Kick it off. Welcome to the 31st Annual Healthcare Conference, Credit Suisse. We're joined today by Ventyx Biosciences. We have Dr. William Sandborn and Martin Auster from the company for a fireside chat. Thank you so much for joining us. Again, it's been quite the year for Ventyx Biosciences. Maybe we can start with some high-level comments on the story, key assets, and we'll dive right in. Thiago, thanks for having us. It's obviously, it's great to see you from this side of the couch or whatever we're doing here. Yeah, we've had a fantastic year. Our IPO last October of 2021, and since then, we've completed two phase one studies for our NLRP3 peripheral program, VTX2735, and then in August, reported data from VTX958, our allosteric highly selective TYK2 inhibitor. Now we're gearing up to launch three phase two trials this quarter for VTX958, and we continue to progress with VTX002, our S1P1R modulator in ulcerative colitis. It's a lot of activity and been very exciting. Happy that Bill is here with me today. He joined us the spring of this year as Chief Medical Officer and President of the company. Over to him. Perfect. Again, a lot of the inbound and a lot of the focus has been on VTX958. I think the investor community is pretty well educated so far, so we can keep this relatively short. Again, allosteric TYK2 inhibition compared to early generation TYK2 inhibitors or JAK inhibitors, I think it's been quite well established that they have a different safety profile that has been recognized on the label. Overall, like what are some of the merits of this mechanism of action, and how can it actually fit in within the overall landscape across I&I indications? We see you know the three on-target effects of TYK2 inhibition are blocking Interferon alpha, Interleukin 12, and Interleukin 23. For interferon alpha blockade, you have a well-established monoclonal antibody for lupus. Sure enough, in a phase II trial, TYK2 inhibition effectively treats lupus. For IL- 23, you know, that's the other main target. We know that with an antibody, that's a very effective disease to target for psoriasis, psoriatic arthritis, Crohn's disease. We have data in ulcerative colitis, so it's a very well-trod and defined path of indications, and all of that reads through to TYK2 inhibitors. What we see as differentiating and what makes it interesting is we know from the monoclonal antibody studies that if you give lower doses of antibody that don't You would expect are not fully blocking the target, you can see PASI 75 in psoriasis in the sort of 50% range. As you get up to higher doses that you would expect are fully covering the target, that you can get PASI 75 up to 80% or 90%, 85% or 90%. We see that with the first generation TYK2 inhibitor, deucravacitinib, that they get that sort of partial coverage of the target with 55% or so PASI 75 efficacy, and that they're limited at that dose level because of off-target adverse events with acne, dermatitis, and dermatologic adverse events. We come to next generation, second generation TYK2 inhibitors like VTX958, we're looking for a wider therapeutic window that can allow target coverage that approaches monoclonal antibody coverage. You should expect incremental increases in efficacy that look more like a monoclonal. That's how we see the clean space and increasing on-target coverage. We know what intense on-target coverage is from all the antibodies, so we don't expect to see a worsening side effect profile for on-target coverage because we know that on-target coverage is quite safe. It's a really interesting place to be and you know we look forward. We've already shown it in phase I, and we look forward in phase II to demonstrating that value proposition. Got it. Since you alluded to it, can we talk a little bit more about the phase I findings? You were assessing target engagement. Does that stack up versus competitors? Again, the safety profile so far has been fairly benign. Can you characterize that relative to TYK2 or other assets? I have a couple of follow-ups there. Yeah. For deucravacitinib, the phase I study and the multiple ascending dose phase looked at doses up to 12 mg BID. What you could see is that you didn't see off-target dermatologic side effects up through about 3 mg twice a day or 6 mg once a day. Your target coverage with those doses is IC 50 for IL-12 and IL-23 inhibition of about eight hours or so and IC 90 at zero hours. It's that sort of mid-level of IL-23 inhibition. As soon as you go above that, you start to see 30% skin adverse events with a substantial rate of acne and acneiform dermatitis, folliculitis, and other skin manifestations. If you got up to 12 mg BID, that got up to 78% of the subjects. Those rates all played through as the phase I was translated into phase II and phase III. In our product, we're able to, at the higher doses, 175 mg twice a day and 350 mg twice a day, we had IC 50 coverage for 24 hours for IL-12/ IL-23 and Interferon alpha. We had IC 90 coverage with 175 mg BID for 16 hours for IL-12/ IL-23, and for 24 hours with the 350 BID dose. A very much greater target coverage, which would be approaching what you would see with the biologic. From the dermatology adverse event profile, we essentially didn't see anything up through 175 twice a day. At the 350 mg BID dose, we saw a couple of patients who had papules, and one of the two had completely reversed while the drug was continued with no topical acne therapy. In the other case, they completed the VTX958 therapy. The papules were improving, and there was no topical therapy. It looks like we were just potentially barely tipping into some skin stuff at that maximum dose of 350 BID. We have a lot of room in phase II to extensively find doses in the intended target coverage. Got it. You have established some compelling target coverage