Ventyx Biosciences, Inc. (NASDAQ:VTYX) Q1 2024 Earnings Call Transcript May 11, 2024

Ventyx Biosciences, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, ladies and gentlemen and welcome to the Ventyx Biosciences First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Dr. Martin Auster, Ventyx’ Chief Financial Officer. Please begin.

Martin Auster: Thank you, operator, and good afternoon to everyone joining us today. Welcome to Ventyx Biosciences conference call webcast where we’ll be discussing our first quarter 2024 financial results and providing a corporate update. Before we begin, I would like to remind everyone that today’s presentations will include forward-looking statements. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A description of these risks can be found in our Form 10-Q for the quarter ended March 31, 2024, which was just recently filed this afternoon. Any forward-looking statements are made only as of today’s date, and we assume no obligation to update any forward-looking statements made on today’s call. With that, I’ll hand the call over now to Dr. Raju Mohan, Ventyx’ Founder and CEO. Raju, please go ahead.

Raju Mohan: Yes. Thanks, Marty, and thank you, everyone, for joining us for our first quarter 2024 earnings call and corporate update. As we recently provided a full pipeline and strategic update at our March Investor Day, I will be brief with my remarks today. Let me take a few minutes to provide some high-level comments on the status of our pipeline programs, and then I’ll hand the call back to Marty to review our first quarter financial results. We’ll then open the floor to Q&A, where I’ll be again joined by Marty and also with John Nuss, our Chief Scientific Officer. So I’ll begin with our portfolio of potential best-in-class NLRP3 inhibitors. In March, we announced positive top line results from a Phase 1 single- and multiple-ascending dose trial of VTX3232, our novel CNS-penetrant NLRP3 inhibitor in adult healthy volunteers.

As you may remember, repeat VTX3232 doses as low as 3 milligrams once daily achieved steady-state IL-1 beta IC50 coverage in both plasma and the CSF and repeat doses of 20 milligrams all the way up to 40 milligrams QD, well exceeded IL-1 beta IC90 coverage in both plasma and CSF. Based on these data on our dose projection modeling, we estimate that VTX3232 doses as low as 12-milligram once daily may be adequate to achieve IL-1 beta IC90 target coverage in the CSF and in plasma. We also observed robust dose-dependent pharmacodynamic or PD effects in a whole blood ex vivo IL-1 beta stimulation assay. And VTX3232 also showed excellent – showed an excellent tolerability profile in this Phase 1 study. We, thus, believe that these data establish VTX3232 as a potential best-in-class drug candidate for the treatment of neuroinflammatory diseases and conditions.

This includes excellent target coverage in plasma and CSF, favorable safety profile and a convenient once-daily oral dosing regimen with our tablet formulation. VTX3232 is a Phase 2-ready compound. As we also communicated in March, we plan to rapidly advance VTX3232 into Phase 2 trials in high-value indications with substantial unmet need, beginning with the Phase 2a trial of VTX3232 in patients with early Parkinson’s disease which we will initiate in the second half of this year. As we discussed, a growing body of preclinical evidence has implicated NLRP3-mediated inflammation as a key driver of Parkinson’s disease pathology by impacting new neuronal death and degeneration. We, therefore, believe that NLRP3 inhibition represents a promising potentially disease-modifying therapeutic approach in this devastating neurodegenerative condition.

More recently, NLRP3 has also created much buzz and discussion as a potentially important target for obesity and obesity-related metabolic diseases, much of it due to data published last February showing central NLRP3-mediated weight loss in obese mice. We have initiated our own studies with VTX3232 in neuroi models of diet-induced obesity similar to the published model we just talked about. In addition to assessing weight loss induced by VTX3232 and with the GLP-1 agonist semaglutide in a monotherapy study, we’re also evaluating VTX3232 in combination with semaglutide. These are exciting studies, and we look forward to providing an update on these studies later in the second quarter. So now moving from mice to humans. We plan to initiate a Phase 2 trial of VTX3232 during the second half of 2024 in obese participants with certain additional cardiovascular risk factors.

Now moving on to VTX2735, our peripherally restricted NLRP3 inhibitor. In March, we announced positive top line results from our Phase 2 trial of VTX2735 in patients with cryoprin-associated periodic syndromes or CAPS. In this trial, VTX2735 demonstrated efficacy comparable to that observed with IL-1 biologics, the current standard of care. VTX2735 also demonstrated consistent and robust reductions in inflammatory biomarkers such as HSCRP, high-sensitive CRP, IL-6, serum amyloid A and fibrinogen. There was also a mean reduction of 85% in the Key Symptom Score for these CAPS patients during the initial treatment period with a very favorable safety profile with all treatment-related adverse events graded as mild. These Phase 2 data in CAPS patients is, therefore, a compelling proof of mechanism for VTX2735 for our peripheral inhibitor and for systemic inhibition of NLRP3-treated-related biomarkers in general, including hsCRP and IL-6.

