Ventyx Biosciences - Q2 2023

Transcript

Operator (participant)

Good afternoon, ladies and gentlemen, welcome to the Ventyx Biosciences Q2 2023 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. Others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. 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 (CFO)

Thank you. Good afternoon, everyone. Welcome to Ventyx Biosciences Conference Call and Webcast, where we'll be discussing our Q2 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 in the Investors News and 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, 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 in 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 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 (Founder and CEO)

Thanks, Marty. Good afternoon, everyone. Thank you for joining our Q2 2023 financial results conference call. It's hard to believe that we're 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 a recent press release, 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. Let me run through this afternoon's agenda. I will begin by providing a high-level business update, then I'll hand the call over to William Sandborn, our President and Chief Medical Officer, who will provide updates across our drug development programs. Finally, Marty will present an overview of our Q2 2023 financial results before opening the call for Q&A.

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.

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 II 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 II 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 II dose across all the trials. In June, we announced that we completed patient enrollment in the phase II SERENITY trial of VTX958 in moderate to severe plaque psoriasis.

This is an important milestone for Ventyx, and I'd like to thank our entire team for all their efforts. With enrollment now complete, we look forward to reporting top-line data from the phase II, phase II SERENITY trial in the Q4 of this year. On the development of an extended release tablet, ER tablet for VTX958, we continue to make progress towards a target product profile and remain confident that we will have an optimized once-daily tablet to advance into phase III trials in 2024. As previously discussed, our development strategy incorporates an iterative process which allows us to sequentially evaluate multiple prototype formulations in humans. We look forward to providing a detailed update in the Q4. In June, we announced that we completed enrollment in the ongoing phase II 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 Q4 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 II trials. We believe we are exploiting the full production potential of this mechanism by a greater reduction of ALC, a validated biomarker, and believe that this may translate into differentiated efficacy relative to other drugs developed for ulcerative colitis. Our aspirations 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 is competitive with or superior to levels achieved by biologics.

This efficacy profile, if achieved, should position VTX-002 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 two trials in CAPS patients, and our CNS-penetrant NLRP3 inhibitor, VTX3232, for which we recently announced initiation of dosing in phase one trial in healthy volunteers. 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 two data for both VTX-002 and VTX958 in the Q4. With that, I'll hand the call over to Bill for a more detailed pipeline discussion. Bill?

William Sandborn (President and CMO)

Thank you, Raju, 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 II 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 the 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 II 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 IL-23. Our team did an excellent job enrolling this trial in around six months, with enrollment now complete, and we are very excited to report top-line data from the phase II SERENITY trial during the Q4. 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 VTX-002, our potential best-in-class S1P1 receptor modulator in development for ulcerative colitis at the phase II stage.

Recall that we have previously shared data from phase II 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. 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 II 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 a 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 II 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 Q4. We expect to report phase II top-line data for VTX002 in ulcerative colitis ahead of the phase II 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 I trial of our CNS-penetrant NLRP3 inhibitor, VTX-3232, 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 VTX-3232, including serial cerebrospinal fluid sampling to assess CNS exposure. We have a phase II proof of concept trial underway with VTX-2735, our peripheral NLRP3 inhibitor, in familial cold autoinflammatory syndrome, or FCAS, which is the most common subpopulation of cryopyrin-associated periodic syndromes, or CAPS.

I'll reiterate that both with NLRP, 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 II 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 with 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 II data for VTX002 and VTX958 just around the corner in the Q4 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 (CFO)

Thanks, Bill. 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 close today. I'll summarize the Q2 results briefly here, though. R&D expenses in the quarter were $48.6 million, compared to $14.7 million in the Q2 of 2022, and this reflects the advancement of our pipeline into later stages of clinical testing, including the execution of the ongoing phase II trial of VTX002 in ulcerative colitis, and the broader phase II program for VTX958, with phase II trials being conducted in psoriasis, Crohn's disease, and psoriatic arthritis.

