Ventyx Biosciences Inc (VTYX) 2022 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Ventyx Biosciences Fourth Quarter and Full Year 2022 Earnings Conference Call.

(Operator Instructions)

As a reminder, this conference call is being recorded.

I would now like to turn the call over to Dr. Marty Auster, Ventyx's Chief Financial Officer. You may begin.

Thank you, Chelsea. Good afternoon, everyone, and thanks for joining us today. Welcome to Ventyx Biosciences Conference Call and Webcast, where we will be discussing our Fourth Quarter and Full Year 2022 financial results and providing a business update.

As a reminder, the company's most recent investor presentation can be found on our website at www.ventyxbio.com under the Investors tab in the News and Events section.

Before we begin today, I'd like to remind everybody 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, the anticipated timing of release and clinical trial data, the market opportunity for our product candidates and the expected timeframe for funding operations with our current cash, cash equivalents and marketable securities.

These statements are subject to risks and uncertainties that could cause actual results to differ. Factors that could cause actual results or outcomes to differ materially from those expressed and/or implied by such forward-looking statements are discussed in greater detail in our most recent reports filed with the SEC, including our Form 10-K for the year ended December 31, 2022, which we anticipate, will be filed this afternoon. 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 or any revisions to these forward-looking statements in light of new information or future events, except as required by law.

With that said, I'll hand the call now over to Dr. Raju Mohan, Ventyx's Founder and CEO. Raju, please go ahead.

Thanks, Marty, and thanks, everyone, for joining the call this afternoon. So here is today's agenda. I'm going to provide a high-level business update, and then I'm going to hand the call over to Bill Sandborn, our President and Chief Medical Officer, and Bill will provide a little more color across all our pipeline programs. And finally, Marty will wrap up with a brief overview of our full year 2022 financial results before we open the call up for Q&A.

So let me start with reiterating that 2022 was a year of outstanding progress and execution for Ventyx. I could not be prouder of our accomplishments, as we continue to build an amazing team, strengthen our financial position and successfully advance our unique portfolio of internally discovered wholly-owned small molecules that target large markets with high unmet medical need.

Recapping now, in the third quarter of 2022, we reported positive topline results from the Phase I trial of our novel allosteric TYK2 inhibitor, VTX958. We believe these data demonstrate a potential best-in-class profile, including class-leading IC90 coverage of IL-23 and other TYK2 mediated cytokines, an excellent safety profile across all doses tested in the multiple ascending dose portion of the Phase I trial. As we had previously guided, we initiated 3 Phase II programs with VTX958, beginning with the SERENITY trial in moderate to severe plaque psoriasis, the HARMONY trial in moderate to severe active Crohn's disease and the TRANQUILITY trial in active psoriatic arthritis. As I said before, Bill is going to provide additional color on these trials.

In June of 2022, we reported positive Phase I data for our peripheral NLRP3 inhibitor, VTX2735. With the completion of requisite CMC and toxicology studies, VTX2735 is now a Phase II-ready program. To that end, we today announced that we have initiated a Phase II proof of mechanism trial for VTX2735 in CAPS patients.

Meanwhile, our novel CNS-penetrant NRLP3 inhibitor, VTX3232 has completed IND-enabling studies, and we look forward to initiating a Phase I trial later in the first half of this year. And we've achieved all of this, while continuing to execute on the global Phase II trial of our potential best-in-class S1P1 receptor modulator VTX002 in ulcerative colitis. We are pleased to report that this trial remains on track to complete enrollment by mid-year, and we remain excited about the potential for VTX002 to differentiate from other S1P1 modulators in ulcerative colitis.

And with 2022 behind us, we held our R&D Day in New York in January and laid out our vision for what we believe will be a truly transformative year in 2023 for Ventyx. With a number of key clinical catalysts in the near-term horizon, the cadence of data will start with topline Phase II data for VTX002, our S1P1 modulator in ulcerative colitis, which is expected in the second half of the year, likely late Q3 or early Q4.

