Ventyx Biosciences, Inc. (NASDAQ:VTYX) Q4 2022 Earnings Call Transcript March 23, 2023
Operator: Good afternoon, ladies and gentlemen, and welcome to the Ventyx Biosciences Fourth Quarter and Full Year 2022 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. . 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. You may begin.
Marty Auster: Thank you, Chelsea. Good afternoon, everyone. Thanks for joining us today. Welcome to Ventyx’s Biosciences conference call and webcast, where we will be discussing our fourth quarter and full year 2022 financial results and providing a business update. As a reminder, the company’s most recent investor presentation can be found on our website at www.ventyxbio.com, under the Investors tab in the News & Events section. Before we begin today, I’d would 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, the anticipated timing of release of clinical trial data, the market opportunity for our product candidates, and the expected time frame for funding operations with current 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 reports filed with the SEC, including our Form 10-K for the year ended December 31, 2022 which will be filed this afternoon. 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 said, I’ll hand the call now over to Dr. Raju Mohan, Ventyx’s Founder and CEO.
Raju, please go ahead.
Raju Mohan: Thanks, Marty and thanks everyone for joining the call this afternoon. So here’s today’s agenda. I’m going to provide a high level business update, and then I’m going to hand the call over to Bill Sandborn, our President and Chief Medical Officers, and Bill will provide a little more color across all our pipeline programs. And finally Marty will wrap up with a brief overview of our full-year 2022 financial results before we open the call up for Q&A. So let me start with reiterating that 2022 was a year of outstanding progress and execution for Ventyx. I could not be prouder of our accomplishments as we continue to build an amazing team, strengthen our financial position and successfully advance our unique portfolio of internally discovered, wholly owned, small molecules that target large markets with high unmet medical need.
Recapping now, in the third quarter of 2022 we reported positive top line results from the Phase I trial of our novel allosteric TYK2 inhibitor, VTX-958. We believe these data demonstrate a potential best-in-class profile, including class leading IC-90 coverage of IL-23 and other TYK2 mediated cytokines. An excellent safety profile across all doses tested in the multiple ascending dose portion of the Phase 1 trial. As we had previously guided, we initiated three Phase 2 programs with VTX958 beginning with the SERENITY trial in moderate to severe plaque psoriasis; the HARMONY trial in moderate to severe active Crohn’s disease and the TRANQUILITY trial in active psoriatic arthritis, and as I said before, Bill is going to provide additional color on these trials.
In June of 2022 we reported positive Phase 1 data for our peripheral NLRP3 Inhibitor, VTX2735. With the completion of requisite CMC & Toxicology studies, VTX2735 is now a Phase 2 ready program. To that end, we today announced that we have initiated a Phase 2 proof of mechanism trial for VTX2735 in CAPS patients. Meanwhile, our novel CNS-penetrant NRLP3 inhibitor VTX3232 has completed IND-enabling studies and we look forward to initiating a Phase I trial later in the first half of this year. And we’ve achieved all of this while continuing to global Phase 2 trial of our potential, best in class S1P1 receptor modulators VTX002 in ulcerative colitis. We are pleased to report that this trial remains on track to complete enrollment by midyear, and we remain excited about the potential for VTX002 to differentiate from other S1P1 modulators and ulcerative colitis.
And with 2022 behind us, we held our R&D Day in New York in January and laid out our vision for what we believe will be a truly transformative year in 2023 for Ventyx. With a number of key clinical catalyst in the near term horizon, the cadence of data will start with top line Phase 2 data for VTX002 our S1P1 modulator and ulcerative colitis which is expected in the second half of the year, likely late Q3 or early Q4. We expect to report top line data from the Phase 2 SERENITY trial of VTX958 in plaque psoriasis later in Q4. And finally, we expect the Phase 2 data readouts for VTX958 in psoriatic arthritis and Crohn’s disease in 2024. So as you can see from my brief summary, there is tremendous amount of activity across our entire pipeline, but as always we remain committed to our mission, which is to bring safe and effective oral medicines to large immunology markets, currently dominated by biologics.
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So we look forward to sharing more updates with you as we progress throughout this year. But with that, I’m going to hand the call over to Bill for a more in-depth update on our pipeline programs. Bill.
Bill Sandborn: Thank you, Raju, and good afternoon everyone. I’m excited to provide a brief pipeline update today as we look forward to a very important year for Ventyx. I’ll begin with the VTX958. As we’ve mentioned, enrollment is underway in three Phase 2 trials of VTX958. This includes 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. We presented key aspects of these three Phase 2 trials at our R&D Day in January. I won’t repeat all of those details here, but it’s important to reiterate that across the three Phase 2 trials, we will explore a range of doses, including a high dose that is expected to approximate trough coverage of IL-23, IC90.