G&A, G&A expenses were $8.6 million for the Q2 2023, compared to $5.7 million in the year-ago period, reflecting growth of the company. Net loss of $53.2 million for the Q2 of 2023 compares to a net loss in the Q2 of 2022 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 equivalent of 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. I'll now turn the call back over to the operator to begin the Q&A session. I'll be joined by our CEO, Raju Mohan, President and CMO, William Sandborn, and our CBO, Chris Krueger. Operator?

Operator (participant)

Thank you, sir. At this time, the floor is now open for questions. If you have a question or comment, please press star one on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality. Thank you. Our first question will come from Michael Yee with Jefferies.

Michael Yee (Managing Director and Senior Biotechnology Analyst)

Hey, 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% positive 75. You look at some of the Nimbus data, I guess they were in that range, and then at 33% positive 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, we're better [across shock person]." The second part of that is, what does that lead you to believe for Crohn's, which would then follow that? Maybe it's the PD marker, IL-13. maybe, maybe Bill could walk through what you see in psoriasis, then how does the IL-13 data play, play into that to give you confidence on Crohn's? Thank you.

Raju Mohan (Founder and CEO)

Yeah. Thanks, Mike. If I do. Yeah, Bill, why don't you walk-. You can take both of those.

William Sandborn (President and CMO)

Yeah. I, 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 for an oral agent. You know, that's generally the zone that was seen recently with the Protagonist, the Janssen, the oral IL-23 antagonist as well. All of these are somewhat short of what you see with the monoclonal antibodies to IL-23. I think, you know, 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. That's sort of how we see it and where we would hope to, to land as a, a low watermark.

Michael Yee (Managing Director and Senior Biotechnology Analyst)

How about, how about for what the read-through data is to Crohn's? Is it the PD data that you see, or maybe just clarify that, that gives you the confidence?

William Sandborn (President and CMO)

Yeah, I mean, you know, of course, speculating on read through to Crohn's. What we know is that with deucravacitinib, doses of six twice a day or 12 once a day have not been effective for ulcerative colitis and Crohn's disease. Those total daily doses or regimens are both twice the six milligrams once a day dose that's approved for psoriasis with sort of moderate efficacy. Then we know with biologics, with inhibition of either interleukin-12, 23 with Stelara or inhibition of interleukin-23 alone with Skyrizi or Cimzia and mirikizumab and others, that the doses that have been required to optimize efficacy in Crohn's disease are higher than the doses that sort of plateaued efficacy for psoriasis.

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. While we have four different active dosing groups in the psoriasis trial across a wide range of doses and exposures, as I 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. We're emphasizing high exposure with the hypothesis that greater exposure will be required in Crohn's disease, and, you know, we anticipate being able to read that Crohn's trial out next year.

Michael Yee (Managing Director and Senior Biotechnology Analyst)

Thank you.

Operator (participant)

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

Alex Thompson (Research Managing Director and Biotech Equity Research Analyst)

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 mid-year update to, to Q4 and how much more buffer you have to get a QD formulation for phase III studies next year. Then for the two phase IIs for ulcerative colitis and psoriasis, I wonder if you could comment on whether discontinuation rates are tracking within your expectations. Thanks.

Raju Mohan (Founder and CEO)

Yeah. You know, outside the disclosure of the, of the data, our goal always to complete the development by the end of the year, Alex, and leave ample buffer. You get ample buffer to complete the, the prototype development. Because real, the, the real actual selection of phase III QD tablet happens after the data comes out from phase II to understand exactly where we line up with the doses and the dose for phase III, right? Always build that in. There's plenty of buffer.

You know, as we outlined in the R&D day, you know, when we introduced the program to you guys, that we're had a strategy that sort of iterative process you build and test in, in, in humans, 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, 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 III, and that's the goal. You know, submit for reg approval, clinical trial works all worked out. 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 II data coming out, and then use that prototype to then actually get the actual tablet made, manufactured, regulatory stability, ready for phase III start. There's no impact on phase III start. You know, we're really confident in the process. We believe we made real progress towards achieving the target profile. Honestly, we recognize that our earlier timing of data release was probably a little overoptimistic.