We expect to report topline data from the Phase II SERENITY trial of VTX958 in plaque psoriasis later in Q4. And finally, we expect the Phase II data readouts for VTX958 in psoriatic arthritis and Crohn's disease in 2024.

So as you can see from our brief summary, there's tremendous amount of activity across our entire pipeline. But as always, we remain committed to our mission, which is to bring safe and effective oral medicines to large immunology markets, currently dominated by biologics. So we look forward to sharing more updates with you as we progress throughout this year. But with that, I'm going to hand the call over to Bill for a more in-depth update on our pipeline programs. Bill?

Thank you, Raju, and good afternoon, everyone. I'm excited to provide a brief pipeline update today as we look forward to a very important year for Ventyx. I'll begin with VTX958. As we've mentioned, enrollment is underway in 3 Phase II trials of VTX958. This includes 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.

We presented key aspects of these 3 Phase II trials at our R&D Day in January. I won't repeat all of those details here, but it's important to reiterate that across the 3 Phase II trials, we will explore a range of doses, including a high dose that is expected to approximate trough coverage of IL-23, IC90. We believe that VTX958 is unique among TYK2 inhibitors in development and may be the first to explore the therapeutic impact of near full inhibition of TYK2 pathways across relevant indications, resulting in potential biologic-like suppression of IL-23 activity.

We believe that this level of inhibition of IL-23 will be important for maximizing efficacy in psoriasis and psoriatic arthritis. And this level of -- high level of target coverage will also likely be essential for exploring the opportunity in Crohn's disease, where there is a particularly high unmet need for a safe and oral -- safe and effective oral therapy and where we believe relatively higher exposures with biologic-like target coverage will be required to achieve efficacy.

Our team is laser-focused on the execution of these trials, and we look forward to reporting topline data from the Phase II SERENITY trial in plaque psoriasis during the fourth quarter of this year.

We also continue to make progress on the development of an extended-release tablet formulation for VTX958 for our once-a-day, or QD, dosing regimen in Phase III, which is expected to simulate our class-leading exposures in our Phase II trials. At our R&D Day, we also showed early data from our prototype extended release formulations that exhibit the desired release profile, both in, in vitro dissolution assays and in dynamic in vitro GI modeling studies. These data give us great confidence in our ability to achieve our target product profile for the QD regimen.

We look forward to updating you on these efforts in the middle part of the year after we have completed our initial in-human testing of these promising prototypes. In the second half of 2023, we will initiate CMC activities on the extended-release tablets to be Phase III ready with the start of Phase III for psoriasis in 2024. We have also initiated broader Phase III planning, and we'll provide more details on this in the latter part of the year.

Moving on to VTX002. I would now like to update you on the Phase II program for our potential best-in-class S1P1 receptor modulator for ulcerative colitis. At our R&D Day, we laid out our strategic vision for this program and shared some very encouraging preliminary pharmacodynamic data from the open-label extension of the ongoing Phase II trial. Among patients completing week 26, which includes 13 weeks of blinded therapy followed by 13 weeks of open-label therapy with VTX002, 60 milligrams. As of January 15, we had observed a mean reduction from baseline in the absolute lymphocyte count of 74%, which we believe is clinically optimized in terms of pharmacodynamic response compared to the more limited absolute lymphocyte reduction achieved by etrasimod and ozanimod, which is in the 50% range.

As we look across the landscape of S1P modulators in multiple sclerosis and ulcerative colitis, we believe that there is a clear and consistent positive correlation between the pharmacodynamic effect as measured by the absolute lymphocyte count and clinical efficacy, with S1P modulators and multiple sclerosis establishing both the efficacy benefits as well as an extensively characterized safety profile of ALC reductions in the 70% to 80% range. Although extensively studied in these multiple sclerosis trials, exploration of the upper part of the safe achievable ALC reduction has, to date, not been adequately explored in ulcerative colitis.

Our Phase II trial is designed to explore this hypothesis in UC with our 30-milligram dose expected to achieve a pharmacodynamic effect, similar to or somewhat higher than etrasimod and ozanimod. Whereas our 60-milligram dose is expected to achieve best-in-class absolute lymphocyte reductions in the 70% to 80% range. And with an early look at our open-label extension data showing a 74% mean reduction from baseline in the ALC with the 60-milligram dose, we believe we are tracking right on target.

