What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-10 compared with 2022-02-09 · 35 added, 34 removed, 185 unchanged (27% of the section changed)

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Secondary objectives include evaluation of histologic changes assessed by hepatic biopsy after 52 weeks of dosing.

In January 2023, we announced completion of patient enrollment in the VOYAGE study and expect to report data for the study’s primary endpoint in the first half of 2023.

VK2809 has been evaluated in eight completed clinical studies, which enrolled more than 300 subjects.

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Pending a blinded review of preliminary safety, tolerability, and pharmacokinetic data, additional dosing cohorts may be pursued.

The primary objectives of the study are to evaluate the safety and tolerability of VK0214 administered once-daily over a 28-day dosing period.

The primary objective of the study is to evaluate the safety and tolerability of VK0214 administered once-daily over a 28-day dosing period.

Secondary and exploratory objectives include an evaluation of the pharmacokinetics and pharmacodynamics of VK0214 following 28 days of dosing in this population.

In January 2022, we announced that this Phase 1b trial of VK0214 in patients with X-ALD has been placed on clinical hold by the United States Food and Drug Administration, or FDA.

The FDA has requested an additional preclinical study prior to continuing the Phase 1b trial of VK0214 in X-ALD.

The request is not due to any findings from ongoing or previously completed studies.

We expect to provide the information to the FDA in the second quarter of 2022.

In January 2022, we initiated a Phase 1 single ascending dose, or SAD, and multiple ascending dose, or MAD, clinical trial of VK2735, a novel dual agonist of the glucagon-like peptide 1, or GLP-1, and glucose-dependent insulinotropic polypeptide, or GIP, receptors.

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VK5211 demonstrated encouraging safety and tolerability in this study, with no drug-related SAEs reported.

Our intent is to continue to pursue partnering or licensing opportunities prior to conducting additional clinical studies.

Our intent is to continue to pursue partnering or licensing opportunities for VK5211 prior to conducting additional clinical studies.

We were incorporated under the laws of the State of Delaware on September 24, 2012.

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Clinical site initiation and patient enrollment have been, and may continue to be delayed due to the prioritization of hospital resources toward the COVID-19 pandemic.

Some patients have not been able to, and others may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services.

Similarly, any inability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact our clinical trial operations.

The severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on our service providers, suppliers, contract research organizations, or CROs, and our clinical trials, all of which are uncertain and cannot be predicted, as well as the timing, rollout and availability of vaccines worldwide and the effectiveness thereof, and the willingness of the general population to be vaccinated.

As of the date of issuance of our financial statements, the extent to which the COVID-19 pandemic may materially impact our financial condition, liquidity or results of operations is still uncertain.

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Research and Development Expenses

During the year ended December 31, 2021, we charged $45.0 million to research and development expense primarily related to our efforts in continuing to conduct the VK2809 Phase 2b VOYAGE clinical trial, completing the VK0214 Phase 1 SAD and MAD study in healthy patients, preparing for and initiating the VK0214 Phase 1b trial and preparing for the initiation of the VK2735 Phase 1 trial.

During the year ended December 31, 2020, we charged $31.9 million to research and development expense primarily related to our efforts in continuing to conduct the VK2809 Phase 2b VOYAGE clinical trial as well as preparing for and initiating the VK0214

Phase 1 SAD and MAD study in healthy patients.

During the year ended December 31, 2022, we incurred $54.2 million in research and development expense primarily related to our efforts in conducting the VK2809 Phase 2b VOYAGE clinical trial, the VK0214 Phase 1b clinical trial and the VK2735 Phase 1 clinical trial.

During the year ended December 31, 2021, we incurred $45.0 million in research and development expense primarily related to our efforts in conducting the VK2809 Phase 2b VOYAGE clinical trial and the VK0214 Phase 1 clinical trial in healthy subjects, preparing for and initiating the VK0214 Phase 1b clinical trial and preparing for the initiation of the VK2735 Phase 1 clinical trial.

We expect that our ongoing research and development expenses will consist of costs incurred for the development of our drug candidates, including, but not limited to:

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Research and development expenses

The increase in research and development expenses during the year ended December 31, 2021 as compared to the year ended December 31, 2020 was primarily due to increased expenses related to our clinical studies of $7.2 million, pre-clinical studies of $3.3 million, manufacturing for our drug candidates of $2.2 million, third-party consultants of $291,000 and stock-based compensation of $265,000, partially offset by a decrease in salaries and benefits of $180,000 and placement fees of $105,000.

The increase in research and development expenses during the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily due to increased expenses related to manufacturing for our drug candidates, pre-clinical studies, salaries and benefits and stock-based compensation, partially offset by a decrease in services provided by third-party consultants and clinical studies.