We believe that VTX958 is unique among TYK2 inhibitors and development and maybe the first to explore the therapeutic impact of near full inhibition of TYK2 pathways across relevant indications, resulting in potential biologic like suppression of IL-23 activity. We believe that this level of inhibition of IL-23 will be important for maximizing efficacy in psoriasis and psoriatic arthritis and this level of high level of target coverage will also likely be essential for exploring the opportunity in Crohn’s disease, where there is a particularly high unmet need for a safe and effective oral therapy and where we believed relatively higher exposures with biologic like target coverage will be required to achieve efficacy. Our team is laser focused on the execution of these trials, and we look forward to reporting top line data from the Phase 2 SERENITY trial and plaque psoriasis during the fourth quarter of this year.
We also continue to make progress on the development of an extended release tablet formulation for VTX958 for our once or QD dosing regimen in Phase 3, which is expected to simulate our class leading exposures in our Phase 2 trials. At our R&D day we also showed early data from our prototype extended release formulations that exhibit the desired release profile, both in Vitro Dissolution Assays and in Dynamic Vitro Modeling GI Modeling studies. These data give us great confidence in our ability to achieve our target product profile for the QD regimen. We look forward to updating you on these efforts in the middle part of the year after we have completed our initial inhuman testing of these promising prototypes. In the second half of 2023, we will initiate CMC activities on the extended release tablets to be Phase 3 ready, with the start of Phase 3 for psoriasis in 2024.
We have also initiated broader Phase 3 planning, and we will provide more details on this in the latter part of the year. Moving on to VTX002, I would now like to update you on the Phase 2 program for our potential best in class S1P1 receptor modulator for ulcerative colitis. At our R&D day, we laid out our strategic vision for this program and shared some very encouraging preliminary pharmacodynamic data from the open label extension on the ongoing Phase 2 trial. Among patients completing week 26, which includes 13 weeks of blinded therapy, followed by 13 weeks of open label therapy with VTX002 60 milligrams, as of January 15 we had observed a mean reduction from baseline in the absolute lymphocyte count of 74%, which we believe is clinically optimized in terms of pharmacodynamic response compared to the more limited absolute lymphocyte reduction achieved by etrasimod and ozanimod, which is in the 50% range.
As we live across the landscape of S1P modulators in multiple sclerosis and ulcerative colitis, we believe that there is a clear and consistent positive correlation between the pharmacodynamic effect as measured by the absolute lymphocyte count and clinical efficacy, with S1P modulators in multiple sclerosis, establishing both the efficacy benefits, as well as an extensively characterized safety profile of ALC reductions in the 70% to 80% range. Although extensively studied in these multiple sclerosis trials, exploration of the upper part of the safe, achievable ALC reduction has to-date not been adequately explored in ulcerative colitis. Our Phase 2 trial is designed to explore this hypothesis in UC with our 30mg dose expected to achieve a pharmacodynamic effect similar to or somewhat higher than etrasimod and ozanimod, whereas our 60mg dose is expected to achieve best in class absolute lymphocyte reductions in the 70% to 80% range.
And with an early look at our open label extension data showing a 74% mean reduction from baseline in the ALC with the 60mg dose, we believe we are tracking right on target, and we are optimistic that our dosing strategy targeting this magnitude of ALC reduction may translate to best in class efficacy profile in ulcerative colitis. So we are very excited about the potential of VTX002 and we continue to make great progress in enrolling this trial. We are well on track to wrap up enrollment by midyear in line with our prior guidance, and we look forward to reporting top line results in the second half of the year. And similar to the planning with VTX958, we have begun a wide range of other Phase 3 enabling studies for VTX002. Next, I’ll briefly discuss our NLRP3 inhibitor portfolio.
As Raju mentioned, we’re pleased to announce today that we’ve initiated a Phase 2 proof of mechanism trial of our peripheral NRLP3 inhibitor VTX2735 in cryopyrin associated periodic syndrome or CAPS, a group of rare autoinflammatory conditions caused by a gain of function mutations in the NLRP3 gene. Specifically, we’re targeting patients with the familial cold autoinflammatory syndrome or FACS, which is the most common subpopulation of CAPS. This trial represents an opportunity for us to efficiently demonstrate clinical proof of mechanism for VTX2735 and a defined patient population with mutations in the NLRP3 gene, where we know that IL-1β antibodies have already been proven effective. Longer term, we continue to see great potential for systemic NLRP3 inhibition in a range of chronic inflammatory conditions that are characterized by NLRP3-induced excess production of IL-1β, including various dermatologic, rheumatologic and cardiovascular diseases.
Finally, we remain on track to initiate a Phase 1 trial of our novel CNS-penetrant NRLP3 inhibitor, VTX3232, during the first half of this year. We expect this trial will characterize the safety target engagement and CNS bioavailability of VTX3232 in healthy volunteers. As we highlighted at our R&D day, we believe that the profile of VTX3232 may define it as a class leading therapeutic for a range of neural inflammatory conditions with a high end medical need. These could include Parkinson’s disease, Alzheimer’s disease and amyotrophic lateral sclerosis among other. We’re very excited about this program, and we look forward to advancing VTX3232 into the clinic in the upcoming months. This concludes our pipeline update for today. In summary, we continue to make great progress across the pipeline with five Phase II trials now underway, and we look forward to generating very meaningful Phase 2 clinical data for VTX002 and VTX958 beginning later this year.