data that speaks to the therapeutic index. There are other competitors that they also have what are supposed to be highly selective molecules. You actually see a fairly different AUC profile in at least phase I. Probably not related solely to specificity, but what could be driving that differentiated profile for VTX958 relative to other next-gen TYK2 inhibitors that are currently in clinic? Yeah, I mean, I think we have to stick mostly to what we've done. We've been pretty transparent with all of our preclinical chemistry, with the selectivity. So, for instance, for selectivity of our compound to the JAK1 allosteric site, we're 4,000-fold more selective than deucravacitinib. You know, we've shown all the primary data behind that. I think we've seen less of that with some of the other products in the field where, you know, there's the statement that it's highly selective, but not a lot of robust data presentation behind it. I guess we can take it at its word that they're highly selective. That said, there's an inconsistency which it's not our job to sort out. What we see is with a highly selective compound, we don't see that off-target dermatologic side effect until really extreme target coverage, and you see it at much lower rates with other products. Fine if you're highly selective, why are you having off-target adverse events, right? Got it. Yeah, again, there's limited data available for us to make a lot of conclusions. Just looking for some broad comments. That's perfect. Once you did establish that target coverage, that's with a twice-daily formulation. Some skepticism if that is actually potentially viable. I know you guys are working towards reformulating. Any progress there? When could we actually expect to maybe see some data? How good risk is actually that reformulation to achieve the same target coverage as you have with twice-daily dosing? Yeah, we've been active in our program to identify an extended-release formulation, which we'd like to get ready for inclusion in phase III trials. For psoriasis, for example, we could be looking at starting phase III programs in, you know, early 2024. Having that prepared throughout the course of 2023. We've made some nice progress and conducted a fairly extensive preclinical characterization thus far for our formulation work. We expect to be conducting some initial human testing, and we plan to have an update for you know, towards the end of the first half of 2023. Got it. You know, this was the well-trod path. If you think about, you know, Rinvoq or upadacitinib in a previous life. I, you know, ran the phase II trials for that with the BID formulation, and by the time we came to phase III, it was once a day. Same thing with XELJANZ. You know, this is a pretty common story that phase II gets run with BID and phase III has solved the problem, but it's a finite group of steps that you can take. You just need a horizon to do it, and given that where we sit, we have an adequate amount of time. Perfect. No, that makes sense. When thinking about the actual commercial opportunity and the competitive landscape, again, it's kind of impossible to dodge questions about its competitors. We might see data for Nimbus fairly recently. How much readthrough could there be? You're talking about perhaps a more selective agent relative to deucravacitinib. Should that necessarily materialize in efficacy? How should that read through to VTX958 potentially? I think whatever is observed is likely to be a positive for us. It seems highly likely there'll be a solid effect. We know that from deucravacitinib. It was recently announced in an interview that they're assessing a range of doses from about 2 mg - 30 mg. You know, there've been several data releases over the years about how much target coverage 30 mg has. That's been modeled data, although real data exists, but just wasn't released. There's been some release of real data at, you know, 35 mg and above. It's a little hard to understand the existing public data right now to know what the target coverage is. You definitely saw dermatologic effects across a range of doses below full target coverage, which gets back to that issue of off-target effects. We're expecting efficacy, and we'll just need to see what the target coverage, the efficacy, and the safety profile, how it comes together. I think any of a variety of ways of how that could come together is probably good news for us. Got it. Shifting a little bit, thinking of commercial opportunities in the clinical development plan, you do have proof of concept for the mechanism across several indications. I think it's fair to say again, you have better target coverage than DUPIXENT, so that might allow you for some more flexibility development-wise. You have spoken about Crohn's specifically. What would be so compelling for Crohn's that maybe a VTX958 can be successful and may set a higher bar relative to other assets in the clinic? Are there any other indications that might be more uniquely suited here, where you can see perhaps greater dose response relative to target coverage? How are you thinking about that more broadly? I mean, there's been a pretty wide range of diseases tested with anti-IL-12/23 and anti-IL-23 antibodies. For instance, you know you won't go into multiple sclerosis, you know you won't go into hidradenitis suppurativa. You know that you can see, you know, a strong benefit in a dose-dependent fashion in psoriasis, psoriatic arthritis, Crohn's disease. We now are seeing emerging data with Lilly and Janssen for ulcerative colitis. Those are all logical indications. And lupus, as we mentioned earlier. In some ways, Crohn's is the most compelling story right now. It's a $13 billion worldwide market. There are no approved oral therapies. We anticipate that Rinvoq will be approvable, but it will have that