And we are optimistic that our dosing strategy, targeting this magnitude of ALC reduction, may translate to best-in-class efficacy profile in ulcerative colitis. So we are very excited about the potential of VTX002, and we continue to make great progress in enrolling this trial. We're well on track to wrap up enrollment by mid-year in line with our prior guidance, and we look forward to reporting topline results in the second half of the year. And similar to the planning with VTX958, we have begun a wide range of other Phase III enabling studies for VTX002.

Next, I'll briefly discuss our NLRP3 inhibitor portfolio. As Raju mentioned, we're pleased to announce today that we've initiated a Phase II proof of mechanism trial of our peripheral NLRP3 inhibitor, VTX2735 in cryopyrin-associated periodic syndrome, or CAPS, a group of rare autoinflammatory conditions caused by a gain of function mutations in the NLRP3 gene.

Specifically, we're targeting patients with the familial cold autoinflammatory syndrome, or FACS, which is the most common subpopulation of CAPS. This trial represents an opportunity for us to efficiently demonstrate clinical proof of mechanism for VTX2735 and a defined patient population with mutations in the NLRP3 gene where we know that IL-1 beta antibodies have already been proven effective.

Longer term, we continue to see great potential for systemic NLRP3 inhibition in a range of chronic inflammatory conditions that are characterized by NLRP3-induced excess production of interleukin-1 beta, including various dermatologic, rheumatologic and cardiovascular diseases.

Finally, we remain on track to initiate a Phase I trial of our novel CNS-penetrant NLRP3 inhibitor, VTX3232 during the first half of this year. We expect this trial will characterize the safety, target engagement and CNS bioavailability of VTX3232 in healthy volunteers. As we highlighted at our R&D Day, we believe that the profile of VTX3232 may define it as a class-leading therapeutic for a range of neuroinflammatory conditions with the high unmet medical need. These could include Parkinson's disease, Alzheimer's disease and amyotrophic lateral sclerosis, among others. We're very excited about this program, and we look forward to advancing VTX3232 into the clinic in the upcoming months.

This concludes our pipeline update for today. In summary, we continue to make great progress across the pipeline with 5 Phase II trials now underway, and we look forward to generating very meaningful Phase II clinical data for VTX002 and VTX958, beginning later this year. None of this happens without a great deal of dedication and diligence for our team, and so I want to echo Raju's sentiments and thank the whole Ventyx team for their ongoing efforts. Before we move to Q&A, I'd like to hand the call back to Marty Auster for a brief discussion of our financial results. Marty?

Yes. Thanks, Bill. You'll find our financial results for the fourth quarter and full year in our press release, and I'll summarize just the full year results here now. R&D expenses were $87.7 million for the year ended December 31, 2022 compared to $58.5 million for the year ending in 2021. This increase reflects the advancement of our pipeline in the later stages of clinical testing, including execution of the ongoing Phase II trial of VTX002 in ulcerative colitis as well as Phase II preparation start-up activities for VTX958 in psoriasis, Crohn's disease and psoriatic arthritis.

G&A expenses grew to $25.4 million in 2022 compared to $8.7 million in 2021, reflecting the buildup of our corporate infrastructure. Net loss was $108.4 million for the year ended December 31, 2022 compared to $83.7 million for the year ending in 2021. Cash, cash equivalents and marketable securities were $356.6 million as of December 31, 2022. Subsequent to the end of the year and early 2023, we raised $48.4 million in net proceeds through our aftermarket, or ATM program, resulting in adjusted total cash and cash equivalents balance of $405 million.

As we spoke on our last quarterly call, we expect our operating expenses to continue to increase throughout 2023, as a function of increased clinical costs associated with our 5 ongoing Phase II trials with VTX958, VTX002 and VTX2735 as well as CMC activities, which we'll be undertaking to prepare the company for future Phase III trials for VTX002, VTX958 and the rest of the pipeline.

