen receptor modulator, or SARM, designed to selectively stimulate muscle and bone formation with reduced activity in peripheral tissues such as skin and prostate.

Following hip fracture, many patients experience a loss of bone and muscle at accelerated rates, placing them at increased risk of further morbidity, re-fracture and prolonged disability. During the fourth quarter, we announced positive results from a 12-week Phase 2 clinical trial of VK5211 in patients who had recently suffered a hip fracture.

Top line data showed that the trial achieved its primary endpoint, demonstrating statistically significant dose-dependent increases in lean body mass, less head, following treatment with VK5211 compared with placebo.

The study also achieved important secondary endpoints, demonstrating statistically significant increases in appendicular lean body mass, which is muscle in the limbs, and total lean body mass for all doses of VK5211, compared to placebo.

Importantly, VK5211 also demonstrated encouraging safety and tolerability in this study, with no drug-related serious adverse events reported. I'd like to take a minute to quickly review the key results from this study.

The Phase 2 clinical trial was a randomized, double-blind, placebo-controlled, parallel group, international study designed to evaluate the efficacy, safety and tolerability of VK5211 in patients recovering from hip fracture surgery.

A total of 108 patients were randomized to receive once-daily VK5211 doses of 0.5 mg, 1 mg, 2 mg, or placebo for 12 weeks. On the primary endpoint of total lean body mass, less head, all VK5211 treatment arms demonstrated highly statistically significant increases in lean body mass relative to placebo.

Specifically, patients receiving VK5211 doses of 0.5 mg experienced a mean placebo-adjusted increase in lean body mass of 4.8% or 1.6 kg. Patients receiving VK5211 doses of 1 mg daily experienced a mean placebo-adjusted increase in lean body mass of 7.2% or 2.5 kg.

And patients receiving VK5211 doses of 2 mg daily experienced a mean placebo-adjusted increase in lean body mass of 9.1% or 3.1 kg. In addition, all VK5211 dosing cohorts demonstrated statistically significantly greater proportions of patients achieving at least a 5% increase in lean body mass compared with placebo.

Approximately 19% of placebo patients experienced at least a 5% increase in lean body mass. By comparison, approximately 61% of VK5211 patients in the 0.5 mg cohort achieved at least a 5% increase. Approximately 65% of patients in the 1 mg cohort achieved at least a 5% increase.

And 75% of patients receiving VK5211 doses of 2 mg demonstrated at least a 5% increase. Another key secondary efficacy endpoint, assess the effect of VK5211 on appendicular lean body mass. Appendicular lean body mass is the lean mass found in the arms and legs and is particularly important to maintain in older people.

On this endpoint, patients receiving VK5211 doses of 0.5 mg daily experienced a mean placebo-adjusted increase of 6.1% or 0.8 kg. Patients receiving doses of 1 mg daily experienced a mean placebo-adjusted increase in appendicular lean mass of 9% or 1.3 kg.

And patients receiving VK5211 doses of 2 mg daily experienced a mean placebo-adjusted increase of 10.2% or 1.4 kg. All of these improvements were statistically significant relative to placebo.

These data demonstrate not only the efficacy of VK5211 in stimulating formation of appendicular lean mass, but once again show the impressive dose response relationship observed in this study.

Lastly, and of particular interest, given the older, more frail nature of this population, there were no significant differences in the rates of adverse events reported among patients receiving VK5211 compared with placebo.

There were also no dose-related differences in reported adverse events among various VK5211 treatment groups and no drug-related SAEs were observed in any patient receiving VK5211. Looking ahead, we expect to present the detailed data from this study at an appropriate scientific conference.

We are very excited about the robust efficacy demonstrated in this study as these results provide compelling evidence of VK5211's efficacy and pharmacologic impact on muscle growth.

As we previously indicated, we believe the further development of VK5211 for hip fracture may be most effectively executed by a partner, particularly one with an existing bone or musculoskeletal franchise.

To this end, we continue to explore opportunities that will allow us to create further value with the program and we will provide updates as appropriate. I'll now review recent progress with our second clinical program, VK2809, which is in a Phase 2 study enrolling patients with non-alcoholic fatty liver disease and hypercholesterolemia.

