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?

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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.

Alex Thompson: Great. Thanks for taking my questions and congrats on the progress. I guess, two for me. Firstly, on the QD formulation, I wonder if you could comment on what has been driving the delay here from the midyear update to Q4 and how much more buffer you have to get a QD formulation for Phase 3 studies next year. And then for the two Phase 2s for ulcerative colitis and psoriasis, I wonder if you could comment on whether discontinuation rates are tracking within your expectations? Thanks.

Raju Mohan: Yes. So outside the disclosure of the data, our goal is always to complete the development by the end of the year, Alex, and leave ample buffers. So you got ample buffer to complete the prototype development. The real actual selection of Phase 3 QD tablet happens after the data comes out from Phase 2 to understand exactly where we line up with the doses and dose for Phase 3. So we’ve always built that in. There’s plenty of buffer. Now, as we outlined in the R&D Day, when we introduced the program to you guys that we had a strategy that sort of iterative process you build and test in humans or establish a relationship between the ER dose, ER prototypes and the IR dose across multiple formulations that we’re doing and testing them in human studies, right?

It’s really important for us to get it nailed, to have the right final formulation, before we begin to make disclosures, as we expect, this formulation will be the drug that we take into Phase 3, and that’s the goal and some reg approval, clinical trial work all worked out. So first of all, there’s plenty of buffer. We always plan to get this done by the end of the year, in time with the Phase 2 data coming out, and then use that prototype to then actually get the actual tablet manufactured, regulatory stability ready for Phase 3 start. So there’s no impact on Phase 3 start. And so we’re really confident in the process. We believe we have progress towards achieving the target profile. But honestly, we recognize that our earlier timing of data release was probably a little overoptimistic.

So we’re looking forward to sharing more details with you in Q4. But the key emphasis is there’s no impact to Phase 3. We always build in the buffer. And that includes manufacturing, regulatory stability, packaging and mailing. So just stay tuned for an update somewhere between now and when we have the Phase 2 data, probably closer to more of — when the Phase 2 comes out.

Alex Thompson: And on the discontinuation rate?

Bill Sandborn: Yes. So I think it wouldn’t be appropriate to give granular, really clinical trial data which was what a specific conversation about that would be. What I would say is these are both sort of shorter-term or induction trials, if you will. The ulcerative colitis trial is 13 weeks in duration to the primary endpoint. And the psoriasis trial was 16 weeks. From a interpretability standpoint, what is typical from a statistical standpoint is if you have patients that discontinued therapy prematurely, and typically both ulcerative colitis trials and psoriasis trials will have some of those, for the dichotomous outcome measures, the patients with missing data are treated as failures. So you actually don’t lose any statistical power in the analyses with any patients that do require discontinuation. So I think we’re well set up in a very conventional fashion to manage any patients that would discontinue, but we won’t make any comments beyond that.

Alex Thompson: Great. Thank you.

Operator: Thank you. Our next question will come from Vikram Purohit with Morgan Stanley.

Vikram Purohit: Hi. Good afternoon. Thanks for taking our questions. So two from our side. First, would just love to get your thoughts on Sotyktu’s commercial performance to date and how it’s impacted if it has in your view of the commercial opportunity for a therapy like 958 in psoriasis? And then secondly, maybe a question for Marty. Could you just remind us what level of pipeline development is contemplated in your current cash guidance and runway, and how far the runway gets you for the current set of lead programs? Thanks.

Raju Mohan: So maybe Marty can take both questions and start with the commercial Sotyktu sort of thing and then go back to the second one.

Marty Auster: Well, it’s a rare treat to get both of them. Thanks, Vikram. So in terms of Sotyktu’s commercial performance, I think we’re quite encouraged by the early days of Sotyktu. Obviously, there is — Bristol has been providing quarterly updates about their commercial performance in this space. They’re getting substantial, significant market share relative to the other approved oral therapy on the market in psoriasis. They’re continuing to kind of see share coming from all different avenues, which is highly encouraging. That includes sort of treatment naive to systemic therapy patients in psoriasis, conversions from the other approved oral therapy Otezla, conversions from patients currently taking biologics who are seeking to get off of injectables and over to orals.