None of this happens without a great deal of dedication and diligence for our team, and so I want to echo Raju’s sentiments and thank the whole Ventyx team for their ongoing efforts. Before we move to Q&A, I’d like to hand the call back to Marty Auster for a brief discussion of our financial results. Marty.
Marty Auster: Yes, thanks Bill. You’ll find our financial results for the fourth quarter and full year in our press release, and I’ll summarize just the full year results here and now. R&D expenses were $87.7 million for the year ended December 31, 2022, compared to $58.5 million for the year ended in in 2021. This increase reflects the advancement of our pipeline into later stages of clinical testing, including execution of the ongoing Phase 2 trial of VTX0002 in ulcerative colitis as well as Phase 2 preparation start-up activities for the VTX958 in psoriasis Crohn’s disease and psoriatic arthritis. G&A expenses grew to $25.4 million in 2022 compared to $8.7 million in 2021, reflecting the buildup of our corporate infrastructure.
Net loss was $108.4 million for the year ended December 31, 2022 compared to $83.7 million for the year ending in 2021. Cash, cash equivalents and marketable securities were $356.6 million as of December 31, 2022. Subsequent to the end of the year, in early 2023 we raised $48.4 million in net proceeds through our At-the-market or ATM program, resulting in adjusted total cash and cash equivalents balance of $405 million. As we spoke on our last quarterly call, we expect our operating expenses to continue to increase throughout 2023 as a function of increased clinical costs associated with our five ongoing Phase 2 trials with VTX958, VTX002 and VTX2735, as well as CMC activities which we’ll be undertaking to prepare the company for our future Phase 3 trials for VTX002, VTX958 and the rest of the pipeline.
While we may experience some quarter-to-quarter variability in our operating results, the general trend will likely be higher over the course of the year, and we continue to believe our current cash, cash equivalents and marketable securities are sufficient to plant support plant operations into 2025. This concludes our prepared remarks for our afternoon’s call, and I’ll now turn the call back to the operator to begin the Q-and-A session, and I’ll be joined there by Raju and Bill. Operator?
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Q&A Session
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Operator: Thank you, sir. Our first question will come from Michael Yee with Jefferies. Your line is open.
Michael Yee : Hello! Thanks for the question. I had a question, two part question for Bill maybe. I guess recently we saw some data from a second generation TYK2; had some better positive data in psoriasis, but I’m interested in your views about how much better that was when the first generation TYK2 and what the implication is for what you can show as your psoriasis data as a second generation. So maybe talk about what your expectation is now for your psoriasis data we just saw. And then secondly, based on that maybe through that versatile, we’ll be needing some higher doses in Crohn’s disease, and therefore what you would expect out of that and what that would mean for you as well? Thank you.
Raju Mohan: Yeah, Bill.
Bill Sandborn : Beginning with the next generation TYK2 inhibitor where data was reported, I think what we saw was that the higher dose that were greater rates of PASI-75, 90 and 100 and what was seen in the Phase 3 studies of deucravacitinib with the 6mg once a day dose, and we believe that the IC sort of 70 and coverage is generally more robust with the next generation product, so that to our way of thinking, it really fits with our premise for VTX958, that more intensive target coverage will lead to greater efficacy. I think it’s encouraging that you saw the greatest level of PASI-100 with the dose of that product that got a little bit of IC-90 coverage in the five or six hour range, and you know just to reiterate, the higher doses that we’ve taken forward will have substantial or complete IC-90 coverage over 24 hours.
For Crohn’s disease, what we know from the relationship between TYK2 inhibition and IL-23 antibiodies is that the doses that are required to see efficacy in Crohn’s disease and the same would be true of ulcerative colitis, is that you need doses of antibody that are at least as great as what gave maximal PASI-75, 90 and 100 rates in psoriasis. And so far the doses studied with deucravacitinib, even investigational doses of six twice a day or 12 once a day would not generate any level of IC-90 coverage, and so I would expect that it will be harder to demonstrate efficacy in Crohn’s disease, but we’ll see.
Michael Yee : Thank you.
Operator: Thank you. Our next question will come from Yasmeen Rahimi with Piper Sandler. Your line is open.
Yasmeen Rahimi : Good afternoon, team, and congrats on all the great updates. I guess following on to the question that Mike had in regard to the competitor data. One of the question that a lot of clients are asking us is in regards to a plateauing effect that was observed with their programs as you recall at the 15mg and 30mg dose group, the PASI reductions were very identical. And so the question being raised, is there just a function of just something in the molecule or what why was it that you’re reaching the plateau, given that there must have been differences on IC-90 coverage between 15mg and 30mg and how do we know moving forward with the doses you are going with, that there’s not really a plateau. I greatly appreciate any of your comments there.
And then in regards to, for Dr. Sandborn, if you could just give us a little bit more color in terms of how enrollment is progressing into SERENITY and maybe to the extent you could comment on whether it’s going to be maybe early on the 4Q or later in 4Q for data and then I’ll jump back right into the queue for maybe for a follow-up. Thanks.