line of use restriction and the black box warnings. An oral, you know, drug that works in Crohn's disease without a line of use restriction, we believe would be very attractive. Then if you look at the IL-23 antibodies in Crohn's disease, risankizumab, for instance, you know, you see a 20%-25% gain over placebo in induction. You know, nothing is better than that. It's similarly strong in biologic naive patients and failure patients. You know, following that earlier line of logic that if you get good target coverage to IL-23 with an oral, that you would have the equivalent of an oral anti-IL-23, I think that's commercially really interesting. Marty, how do you see it? You've analyzed commercial markets for a long time. I mean, these markets across the board are incredibly large markets. They still have some degree of under-penetrance, particularly in IBD, and there's a possibility of oral therapy. Kind of all those factors make sense that over the next sort of 5-10 years, you know, the TYK2 target is sort of well situated to address and expand some of those markets. Yeah, kind of to build upon that, 'cause again, one of the pushbacks that you get, not just for Ventyx but for I&I stories overall, is again, these markets are highly competitive. There are biosimilars, so on and so forth. That being said, you do see successful launch after successful launch for new mechanisms or for oral drugs. Again, there's this perception that the TYK2 class is overly competitive. You have DUPIXENT with a huge lead to market. In psoriasis, you have Otezla, which has an imperfect profile, but still it's been there for quite some time. How fair are some of those pushbacks, either when you're thinking in their class, especially now with emerging data suggesting that an IL-17 oral agent could be potentially viable? Yeah, well, I think from the perspective of psoriasis, obviously, you know, Bristol Myers Squibb studied deucravacitinib in head-to-head with Otezla and had, you know, differentiated efficacy. I think that's, you know, a very clear signal that, you know, to set up the TYK2 class to sort of, improve upon the, you know, pretty good commercial performance, frankly, for that drug. Over $2 billion in annual sales, like $2.3 billion, $2.4 billion run rate currently. So there's a pretty significant base just to start from there, and then to continue to expand oral penetration to psoriasis, the class opportunity could be significant. I think Bristol's talked about a $4 billion peak opportunity for TYK2. You know, when we talk about VTX958, you know, our ambition is to do more than just sort of develop a best-in-class profile in psoriasis. It's to expand this molecule into Crohn's, which again, almost as large of a market as psoriasis, much less competitive on the oral therapy front. You know, it's you get pretty big theoretical opportunities here pretty quickly. Just to recap expectations. Again, we're gonna get some data about the formulation probably the latter half of the first half of 2023. You're gonna initiate several phase II trials. How quickly can those enroll? I know you haven't really given a lot of specifics, but what could be a reasonable timeline for phase II proof of concept data in indications? Yeah. To look at the cadence of what you could expect from us for our S1P1R modulator, VTX002, we'd said at the earnings call last week that we anticipate completing enrollment by mid-year. That would give us a readout in, you know, early fourth quarter. And then we anticipate to have a readout in psoriasis before the end of next year. We'll have two meaningful phase two trials readout in later 2023, and we're anticipating the Crohn's and psoriatic arthritis trials in the first half of 2024. Then we will announce at R&D Day in later January a commercially important indication for our peripheral and our NLRP3 inhibitor, VTX2735, and we intend to complete that in that same timeframe. By summer of 2024, less than two years away, three molecules, five to five phase III programs in commercially important markets. If I can add to that also, VTX3232 is expected to enter phase I study in the first quarter of 2023. We'll report phase I data from that by the end of next year as well. Really busy back half of the year, and that's a really important molecule, just as the could be the first CNS-directed NLRP3 inhibitor readout data in the clinic, which is a very important target and a lot of different CNS indications like Parkinson's, for example, that makes sense with that molecule. Got it. No. Perfect. Shifting gears a little bit to VTX002, since you alluded to data next year. Again, it's an asset that seems to be underappreciated. There's again this perception that you already have a couple S1P1R modulators in clinic or being launched commercially. Where could there be differentiation for this molecule? Again, there was this theoretical argument of several receptor selectivity being potentially driving differentiated efficacy. Separate arguments mostly related to just PD markers and lymphocyte lowering. Both molecules seem to have achieved, at least in healthy volunteers, a fairly decent degree of lymphocyte lowering. Where exactly could this play out given the competitive landscape? Again, you've seen all those data so you probably have a pretty good insight into how zero zero two may differentiate. The issues that play in are the degree of lymphocyte depletion, the rapidity of lymphocyte depletion, and this has to do with the half-life of the drug. Etrasimod, the Arena Pfizer drug, has a half-life of about 30 hours, so within a week it drops down to, you know, target lymphocyte suppression. ozanimod, actually, most of the active compound is a long-acting phosphorylated metabolite with a half-life of, say, 10 days. You're really not getting to your target pharmacodynamic