We think long term about the market opportunity here. This is a $25 billion global class of therapeutics. We think that oral agents overall are going to play a very significant and substantial meaningful portion of that market. Currently, the oral portion of that market is just about 10% or so. We think that’s going to grow meaningfully from here. We think TYK2 is going to be a major player within that class, obviously, with the introduction of Sotyktu and then obviously our own development in other TYK2 plans we think look attractive that are coming online in the next several years. So I think it all looks pretty favorable. Shifting over to the cash guidance question, Vikram. So our cash guidance is forecast to bring us into 2025. And what that includes then is sort of Phase 3 prep work and the ability for us to kind of be able to be on track for Phase 3 launches in 2024 for both VTX002 ulcerative colitis program as well as for VTX958 in psoriasis.

It includes completion of the VTX958 Phase 2 programs in Crohn’s disease as well as in psoriatic arthritis, both of which we’re expecting to report data in 2024. It includes completion of the Phase 1 SAD and MAD that Bill described earlier for VTX3232, our CNS directed NLRP3 inhibitor as well as our Phase 2 proof of mechanism trial in CAPS patients with 2735. It does not obviously then get us through completion of those Phase 3 trials for psoriasis or UC, but allows us to kind of be positioned to commence and allows us to complete all the other ongoing clinical work that’s happening now. If we continue to kind of advance, obviously we will have additional capital needs eventually.

Vikram Purohit: Understood. Thank you.

Operator: Thank you. Our next question will come from Yasmeen Rahimi with Piper Sandler.

Unidentified Analyst: Hi. This is [indiscernible] speaking in for Yasmeen Rahimi at Piper. Thank you for taking our questions. Our first question is, as we will be eager to do our comparisons of SERENITY to other oral psoriasis agents, which PASI score in your view is the most reflective of drug activity and dose ranging, and what type of activities have been completed in regards to Phase 3 prep costs VTX958 and VTX002? Thank you so much.

Raju Mohan: Yes, I’ll deal with the second question and I’ll have Bill address the first one. So as we guided in the last earnings call, we’ve initiated all necessary activities around Phase 3 prep for both programs. So this includes CMC work, drug substance, drug product, regulatory preparation for end of Phase 2 meetings, all of the clinical studies that are needed to support that certain domain PK study. So all that has been well planned and it’s on track. Again, we’re planning for data release in the fourth quarter, and then moving on seamlessly to Phase 3 start. So yes, all necessary activities. There will be no delay due to anything that’s not planned or executed both on the CMC side, the reg side, the clinical side, and all the other planning that goes to these trials. So, Bill, why don’t you address the first question?

Bill Sandborn: Sure. So what is the utility of the different PASI outcome measures for Phase 2 dose finding? We have both Phase 2 data fully published with Sotyktu in abstract form with the Takeda-Nimbus product. But we also have Phase 2 trial data with a number of the anti-IL-23 antibodies. And what you see across both the TYK2 inhibitors and the antibodies is that, first of all, we know that psoriasis is exquisitely sensitive to IL-23 inhibition. So you see relatively high levels of — respectively, if PASI 75, 90 and 100 as you go up on dosing. But I would say the most sensitive outcome measure seems to be PASI 75. And you will sometimes see sort of a blending of several dose groups across the range of three or four doses for PASI 75.

And then as you go up to PASI 90 and especially PASI 100, that seems to be more specific or differentiating. So the absolute rates of achieving PASI 100 in particular will be lower often, half or less of what it is with PASI 75. And that tends to separate groups better. And that was seen both with Sotyktu with the 12 milligram once a day dose in Phase 2 and with the Nimbus-Takeda product at the 30 milligram dose that each of the highest doses and highest exposures had the greatest achievement of PASI 100. So that’s sort of how we see it.

Unidentified Analyst: Very helpful. Thank you so much.

Operator: Thank you. Our next question will come from Derek Archila with Wells Fargo.

Derek Archila: Hi, guys. Thanks for taking the questions and congrats on the progress here. Just two quick ones from us. I guess first, can you just remind us how we should be thinking about the geographical diversity from the Phase 2 trial with VTX002 in terms of like number of U.S. sites versus ex-U.S. sites? And then maybe I missed this in the prepared remarks. But I guess when are we going to see the data for VTX2735? And how are you thinking about prioritizing either indications or potentially partnering that asset in the future? Thanks.