We're looking forward to sharing more details with you in Q4. The key emphasis is there's no impact to phase III. We always build in the buffer, and that includes manufacturing, regulatory, stability, packaging, and mailing. Just, you know, stay tuned for an update somewhere between now and, and, when we have the phase II data, probably closer to more of the, when the phase II comes out.

Alex Thompson (Research Managing Director and Biotech Equity Research Analyst)

On the discontinuation rate?

William Sandborn (President and CMO)

Yes. I, I think we-it wouldn't be appropriate to, you know, give granular, really clinical trial data, which, which is 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, the ulcerative colitis trial is 13 weeks in, in duration to the primary endpoint, and the psoriasis trial is 16 weeks. From a, interpretability standpoint, what is, typical from a statistical standpoint, is if you have patients that, discontinue therapy prematurely, and typically both ulcerative colitis trials and Crohn's or, psoriasis trials will have some of those.

The, for the dichotomous outcome measures, the patients with missing data are treated as failures. You actually don't lose any statistical power in the analyses with any patients that do require discontinuation. I think we're well set up in a very conventional fashion to, you know, manage any patients that would discontinue. We won't, you know, make any comments beyond that.

Alex Thompson (Research Managing Director and Biotech Equity Research Analyst)

Great. Thank you.

Operator (participant)

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

Vikram Purohit (Executive Director and Equity Research Analyst)

Hi, good afternoon. Thanks for taking our questions. 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, your view of the commercial opportunity for a therapy like 958 in psoriasis. Secondly, maybe a question for Marty. Could you just remind us, you know, what level of pipeline development is contemplated in your, your current cash guidance and runway, and how far the runway gets you for the current set of new programs? Thanks.

Raju Mohan (Founder and CEO)

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 (CFO)

Yeah, this is, it's a, a rare treat to get both of them. Thanks, Vikram. In terms of Sotyktu commercial performance, you know, I think we're quite encouraged by the early days of Sotyktu. Obviously, there's, you know, Bristol has been providing quarterly updates about their, their commercial performance in the 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 all, from all different avenues, which is, which is highly encouraging. That includes sort of, treatment naive, to systemic therapy patients in psoriasis, conversions from the other approved therapy, oral therapy, Otezla, conversions from patients currently taking biologic who are seeking to get off of injectables and over to oral.

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, with the introduction of Sotyktu, and then obviously, our own development and other TYK2 partners we think look attractive that are coming online in the next several years. I think it all, all looks pretty favorable. Shifting over to the cash guidance question, Vikram. Our cash guidance is forecast to bring us into 2025.

What that includes then is sort of phase III prep work and the ability for us to kind of be able to be on track for phase III launches in 2024 for both the VTX002 ulcerative colitis program, as well as for VTX958 in psoriasis. It includes completion of the VTX958 phase II 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 I SAD/MAD that Bill described earlier for VTX3232, our CNS directed NLRP3 inhibitor, as well as our phase II proof of mechanism trial in CAPS patients with 2735.

It does not, you know, obviously then get us through completion of those phase III trials for psoriasis or UC, but allows us to kind of be in position 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'll, we'll have additional capital needs eventually.

Vikram Purohit (Executive Director and Equity Research Analyst)

Understood. Thank you.

Operator (participant)

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

Jungyoon Ku (Healthcare Investment Banking Associate)

Hi, this is Jungyoon Ku speaking in for Yas 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 in dose ranging? Second, what type of activities have been completed in regards to phase III prep across VTX958 and VTX002? Thank you so much.

Raju Mohan (Founder and CEO)

Yeah, I'll, I'll deal with the second question, and I'll have Bill address the first one. As we guided in the last earnings call, we've initiated all necessary activities around phase III prep for both programs. This includes, you know, CMC work, drug substance, drug product, regulatory preparation for end of phase II meetings, all of the clinical studies that are needed to support that, certain domain PK studies.

All that has been well-planned, and it's been on track. Again, you know, we're planning for data read in the Q4 and then moving on seamlessly to phase III start. Yes, all, all, all necessary activities. There'll be no delay, due to anything that was not planned or executed, both on the CMC side, the reg side, the clinical side, and all the other planning that goes, goes to these trials. Bill, why don't you address the first one, first question?

