Thank you for standing by and welcome to the Ventyx Biosciences' Second Quarter 2022 Earnings Conference Call. At this time all participants are in listen only mode. After the speaker's presentation there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program may be recorded.

And now, I'd like to introduce your host for today's program, Marty Auster, Chief Financial Officer, please go ahead, sir..

Thank you, Jonathan. Good afternoon, everybody. Thanks for joining the call today. Welcome to Ventyx Biosciences' conference call webcast where we'll be discussing topline results from the Phase 1 trial of our TYK2 Inhibitor VTX-958.

As a reminder, you can find press releases issued today covering the Phase 1 results from VTX-958 as well as our second quarter financial results on our website at ventyxbio.com under the Investor tab of the News & Events section.

Before we begin today, I'd like to remind everyone that conference call webcast will take forward-looking statements including statements about the potential and positioning VTX-958 and related market opportunities, the timing of commencement enrollment and completion of clinical trials, the anticipated timing of release of clinical trial data and the expected timeframe for funding operations and current cash equivalents and marketable securities.

These statements are subject to risks and uncertainties that could cause actual results to differ. And please note, that these forward-looking statements reflect our opinion only as the date of this call.

Factors that can cause actual results or outcomes to differ materially from those expressed or implied by such forward-looking statements are discussed in greater detail in our filings with the SEC including a Form 10-Q for the second quarter of 2022, which we do expect to file this afternoon.

Today's call will feature a presentation hosted by our CEO, Dr. Raju Mohan; and our President and Chief Medical Officer, Dr. Bill Sandborn.

Following the presentation, we will open the call to your questions and at that time through Zoom, Bill will also be joined by our Executive Chairperson, Sheila Gujrathi; and our Chief Business Officer, Chris Krueger. We're also joined today by a special guest Dr. James Krueger, in addition to serving on the Ventyx Scientific Advisory Board, Dr.

James Krueger is the Director of the Milstein Medical Research Program; and the D. Martin Carter, Professor in Clinical Investigation at Rockefeller University in New York. Dr. Krueger is a Board-Certified Dermatologist and was recognized as a world-renowned research expert on the Pathophysiology and Treatment of Psoriasis.

With that said, I will hand the call over to Dr. Raju Mohan, our CEO, Ventyx founder to walk you through the slides. Thanks..

Thanks, Marty. And good afternoon, everybody. It's a pleasure to be able to have the opportunity to present the Phase 1 results. Slide 3, please. Before we talk about VTX-958, which is a focus of this call today. VTX-958 is going to go into Phase 2 trials.

And they will talk more about this later the discussion initiating three Phase 3 trials in Q4 of 2022 really want to highlight our portfolio of small molecule compounds differentiated molecules, all internally discovered and we owned all rights all IP rights these compounds. So in addition to VTX-958, we have VTX-002 S1P1 modulator.

This compound is currently in Phase 2 studies and ulcerative colitis, and record report topline data for this compound in 2023. Then for NLRP3 portfolio, our peripheral compound VTX-2735. It's a potent inhibitor of NLRP3. And we've announced Phase 1 results in July of this year, we plan to initiate Phase 2 trials in CAPS patients in Q4 2022.

In addition, we'll be discussing addition additional opportunities for developing this compound also later this year. And finally, VTX-3232. This is also in the NLRP3 class. This however, is a brain penetrant, a CNS-penetrant and an arbitrary compound. This compound is currently in IND-enabling studies, we plan to initiate Phase 1 trial in Q1 of 2023.

So that is a portfolio of small molecule compounds. Let's move to the next slide please. So, why the excitement of TYK2, so TYK2 is a clinically validated target from two angles.

One is the established efficacy of biologics IL-23, IL-12/IL-23, all targeting clinical efficacy in IBD and psoriasis and psoriatic arthritis and the other target picture is interferon-alpha and now validated in this business.

So, in addition to the biologics that also validate this target allosteric TYK2 inhibitors also target the same pathways I have IL-12/IL-23 and interferon-alpha, and thus, TYK2 is clinically validated in these targets, not just by the biologics, that targets pathways but also by a small molecule to product Sydenham, that are shown efficacy now in psoriasis, psoriatic arthritis, and most recently in lupus.