While we may experience some quarter-to-quarter variability in our operating results, the general trend will likely be higher over the course of the year, and we continue to believe our current cash, cash equivalents and marketable securities are sufficient to support planned operations into 2025.

This concludes our prepared remarks for the afternoon's call, and I'll now turn the call back to the operator to begin the Q&A session, and I'll be joined there by Raju and Bill. Operator?

(Operator Instructions)

Our first question will come from Michael Yee with Jefferies.

I had a question -- 2-part question for Bill, maybe. I guess, recently, we saw some data from a second generation TYK2 had some better positive data in psoriasis. But I'm interested in your views about how much better that was than the first generation TYK2? And what the implication is for what you could show in your psoriasis data as a second generation? So maybe talk about what your expectation is now for your psoriasis data that we just saw?

And then secondly, based on that, and briefly that -- what are stool -- the needs in a higher doses in Crohn's disease, and therefore, what you would expect out of that? What that would mean for you as well?

Yes, Bill?

Beginning with the next-generation TYK2 inhibitor where data was reported, I think what we saw was that the higher doses that there were greater rates of PASI-75, 90 and 100 than what was seen in the Phase III studies of Deucravacitinib at the 6 milligrams once-a-day dose. And we believe that the IC sort of 70 and coverage is generally more robust with the next-generation products so that -- to our way of thinking, it really fits with our premise for VTX958, that more intensive target coverage will lead to greater efficacy.

I think it's encouraging that you saw the greatest level of PASI-100 with the dose of that product that got a little bit of IC90 coverage in the 5- or 6-hour range. And just to reiterate, the higher doses that we've taken forward will have substantial or complete IC90 coverage over 24 hours.

For Crohn's disease, what we know from the relationship between TYK2 inhibition and IL-23 antibodies is that the doses that are required to see efficacy in Crohn's disease and the same would be true of ulcerative colitis is that you need doses of antibody that are at least as great as what gave maximal PASI-75, 90 and 100 rates in psoriasis.

And so, so far, the doses studied with Deucravacitinib, even investigational doses of 6 twice a day or 12 once a day would not generate any level of IC90 coverage. And so I would expect that it will be harder to demonstrate efficacy in Crohn's disease, but we'll see.

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

Congrats on all the great updates. Following on to the question that Mike had in regard to the competitor data. One of the questions that a lot of clients are asking us is in regards to a plateauing effect that was observed with their programs. As you recall, at the 15 and 30 mg dose group, the PASI reductions were very identical. And so the question being raised, is there just a function of just or mid or we'll see. But I'm confident something in the molecule? Or why was it that you're reaching the plateau, given that there must have been a differences in IC90 coverage between 15 and 30 milligrams and how do we know, moving forward, with the doses you are going with that there's not really a plateau?

Greatly appreciate any of your comments there. And then in regards to for Dr. Sandborn, if you could just give us a little bit more color in terms of how enrollment is progressing into SERENITY and maybe to the extent you could comment on whether it's going to be maybe early in the 4Q or later in 4Q for data, and then I'll jump back right into the queue maybe for a follow-up things.

Yes, thanks. Yes. This is Raju. So as following up on Bill's answer to Mike. And there's a lot of focus on the plateauing effect last week, discussions with folks. And specific to the 15 and 30 milligram dose, these are small trials. There's a lot of exposure variability amongst these doses. And that's one aspect of it.

But the real -- I think the real focus should be on the more sensitive end points where you clearly see a benefit for higher coverage. And you see for Deucrava, you see it for the Nimbus Takeda drug, and we expect that for our compound as well, right? So I think the totality of this, we should take home is that from all the trials in psoriasis, IL-23 biologics give you about 80% of PASI-75, about 70% of PASI-90, and about 33% to 50% of PASI-100. That's the overall efficacy profile we are targeting.

And we can show that we can achieve a biologic-like coverage of the IL-23 in our Phase I data, and we're targeting biologic-like efficacy in our Phase II trials, not only for psoriasis, but for Crohn's disease and psoriatic arthritis. So really focused on a more sensitive endpoints and the cross-route round comparisons are difficult.