William Sandborn (President and CMO)

Sure. What is the utility of the different PASI outcome measures for phase II dose finding? You know, we have both phase II data fully published with Sotyktu and in abstract form with the Takeda Nimbus product. We also have phase II trial data with a number of the anti-IL-23 antibodies. What you see across both the TYK2 inhibitors and the antibodies is that, first of all, we know that psoriasis is explicitly sensitive to IL-23 inhibition.

So you see relatively high levels of, respectively, of PASI 75, 90, and 100 as you go up on dosing. The, the, 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, you know, PASI 75. Then as you go up to PASI 90 and especially PASI 100, that seems to be more specific or differentiating.

The absolute rates of achieving PASI 100 in particular, will be lower, often, you know, half or less of what it is with PASI 75, and that tends to separate groups better. That was seen both with TYK2, with the 12 milligram once a day dose in phase II, and with the Nimbus Takeda product at the 30 milligram dose, that, you know, each of the highest doses and highest exposures had the greatest achievement of PASI 100. That's sort of how we, how we see it.

Jungyoon Ku (Healthcare Investment Banking Associate)

Very helpful. Thank you so much.

Operator (participant)

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

Derek Archila (Managing Director, Co-Head of Therapeutics Research, and Senior Biotechnology Analyst)

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 II trial with VTX002, in terms of, like, number of U.S. sites versus ex-U.S. sites? 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 (Founder and CEO)

Bill, why don't you take both of them, and then maybe I can add to the future of 2735. Why don't you begin?

William Sandborn (President and CMO)

Yeah. 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 II, and you're requiring, you know, anywhere from 132 patients target enrollment for Crohn's disease or 180 patients target enrollment for the, for the now enrolled ulcerative colitis trial. Those end up being multiple countries in worldwide development programs. It's typical to have greater enrollment in Eastern Europe, 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, we won't get into details about, exactly the, the distribution of the trial sites, except to say it's, you know, it's pretty conventional for a phase II trial, and I feel very comfortable with the geographic mix that we achieved, and we'll, you know, report that when, when we report the data in the Q4. For, for VTX2735, our peripheral NLRP3 inhibitor, we reported, 1 year ago in June, the, the phase I, SAD and MAD data. We have an ongoing, sort phase II-a trial in, in CAPS. As I mentioned, we do have patients that are now enrolled in the trial. You know, remember, this is an ultra-rare disease.

There's a couple hundred patients in the U.S., so you know, just if, if you had two patients, that's 1% of the prevalent population. This is not easy to recruit, and the fact that we have patients enrolled, we're pleased with. I, I won't, you know, get into the granular detail about where we are on 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 by late in the year with that program.

Raju Mohan (Founder and CEO)

Good. Then, this is Raju. On, on, on, you know, development strategy for VTX2735, you know, as we said at R&D Day, and we've sort of continued to reiterate that, we want to get both compounds phase II ready. VTX2735 has finished phase I. We're in the middle of starting some chronic tox studies, and with VTX3232, again, we are finishing up phase I. Expect to have that wrapped up early, first half of next year. Again, there again, we're, you know, we're CMC ready. We're planning on, on the tox work. We'll have both, both compounds phase II ready in the first, early first half of next year.

You know, we'll have the data readouts on the 2 phase II trials ongoing for VTX958 and VTX002, and, you know, we'll just look at the strategy across the portfolio as where we pursue these two, these two molecules. 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 II start. You know, we've outlined the opportunities for both products. The peripheral molecule has indications, broad indications that Bill outlined, both in cardio, cardiometabolic areas, as well as some very specific derm indications. Then for VTX3232, there's a, a huge excitement in neurodegenerative diseases, including Parkinson's.

Our goal has been, always been focused on the phase II trials, get ready for phase III with the two compounds and get the NLRP3 portfolio phase II ready late this year or early first half, and then we can sort of look at the entire portfolio and decide where we take these two molecules. Excellent. Thank you.