As you know these are large, the diseases we talked about here are large markets in the immune disease space, totaling close to $50 billion worldwide. And there's clearly a high unmet need for all agents, because this market, as you know, is currently dominated by biologics.

So where does that position VTX-958 is a highly selective TYK2 inhibitor, an Allosteric inhibitor. And what we will show you today and what Bill would share with you is the high selectivity of his compound, what differentiates this compound from compounds that are left selected that have shown that profile is borne out in the clinical trials.

And the positive Phase 1 data that we'll show you today will establish the therapeutic window; this profile demonstrates the excellent safety profile.

And this all leads to class leaving target coverage of cytokines of interest, and positions VTX-958 for success across multiple indications that we are planning to start in the second half of this year. Next slide, please. Slide 5.

So, right from the beginning, our chemistry strategy has focused on the allosteric domain of TYK2 plastic JAK inhibitors target the kinase domain, this domain is highly conserved within the JAK family.

And while it's easy to get potent compounds, these compounds generally have very poor selectivity, they cross over into the entire JAK family, they had JAK-1, JAK-2 and JAK-3, by targeting the allosteric domain, which is much less conserved, one can actually get very high selectivity from this approach.

And that's exactly what we have done with VTX-958 as shown in the panel here, and that's VTX-958 has selectivity for TYK2.

In the allosteric domain versus JAK-1, it's about 4000 volts selective, it has almost no affinity for JAK-2 and JAK-3, there is no binding to any JAK-2 or to allosteric domains, there's absolutely no activity the other kinase domain, and no kinase enzyme inhibition has been shown in our assays for any chat founding members.

So as a TYK2 inhibitor, targeting the allosteric domain of TYK2 affords inhibitors of high selectivity against other JAK isoforms. And pretty important here avoids potential safety risks that are associated with composite either hit JAK-1 or JAK-2 or JAK-3, or compounds that are not as selective as the VTX-958. Slide 6, please.

So, if you look at if you look at the both the product segment, and VTX-958 are both bonafide allosteric, TYK2 inhibitors, where the difference comes up is in the binding of VTX-958 to the allosteric domain of TYK2, versus binding to the allosteric domain of JAK-1. And if I can focus you on the on the table below, go into the VTX-958 column.

VTX-958 has 4000-fold selectivity for TYK2 versus JAK-1 in the allosteric binding pocket in contracts across a system has only about a 50-fold selected profile for TYK2 versus JAK-1. And just a little bit of a structural lesson in here.

And the reason why we've been able to do this is that you both VTX-958 and the product, both exploit the baleen, which is present in the chicks to chase your domain, they both bind to it.

What we have done with VTX-958 is build a compound such that it has a negative interaction with isoleucine, which is now a substitute for baleen in the JAK-1 domain. And whereas the process, it can still bind to this isoleucine.

And this binding difference between VTX-958 and a steric repulsion with the isoleucine was the proper system that can bind to it results in this very high selectivity that we've shown for this compound. So this is the binding differential for VTX-958/VTX-4004. Select the pro TYK2 plus the JAK-1. Next Slide 7, please. Where this has the biggest impact.

It's now on the functional selectivity of Deucravacitinib, the function selectivity in its ability to now hit selectively hit, seek to driven cytokines, IL-12/IL-23 and appealing alpha and you can see that there with the product segment.

They're both bonafide allosteric compounds that both hate IL-12/IL-23 and alpha, where the difference is most striking is in the right-hand column, or VTX-958 has no finish for these pleiotropic cytokines, these are protective cytokines that you do not want to block.

So VTX-958 In all the assays that we have run across a panel of cytokines, has no inhibition of mild to no inhibition of IL-10, no inhibition of interferon gamma, no inhibition of IL-4, no inhibition of IL-6 sofa a composite of cytokines, all with a single message, we are highly selected picture versus JAK-1 and the Deucravacitinib which is which has some interaction with JAK-1 that ends up inhibiting the entire panel of cytokines, IL-22 attend gamma-4 and gamma-6.

So, coupled with the high selectivity of VTX-958. And the safety profile that we've now seen, first from non clinical safety assessment, and now from the safety data that Bill represented to you in the subsequent slides, really allows us to reach this this broad, terrific window.