Raju Mohan: Bill, why don’t you take both of them and then maybe I can add to the future of 2735? But why don’t you begin.

Bill Sandborn: Yes. So for geographic diversity, inflammatory bowel disease trials, whether it’s ulcerative colitis in the case of VTX002 or Crohn’s disease in the case of VTX958, you really require a lot of clinical trial sites as you get into Phase 2 and you’re requiring anywhere from 132 patients target enrollment for Crohn’s disease or 180 patients target enrollment for the now enrolled ulcerative colitis trial. So those end up being multiple countries and worldwide development programs. It’s typical to have greater enrollment in Eastern Europe, but to have enrollment in Western Europe and North America as well. We are in all of those jurisdictions in the ulcerative colitis trial. I think we won’t get into details about exactly the distribution of the trial sites except to say it’s pretty conventional for a Phase 2 trial and I feel very comfortable with the geographic mix that we achieved, and we’ll report that when we report the data in the fourth quarter.

And then for VTX2735, our peripheral NLRP3 inhibitor, we reported a year ago in June the Phase 1 SAD and MAD data. And then we have an ongoing sort of Phase 2a trial in CAPS, as I mentioned. We do have patients that are now enrolled in the trial. And remember, this is an ultra rare disease. There’s a couple hundred patients in the U.S. So just if you had two patients, that’s 1% of the population. So this is not easy to recruit. And the fact that we have patients enrolled, we’re pleased with — I won’t get into the granular details about where we are in that. But I think we’re pleased with the level of screening and enrollment that’s going on. And I feel confident that we’ll be able to have some data late in the year with that program.

Raju Mohan: This is Raju. So on development strategy for 2735, as we said on R&D Day and we’ve sort of continued to reiterate that, we want to get both compounds Phase 2 ready. So 2735 has finished Phase 1. We’re in the middle of starting some chronic tox studies. And with 3232, again, we are finishing up Phase 1, expect to have that wrapped up early first half of next year. And there again, we’re CMC ready, we are planning on the tox work. So we’ll have both compounds Phase 2 ready in the early first half of next year. And we’ll have the data readouts on the two Phase 2 trials ongoing for 958 and 002. And we’ll just look at the strategy across the portfolio as we pursue these two molecules. But no matter where these go in terms of whether we do it alone or whether we have a partner, we are ready for the Phase 2 start.

And we’ve outlined the opportunities for both drugs. So the peripheral molecule has broad indications that they’ll outline both in cardio metabolic areas as well as some very specific derm indications. And then for 3232, there’s a huge excitement in neurodegenerative diseases, including Parkinson’s. And our goal has been always focus the Phase 2 trials, get ready for Phase 3 with the two compounds and get the NLRP3 portfolio Phase 2 ready late this year or early first half. And then we look at the entire portfolio and decide where we take these two molecules.

Derek Archila: Excellent. Thank you.

Operator: Thank you. [Operator Instructions]. And our next question will come from Chris Shibutani with Goldman Sachs.

Chris Shibutani: Thank you. Two questions, if I may. On the psoriatic arthritis opportunity, the Takeda-Nimbus is expected to have Phase 2b data that reads out this year. Can you share with us what your expectations are for this trial and any potential for read through in terms of what’s your ongoing psoriatic arthritis trial? And the question on Crohn’s as far as enrollment in the Phase 2, have you observed any changes in particular since Bristol’s compound failed its Phase 2 study? I did note that in Bill’s prepared remarks about the S1P UC study, the words perseverance was used. Thank you.

Raju Mohan: Yes. Bill, go ahead.

Bill Sandborn: Yes. I think we saw the totality of effect at the higher doses with the Nimbus-Takeda product in psoriasis as being a bit greater than what was seen with deucravacitinib particularly with where you end up at the final approved dose. And so given really a meaningful signal with both the 3 milligram BID as I recall and 12 milligram — or 6 milligram QD and 12 milligram QD doses with deucravacitinib and to my — I thought there was a bit of dose response, particularly as you got into the ACR50 and 70 for the 12 milligram once a day dose with deucravacitinib. So I anticipate that there would be a positive and meaningful effect across ACR20 and 50 and 70 for the Nimbus-Takeda drugs. I don’t know that we know exactly what doses they are doing, but it’s reasonable to speculate or anticipate that they would include some of the higher doses from the already completed psoriasis trial.