Operator (participant)

Thank you. Once again, if you do have a question, please press star one on your telephone keypad at this time. Our next question will come from Chris Shibutani with Goldman Sachs.

Chris Shibutani (Senior Analyst and Managing Director)

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

Raju Mohan (Founder and CEO)

Yeah. Bill Sanborn, go ahead.

William Sandborn (President and CMO)

Yeah, I, I think, we saw the totality of effect at the higher doses with the Nimbus Takeda product in psoriasis as being, you know, a bit greater than what was seen with deucravacitinib, particularly with where you end up in, at the final approved dose. So given really a meaningful signal with both the three milligram BID, as I recall, and 12 milligram or six milligram QD and 12 milligram QD doses in with deucravacitinib. To my eye, I, I thought there was a bit of dose response, particularly as you got into ACR50 and ACR70 for the 12 milligram once a day dose with deucravacitinib.

I anticipate that there would be a positive and, and meaningful effect across ACR20 and ACR50 and ACR70 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. 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. 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.We think that opens up the opportunity for other TYK2 inhibitors with excellent target coverage, like VTX958.

Chris Shibutani (Senior Analyst and Managing Director)

On the Crohn's enrollment pace?

William Sandborn (President and CMO)

Yeah, I, I mean, you know, we've always resisted being too granular about that as we've gone along. You know, we had a lot of learnings around, around then, and in my view, we were quite successful in, in the ulcerative colitis program with, you know, getting the right CRO, the right country mix, the right number of sites, effectively interacting with the investigators and getting the trial enrolled on a timely basis. You know, 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, you know, contract negotiations. We had, you know, relationships with the sites, with the investigators, with the study coordinators and all those things.

You know, we have all those synergies going for us in the Crohn's trial. I'll just say, you know, from my standpoint, the, the site activation rates that we had planned were, you know, on track. The patient enrollment rates are on track, and I, I feel confident that we can deliver the results next year. I'm going to wait another, you know, quarter or two before we start to, you know, narrow the band around, you know, when exactly next year. For our internal metrics, we're absolutely on track for where we intend to be right now, and the trajectory is, is strong to stay on track.

Chris Shibutani (Senior Analyst and Managing Director)

Great. Thank you.

Operator (participant)

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

Emily Bodnar (Biotech Equity Research Analyst)

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 phase II phase II data so far. Also, Bristol has talked about evaluating phase II 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 VTX938? Thank you.

Raju Mohan (Founder and CEO)

Bill?

William Sandborn (President and CMO)

Well, until we have more data, with the Nimbus Takeda products, we have sort of another data set, you know, with the implied target coverage and things across the range of doses. I, 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 six milligram dose. If you do, you know, cross mechanism of action comparisons, those data with the 12 milligram dose actually look pretty favorable to other agents and even JAK inhibitors. You know, 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, you know, there is some logic to it, and, and, you know, we're, we're of course, thinking about different indications in term, including whether there are any in, in beyond psoriasis and dermatology. Haven't pulled the trigger to go into that spaceship, we're watching that with interest. For lupus, you know, you'll recall that, that really interleukin-12 and interleukin-23 inhibition with Stelara was ultimately not effective, I'm a little bit skeptical about, for, IL-23 inhibition with that. Of course you have the interferon-alpha side, and, and that looks good.

I think, you know, for TYK2 inhibition, that's, that's certainly an opportunity for us, and one that is differentiated from the IL-12/23 and the IL-23 antibodies where, you know, lupus cannot be a target. These are large trials. The endpoints are, are sort of squishy. If you'll remember, the phase II study, deucravacitinib in lupus, as I recall, it was 360 patients, about 90 patients per arm for 3 doses plus placebo.

It took about 3.5 years to recruit that trial and, and read out six-month results. It's really a long slog. The, the effect sizes are often in the 10%-15% range relative to placebo, so you need a lot of patients per group. We haven't pulled the trigger on that yet because we think it's a big undertaking. Of course, you know, pending successful and robust data in some of our other ongoing phase two trials, that could be revisited at any time.

Emily Bodnar (Biotech Equity Research Analyst)

Very helpful. Thank you.

