Ventyx Biosciences, Inc. (NASDAQ:VTYX) Q2 2023 Earnings Call Transcript

Ventyx Biosciences, Inc. (NASDAQ:VTYX) Q2 2023 Earnings Call Transcript August 13, 2023

Operator: Good afternoon, ladies and gentlemen, and welcome to the Ventyx Biosciences Second Quarter 2023 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the call over to Dr. Marty Auster, Ventyx’s Chief Financial Officer. Sir, you may begin.

Marty Auster: Thank you. Good afternoon, everyone. Welcome to Ventyx’s Biosciences conference call and webcast where we will be discussing our second quarter 2023 financial results and providing a business update for you. As a reminder, the company’s most recent investor presentation can be found on our website at www.ventyxbio.com, under the Investors News & Events section. Before we begin today, I’d like to remind everyone that this conference call and webcast will contain forward-looking statements about the company including without limitation statements about the anticipated timing of commencement, enrollment and completion of clinical trials for our product candidates, the anticipated timing of release of clinical trial data, the market opportunity for our product candidates and the expected timeframe for funding operations with our current cash, cash equivalents and marketable securities.

These statements are subject to risks and uncertainties that could cause actual results to differ. Factors that could cause actual results or outcomes to differ materially from those expressed and/or implied by such forward-looking statements are discussed in greater detail in our most recent periodic reports filed with the SEC, including our Form 10-Q for the quarter ended June 30, 2023, which I filed just a few minutes ago. Please note that these forward-looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events, except as required by law. With that, I’ll hand the call over now to Dr. Raju Mohan, Ventyx’s Founder and CEO.

Raju, please go ahead.

Raju Mohan: Thanks, Marty, and good afternoon, everyone. Thank you for joining our second quarter 2023 financial results conference call. It’s hard to believe that we are already in August and how the first half has flown by. As you may have recalled from the R&D discussions in January and from recent press releases, it’s been a tremendously productive first half of the year for Ventyx, and I am very proud of our team’s execution across the entire pipeline. So let me run through this afternoon’s agenda. I will begin by providing a high level business update. And then I’ll hand the call over to Bill Sandborn, our President and Chief Medical Officer, who will provide updates across our drug development programs. And finally, Marty will present an overview of our second quarter 2023 financial results before opening the call for Q&A.

So let me start by saying at Ventyx, we’ve always believed that novel oral therapies are poised to play a significant long-term role in the treatment of numerous immune diseases indications that are currently dominated by injectable biologics, including indications such as psoriasis, inflammatory bowel disease, psoriatic arthritis, lupus and others. These large but underpenetrated markets currently exceed over $50 billion in annual sales. And we believe that as clinicians and patients are offered the choice of using a pill, an oral drug, instead of an injectable therapy, there is the potential for a meaningful shift in market share, as well as a general expansion of the treated populations in each of the diseases I referenced earlier. We have seen an overall increase in excitement around the promise of oral therapies, encompassing different targets and indications.

And we believe that our portfolio of internally discovered compounds positions us at the forefront of this revolution in oral therapies. And I am proud we are currently conducting five Phase 2 trials across our wholly-owned pipeline of novel small molecules. Let me begin with the compounds. As you know, our allosteric TYK2 inhibitor VTX958 is in Phase 2 development for plaque psoriasis, Crohn’s disease, and psoriatic arthritis, all diseases where TYK2 plays a direct role in modulating IL-23, a key cytokine implicated in the pathology of disease progression. As previously discussed, we are aiming to achieve trough coverage of TYK2 IC90 at the highest Phase 2 dose across all the trials. In June, we announced that we completed patient enrollment in the Phase 2 SERENITY trial of VTX958 in moderate to severe plaque psoriasis.

This is an important milestone for Ventyx, and I’d like to thank the entire team for all their efforts. With enrollment now complete, we look forward to reporting top line data from the Phase 2 SERENITY trial in the fourth quarter of this year. On the development of an extended release tablet, ER tablet for VTX958, we continue to make progress towards the target product profile and remain confident that we will have an optimized once daily tablet to advance into Phase 3 trials in 2024. As previously discussed, our development strategy incorporates an iterative process that allows us to sequentially evaluate multiple prototype formulations in humans. We look forward to providing a detailed update in the fourth quarter. In June, we announced that we completed enrollment in the ongoing Phase 2 trial of VTX002 in patients with moderate to severely active ulcerative colitis.

I’d like to again congratulate the Ventyx team on this important milestone. We look forward to reporting top line results from this trial early in the fourth quarter of this year. We believe we are the first company to demonstrate a greater magnitude of reduction in absolute lymphocyte counts, or ALC, relative to etrasimod and ozanimod in similar Phase 2 trials. We believe we are exploiting the full potential of this mechanism by a greater direction of ALC, a validated biomarker and believe that this may translate into differentiator efficacy relative to other drugs developed for ulcerative colitis. Our aspiration for this asset have always been very clear, which are to demonstrate efficacy in moderate to severe UC patients that is differentiated from both etrasimod and Zeposia, ozanimod, and it’s competitor with or superior to levels achieved by biologics.