In addition to hitting the button cytokines, we talked about IL-23 cytokines have been implicated in psoriasis, psoriatic arthritis, and Crohn's disease, it really allows this perfect window, the safety profile of this compound, this unmatched target coverage allows us to obtain safely assumed exposures, higher exposures in Phase 2/Phase3 studies to then elicit maximum efficacy in these disease indications.

Slide 8, please. So with that, I'm going to hand over to Bill to walk you through the Phase 1 results.

Bill?.

Thank you, Raju. And just to remind the listeners on this platform, you need to advance your own slides. And we're currently on Slide 9. So what are the goals of our Phase 1 study, it's really to show the safety exposure and the target coverage of VTX-958.

And specifically, to maximize exposure in the multiple ascending dose cohorts with both QD and BID dosing regimens to evaluate the safety profile through all of the dose cohorts in this 14 Day dosing study to determine the target coverage of TYK mediated cytokines, interleukin IL-12/IL-23, and interferon-alpha to demonstrate direct emergence of TYK2 driven target engagement in subjects by validated in-vivo and ex-vivo pharmacodynamic assays.

And I'll note that in Phase 1 healthy volunteer studies with Deucravacitinib that the results of this panel have from academic assays read through very well to be demonstrated in Phase 2 and Phase 3 clinical trials and various indications.

And finally, to establish the correlation between VTX-958 exposure and TYK2 IC-90 coverage in terms of hours per day covered. Next slide, Slide 10. So what's the summary of the data that I'll show you? These really roll up to safety, exposure and target coverage.

Firstly, VTX-958 was well tolerated across all the SAD/MAD cohorts, all VTX-958 drug related adverse events were classified as mild. There were no dose dependent trends in the frequency of treatment emergent adverse events, and there was minimal off target adverse events observed with VTX-958.

And this is relative to other Allosteric TYK2 inhibitors which I will review in a few minutes. Secondly, VTX-958 exhibits class leading TYK2 IC-90 coverage, meaning that we achieve TYK2 IC-90 coverage for up to 24 hours with no dose limiting toxicities.

And finally, we saw robust dose dependent pharmacodynamic activity in ex-vivo in in-vivo assays supporting the hypothesis that greater pathway in efficient may enable differentiated efficacy in the clinic. Moving to Slide 11. This is the schema for the single ascending dose part of the Phase 1 study VTX-958 was administered as a suspension.

There were seven dose levels ranging from 50 milligrams to 500 milligrams, eight subjects per cohort six active and to placebo. On each subject received a single dose of VTX-958. Then had a wash out and was redoes this time with an interferon-alpha challenge and this occurred at each of the seven dosing levels.

Looking in the lower right VTX-958 was well tolerated through all the seven cohorts. All adverse events were classified as mild there was no temporal relationship to dosing.

There were no clinical laboratory adverse events of concern and significant pharmacodynamic effects as measured by interferon response gains, and IL-12 signaling following interferon-alpha challenge and ex-vivo study simulation was observed.

I'm not going to show the detailed results because the multiple ascending doses is really the area of greatest interest. Moving now to Slide 12. Here's the schema for the multiple ascending dose study. You can see we studied five dose cohorts, alternating BID cohorts, 50, BID, 175 milligrams BID and 350 milligrams BID.

And in between 250 milligrams QD and 500 milligrams QD, these five dose cohorts for dose for 14 days. Again, eight subjects per cohort TYK2 placebo.

The primary objective was to measure the safety and tolerability the determine the therapeutic concentration and the dose correlation with target coverage for the targets for both IC-50 and IC-90 coverage. Pharmacodynamic analyses were done these included an in-vivo interferon-alpha stimulation on day 13.

And then transcriptome analysis of tech to responsive genes pre and post interferon-alpha challenge. And secondly, an ex-vivo IL-12/IL-18 stimulation at baseline and at day 10. As I noted, the interferon-alpha stimulation was on day 13, we did that up through cohort four, as you'll see shortly, the interferon itself causes a lot of adverse events.