So we do think that the concept of TYK2 inhibition being an effective therapy for psoriatic arthritis is likely to be further confirmed with the Nimbus-Takeda data. And we wouldn’t be surprised to see an effect that’s at least as good and possibly a little better than what was seen with deucravacitinib and we think that opens up the opportunity for other TYK2 inhibitors with excellent target coverage, like VTX958.

Chris Shibutani: And on the Crohn’s enrollment pace?

Bill Sandborn: Yes. We’ve always resisted being too granular about that as we’ve gone along. We have a lot of learnings around them. In my view, we were quite successful in the ulcerative colitis program with getting the right CRO, the right country mix, the right number of sites, effectively interacting with the investigators and getting the trial enrolled in a timely basis. And we’ve taken all those learnings as a young company and applied to the Crohn’s program. There are many common sites between the ulcerative colitis and the Crohn’s programs, which allowed us to leverage contract negotiations. We had relationships with the sites, with the investigators, with the study coordinators, and all those things. And so we have all those synergies going for us in the Crohn’s trial.

And I’ll just say, from my standpoint, the site activation rates that we had planned were on track, the patient enrollment rates are on track, and I feel confident that we can deliver the results next year. I’m going to wait another quarter or two before we start to narrow the band around when exactly next year. But for our internal metrics, we’re absolutely on track for where we intend to be right now. And the trajectory is strong to stay on track.

Chris Shibutani: Great. Thank you.

Operator: Thank you. Our next question will come from Emily Bodnar with Wainwright.

Emily Bodnar: Hi. Thanks for taking the questions. Maybe just to follow up on the previous question on psoriatic arthritis, if you can kind of talk about how you think about the bar for you internally versus subject to Phase 2 data so far? And then also Bristol talked about evaluating Sotyktu for other indications, like SLE and alopecia. Are those indications that you think might make sense for a TYK2 inhibitor? And are those ones that you’d maybe consider for VTX958? Thank you.

Raju Mohan: Bill?

Bill Sandborn: Yes. Until we have more data with the Nimbus-Takeda products, we have sort of another data set with the implied target coverage and things across the range of doses. I think right now, the floor benchmark should probably really be what was seen with deucravacitinib and maybe say that it’s what was seen with the 12 milligram dose as opposed to the 6 milligram dose. If you do cross mechanism of action comparisons, those data with the 12 milligram dose actually look pretty favorable to other agents, even JAK inhibitors. So let’s see as we get some more data in that field how high the floor can raise, but that’s probably how we would think about it. For other indications, I’m not aware that there are any data yet for alopecia.

It’s interesting. There is some logic to it. And we’re, of course, thinking about different indications, including whether there are any beyond psoriasis and dermatology. I haven’t pulled the trigger to go into that space yet, but we’re watching that with interest. For lupus, you’ll recall that really interleukin 12/23 inhibition with Stelara was ultimately not effective. So I’m a little bit skeptical about IL-23 inhibition with that. But of course you have the interferon alpha side and that looks good. So I think for TYK2 inhibition, that’s certainly an opportunity for us and one that is differentiated from the IL-12/23 and IL-23 antibodies where lupus cannot be a target. These are large trials. The endpoints are sort of squishy. If you’ll remember, the Phase 2 study, deucravacitinib in lupus, as I recall, it was 360 patients, about 90 patients per arm for three doses plus placebo.

It took about three and a half years to recruit that trial and readout six-month results. So it’s really a long slog, the effect sizes are often in the 10% to 15% range relative to placebo. So you need a lot of patients per group. And we haven’t pulled the trigger on that yet, because we think it’s a big undertaking, but of course, pending successful and robust data in some of our other ongoing Phase 2 trials, that could be revisited in any time.

Emily Bodnar: Thank you.

Operator: Thank you. Our next question will come from Sam Slutsky with LifeSci Capital.