General and Administrative Expenses

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General and administrative expenses

The decrease in general and administrative expenses during the year ended December 31, 2021 as compared to the year ended December 31, 2020 was primarily due to decreased expenses related to salaries and benefits of $355,000 and legal services of $75,000, partially offset by increased expenses related to insurance of $149,000, professional fees of $125,000, services provided by third-party consultants of $101,000 and stock-based compensation of $18,000.

The increase in general and administrative expenses during the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily due to increased expenses related to legal services, stock-based compensation, salaries and benefits, and insurance, partially offset by decreased expenses related to professional fees and services provided by third-party consultants.

Other Income (Expense)

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Other income (expense)

Other income (expense) recognized during the year ended December 31, 2021 consisted primarily of interest income of $703,000 and foreign exchange gain of $7,000, offset by expense relating to the amortization of certain financing costs of $18,000.

Other income (expense) recognized during the year ended December 31, 2020 consisted primarily of interest income of $3.3 million, offset by expense relating to the amortization of certain financing costs of $106,000.

Other income (expense) recognized during the year ended December 31, 2022 consisted primarily of interest income, offset by expense relating to the amortization of certain financing costs and realized loss on investment.

Other income (expense) recognized during the year ended December 31, 2021 consisted primarily of interest income and foreign exchange gain, offset by expense relating to the amortization of certain financing costs.

Liquidity and Capital Resources

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As such, we believe our cash, cash equivalents and short-term investments will be sufficient to fund our operations through at least the first quarter of 2024, which is more than one year after the date our December 31, 2022 financial statements were issued.

Our primary use of cash is to fund operating expenses, which to date have consisted of the cost to obtain the license of intellectual property from Ligand, certain research and development expenses related to furthering the development of VK2809, VK0214 and VK5211, and general and administrative expenses.

Our primary use of cash is to fund operating expenses, which to date have consisted of the cost to obtain the license of intellectual property from Ligand, certain research and development expenses related to furthering the development of VK2809, VK2735, VK0214 and VK5211, and general and administrative expenses.

Since we have not generated any revenues to date, we have incurred operating losses since our inception.

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Wainwright & Co.

LLC, or each an Agent and, together, collectively, the Agents, pursuant to which we may offer and sell, from time to time, through or to the Agents, as sales agent or principal, or the ATM Offering, shares of our common stock having an aggregate offering price of up to $125.0 million, or the ATM Shares.

Any ATM Shares offered and sold in the ATM Offering are to be issued pursuant to the Shelf Registration Statement and the 424(b) prospectus supplement relating to the ATM Offering dated July 28, 2021.

LLC, collectively, the Agents, pursuant to which we may offer and sell, from time to time, through or to the Agents, as sales agent or principal, or the ATM Offering, shares of our common stock having an aggregate offering price of up to $125.0 million, or the ATM Shares.

The Shelf Registration Statement will expire on August 11, 2024.

No shares of our common stock were sold under the ATM Agreement from its inception through December 31, 2021.

On March 17, 2020, our board of directors authorized a stock repurchase program, whereby we may purchase up to $50.0 million in shares of our common stock and outstanding warrants to purchase our common stock, over a period of up to two years, or the Repurchase Program.

From its inception through December 31, 2022, 1.4 million shares of our common stock were sold under the ATM Agreement for aggregate net proceeds to us of approximately $11.7 million.

On March 17, 2020, our board of directors authorized a stock repurchase program, whereby we could purchase up to $50.0 million in shares of our common stock and outstanding warrants to purchase our common stock, over a period of up to two years, or the Repurchase Program.

The Repurchase Program may be carried out at the discretion of a committee of our board of directors through

open market purchases, one or more Rule 10b5-1 trading plans, block trades or privately negotiated transactions.

Through December 31, 2021, no shares of our common stock or warrants to purchase our common stock were repurchased by us under the Repurchase Program.

Through March 17, 2022, the termination date of the Repurchase Program, we repurchased an aggregate of 1,464,217 shares of our common stock under the Repurchase Program.

These shares repurchased by us under the Repurchase Program are being held in treasury until such time as we reissue or retire them.

On March 10, 2022, our board of directors authorized a new stock repurchase program effective March 18, 2022, whereby we may purchase up to $50.0 million in shares of our common stock over a period of up to two years, or the New Repurchase Program.

The New Repurchase Program may be carried out at the discretion of a committee of our board of directors through open market purchases, one or more Rule 10b5-1 trading plans, block trades and in privately negotiated transactions.

Through December 31, 2022, we repurchased an aggregate of 729,034 shares of our common stock under the New Repurchase Program.

These shares repurchased by us under the New Repurchase Program are being held in treasury until such time as we reissue or retire them.