So we didn't do the interferon challenge and the final score. Moving now to Slide 13. I want to orient you to this, we're really focused on the exposure and target coverage across the cohorts. For the three, TYK2 targets interleukin 12, interleukin 23, and interferon-alpha.

When you compare and contrast this to other compounds, make sure that you're really understanding which of these are all of these that are being covered.

What you can see here, we'll begin with this just looking at the two QD doses, you can see that for IL-12 and IL-23, you have four to six hours of IC-90 coverage, and nine to 14 hours of IC-90 coverage or IC-50 coverage, and just even a little bit more coverage for interferon-alpha. As you go up to the BID doses 175 and 350.

You can see that we have 16 to 24 hours of IC-90 coverage for IL-12 and IL-23 and IL-24 hours of coverage for IC-50. And similar results for interferon-alpha. So if when you roll this together, we see safety achieved with class leading to IC-90 coverage.

The IC-90 coverage lasts up to 24 hours file IL-12/IL-23 and interferon-alpha and the exposures that we demonstrate here approach biologic like or monoclonal like suppression of IL-12 and 23 pathways. Moving to Slide 14. So let's transition now to the safety assessment.

All of the drug related adverse events were classified as mild there were no serious adverse events, no patients discontinued therapy, and there were no dose interruptions. There were no dose related trends in the frequency of treatment emergent adverse events observed.

There were minimal dermatologic adverse events, the skin and subcutaneous disorders were reported in a total of three patients in the Phase 1 trial. That's just 10%. Remember that number as we compare and contrast that to other Allosteric TYK2 inhibitors in a few minutes. All of these adverse events were classified as not drug related.

There are no observed infections, cytopenia’s and Lipid abnormalities. We believe that these data are consistent with a potential best in class therapeutic window in the context of the ability to cheat achieve for up to 24 hours TYK2 IC-90 coverage with a favorable safety profile. Slide 15. Here's some of the details for the adverse events.

We divided the adverse event reporting into pre-interferon challenge safety assessment, which goes up until the time of the interferon challenge partway through day 13. And then I also want to show you on a subsequent slide the adverse events that occurred after the interferon challenge.

Interferon-alpha causes a lot of side effects and so we split this out so you can better see potentially drug related side effects. Walking through this you can see headaches, soft faeces, in a smattering of patients no clear relationship.

There were three patients that had a skin manifestation papule rash in the 250-QD cohort there was a cytopenias papule on the lower right cheek judge not to be drug related smile results with continued VTX-958 dosing and did not have any topical therapy to the lesion. This is such a tiny thing that we're really almost dismissing.

This is being related. Then there were two patients at the 350 BID cohort who had skin papules. One of those, these were mild patches judged to be not drug-related, one subjects had mild faeces papules that resolved with continued VTX-958 dosing and again, no topical therapies that lesions were success subjects with mild faeces and TEAEs capsules.

That improved but did not completely resolve with continued VTX-958. dosing. Again, no topical therapies. Finally, there were some patients with dry mouth and abdominal pain. There was one patient that has liver transamination elevations, these were judged as mild and occurred in the context of a COVID-19 section. Moving on to Slide 15 -- or Slide 16.

Here are the adverse events that occurred after interferon-alpha challenge, you can see that they occur frequently, and both placebo and VTX-958. And they're the sorts of things you would expect to see with interferon-alpha, there was one patient that had a rise in ALT just after the interferon-alpha dose, which resolved thereafter.

Moving on to Slide 17. Looking at the potentially JAK related, hematologic and chemistry panel, findings, there were no changes over time and hemoglobin neutrophils, lymphocytes, or platelets, no changes in trapping fossil kinase and no changes in Lipid’s. Moving on to Slide 18.

So now, transitioning from safety to the pharmacodynamic effects, we saw wrote robust dose descendant dependent pharmacodynamic effects. On the left you can see complete suppression of all IL-12 signaling received dose dependent inhibition of interferon gamma, after dual IL-12/IL-18 stimulation at all time points.

This these data imply complete suppression of IL-12 signaling. And I note that IL-12/IL-23 share the TYK2 specific heterodimer IL-12 are beta-1. So, we believe that this inhibition of IL-12 signaling also indicates inhibition of IL-23 signaling, and you can see the data in the graph below.