And as we communicated in March, we plan to evaluate VTX2735 for future development in cardiovascular and potentially other indications with an initial focus on recurrent pericarditis and also in the secondary prevention of major adverse cardiovascular events or MACE, both recurrent pericarditis, RP, and MACE prevention represent indication with large addressable markets and substantial unmet medical need. So we, thus, plan to update or provide an update on our cardiovascular development plans later in this year. Beyond our NLRP3 inhibitor portfolio, the team continues to make progress advancing our IBD assets, including VTX002, our potential best-in-class S1P1 receptor modulator for ulcerative colitis and VTX958, or allosteric TYK2 inhibitor in Phase 2 development for the treatment of Crohn’s disease.

For VTX002, you’ll recall that we announced positive Phase 2 data in October of 2023, demonstrating what we believe is a potential best-in-disease profile for an oral agent in ulcerative colitis. This includes a highly differentiated rate of complete endoscopic remission and a potential best-in-class safety profile. At the March event, we also showed preliminary data from the open-label extension part of the Phase 2 trial, further reinforcing the endoscopic remission data and the differentiated profile. We anticipate that the data from the 52-week long-term extension part of this Phase 2 study will continue to show sustained or perhaps even improved data for endoscopic remission from that observed in the 13-week induction period. This program is fully Phase 3 ready, and our teams continue to make preparations for our pivotal Phase 3 trial is ongoing.

Last month, we completed a productive End of Phase 2 meeting with the FDA, and we expect to conduct a scientific advice meeting with the EMA later this quarter. We continue to have confidence that our completed Phase 2 trial may be sufficient to support approval of VTX002 with successful completion of a second pivotal 52-week trial in ulcerative colitis. And as we have previously indicated, efforts are underway to identify a partner or other source of non-dilutive financing to support this pivotal Phase 3 trial. Finally, our Phase 2 trial of VTX958, our allosteric TYK2 inhibitor and moderately to severe active Crohn’s disease continues to progress. As we’ve mentioned in the first quarter of this year, we implemented a protocol amendment to streamline detection of a potential efficacy signal in this trial.

As a result of the protocol amendment, target enrollment was revised from approximately 132 patients to approximately 93 patients, and the trial’s sole primary end point is now the change from baseline in the main Crohn’s disease activity index or CDAI score at week 12. We have completed enrollment in the trial in March, and we look forward to reporting top line results in early second half of 2024. So in conclusion, I would like to again thank all of our Ventyx team members for their continued efforts and contributions across the pipeline to our investigators and collaborators and across all the patients that enroll in our trials. We are very much looking forward to a productive year for Ventyx and to continue to provide these exciting updates.

I’ll now hand the call back to Marty for a brief review of our financial – of our first quarter financial results. Marty?

Martin Auster: Yes. Thank you, Raju. Our financial results for the first quarter ended March 31, 2024, are presented in our press release issued at market close, and I’ll briefly summarize those results here now. R&D expenses in the quarter were $33.7 million compared to $35.4 million in the first quarter of 2023. G&A expenses in the first quarter of ‘24 were $8 million compared to $7.1 million for the first quarter of 2023, and our net loss in the first quarter of 2024 was $38.6 million compared to a $38.9 million net loss in the first quarter of 2023. Our cash, cash equivalents and marketable securities balance was $302.6 million as of March 31, 2024. Net cash used in operating activities during the first quarter of $47.6 million was higher than the reported operating expenses of $41.8 million and is primarily due to an increase in prepaid expenses and a decrease in accrued expenses during the quarter.

We expect both our operating expenses and our operating cash flows on a quarterly basis to decrease as we get into second quarter of 2024 and remain lower for the rest of 2024 as we complete the wind-down activities related to our Phase 2 trial programs in psoriasis and psoriatic arthritis for VTX958. We continue to believe that our current cash, cash equivalents and marketable securities are sufficient to support our planned operations into at least the second half of 2026. This concludes our prepared remarks for this afternoon’s call, and I’ll now turn the call back to the operator to begin the Q&A session. On the Q&A session, I’ll be joined by Dr. Raju Mohan as well as our Chief Scientific Officer, John Nuss. Operator, please go ahead.

Operator: Thank you. [Operator Instructions] And the first question today comes from Michael Yee with Jefferies.

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