This efficacy profile, if achieved, should position VTX002 as a potential class leading safe oral agent in UC, and Bill will provide more color on progress of this trial. Beyond these lead programs, we continue to advance our novel NLRP3 inhibitor portfolio, including our peripheral compound VTX2735, which is now in Phase 2 trials in CAPS patients and our CNS-penetrant NLRP3 inhibitor VTX3232 for which we recently announced initiation of dosing in Phase 1 trial in healthy volunteers. So in summary, I’m very proud of our team’s execution during the first half of the year. And we look forward to generating important Phase 2 data for both VTX002 and VTX958 in the fourth quarter. So with that, I’ll hand the call over to Bill for a more detailed pipeline discussion.

Bill?

Bill Sandborn: Thank you, Raju, and good afternoon, everyone. I’m excited to provide a brief pipeline update today and to highlight recent progress across our portfolio. I’ll begin with our allosteric TYK2 inhibitor VTX958. You will recall that we have three ongoing Phase 2 trials for VTX958, the SERENITY trial in moderate to severe plaque psoriasis, the HARMONY trial in moderately to severely active Crohn’s disease and the TRANQUILITY trial in active psoriatic arthritis. As Raju mentioned, we announced in June that we completed patient enrollment in the SERENITY trial in plaque psoriasis. The SERENITY trial includes a target enrollment of approximately 200 patients, randomized to one of four VTX958 doses or to placebo. And the primary efficacy endpoint is the proportion of subjects achieving PASI 75 at week 16.

As previously disclosed, we are exploring multiple dose cohorts in this Phase 2 trial ranging from an anticipated minimally therapeutic dose at the low end to a high dose that is expected to achieve TYK2 IC90 coverage at trough as measured by IL-12 and 23. Our team did an excellent job enrolling this trial in and around six months, with enrollment now complete and we are very excited to report top line data from the Phase 2 SERENITY trial during the fourth quarter. In addition to the SERENITY trial, we continue to make progress enrolling the HARMONY trial in Crohn’s disease and the TRANQUILITY trial in psoriatic arthritis and we expect to have more to say about our progress on these trials before the end of the year. Now moving to VTX002, our potential best-in-class S1P1 receptor modulator in development for ulcerative colitis at the Phase 2 stage.

Recall that we have previously shared data from Phase 2 open label extension demonstrating that our high dose of 60 milligrams is achieving steady state absolute lymphocyte count reductions in the approximately 70% or more range as compared to approximately 50% for etrasimod and ozanimod. And our thesis remains that this differentiated pharmacodynamic effect may translate into improved efficacy in ulcerative colitis based on our analysis of consistent observed efficacy driven dose response across both ulcerative colitis and multiple sclerosis trials evaluating S1P1 receptor modulators. As Raju mentioned, we announced in June that we completed enrollment in the ongoing Phase 2 study of VTX002 in patients with moderately to severely active ulcerative colitis.

This trial includes a target enrollment of approximately 180 patients randomized to one of VTX002 doses or placebo for a 13-week induction treatment period, followed by a 39-week blinded long-term extension period. The primary endpoint is the proportion of subjects achieving clinical remission at week 13, as defined by the modified Mayo score. I want to join Raju in congratulating the team on this accomplishment. It is no small feat to enroll a large Phase 2 ulcerative colitis trial in a challenging and dynamic environment. And I’m grateful for the dedication and perseverance of our team. We are now looking forward to reporting top line data from this trial early in the fourth quarter. We expect to report Phase 2 top line data for VTX002 in ulcerative colitis ahead of the Phase 2 top line data for VTX958 in psoriasis.

Finally, I’ll touch briefly on our portfolio of novel NLRP3 inhibitors. We announced in June that we had initiated dosing in a Phase 1 trial of our CNS-penetrant NLRP3 inhibitor VTX3232 in healthy volunteers. This is a two-part single ascending and then multiple ascending dose trial designed to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of VTX3232, including serial cerebrospinal fluid sampling to assess CNS exposure. We have a Phase 2 proof of concept trial underway with VTX2735, our peripheral NLRP3 inhibitor and familial cold autoinflammatory syndrome, or FCAS, which is the most common subpopulation of cryopyrin-associated periodic syndrome, or CAPS. I’ll reiterate that with both of our NLRP3 inhibitors, our goal is to establish a potential best-in-class profile in terms of safety, pharmacokinetics and pharmacodynamics, and to ensure that these compounds are Phase 2 ready.