Moving to the right side, we also saw robust inhibition of TYK2 responsive genes, including CXCL-10, ISG-20, and IFI-27. These genes are direct downstream targets of interferon-alpha and display diverse onset amplitude and resolution kinetics, there's potent exposure product could in an app pharmacodynamic activity and all three genes.

And the response is dose related through all the cohorts tested. In the table below, you can see the impact on these tech mediated genes expressed as a percentage of inhibition relative to placebo for the 175 milligram BID dose, and what you can see is really dramatic inhibition through most of the day for all three genes. Moving on to Slide 19.

So in summary, we believe that we've demonstrated class leading target coverage with excellent safety and exposure margins. VTX-958 demonstrated differentiation versus the deucravacitinib and other allosteric TYK2 inhibitors. In terms of safety and target coverage in the Phase 1 MAD study. VTX-958 achieved TYK2 IC-90 coverage from 24 hours.

There's a broad therapeutic window with biologic or monoclonal antibodies like suppression of IL-12/IL-23 pathways, and we note that VTX-958 is the only allosteric TYK2 inhibitor to demonstrate safe and sustained coverage of IC-90 for IL-12/IL-23 and interferon-alpha.

Moving on to Slide 20, we’ll now spend a few minutes looking at the differentiation and development strategy for VTX-958. Moving on to Slide 21.

So let's think about this profile relative to deucravacitinib and what the opportunity is to differentiate VTX-958 in terms of an improved therapeutic window, first generation allosteric TYK2 inhibitors like to deucravacitinib are limited by toxicities. Deucravacitinib at a six-milligram dose.

This is the Phase 3 psoriasis dose achieves IC-90/IC-50 coverage for about nine hours and never achieves IC-90 coverage. There's a dose dependent exposure of skin toxicities and I'll get more into that in another slide, including acne and rash with deucravacitinib particularly above the six milligram QD dose.

And we would expect that fuller pathway inhibition with an improved therapeutic window would be expected to drive to differentiation of VTX-958 vs deucravacitinib meaning that we'd have greater coverage of the TYK2 IC-50 And especially IC-90, that could be expected to drive improved efficacy, not only in indications like inflammatory bowel disease were very high doses and IC-90 coverage may be necessary, but also improved efficacy and indication such as psoriasis and psoriatic arthritis.

And on the left, you can just see the time versus concentration curves for deucravacitinib into that the psoriasis dose of six milligrams once a day, as well as a 12-milligram gram once a day dose. And you can see that both of these have IC-50 coverage for part of the day but no IC-90 coverage. Next slide, Slide 22.

So let's get into the details of the skin adverse events and target coverage a little bit, I'm going to focus you to the table on the right initially on the second line. So these are the deucravacitinib Phase 1, MAD data and healthy volunteers. From our reminder, this is a 14-day study with interferon-alpha challenge on day 13.

So exactly the same as what we saw. And in the context of a 14-day study, once you get to 6 milligrams BID or 12 milligrams QD, you're seeing 33% to 50% rolled up skin adverse events. As you go up to 12 milligrams, the ID, it's almost 80%. And across all of the doses that were studied, it's 42% of patients.

I'll remind you that I showed you a few minutes ago that are rolled up skin manifestations with VTX-958, or by contrast 10%. Then if you look down to the various Phase 2 and Phase 3 clinical trials, you can see that if you stay for six milligram QD dose, or three milligrams BID, you can have acne and rash in the sort of 2% to 4% range.

Although with lupus, if you've looked at all skinnies at three milligrams BID, it was still 17%.

But then when you get up to 6 milligrams BID and 12 milligrams QD, you're getting often in the 9% or 8%, 9%, 10% range, acne and rash in the lupus trial where they reported all of the skin manifestations together, you can see it's 34% of patients with both of these doses.

So and then just to remind you, the six milligram QD dose has nine hours of IC-50 coverage for TYK2 in zero hours for IC-90. And even as you get up to 6 milligrams BID and 12 milligrams QD, you're having 18 hours of IC-50 coverage and zero hours of IC-90 coverage. So very different coverage than what you see with VTX-958.