VK2809 is a novel, orally available small molecule thyroid receptor agonist that possesses selectivity for liver tissue, as well as the beta receptor subtype.

Preclinical studies have demonstrated that treatment with VK2809 leads to rapid histologic improvement in animal models of liver disease, including a model of diet-induced and biopsy-confirmed NASH, as well as significant reductions in LDL cholesterol and triglycerides in humans.

In a prior Phase 1b study in patients with mild hypercholesterolemia, VK2809 was shown to significantly reduce not only LDL-cholesterol and triglycerides, but also both lipoprotein(a) and apolipoprotein B, two proteins associated with increased risks of cardiovascular disease.

These data suggest potential long-term cardiovascular benefits that extend beyond those provided by LDL reduction alone. The overall profile of VK2809 thus far suggests promise in diseases that result from lipid dysregulation as well as diseases related to liver fat such as NASH.

In the second quarter of 2017, we announced data from a study of VK2809 in an animal model of NASH. The study was designed to evaluate VK2809 dosed orally once per day for eight weeks in rodents that had developed true diet-induced NASH as confirmed by a pre-study biopsy.

In the study, animals receiving VK2809 demonstrated statistically significant reductions in fibrosis, liver collagen, liver steatosis, and the non-alcoholic fatty liver disease activity score, also known as NAS, which is composite measure of steatosis, inflammation and ballooning.

We presented final results from this study last October at the AASLD meeting in Washington, D.C. Key results included data showing that eight weeks of treatment with VK2809 produced an 80% reduction in total liver lipids, a 70% reduction in liver triglycerides, a 65% reduction in liver cholesterol, and a 40% reduction in the NAS score.

All of these data were statistically significant. Treatment with VK2809 also resulted in statistically significant reductions in key measures of fibrotic activity, including a 50% reduction in total liver fibrosis, a 60% reduction in type I collagen content, and a 46% reduction in liver hydroxyproline content.

These observed effects on fibrosis and collagen content are of particular importance as scientific literature suggests that liver fibrosis is associated with long-term outcomes in patients with non-alcoholic fatty liver disease and that hepatic collagen content is correlated with fibrosis staging and outcomes in these patients.

Collectively, these studies provide a very encouraging picture of VK2809's potential benefit in the setting of NASH.

Our ongoing Phase 2 trial is a randomized, double-blind, placebo-controlled, parallel group study designed to assess the efficacy, safety and tolerability of VK2809 in patients with elevated LDL cholesterol and non-alcoholic fatty liver disease.

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, plasma lipids, and inflammatory markers. We continue enrolling new patients in this study and currently expect to announce the results from the trial in the second half of 2018.

This has been a challenging study to conduct but we are excited about VK2809's potential in this setting and look forward to reporting the top line data following completion of the trial.

Assuming we receive positive results from this trial, our go forward strategy would be to meet with the appropriate regulatory agencies to discuss and identify next steps. At the same time, we will evaluate all options, including partnering, for the advancement of the program.

I'd now like to address Viking's two orphan disease programs, both of which we believe have the potential to be best-in-class options for serious conditions with no available treatments. These rare disease programs offer unique opportunities for Viking.

Specifically, as the required trial sizes and associated expenses are often lower than for the larger indications, Viking could potentially advance these programs independently without the support of a partner. I'll first discuss our program evaluating VK2809 in the glycogen storage disease type Ia, or GSD Ia, which continues to advance.

GSD Ia is an orphan genetic disease caused by a deficiency of glucose-6-phosphatase, an enzyme responsible for the liver's production of glucose from glycogen and gluconeogenesis. The disease, for which there is no pharmacologic treatment, results in increased triglyceride production and elevated hepatic triglyceride content.

This can potentially lead to hepatic steatosis, development of hepatic adenomas, and hepatocellular carcinoma. In the third quarter of 2017, we reported final results from an in vivo proof-of-concept study which evaluated VK2809 in a model of GSD Ia.

This study was conducted under a sponsored research agreement between Viking and Duke University and the results were presented at the 13th International Congress of Inborn Errors of Metabolism in Rio De Janeiro, Brazil. The results demonstrated that treatment with VK2809 led to statistically significant reductions in key metabolic markers of GSD Ia.