We believe that this approach will create strategic optionality and will unlock the value of these programs in a wide range of indications for future development. With peripheral NLRP3 inhibition, this includes large cardiovascular, dermatologic and rheumatic disease indications and within NLRP3 inhibition in the CNS, this includes neurodegenerative diseases, such as Parkinson’s disease and Alzheimer’s disease, among others. In conclusion, this is a very exciting period for Ventyx with important top line Phase 2 data for VTX002 and VTX958 just around the corner in the fourth quarter of this year. I’d like to thank our team again for their efforts during the quarter. Before moving on to question-and-answer, I’ll hand the call back to Marty for a brief discussion of our financial results.

Marty?

Marty Auster: Thanks, Bill. So you’ll find more detail on our financial results in the press release issued after the bell today as well as in our 10-Q which filed also after market closed today. I’ll summarize the second quarter results briefly here though. R&D expenses in the quarter were 48.6 million compared to 14.7 million in the second quarter of 2022, and this reflects the advancement of our pipeline into later stages of clinical testing, including the execution of the ongoing Phase 2 trial of VTX002 in ulcerative colitis and the broader Phase 2 program for VTX958 with Phase 2 trials being conducted in psoriasis, Crohn’s disease and psoriatic arthritis. G&A expenses were 8.6 million for the second quarter 2023 compared to 5.7 million in the year ago period, reflecting growth of the company and net loss of 53.3 million for the second quarter of 2023 compares to a net loss in the second quarter of ’22 of 20.0 million.

Cash, cash equivalents and marketable securities were 332.3 million as of June 30, 2023. This compares to 376.9 million in cash, cash equivalents and marketable securities on March 31, 2023. We continue to believe our current cash equivalents and marketable securities are sufficient to support our planned operations into 2025. This concludes our prepared remarks for the afternoon’s call, and I’ll now turn the call back over to the operator to begin the Q&A session. And I’ll be joined by our CEO, Raju Mohan; President and CMO, Bill Sandborn; and our CBO, Chris Krueger. Operator?

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Q&A Session

Operator: Thank you, sir. At this time, the floor is now open for questions. [Operator Instructions]. Thank you. And our first question will come from Michael Yee with Jefferies.

Michael Yee: Hi, guys. Thanks for the question and thanks for the updates today. Maybe a two-part question on the upcoming TYK2 results for you. I know a lot of people kind of point to Bristol’s data, BID dosing, you kind of get to 67%, 69% PASI 75. You looked at some of the Nimbus data. I guess they were in that range, and then at 33% PASI 100. How do you think about where you want to be relative to the profile of some of those? I guess, higher the better, of course, but what would you want to see there to say, hey, look, we’re better at crosstalk person [ph]. And then the second part of that is, what does that lead you to believe for Crohn’s, which would then follow that? And maybe it’s the PD marker for IL-13. So maybe Bill could walk through what you see in psoriasis? And then how does the IL-13 data play into that to give you confidence on the Crohn’s? Thank you.

Raju Mohan: Yes. Thanks, Michael. So, Bill, why don’t you — you can take both of those.

Bill Sandborn: Yes. So I think in terms of where we would like to arrive, really if we get into the zone that the Nimbus-Takeda product achieved, especially where you see the PASI 100 up into the 30s, that’s really getting up into a solid area of efficacy from an oral agent. And that’s generally the zone that was seen recently with the protagonist Janssen oral IL-23 antagonist as well. And then — but all of these are somewhat short of what you see with the monoclonal antibodies to IL-23. And so I think the aspirational floor has been set with some of these other oral sort of second generation agents, and you want to hit into that zone, and above that would be further differentiating. So that’s sort of how we see it, and where we would hope to land as a low watermark.

Michael Yee: And then how about — what the read-through that is to Crohn’s? And is it the PD data that you see or maybe just clarify that that gives you the confidence?

Bill Sandborn: Yes. We’re, of course, speculating on read-through to Crohn’s. So what we know is that with deucravacitinib, doses of 6 twice a day or 12 once a day have not been effective for ulcerative colitis and Crohn’s disease. And of course, those total daily doses or regimens are both twice the 6 milligrams once a day dose that’s approved for psoriasis with sort of moderate efficacy. And then we know with biologics with inhibition of either interleukin 12, 23 with Stelara or inhibition of interleukin 23 alone with Skyrizi or Tremfya and mirikizumab and others, that the doses that had been required to optimize efficacy in Crohn’s disease are higher than the doses that sort of plateaued efficacy for psoriasis. So it’s reasonable to speculate that you would need that more intense target coverage for Crohn’s disease as well with blocking interleukin 23 and interleukin 12 with TYK2 inhibition.

We, of course, need to generate primary data to show that and our trials are designed to do that. So while we have four different active dosing groups in the psoriasis trial across a wide range of doses and exposures, as I had described a few minutes ago, in Crohn’s disease, we have just two active doses, and they’re the two highest active doses from the psoriasis trial. So we’re emphasizing high exposure with the hypothesis that greater exposure will be required in Crohn’s disease. And we anticipate being able to read that Crohn’s trial out next year.

Michael Yee: Thank you.

Operator: Thank you. Our next question will come from Alex Thompson with Stifel.