But really, as you get to the higher efficacy endpoints like PASI-90 and 100, you will see differentiation with drugs that have higher coverage of IL-23, and that's what we are targeting. Bill, why don't you update on the enrollment?

Yes. I mean, I think we're circumspect about providing too much details on enrollment, except to say that I'm very comfortable committing to topline data in the fourth quarter of this year. And whether it's early in the fourth quarter or mid or -- we'll see. But I'm confident we'll data in the fourth quarter.

Our next question will come from Matthew Harrison with Morgan Stanley.

This is Steve for Matthew. So I want to ask about the VTX2735, the Phase II trial, it just started on CAPS. How should we think about the peripheral concept? And should we expect to see in the data?

Yes. Bill?

Yes. So as you know, with CAPS, they have a variety of symptoms, which can include rash, fever or paralysis. There are validated scoring systems that measure those. The patients will not be on a biologic. So they will have stopped the biologic, they'll be symptomatic. We're treating them in the context of the trial and expecting to see improvement in the validated symptom measures, which should allow relatively direct comparisons to prior Phase II and Phase III data with the various biologic agents, which include Anakinra, Rilonacept and Canakinumab.

Our next question will come from Jeff Jones with Oppenheimer.

I guess, I'll slide over to the 002 program. With the etrasimod data now published, and of course, Bill, you can first start there. Any thoughts on how that study data impacts your positioning of the 002 program? Obviously, that study is well underway, but how does that help you in your thinking about positioning of the program and getting ready for Phase III?

Yes. So what you see with both ozanimod and etrasimod from their Phase II programs is, they had a lower dose that achieved roughly 30% reduction in ALC from baseline and a higher dose that received -- that resulted in 50% to sort of 54%, 55% reduction in the ALC. And with each drug, you saw a linear dose response from the 30% reduction to the 50% to 55% reduction.

If you look analogously in multiple sclerosis in Phase II trials, they explored with -- there's 4 different drugs approved and -- for S1P, and in Phase II, they explored across the range from 20% or 30% ALC reduction all the way to 79% ALC reduction. And then in Phase III, a range across sort of 55% with ozanimod on the low side of multiple sclerosis, up to 73% to 79% with different doses of Gilenya on the higher side of ALC reduction.

And across all of these, whether you look at clinical remission and endoscopy across low to mid lymphocyte reduction in ulcerative colitis or annualized relapse rate, a clinical measure of multiple sclerosis or reduction in T1 Gadolinium-enhancing brain lesion reduction on MRI with multiple sclerosis, you see linear relationships between the degree of lymphocyte reduction and clinical outcome measures on one hand or sort of structural outcome measures on the other.

And at least in multiple sclerosis, you don't really plateau those effects until you get up to at least 65% ALC reduction in probably low 70s. So what we believe is that the range above 55% reduction is unexplored in ulcerative colitis, and given what's been seen with multiple sclerosis, we think it's very logical that -- what's been seen with multiple psoriasis going to 70-something percent reduction and the linear relationship between load intermediate lymphocyte reduction in ulcerative colitis, but it's very logical to think that you could add to the magnitude of efficacy that was seen with etrasimod.

And so we're really looking for 20-plus percent efficacy across the important outcome measures, but the primary endpoint will be clinical remission. And if you think about most of the existing drugs, the difference between drug and placebo is about 10%. So a 20-plus percent delta becomes really clinically meaningful, especially for a safe oral therapy.

I appreciate that color and sounds fairly analogous to the way you're thinking about the TYK2 scenario.

Our next question will come from Chris Shibutani with Goldman Sachs.

If I could return to 958 and some of the context with competitor data that we saw at the AAD meeting. But maybe approach it more from the question of not efficacy, but on the overall tolerability profile as well. Looking to see how you view some of the relative information that we learned, in particular, in terms of any potential that you might see something in the way of CPK elevation?