Specifically, VK2809 produced a 69% reduction in liver triglycerides, a 36% reduction in liver weights, and a 54% reduction in liver triglyceride concentration, compared to vehicle-treated controls.

We believe the rapid and significant reductions in liver triglyceride content, combined with the reduction of total triglycerides within normal ranges for wild type animals, provide support for the continued development of VK2809 as a treatment for GSD Ia.

To that end, we recently filed an IND to advance VK2809 into a proof-of-concept study in patients with GSD Ia and we expect to begin dosing in this trial in the near term. Our second orphan disease program is evaluating our small molecule thyroid receptor agonist, VK0214, as a treatment for X-linked adrenoleukodystrophy or X-ALD.

X-ALD is a debilitating disease caused by a defect in a peroxisomal transporter called ABCD1. These patients are often characterized by the accumulation of very long chain fatty acids in plasma and tissue.

Sustained elevations in very long chain fatty acids are believed to contribute to the severe cerebral and motor neuron toxicities commonly observed in this disease. Activation of the thyroid beta receptor is believed to stimulate 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 2017, we along with our collaborators at the Kennedy Krieger Institute completed a 25-week study evaluating VK0214 in an animal model of X-ALD, called the ABCD1 knockout model. The results from this study were presented last October at the 87th Annual Meeting of the American Thyroid Association.

As we discussed on our last quarterly call, the data showed that treatment with VK0214 for 25 weeks led to significant reductions in plasma levels of multiple very long chain fatty acids, including the benchmark highly toxic C26 fatty acid.

Importantly, data from this study also showed that very long chain fatty acid levels in CNS tissues were significantly reduced, suggesting a potential direct benefit in both brain and spinal cord. In addition, the result showed improved expression of the compensatory transporter known as ABCD2 in both brain and liver tissue.

As I mentioned earlier, the accumulation of very long chain fatty acids is believed to contribute to the underlying pathology of X-ALD.

Thus, these data showing reduced very long chain fatty acids, as well as improved transporter expression, provide additional support for the role of selective thyroid receptor beta activation as a potential therapeutic approach to the treatment of X-ALD.

We are currently initiating IND enabling work and plan to file an IND for VK0214 by the end of 2018. With two clinical programs and two preclinical programs rapidly advancing, it is critical that we have adequate resources to continue development of our pipeline assets.

To that end, we recently raised $78 million in gross proceeds through two financings, one during the fourth quarter of 2017 and one during the first quarter of 2018.

Beyond providing the financial resources required to advance our programs, these financings strengthened Viking's shareholder base through the addition of multiple fundamental, long-term life science investors, and we are grateful for their support. As a result of these financings, we believe our runway currently extends into the 2020 timeframe.

In conclusion, with positive Phase 2 data for VK5211 in hip fracture, the promise of VK2809 in fatty liver disease and hypercholesterolemia, and encouraging proof-of-concept data from both our GSD Ia and X-ALD programs, we believe we have an exciting and diverse pipeline targeting multiple indications with high unmet need and representing substantial commercial opportunities.

Looking forward in 2018, we expect to continue our partnering discussions for VK5211, announce the results from our Phase 2 trial of VK2809, initiate a proof-of-concept trial of VK2809 in GSD Ia, and file an IND for VK0214 in X-ALD. We look forward to reporting our progress in each of these areas in the coming months.

This concludes our prepared statements for today. Thanks for your support and thanks for joining us. And I'd now like to open the call for questions.

Operator?.

[Operator Instructions] The first question comes from Jason McCarthy with Maxim Group. Please go ahead..

Brian, sounds like everything is going very well over there.

Just a couple of questions, first for VK5211, you mentioned that the time to meet with the FDA will be in the second half of this year, can you just give us a sense of how long after that you might expect to potentially initiate a Phase 3 program, and maybe what you might think the size of that program would be? And for VK2809, can you give us a sense, and I'm not sure if you mentioned it earlier, where the enrollment is today? And if you could just review with us what the endpoint to that trial is in cholesterol and reducing liver fat, because we have seen some interesting data lately within this class of molecules showing significant reductions in liver fat?.

