VTYX - Ventyx: Critical Proof Of Concept Data Later This Year

2023-06-15 17:30:08 ET

Summary

• Ventyx Biosciences, Inc. has a number of interesting assets in mid-stage trials.
• The company is founded by a successful serial entrepreneur.
• Phase 2 data later this year will be pivotal for Ventyx Biosciences prospects.

Using a new and very useful tool developed by my team, I was checking out Ventyx Biosciences, Inc. ( VTYX ) once again , and I see that they have the following trials running:

This tool has been developed by a team of software experts using my functional knowledge of the biopharma sector. Clicking on each of those “indications” gives you information about them, including prevalence and incidence rates, market potential, and competing drugs. Here’s what I found for the first indication:

The list of approved drugs and the completion dates of these trials validate what I said earlier about Ventyx - that it has no near-term data catalysts, and it is working in a highly competitive field, so it really needs to differentiate itself from its rivals in order to gain traction.

The tool also uses sophisticated programming to give you relevant previous trial data. My regular readers know how important this metric is to determine the chances of success of ongoing trials. So I clicked on those blue bulbs next to the trial list above, and found that the company published top line data from a phase 1 trial in healthy volunteers. Now, in the list, there are only 3 phase 2 trials listed, so I am guessing the phase 1 trial we find here has been converted into phase 2. This is standard practice, and the only way to explain the lack of a phase 1 trial in the registry.

The phase 1 trial is in healthy volunteers, so, while there’s safety and pharmacodynamic data, there’s no efficacy data. We can make an effort at guessing efficacy by some of the PK/PD data. Data shows the following:

• VTX958 was well-tolerated across all SAD and MAD cohorts, with an excellent safety profile

• Class-leading target coverage, with TYK2 IC50 and IC90 coverage up to 24 hours

• Robust dose-dependent pharmacodynamic activity and evidence of target engagement as measured by in vivo IFN? challenge and ex vivo IL-12/IL-18 stimulation assays.

Here, IC50 and IC90 are the concentrations of the drug required for 50% and 90% inhibition of the target, respectively; IC90 is approximately 10 times IC50. Obviously, these are indirect measures of efficacy, not direct clinical outcomes. Similar are the in vivo IFN? and ex vivo IL-12/IL-18 stimulation measures. These are indirect indications of the molecule’s clinical potential, but this company still does not have clinical efficacy data.

In my previous coverage, I offered one reason for the bearish view about Ventyx:

In phase 1 trial, VTX958 achieved TYK2 IC90 coverage of IL-12, IL-23 and IFN? for up to 24 hours with no dose-limiting toxicities. The company compares this with first generation TYK2 inhibitors, whose exposures were limited by toxicities. Deucravacitinib 6mg QD achieved just IC50 coverage, not IC90, and that too for ~9 hours. A number of safety issues - skin toxicities (acne, rash) etc. - happened at high exposures, limiting coverage. Another molecule, ?? NDI-034858 (TAK-279) achieved 24 hours IC50 coverage but merely 5 hours IC90 coverage. However, IC50 or half-maximal inhibitory concentration may often be adequate for a drug’s efficacy in many indications. IC90 may or may not be overkill, and will require other factors to be considered. Also in psoriasis, high response rates of 90% are seen from biologics, while response rates for oral TYK2 and PDE4 inhibitors are much smaller. Ventyx Biosciences, Inc. thinks that with its higher exposure, VTX958 may approach biologics in their response rates, but there is no such data available to validate that claim as of now.

And yet, it has a market cap of $2bn. That is the primary worry. So why is an early-stage company valued so high? Maybe the following brief bio of the founder helps explain that:

Dr. Raju Mohan has had an illustrious career founding and then selling biopharma companies to big pharma. The market is probably hoping he will do it again. That expectation is priced into this stock.

Ventyx’ second asset is VTX002, which is not listed on the registry as a Ventyx product because it is being developed by Oppilan Pharma, also founded by Dr Mohan. This asset completed a phase 1 trial, whose data was not easily available. Here’s the brief report I found:

In our Phase 1 trial, VTX002 was well tolerated across all doses tested while producing robust, dose-dependent reductions in circulating lymphocytes, a key biomarker of S1P1R modulator activity which has correlated with efficacy in multiple Phase 2 and Phase 3 trials of other S1P1R modulators.

The company recently announced preliminary pharmacodynamic data from the open-label extension of the ongoing Phase 2 trial. Data showed that patients completing Week 26 had a mean reduction of 74% from baseline in absolute lymphocyte count. The company thinks this data is highly competitive with respect to other S1P receptor modulators, both approved and in pipeline, for the treatment of ulcerative colitis.

Topline data from the phase 2 trial is expected in 2H 2023. Top line Phase 2 data for VTX958 in plaque psoriasis is also expected in Q4 2023.

Financials

Ventyx Biosciences, Inc. has a market cap of $1.99bn. Using the tool I mentioned at the beginning, we can get a smart glimpse at its cash runway, and more importantly, whether its next major catalyst is within, or beyond, that cash runway. This piece of information is important for investors to identify risks of dilution. So, here’s what the TickerBay Cash Runway tool shows us:

Thus, its cash seems to be running out before the next major catalyst. However, if we go by my standard system of calculating this, R&D expenses were $35.4 million for the quarter ended March 31, 2023, while G&A expenses were $7.1 million. Thus, they have a total operating expense of $42mn, which gives them about 9 quarters of cash, starting from March. Thus, they will run out of cash in the first quarter of 2025, or they have enough runway to cover their next major catalyst.

In its early days, Ventyx had been backed by “Third Point, RTW Investments, Janus Henderson Investors, Wellington Management and OrbiMed, as well as lead investor venBio.” Institutions hold a large percentage of the company, followed by PE/VC firms. Key holders today are NSV Investments, FMR LLC, and so on. Insiders have generally been selling stock.

Bottom Line

Ventyx Biosciences, Inc. generated considerable investor interest in its early days. Things have settled into a languorous mode lately, mostly because they still do not have a lot of human data, and there are a lot of competing drugs. I would still like to see data later this year before taking a call on Ventyx Biosciences.

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