How are you thinking about that potential of the ongoing Phase II study? And related to that, now that we have sort of a new visibility on the competitive data set and what's happening, I believe theoretically, there's still potential for you to make modifications to your Phase II programs across the different indications. How are you thinking about that? Is there a potential for tweaks to any of the program design?

Yes, I'll take the latter question, and then I'll have Bill talk about some of the safety end points that been disclosed with the latest Takeda Nimbus data. So no, we have a very strong belief in our design of the Phase II trials across all 3 trials. Very carefully targeted, approached the way we've done the dose regimens, and we -- or the dose cohorts. We've shared the broad strategy across all 3 programs with psoriasis and then with Crohn's disease and psoriatic arthritis.

And really at the top dose, we're targeting, as we said, biologic-like coverage, trough levels, IC90 coverage for all 3 indications there. So none of the data that you've seen come out whether it's specific data or now, recently, the Nimbus Takeda data has any impact on our strategy, but we have a clear line of sight to, as I said before, and builds, particularly in previous discussions as well, Chris, that our belief in our target coverage with biologic-like coverage, we are really aiming for biologic-like efficacy across these trials. So nothing here needs to be adjusted or tuned and we've placed the focus on execution of these trials. But let me get back to Bill on your question about CPK and tolerability. Bill?

Yes. I mean, for CPK, if you walk back to Deucravacitinib and what -- between the prescribing information, what's available from the summary basis of approval with the FDA website, about 1% of patients with Deucravacitinib at the 6-milligram dose had CPK elevations that were grade 4 and about 1.5% had grade 3. It's a relatively similar low percentage.

I think that was seen with the Nimbus Takeda data. And all of these are very different from what you see with either pan-JAK inhibitors like Tofacitinib or JAK1 selective inhibitors like upadacitinib. So our way of thinking -- so these are just low rates of events. Then we've already seen the willingness of regulators to give clean safety label so those low rates are labeled, but they're not black box warnings. And I think the data really are just consistent -- additional emerging data, from my point of view, are still consistent with allosteric TYK2 inhibitors being highly selective, different from JAK inhibitors and consistent with clean labels. And we believe our product will be right in that zone for tolerability.

(Operator Instructions)

And our next question will come from Sam Slutsky with LifeSci Capital.

This is Rami on for Sam. First, I guess, with the NLRP3 inhibitors, can you remind us what level of IL-1 beta and IL-18 reductions you're looking for in order to see clinical benefit across the range of indications you could go after? And then secondly, what level of detail do you anticipate providing for the mid-year update regarding the extended release formulation of 958? Is it primarily safety and PK data? Or is there anything else we should look out for?

Yes. Let me take the extended release, and I'll have Bill talk about the level of coverage we expect for the cytokines for NLRP3. So on the ER tablet, Rami, we had quite a pretty meaningful data update at the mid-year or somewhere in the mid-year timeframe that we've talked about. So we've showed data for the prototypes that we've already completed. We've showed relevant in vitro -- human-relevant in vitro data, which is both, as Bill said, the solution across different bio relevant or GI-relevant changes and also showed data from a dynamic GI model, which again, is very relevant to what happens in the absorption distribution phase.

And on safety, these are short studies. We've done longer studies, obviously, in the MAD phase. I don't expect any really safety issues. We'll show you a comprehensive profile that says, we can achieve IC90 coverage with the QD regimen. So that's what you will see in the mid-year timeframe.

And related to the NLRP3 inhibitors, if you recall the translational medicine Phase I data that we shared at R&D Day with the 2735 and NLRP3 inhibitor, so the peripheral compound during the multiple ascending dose portion of the trial, we did a whole blood ex vivo stimulation assay at day 10, where you give LPS and ATP and then look at the ability to block IL-1 beta production.

And at the higher doses and the higher doses in MAD were 100 milligrams and then 200 milligrams, we were really able to completely aggregate IL-1 beta production. And we -- what we're looking for is read through the clinical efficacy where you have clinical diseases that are -- you have an alteration in NLRP3 that leads to an excess in IL-1 beta and where you can see effects of monoclonal antibodies against IL-1 beta treating that excess and resulting in disease improvement.

So as I mentioned earlier, we are, for instance, treating the NLRP3 gain-of-function mutation CAPS with this. We know that's characterized by very high levels of IL-1 beta and currently treated with antibodies, and we will need to aggregate IL-1 beta production to see those patients get better. And what we -- the point of that trial is to show that the complete abrogation that we saw with those higher doses in MAD in Phase 1 translates into the clinic.

Having shown that, then you could have some confidence that you think a variety of other diseases where randomized controlled trials have shown that IL-1 beta antibodies are effective. This would be things like Recurrent pericarditis, Juvenile Arthritis, Adult-onset Still's disease. There were definitely studies that showed that Acute Gout achieved that. You've seen it for secondary prevention of MACE events in patients with the prior history of MI.

We know that there's translational medicine studies have shown high rates of expression of IL-1 beta in biopsies of patients with Hidradenitis suppurativa. So there's a variety of places that one could logically go, once you've shown that your small molecule NLRP3 inhibitor treats an IL-1 beta-driven disease.

Our next question will come from Emily Bodnar with H.C. Wainwright & Co.

I guess going back to safety for VTX958. We thought the Nimbus molecule, there are some signals of acne and viral infections. Could you maybe talk about if you expect to see this in your Phase II study? I know you didn't really see it in Phase I, but it was noted with Deucrava as well. So interested to hear your thoughts there.

And then maybe if you could just give your perspective on the oral psoriasis market, in general. Now that we're getting a lot of mechanism showing positive data like the recent oral IL-23 agent and also an oral IL-17. So curious how you think the TYK2...

Yes. Number of great questions, Emily. So let's just take them one by one here, and I'll have Bill jump in, if needed here. So first, on the dermatologic side effect that you've seen now with the Nimbus compound as is seen with Deucrava.

So and we made this very categorically clear that we do not believe these are on target. So there is no reason, mechanistically, that TYK2 should manifest or an IL-23 pathway that TYK2 is targeting, should manifest these dermatological effects, the acne and the folliculitis and other effects. So as you pointed out, this kind of magnitude of effects, and we ran trials in a similar timeframe that folks have done before, the sort of 14-day Phase I studies where these effects were elicited very early in these trials.

So we think these are off target for both the Nimbus compound and for Deucravacitinib. We have speculations and ideas about potentially what may be happening. Hitting some other targets that are involved in these side effects, but from our perspective, we don't expect to see these. They are not picture driven, and so they're off target. I think that's the most relevant conclusion for our compound VTX958. The other question was about the -- go ahead.

Yes. The viral infection was specifically COVID, and there did seem to be a treatment -- an imbalance between placebo and the treatment groups, although it wasn't very dose dependent, as I recall. We don't really see that with the anti-interferon-alpha antibody Anifrolumab in Lupus patients. And so I'm not quite sure what to make of that. As the presenter at AAD noted, the study was run at the height of the COVID pandemic, and so it's sort of a unique circumstance.

And none of the patients died or were seriously ill as I understood it from the infection. So I'm not too sure what -- I think it's a little premature to know what to make of that, except to say that when you look at anti-interferon-alpha antibody with really complete target coverage with lupus, this is not an important issue, and there's no such signal with IL-12 23 inhibition with STELARA or with IL-23 inhibition at very high antibody doses with either Tremfya, Skyrizi, et cetera. So I think it's likely to be sort of a fluke of the pandemic and not go further, but time will tell.

And also to note that this really hasn't been seen to any meaningful degree. The way that the COVID was seen in the Takeda Phase II study that really wasn't seen in the Phase II and Phase III trials across multiple indications with Deucravacitinib at doses that are getting up to overlapping with some of the Nimbus Takeda doses. And so in terms of -- I see 50 and 70 coverage for the TYK target. So I'm going to guess in the fullness of time that, that safety issue won't be replicated, but time will tell.

So back to the newer oral IL-17s and oral IL-23. So let's just dig the oral IL-17, first. So look, we had a discussion about PASI-75. We're discussing PASI-90. We're talking about PASI-100 possibilities with drugs that can achieve the coverage that we do, a biologic-like coverage to talk about a drug where there was absolutely no PASI-75. I just don't think is relevant to this discussion today, and we can have more discussions subsequently if and when we see better effects with an oral IL-17. So I'll put that to rest there.

In terms of an oral IL-23, and I'm assuming you're referring to some of the protagonist Jansen PR that has come out. It's really hard to speculate on data that we haven't seen, and we expect to see this data in the latter half of the year, and we can have a discussion just like we're having today with competitor compound is certainly very hard to speculate on a PR, generic PR that came out.

But I think more in context of the opportunities that we have with our approach with 958 across a broad range of autoimmune indications and perhaps, the lack of opportunity for some of these newer oral IL-23. And then I'd love to hear Bill's perspective on that because I think that's more important to us, broadly. Today, we can discuss and talk about data that we haven't seen. Bill?

Yes. So we'll need to see, as Raju said, what the data look like in psoriasis. But as I mentioned earlier, you really -- to unlock the inflammatory bowel disease market, you really need to have doses that mimic a optimally-dosed IL-23 antibody in psoriasis. So doses that would give you PASI-75s, up to 85% or 90% and 60% to 70% PASI-90s and sort of 33% to 40% or 50% PASI-100s. And the IBD doses are often a bit higher than that.

Part of that is a couple of reasons that antibodies -- and I think peptide antagonists are going to be the same. You're basically binding already secreted cytokine and different disease settings can give different amounts of cytokine, and you can have differences in target mediated clearance. And then you can also excrete parenterally-administered drug in the gut, and this is well described that REMICADE, for instance, given intravenously is lost in the stool in severe colitis and Crohn's disease.

So those are reasons why you need more antibody for IBD than you need for the optimal dose of psoriasis. So even if with a peptide antagonist, you show that you can start to get into the zone of IL-23 parenteral agents for efficacy, I would expect that like antibodies, you'll need to go further than that to have efficacy in IBD.

By contrast with TYK2 inhibitors, they're really intracellular acting and you're eliminating the secretion of the cytokines to begin with. So you wouldn't expect to have that same target-mediated clearance. And I think as you get to IC90 coverage, you should be able to effectively treat Crohn's disease and ulcerative colitis, and that's what we're planning to demonstrate in our ongoing Phase II trial in Crohn's disease.

Our last question will come from Alex Thompson with Stifel.

This is Pat for Alex. Just a quick question on IL-4 receptor alpha program. If you guys could just talk about biological proof of mechanism there? And what kind of benchmarks from DUPI maybe are out there that you guys are taking a look at?

Well, first, truly excited about an oral agent that's similar pathway as DUPIXENT. And you saw this morning, the data from the COPD trial. So it's super exciting for us to be in that pathway. We showed early data at the R&D Day, and we felt comfortable, we're on our way to really mechanistically exciting approach to how to target the IL-4 antagonist. I think beyond that, now we just wait to stay tuned for, and we'll share some more data perhaps at the end of the year with progressing towards our candidates, including showing proof of -- relevant proof of concept in animal studies, and the benchmarks against DUPI have been all pretty validated.

So initially, it's a mechanistic approach, targeting 4 and 13 and then certainly, showing some proof of mechanism data and then a similar track to what we've done with all our drugs. In this case, differentiation is clear, but I think more importantly, targeting DUPIXENT-like efficacy is going to be the goal for this molecule.

There are no further questions at this time. So I would like to turn the floor back over to Dr. Raju Mohan for additional or closing remarks.

Yes. Thank you. Thank you, all. Thank you for participating. Thank you with some great questions. Thank you for listening to us. It almost seems like we need another R&D Day here because, obviously, we are very passionate about the programs. We understand our molecules, we understand differentiation, and we love to discuss the dialogue with you.

So thank you all again, and I'll look forward to the next discussion.

Thank you. Ladies and gentlemen, this concludes today's Ventyx Biosciences Fourth Quarter and Full Year 2022 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.