The following table summarizes our cash flows for the periods indicated below (in thousands):

Cash used in operating activities

Cash provided by investing activities

Cash provided by financing activities

Cash Used in Operating Activities

During the year ended December 31, 2021, cash used in operating activities of $47.6 million primarily reflected our net losses for the period, adjusted by non-cash charges such as stock-based compensation, amortization of investment premiums, amortization of right of use assets, amortization of financing costs, and interest expense related to operating lease liability as well as changes in our working capital accounts, primarily consisting of an increase in accrued interest, net of interest received on maturity of investments and a decrease in lease liability, partially offset by an increase in prepaids and other current assets and a decrease in accounts payable and accrued expenses.

During the year ended December 31, 2020, cash used in operating activities of $21.8 million primarily reflected our net losses for the period, adjusted by non-cash charges such as stock-based compensation, amortization of investment premiums, amortization of financing costs and amortization of right of use asset as well as changes in our working capital accounts, primarily consisting of an increase in accrued interest, net of interest received on maturity of investments, accounts payable and accrued expenses and a decrease in prepaid expenses and lease liability.

Cash Provided by Investing Activities

During the year ended December 31, 2021, cash provided by investing activities of $38.0 million resulted primarily from the proceeds of maturities of investments of $206.0 million, partially offset by the purchase of investments of $168.0 million.

During the year ended December 31, 2020, cash provided by investing activities of $41.6 million resulted primarily from the proceeds of sales and maturities of investments of $322.2 million, partially offset by the purchase of investments of $280.6 million.

Cash Provided by Financing Activities

During the year ended December 31, 2021, cash provided by financing activities was $6.9 million, which consisted primarily of proceeds from certain warrant exercises of $7.1 million and proceeds from certain stock option exercises and ESPP purchases of $569,000, partially offset by the value of shares withheld to cover taxes of $707,000.

During the year ended December 31, 2020, cash provided by financing activities was $950,000, which consisted primarily of proceeds from certain warrant exercises of $854,000 and proceeds from certain stock option exercises and ESPP purchases of $418,000, partially offset by the value of shares withheld to cover taxes of $296,000 and payments of certain financing costs of $26,000.

Net cash used in operating activities

Net cash provided by investing activities

Net cash provided by financing activities

Net Cash Used in Operating Activities

During the year ended December 31, 2022, net cash used in operating activities of $48.4 million primarily reflected our net losses for the period, adjusted by non-cash charges such as stock-based compensation, amortization of investment premiums, amortization of right of use assets, amortization of financing costs, and interest expense related to operating lease liability as well as changes in our working capital accounts, primarily consisting of an increase in accounts payable, accrued expenses and accrued interest, net of interest received on maturity of investments, partially offset by a decrease in lease liability and an increase in prepaids and other current assets.

During the year ended December 31, 2021, net cash used in operating activities of $47.6 million primarily reflected our net losses for the period, adjusted by non-cash charges such as stock-based compensation, amortization of investment premiums, amortization of right of use assets, amortization of financing costs, and interest expense related to operating lease liability as well as changes in our working capital accounts, primarily consisting of an increase in accrued interest, net of interest received on maturity of investments and a decrease in lease liability, partially offset by an increase in prepaids and other current assets and a decrease in accounts payable and accrued expenses.

Net Cash Provided by Investing Activities

During the year ended December 31, 2022, net cash provided by investing activities of $54.8 million resulted from the proceeds of maturities of investments of $176.2 million, partially offset by the purchase of investments of $121.4 million.

During the year ended December 31, 2021, net cash provided by investing activities of $38.0 million resulted from the proceeds of maturities of investments of $206.0 million, partially offset by the purchase of investments of $168.0 million.

Net Cash Provided by Financing Activities

During the year ended December 31, 2022, net cash provided by financing activities was $4.2 million, which consisted primarily of proceeds from the ATM Offering, net of fees of $11.7 million, proceeds from certain warrant exercises of $633,000 and proceeds from ESPP purchase of $215,000, partially offset by $6.8 million in repurchases of our common stock under the Repurchase Program and the New Repurchase Program and the value of shares withheld to cover taxes of $1.5 million.

During the year ended December 31, 2021, net cash provided by financing activities was $6.9 million, which consisted primarily of proceeds from certain warrant exercises of $7.1 million and proceeds from certain stock option exercises and ESPP purchases of $569,000, partially offset by the value of shares withheld to cover taxes of $707,000.

Future Funding Requirements

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We will need to raise additional capital to fund our operations and complete our ongoing and planned clinical trials.

Although we expect to finance future cash needs through public or private equity or debt offerings, funding may not be available to us on acceptable terms, or at all.

Although we expect to finance future cash needs through public or private equity or debt offerings, funding may not be

available to us on acceptable terms, or at all.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis