For joining us on our next session. I am Mike Yee, Managing Director and one of the Senior Biotechnology Analysts here at Jefferies, and I'm very pleased to have the CEO, Raju Mohan, and the CFO, Martin Auster, from Ventyx Biosciences up here with us. I guess, in this fireside chat, I would love to just maybe start off by asking, Raju, obviously about the recent TYK2 data that came out, that was, to say the least, very surprising. And I would love to just sort of ask, obviously, where do we go from here? What is the messaging to investors about the next steps for TYK2 and, most importantly, the company, because there are some other assets of the company, and what should we be paying attention to, given the recent results? Yeah. Yeah- Maybe it would be helpful to briefly summarize what happened and how, you know, what are the takeaways and where do we go? Yeah, sure. Thanks, Mike, and thank you all, and- It's an important question. Yeah. It is. And so there's a lot of questions and sort of chronology in here. So let me first start by reminding folks what data we presented. So we have two readouts this part of the last quarter. One was a phase II readout for our S1P1 compound in moderate to severe ulcerative colitis, and then we had a phase II readout for the TYK2 molecule in psoriasis. And we'll start back on the psoriasis data here. So we had set up the phase II trial based on our data from our TYK2 compound, VTX-958, where we had shown that we can cover inhibition of cytokines of interest on IL-23 for better part of the day with our top doses. And of course, we had sort of gradual coverage down, and we had dosed a phase II in this trial with the expectation that a base case scenario would be in line with where Nimbus was, given the fact that we had coverage. And we're very confident about our profile. So, coverage of IC90, calibration of the IC90 numbers vis-à-vis other compounds, so all of that was set. The phase II data that we disclosed, which was essentially top-line data as a PASI readout across the dose cohorts, and then we have a look at PASI 75, PASI 90, and PASI 100, both from our internal expectations for what we would progress forward, as well as what other folks have shown more recently, which is the deucravacitinib data and then the deucravacitinib, which is the Bristol compound, and then the Nimbus Takeda data for their molecule, which came out early this year. The totality of the data that we saw, in particular, the PASI 75, led us to conclude that this, the profile of the compound in psoriasis, and let me remind you, this is only in psoriasis, the study didn't justify our internal calibration to move this compound forward. Given the fact that there is a considerable overlap of patients, as well as pathology in both psoriatic arthritis, which is a trial that we had just finished enrolling, decided to terminate both of those trials and really focus forward on our portfolio. We have a number of assets. TYK2 was one of them, and we decided that to essentially not drag the psoriasis piece and really focus more on the portfolio and in respective TYK2, focus on Crohn's disease, which we think is a, which is a different, and actually, a better value proposition and the benefit reward, I wouldn't call it risk so much, but the benefit there in terms of where the field is and the orals justified us moving that program forward. Can I ask a question on that? So, given the results that you saw in psoriasis and then quickly stopping the psoriatic arthritis study, you've had maybe a few weeks or a period of time to look at the results. Is there anything at all, looking at it, that could give us some incremental insight into what happened? Is it a patient population that messed it up? Is it a site that messed it up? Anything at all? No, I don't think it's a patient population. I don't think it's a site. I mean, look, these are smaller trials, and you will have diversity of patients, especially in the psoriasis patients. It's a very broader subset of patients than a Crohn's trial in terms of their comorbidities, but I don't think we can point to- Okay ... any particular issue here. Okay. Again, it's early. We have to go back and look at some of the exposure analysis. Right. We're looking at exposure in the skin, but no, I'm not going to ascribe it- Right ... to any site. These are pretty standard CROs that run the trials. So a very helpful piece of information, and I don't know if you guys are planning to look at this, and we'll be able to look at this before the interim analysis of IBD, is to ultimately, it would be great. I'm sure we would love to see if patients with higher PK exposure, in general, had higher PASI improvements. And even though, and so therefore, that would've meant that there was a bioavailability question. There was this and that was the issue. Mm-hmm ... not the actual molecular structure of the drug per se, because it was hitting in assays, you were getting extreme potency. So if it was an exposure thing, that would've just meant the bioavailability of the drug wasn't up to par, and that was the issue. Yeah, so- Now, obviously, you know, as the science people, I think I'm sure you wanna find- Yeah. So, like I said, we are- Exposure analysis. We will, we'll do an exposure analysis, and we'll do it by the patient level. We'll also look at the skin exposures. Okay. But we're very confident in the molecular profiling of the- Yeah ... compound going forward, so there's no ambiguity there. Okay. By the way, not that I'm not sure how important it is, but the other update was that you then ultimately announced you actually did get the extended release formulation and that you actually do have a once a day as well, and that had actually looked like the PK area under the curve of the twice a day. So for whatever that was worth, that actually hit two, but that's not so important right now. Right. So small mercies there. Remarkable. We did. Yeah, you know, it's part of the goal for the program, and we- Yeah ... achieved that, and we disclosed that, so, you know, and- So, eventually we'll find that out. I think we'd like to unravel the mystery of what happened there because an exposure analysis would give us an answer. Now, in IBD, just to be very clear, there is an interim analysis because a sufficient number of patients have been enrolled. So before we pull and stop anything, we would like to get some insight. Is there how many patients have been enrolled? Is it half of the study? And based on that, is there a threshold that would say, "Yeah, we should continue forward in this," because if the interim does proceed forward, there must be a certain amount of efficacy you're seeing, which would give us some hope. Any comments about that, and when is that interim analysis? Yeah, Mike, so we committed to- Crohn's disease study. Right. So the interim analysis for the Crohn's trial will be in Q1. What we have indicated is we, we've got about, a little over 40% of the trial was enrolled as of the psoriasis call a week ago. Okay. It's a 132-patient trial, so that's 50+ patients enrolled. So obviously, to get out to 12 weeks, we'll, we'll determine sort of what cut point we wanna make in terms of how many patients we wanna include in that interim analysis. And we'll, we'll have a communication at that time, either about the efficacy of the drug we're seeing or, or a decision to discontinue and, and sort of close the program down. Is there a certain threshold or amount of delta or efficacy that would lead you to continue the rest of the study? Yeah, I think... I mean, I think it's reasonable to look at some of the more recent drugs that have generated data- Yeah ...in Crohn's, and some of the IL-23 antibodies, Skyrizi, Tremfya, Rinvoq, you know, recently obviously reported phase III Crohn's data. And if you look across those studies, you know, you see fairly, you know, similar to UC- Yeah ... you see fairly conserved endoscopic response rates. We see more variability, more placebo response, and clinical response rates. So we'll be, you know, probably putting more weight on the endoscopic data we've got. Yeah, endoscopic. Yeah. Just, so to wrap this one up, like, what is the hypothesis that you guys or Bill would have to say that even though psoriasis didn't meet... By the way, I think you did say it was statistically significant, and it did hit. So there is a delta, and you just didn't disclose. Now, funny enough, is it a delta that was more JAK inhibitor-like? And obviously, there is data out there that is much higher than that now, so it's not worth moving forward because there's competitors that are 10% better. But there was actually-- it wasn't like it, quote-unquote, "failed." It actually did hit statistical significance, but did it at least look like Sotyktu? Original question. Yeah. The data was disclosed on the conference call on the slides that are available on our website. There was like about a 48%-50% PASI 75 response in the drug arm. Just slightly lower than Jacobra. Still below the gross response, probably. So given that result, is there any reason to believe that IBD would actually have positive result? Or it's more like, "Hey, you know, we're this way through. Before we pull the rug, we should at least take a look at that," just- Well, I think there is a hypothesis. We have a hypothesis we touched upon briefly without making a big deal about it in particular, but we have a hypothesis that this drug does have preferential disclosure in the gut wall. Right. Um- Right. Now, how that bears into efficacy, vis-à-vis, the IC90 coverage that we've shown in whole blood, will have to bear out. So that, there is- So because there seems to be an accumulation or greater exposure in the gut from- From- Yeah, let's say. ... from non-clinical work. Again, we don't have any data from human studies here, and partly the trial is enrolled to the extent Mark, Marty said, that allows us to have sufficient patients. We can do an analysis at a very incremental cost to the study, and we will, we'll look at it, and we'll thoughtfully decide. But there is. It's not a complete shot in the dark, let me just put it there. Now, what is interesting, since this is an investment community, is that, obviously, the stock and the valuation of the company now trades at 50% of cash. Mm-hmm. Just to be clear, we're talking about the value is now well below the cash balance, yet this quarter, you also did report out statistically significant positive S1P data in ulcerative colitis. That generally is in the range of a clinically competitive Mayo Score, but that the endoscopic remission is the high end, and I don't want to say the highest, but if you put up a chart, you would see it's definitely in the upper side of efficacy, and yet people aren't paying attention. So, can you just summarize where you would like to take the S1P based on just the fact that the Mayo necessarily wasn't above 20-20% delta, but that all of the other endpoints as well are very strong? What is the plan for that? ... Yeah, so, and I'll have Marty add to that. So we're planning for- You'd agree that this is, I mean, it's got to be a huge value proposition here at this point. Yes, and then I think the market's really never appreciated- Yeah the value proposition, so much focus on TYK2. Right. So, yeah, so we're committed to taking this compound into phase III. We've publicly said that, planning for a second half of the year, third quarter time frame. We had done all the early planning prior to the results coming out, and certainly now we are full steam with that planning. There is a significant milestone, which is the end of phase II meeting, which is gonna be sometime in the second quarter of the year, close to that time frame. That's gonna determine an agreement with the agency on the design of the phase III trial. We believe the phase III trial is gonna be the second of the two pivotal trials, the first one being the UC trial. We truly believe the Endoscopic Remission is differentiated from what's been shown with really a class of drugs, right? That the biologics tend to be more in the 10-10% delta intervals, like single digits. And we believe that the clinical remission in a phase III trial would sort of adjust to the geometric mean historically- Mm-hmm, mm-hmm ... as well as the placebo, actually the placebo rate adjusts to the geometric mean there. And both on safety of this compound, which has really been different from etrasimod in terms of cardiovascular effects that we've shown. So if I were to, and Santosh, if you were to describe what you think a phase III result and the clinical profile of this drug is, you or and actually, I've pushed on Bill on this, you believe that the Mayo Score, the, which is the primary endpoint for these studies, could have the same or better, delta, and stack up much more, to some of the higher-end compounds and certainly better than what etrasimod is. Because actually, your phase II had a greater proportion of naive patients, where there is a slightly higher placebo response, and quite frankly, the placebo response was on the higher end of some other studies with major delta, naturally a little bit lower because your drug arm actually did show a pretty high, Mayo Score. So only the placebo arm was slightly higher, and that's because there's a higher proportion of naive patients. Obviously, Bill Sandborn, who has run a gazillion of these studies and is, if you take a look at the Prometheus data as well, their Mayo Score is higher end, but their delta is quite wide because their placebo was very low. Yeah. And so do you agree with that? And so based on the endoscopic data and based on what I just explained with the Mayo, that you ultimately believe your phase III profile would stack up very well against other drugs? Yes, absolutely. I think it's well put. I think you captured pretty much- Maybe if Wall Street doesn't see that- No. Pharma would see that? I don't, I don't know, strategic— doctors, I don't know. Talk, talk to me about it. Yeah, Marty, doctor. I mean, help me out. Mm-hmm. Mm-hmm. Yeah, like, I mean, I think you're, you're hitting the nail on the head. I think the, the endoscopic scores, the endoscopic remission is always the most rigorous, most objective data point. Right ... you get, right? Obviously, the Mayo- But that's not placebo. That's like, you know, that's- Right, you- ... someone's looking at that. It's the most objective part of the Mayo Clinical Remission, which is a combination of rectal bleeding scores, as well as frequency- Having to go to zero, by the way. And endoscopy. This endoscopy to zero. Right. Exactly. So what we're doing with the S1P, which, you know, I think, you know, Raju alluded to slightly earlier, was, we've dosed this product to achieve a kind of a deeper lymphocyte reduction, more similar to what you see with some of the MS, multiple sclerosis approved S1P modulator agents, and differentiated from the UC-focused S1P modulators, ozanimod and etrasimod. Mm-hmm. So we think that's why we're getting differentiated endoscopic results, and we assume that with a larger sample size, maybe, maybe as you said, a more robust mixture of experienced patients will kind of tamp down a little bit of placebo noise. Right ... and then the clinical remission scores will sort of follow suit. But again, like I, you know, sitting here, it's. You like being in a position where the endoscopy scores are driving the efficacy picture because that's much more reproducible- Mm-hmm ... historically, as well as obviously much more objective and more, sort of trustable in a smaller phase II trial. Mm-hmm. Good. Okay. So the next step is an announcement that you have gone to the FDA, and you, in Q2, you'd come back to us with an okay and green light to start phase III. There should be no surprises to that? Yeah. So if you look at the development of Zeposia, right, that was a phase II trial and a single phase III trial-supported approval. Wow! This is a, you know, very similar path and a kind of trodden path with FDA. So we're expecting little in the way of surprise there in terms of the- You need to run one phase III. That's our- Between that and the phase II that was just reported, that should support a package. Right, and that would be similar to the Zeposia approval path. Okay. We will, you know, sort of determine final trial size, things like that. But if you look at like Arena's ELEVATE-52, their maintenance study, something like that is probably a good sort of benchmark to think about. Wow! Okay. We'll confirm with- We'll hear an update on that. Presumably, you have the money to support that phase III? We had $300 million in cash and equivalents at the end of the third quarter- Okay ... 2023, which we just reported last week. When we have agreement on path forward with FDA, we will lay out sort of costs of program that we estimate- Okay ... where we're at, and sort of what additional financing, if any, is needed. When we are, you know, obviously thinking about sort of, we've got capital, you know, well into 2025, and we're thinking about sort of how to extend that runway. Obviously... Right. There's some wind-down costs associated with the VTX958 psoriasis and psoriatic arthritis programs. Once we get through that, we'll see an attenuation of burn as we get into 2024. From there, we'll have to, you know, sort of think about different strategic options we have with the rest of our pipeline. Right. and we'll also- Yeah consider other sorts of financing. So let me. So what I heard was the current guidance is that you have cash through 2025. A biotech analyst could probably figure out that a phase III study for your S1P is gonna take out more than to 2025, so, but that does not include wind-down costs and other things that would be happening, so maybe that extends it a little bit. But you do also have a portfolio of other things that you could be strategic around for capital or otherwise. So that would be the NLRP3. Is that right? I'm not familiar. You are reading the comments correctly. Okay, so- Yeah. NLRP3. So, tell us what the next event is there. Is that something that would be up for partnership to raise capital to support the S1P? Tell us about that. I don't know. Yeah. So, you know, we again don't talk much about NLRP3. It's a very substantial portfolio. We have two compounds, distinct chemotypes. One is a peripheral molecule where we profile the phase I study. This is VTX2735. We are completing a CAPS study in CAPS patients, and while this is not an indication that we've talked about taking it in a full-blown phase II, it is really a proof of concept of this compound in patients with a clear relevance to the target, which is IL-1 beta. And so that data will come out sometime in the first quarter. We again talked about disclosing that in some forum with some of the other stuff we've talked about. We also have a brain-penetrant CNS molecule, VTX3232. We're completing a phase I study now. Data will be out in the first quarter. This study is not only looking at plasma levels of the drug. We'll have drug exposure in the CSF, which is surrogate for the brain- Yeah ... and we'll have biomarker data in the CSF as well. And, the totality of this is broad indications, not necessarily something we would embark on our own. It sets us up as, as Marty said, that we have optionality in terms of how we approach this. Alliances, partnerships, strategic deals, non-equity financing to then again look at the totality of the portfolio, S1P1 being the priority in terms of phase II. Right. Again, some look at the Crohn's options once the interim reads out. So someone- Do you think it is more likely that you could be strategic around the NLRP3 port package to fund S1P to keep the wholly owned rights, or that, hey, no, Mike, actually, we could see a lot of interest around the S1P, and we could get it funded by partnering that? Or is maybe it's 50/50. I don't know. I think all- Both of them have good and I don't know. Yeah, I think all options right now are on the table. Again, depends on interest we have in the structure, interest we get from external forces. But we have the optionality, and again, the NLRP3s will be phase II-ready for... What, what would you look for in this update? Q1, thinking very near term, in Q1, you're gonna have an update and data on the NLRP3 in a CAPS population, and if you saw efficacy, that is a clear proof of concept that the drug is working. Mm-hmm. And then you also have a blood-brain barrier-penetrant one. Mm-hmm. You're looking at levels in the CSF to see if it's there- Mm-hmm ... and biomarkers going in the right direction, so you're seeing efficacy in the CNS. What is good CAPS data, and what would be a positive result that would say, "Here we are, we have it? Yeah, I mean, there's not a lot of data out there in CAPS patients from NLRP3. There's only a couple of drugs have gone through. I think good, it's a- Is it placebo-controlled? It's an open label trial. Okay. But it's a pretty clear response in these patients. So as you know, some of you don't know, these are patients that have a genetic mutation from NLRP3, and they're pretty sick when they're off the drugs, and most of them- But this is a genetic form of CAPS. It's a genetic form of IL. They are essentially a knock down of NLRP3 in these folks. Okay. or a gain of function of NLRP3. Okay. And so as soon as you take them off the biologics, which they're on, which is IL-1 beta molecules, they end up- This is the Novartis compound? They're on a couple of drugs- Okay ... one is Novartis, and start to get pretty sick pretty quickly within, depending on the half-life of the drug, within days. And then biomarker levels like hsCRP skyrocket in these patients. Okay. But the symptoms like joint aches and headaches and fever, very rapid. And conversely, the response from what we heard from Hal Hoffman, who is one of our consultants, expert in this field, is very rapid as well. Okay. So we hope to show that data. It's pretty... From my understanding, folks who do it, it's pretty, clear-cut, so hopefully, that will show. Right. As well as the biomarker in these patients. Yeah. hsCRP levels really are very, very high, and Okay ... presumably, you would normalize those, or at least close to normal. Okay. How many patients is this and over what duration? We haven't disclosed that yet. Remember, the total patients in the U.S. is about 200. Oh, as a market? As a, as a- But if you- No, the total, total number of- Yeah ... CAPS patients is 200- Yeah ... or so, right? Yeah. So we'll have, yeah, we'll have a few patients. A few patients. Patients in that trial. Yeah, just to be clear, and this is not like you're trying to take a drug forward in CAPS. This is like, is it working? Because if you are hitting this target, you are shutting down the immune system. What would be a, for example, the ultimate type of development for a partner? What, what, why would someone be interested in that? Oh, I think, I think there's an interest in CAPS from a whole subset of people. For us- Okay ... the interest really would be in a partnership with a partner who's interested in cardiometabolic space. Okay. There is interest certainly in chronic kidney disease. There's a whole IL-1 beta pathologies, and we will certainly disclose the options. Okay. Whether we do it ourselves or not is- Okay ... is not determined yet. To be frank, I would presume that the CNS indication is even much more open space high in the medical need because there's a whole bunch of indications there that... C- ... together as a portfolio could be- Correct, and a lot of interest from folks in that field as well. Good. Well, guys, thank you very much for summarizing. I know that there'll be an update in Q1 as well for this, and we're marching forward with the S1P. So thank you, guys. Appreciate it, and look forward to continued dialogue with you. Likewise, Mike. Thank you, Mike. Always. Thank you.