effect for a month. From a trial length perspective, the etrasimod trials were 12 weeks in duration, so you really had a full 12-week trial. ozanimod was eight and 10 weeks, but let's subtract four weeks for, you know, gradually accumulating the drug and getting the benefit. Those were quite short trials, and etrasimod looks a bit better, but I think some of that is just the differences in trial design. Both drugs end up with lymphocyte depletions in the 45%-50%, low 50s%. In multiple sclerosis, there are four drugs approved. Three of the four, GILENYA, MAYZENT, and PONVORY, have lymphocyte reductions in the 65%-80% range, and all three of those drugs tend to have larger improvements in the annualized relapse rate, a clinical measure of multiple sclerosis, and the gadolinium T1 positive lesions on brain counts, so the MRI lesions relative to ozanimod, which has lymphocyte suppression in the low 50s% and has relatively less efficacy than the other three drugs. If you take MS as the example, you get better data for efficacy if you get up in that 65%-80% lymphocyte depletion range and that range, 'cause most of the safety with this class of drugs is with GILENYA, and it's quite safe and doesn't have black box warnings. Our trial, we have a drug with a 20-hour half-life. We're dose titrating per week as most of the other drugs do to deal with the first dose heart rate effect. We have a full 12 weeks of induction efficacy, so all those learnings are there. Then the top dose that we have, we're aiming for lymphocyte suppression in the sort of 65%-80% range. We're gonna go up into that zone where three out of four MS drugs failed with the optimal dose, and we believe that will give us a chance for differentiated efficacy. Understood. I'm assuming how tightly correlated in UC do you have that PD marker translating to clinical efficacy? Are there any theoretical safety concerns of redosing that high and getting that PD effect as great as you intend to get? Yeah. We will of course have a dose that is in the ozanimod, etrasimod range as well. You're gonna take several shots on goal and explore that. I would say it differently. Ultimately, ozanimod and etrasimod is sort of the same experiment, and they're all different than with the exception of ozanimod for what was done in MS. I think the story is pretty clear and unequivocal to my read of the literature that the more intensive dosing in MS is very safe and doesn't have black box warnings and is better for efficacy. I don't actually think that the etrasimod and ozanimod data are relevant to the question because neither drug had full and adequate dose finding. Got it. Understood. Perhaps just one final on VTX002. You know that Arena actually tried to develop an S1P1R modulator across a couple of other indications. You already have a full plate, right, with the TYK2 inhibitor, so I understand it might be tough to manage several concurrent trials, but what's the appetite for developing VTX002 in other indications outside of UC right now? And again, I guess to a certain degree, that also plays into what you mentioned earlier, Marty, for the rest of the pipeline. Again, there's a lot of stuff going on there, but with the data cadence being heavy in the second half of next year, how should investors think about this opportunity, right? You seem to be trading at a slight discount right now to other I&I plays despite having multiple readouts that could be themselves quite meaningful, right? What's the disconnect? Just trying to figure out where the question was gonna be in there. Well, I'll just speak briefly to the other indications, and then Marty can talk to the valuation. For the two other indications, what we're aware of is an Eosinophilic Esophagitis trial with etrasimod and an atopic dermatitis trial. They had previously done an atopic dermatitis trial where there was a high placebo rate, and it made it hard to interpret. Those are both interesting indications. We're just looking to see what the data shows. If either or both of them come back with stellar data, the same logic that I just laid out would apply to other indications. You know, the door is always open for partnership discussions, and so with the things we have on our plate right now, we can do those. We're in good shape to do them from a cash runway perspective. You know, if we were to take on other things, you know, at some point, you have to have some reinforcements. Whenever really new data points that are attractive come up, then that can change how you think about, you know, optionality so. Tiago, as we reported at the end of Q3, we've got $412 million in cash. It's a runway into 2025. As Bill was detailing earlier, we're gonna have, you know, five to six important clinical data readouts. We're gonna have phase I data that sort of demonstrates, hopefully can demonstrate CNS penetration and activity on the NLRP3 target with VTX3232. There's a lot of different value-creating opportunities across four different assets. It's a nice diverse pipeline, and there's also a really good blend of heavily de-risked high probability of success and some things that are also a little bit less established, where we're trying to groundbreaking some new science. I think it's a good blend. It's capitalized into 2025. We can, you know, kind of accomplish all of our goals here. Bill's built out a really nice clinical group as well. We've expanded this company from, you know, doubled the size of the company effectively this year from 25, 30 employees at the start of the year to pushing 50 employees currently. I'm really excited about the progress we've made since the IPO and, you know, really thrilled to be here and share the story with you today. Cool. I think we can wrap it up at our time. Again, thank you guys for attending. Great to see you. Thanks so much.