So with the VK5211 program, we currently expect to request a meeting with the FDA that we would expect to occur likely later in the summer. And following that meeting, it's our intention to really seek a partner for further development of VK5211. At this point, we probably would not proceed further into a Phase 3 program.

It's probably best handled by someone with a bone franchise or a musculoskeletal franchise who is a little bit larger than us, and so the timing of that is a little bit unknown, pending a licensing agreement.

With VK2809, we are I think reasonably close to having that trial enrolled, but when we look at the calendar, it seems like it would be difficult to have the data available by the end of June.

So, we decided to push it into the second half, and so I don't think I would interpret that as December but that's probably all the guidance that we're going to give on that now..

Okay, great. Thank you for taking the question..

The next question comes from Scott Henry with ROTH Capital. Please go ahead..

Just two, couple of pipeline questions, did you disclose what the current size of the enrollment is currently for VK2809?.

So the trial is enrolling up to 60 patients with elevated LDL and non-alcoholic fatty liver disease..

Okay. It has taken a little longer than originally anticipated now, granted you have more resources as well.

Can you just talk about why it took a little bit longer and how it's kind of evolved over that time?.

Yes, we've discussed this previously. So, several factors sort of combined here. One of them is that we are requiring patients to have sort of a constellation of lipid abnormalities. They've got to have elevated LDL, they've got to have elevated triglycerides, they've got to have a minimum fat content in their liver.

So, it's a little different than simply looking at one of those metrics. Secondly, we are enrolling people who have a minimal cardiovascular disease risk, and so we are excluding Type 2 diabetics, and that's a pretty significant portion of the NASH population. We don't expect that to be required in further studies, but this is required in this study.

And then thirdly, and probably less importantly, there are a lot of other NASH trials ongoing, but that's probably not a major contributor to the challenges with enrollment. That said, it is enrolling and we are I think moving along with getting trial wrapped up..

Perfect. Thank you for that color.

And then on GSD Ia with the Phase 1 trial starting in 2018, would you expect that data by year-end?.

So it's a good question. I think we will have some initial data by the end of the year, and that would be a look at plasma triglycerides after 28 days. And so, we would expect that we should have some top line data on that metric at four weeks, yes..

Okay, great.

And then just a couple of modeling questions, when we think about R&D for 2018, if we think about $14 million in 2017, I would expect a bump-up in 2018, any color on how we should think about R&D for the full year in 2018?.

Yes, it is going to increase as the GSD study gets underway here and as the GLP talks work. It's underway for VK0214. So, I think when you look at total burn, we were typically below $1.5 million a month in 2017 and we'll probably be closer to $1.5 million to $2 million in burn per month in 2018, and that will be a combination of R&D and SG&A..

Okay, great. Thank you for taking the questions..

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

Thanks for the update and for taking the questions.

In regards to partnering 5211, I'm wondering if you're seeing or if you anticipate seeing any interest in other indications besides hip fracture, and if so, if you could talk about what those indications might be?.

It's a great question. And so, we did the study in hip fracture and showed this tremendous effect on muscle. I think maybe others have viewed those data as potentially interesting in a number of different indications. So, fracture definitely, and then replacement market, hip replacements and knee replacement.

But the larger markets that seem to have come up, and some of the discussions include cachexia and sarcopenia, and I think they are all really interesting areas, they all face I think similar challenges with what the regulatory path might look like, but I think people see the data as important for a much broader array of indications than simply hip fracture..

Okay.

And sorry if I missed this earlier, but did you mention what conference you are targeting for presentation of the 5211 data, and then is there going to be any additional follow-up data released from that study before that conference?.

So we are planning to submit an abstract to ASBMR Conference. That's at the end of September. And we do not yet have the 24-week data. So, this trial, as you'll remember, had a 12-week treatment period and then a 12-week follow-up period. We're expecting to receive the 12-week follow-up data later this month.

And so, we haven't yet received that, and we haven't decided whether or not we'll make the announcement there or include it in the abstract submission for the ASBMR Conference..

Okay. Thanks for taking the questions..

This concludes our question-and-answer session. I would like to turn the conference back over to Stephanie Diaz for any closing remarks..

Great, thank you, and thanks everyone for your participation and continued support of Viking Therapeutics. We look forward to updating you again in the coming months. Thank you..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..