Sam Slutsky: Hi. Good afternoon, everyone. Thanks for the questions. A quick question for Bill. On the S1P class, obviously, Zeposia sales in UC I think has so far underwhelmed versus earlier expectations. That said, Pfizer obviously believes that a [indiscernible] blockbuster in IBD, and they obviously paid a good amount of money to get the drug. I guess as the IBD position, it would be good to get your view on what factors could have contributed to the slow launch of Zeposia. And then what potential profile for next gen S1P1 could lead to better uptake or does ultimately result in blockbuster potential expected for the class?

Raju Mohan: Go ahead, Bill.

Bill Sandborn: Yes, I’ll opine a little bit and then maybe Marty, given all of his life experience, could talk a little bit about the launch as well for Zeposia. But I think whenever there’s a new mechanism of action, robust physician and provider engagement in education is required. Therapies usually don’t sell themselves. They require an educational and ultimately marketing campaign. And I think the sense that I get from all of my colleagues in the field is that that just hasn’t happened in any robust way with Zeposia. So I think that plays a lot into it. The drug has also been priced for the multiple sclerosis market. So it’s in the $80,000, $90,000 $100,000 range. So as a starting price for an IBD drug, that’s kind of high and that really then sets barriers to access.

So I think it’s heavily those things. I do have the sense that there is a rising experience with using the drug and it’d be interesting to see where Pfizer sets their pricing. I would anticipate that they’re going to put a lot more marketing and education muscle behind it, and that the launch of etrasimod will really start to grow the class. What are physicians and ultimately patients looking for? I think it’s really heavily about efficacy. And most of our legacy drugs were about 10% better than placebo. So 10% placebo adjusted remission rates for induction. Some of the newer entrants, Rinvoq is 20% to 25% placebo adjusted delta, some of the Phase 2 data with TL1A antibodies, both the Prometheus and Roivant. The Pfizer molecules had 25% and 20%, respectively, remission deltas.

Etrasimod depending when you look at it, Phase 2 was 25%, Phase 3 was 20% in one trial and about 10% in the other trial. Blended average is probably high teens pushing 20%. So I think the next generation drugs that would be really differentiated and exciting, you probably want to see at least a 15% and ideally 20% or more placebo adjusted remission rate. And that’s what we’re aspiring to. And if we land in that zone on not only the primary endpoint, but with consistency and the secondary endpoints and some of the differentiating things like getting complete endoscopic remission and stuff like that, that’s going to be very interesting to people. Our drug is not aimed at multiple sclerosis. So it could be appropriately priced for an ulcerative colitis market.

And we think all of that will be a real opportunity. Marty, did you want to add anything about the sort of long trajectory of Zeposia as you see it?

Marty Auster: Yes, Bill, I think you hit on a lot of the things that we see and we talk about internally, what we hear from KOLs and folks we engage with in the field. I think it’s a combination of the factors you cited, along with also as you sort of talked around the efficacy there. Sam, on Zeposia, it was in sort of very low double digits. So it wasn’t particularly sort of — it wasn’t groundbreaking or exciting efficacy. It’s perceived as a slower onset of action drug as well, which is better of a fast onset of action, of course, with the active metabolite data that the drug works through. So I think we’ve got some benefits with VTX002 that I think are hopefully more attractive attributes to the market. And obviously, we’ll be watching closely as you and our investors will on how Pfizer’s regulatory outcome and commercial launch goes to the etrasimod later this year.

Sam Slutsky: Thanks.

Operator: Thank you. And at this time, there are no further questions in the queue. So I’d like to turn the floor back over to Dr. Mohan for additional or closing remarks.

Raju Mohan: Great. And thank you all again, all the analysts, all the investors for your continued interest in Ventyx. Hopefully, we will connect with many of you at one of the upcoming conferences we plan to attend in the third quarter. And we’re really excited for the fourth quarter approaches. Looking forward to sharing our Phase 2 top line results with you for both, starting with 002 in UC and then followed by VTX958 in psoriasis. So thank you all once again.

Operator: Thank you. This concludes today’s Ventyx Biosciences second quarter 2023 earnings conference call. Please disconnect your line at this time, and have a wonderful day.