Operator (participant)

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

Sam Slutsky (Senior Research Analyst)

Hey, good afternoon, everyone. Thanks for the questions. Quick question for Bill. Just on the S1P class, you know, obviously the Zeposia sales in UC, I think, have so far underwhelmed versus earlier expectations. That said, Pfizer obviously believes that Etrasimod is going to be a blockbuster in IBD. They obviously paid a good amount of money to get the drug. I guess, as an IBD physician, 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 a next-gen S1P1 could lead to better uptake, or does ultimately result in blockbuster potential, like expected for the class?

Raju Mohan (Founder and CEO)

Go ahead, Bill.

William Sandborn (President and CMO)

Yeah, I'll, I'll, 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. I, I think, you know, whenever there's a new mechanism of action, you know, robust physician and provider en-engagement and education is required. You know, therapies, therapies usually don't sell themselves. They require an educational and, and ultimately marketing campaign. I, I think the sense from- that, that I get from all of my colleagues in the field is that, you know, that just hasn't happened in any robust way with Zeposia. I think that plays a lot into it. The, the drug has also been priced for the multiple sclerosis market. You know, it's in the $80,000, $90,000, $100 range- $100,000 range.

As a starting price for an IBD drug, that's, that's kind of high, and that really, you know, that then sets barriers to access. I think it's heavily those things. I do have the sense that there is a rising experience with using the drug, and, you know, it'll be interesting to see where Pfizer sets their pricing. I would anticipate that they're gonna 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. 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, you know, 20%-25% placebo-adjusted delta.

Some of the phase II data with TL1A antibodies, both the Prometheus and Roivant Pfizer molecules, had 25 and 20%, respectively, remission deltas. etrasimod, depending on you look at it, phase II was 25%, phase III was 20% in one trial and about 10% in the other trial. Blended average is probably high teens, pushing 20%. I think the next generation drugs that would be really differentiated and exciting, you probably wanna see at least a 15 and ideally 20% or more, placebo-adjusted remission rate.

You know, if that- that's what we're aspiring to, and if we land in that zone on not only the primary endpoint, but with consistency in the secondary endpoints and some of the differentiating things, like getting, you know, complete endoscopic remission and stuff like that, you know, that, that's gonna be very interesting to people. Our, our drug is not aimed at multiple sclerosis, so it could be appropriately priced for an ulcerative colitis market. We, we think all of that will be a real opportunity. Marty, did you want to add anything about the sort of launch trajectory of Zeposia as you see it?

Marty Auster (CFO)

Yeah, Bill, I think you hit on, you know, a lot of the things that we, we see and we talk about internally, and we hear from, 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, as you sort of, talked around the efficacy there. Sam, on, on Zeposia was in the sort of low, very low double digits, so it wasn't particularly sort of, it wasn't groundbreaking or exciting efficacy. It's, it's perceived as a slower onset-of-action drug as well, which, which, you know, is, you know, better, better have a fast onset of action, of course, with, with the active metabolite that, the drug works through.

I think we've got some, some benefits with VTX002 that I think are, are, you know, hopefully more attractive attributes for the market. Obviously, we'll be watching closely, as you and our investors will, on, on how Pfizer's regulatory outcome and commercial launch goes with the later this year.

Sam Slutsky (Senior Research Analyst)

Fair point. Thanks.

Operator (participant)

Thank you. At this time, there are no further questions in the queue. I'd like to turn the floor back over to Raju Mohan for additional or closing remarks.

Raju Mohan (Founder and CEO)

Yeah, great. Thank you all again, all your analysts, all the investors, for your continued interest in Ventyx. Hopefully, we'll connect with you, with many of you at one of the upcoming conferences, we plan to attend in the 3rd quarter. We're really excited, you know, for the 4th quarter approaches. Looking forward to sharing our phase II top line results with you for both, starting with VTX002 in UC and then followed by VTX958 in psoriasis. Thanks. Thank you all once again.

Operator (participant)

Thank you. This concludes today's Ventyx Biosciences Q2 2023 earnings conference call. Please disconnect your line at this time and have a wonderful day.