And yet significant dose dependent dermatologic adverse events. So we believe that these data establish robust differentiation versus deucravacitinib. We note that deucravacitinib elicits a dose dependence and potentially dose limiting skin toxicities. The skin findings occur with high frequencies and exposures greater than 6 milligrams per day.

And by contrast that VTX-958 demonstrates the potential for a best-in-class therapeutic window, meaning that we've achieved high TYK2 IC-90 coverage without frequent skin adverse events. Next slide, Slide 23. So I want to level set you here. This is comparing three different allosteric TYK2 inhibitor Phase 1 data.

So these are 14 Day trials and healthy volunteers with a interferon-alpha challenge at the back end of the trials. And we'll start with VTX-958. So we looked at total daily doses ranging from 100 milligrams to 700 milligrams per day we saw skin and subcutaneous disorders that 10%.

These were papular rash in all three patients, but I'll remind you that one of those at the 252-day dose was just a single papular rash that was judged not related and resolved under therapy. So quite low skin manifestations and we had a single patient with elevated Trans AEAES that were mild in the context of the COVID infection.

If you look at the clinically relevant doses of 175 BID and 350 BID. We have 16 and 24 hours of IC-90 coverage respectively, and 24 hours of IC-50 coverage. Now let's start on the right looks at deucravacitinib. They studied in Phase 2 Phase 1 healthy volunteers doses ranging from 2 milligrams to 24 milligrams of total daily dose.

The overall skin and subcutaneous disorders were 42% including rash 20% and acne 13%. At the relevant clinical dose six milligrams QD, there was IC-50 coverage of nine hours and IC-90 coverage of zero hours. In the middle we see the Nimbus compound.

There were a couple of dose ranges looked at 20 milligrams to 35 milligrams QD and 50 milligrams to 100 milligrams QD. You can see up to 67% acneiform dermatitis of papular rash and up to 25% of patients.

Patients have developed a great CP-3 CPK elevation on 20 milligrams if we consider 30 milligrams of the clinic room relevant doses, 24 hours of IC-50 coverage, and about IC, five hours of IC-90 coverage. Going on to Slide 24.

So here we're stepping away from just focusing on healthy volunteers to the totality of the opportunities and available data and focusing on the clinically relevant doses. So with VTX-958, 175 BID 24 hours of IC-50, covering 16 hours of IC-90 coverage for that dose and below essentially no skin findings, no laboratory findings.

And we believe this represents a best-in-class therapeutic window, not only for inflammatory bowel disease, but also the opportunity to leverage and maximize the dose response in psoriasis and psoriatic arthritis above what was achievable with deucravacitinib because of the limited therapeutic window.

For the deucravacitinib, the relevant dose of 6 milligrams QD, nine hours of IC-50 coverage, no hours of IC-90 coverage. You see dose dependent acne apnea form dermatitis, electrolyte and rash especially as doses more than 6 milligrams QD. So that's dose limiting.

You can see rare CPK and triglyceride elevations in the psoriasis Phase 3 trials, we note that there was a failed trial of deucravacitinib, six milligram BID dose and ulcerative colitis.

And I think I've explained why that they really wouldn't have the IL-12/IL-23 coverage that you would expect to see for efficacy and inflammatory bowel disease more on that in a moment.

And we think there's still an opportunity to go up as they really showed in their Phase 2 trial for some of the more robust outcome measures like PASI-90 where there was a limit, a linear dose response across all the doses studied.

And finally with this number of products that are relevant dose of 30 milligrams QD 24 hours of IC-50 coverage, only five hours of IC-90 coverage and they see acne rash and skin manifestations. There's been a case of neutropenia, CPK, elevation and triglyceride elevations.

They currently have no active programs that we're aware of and inflammatory bowel diseases. Moving on to Slide 25. So let's look at the sort of commercial opportunity here. We've thought of the biologic compounds directed against interleukin 17 and IL-23, as currently sort of the best-in-class compounds for psoriasis.

And you can see 85% to 90% response rates for PASI-75 outcome measures of TYK2 is about a third of that the PASI-75 in the 30% range. Deucravacitinib is superior to a TYK2, but still only achieving low 50% range, PASI-75.

So there's a large gap between what is achieved with Deucravacitinib with a 6 milligram, once a day dose and what you can see with the biologic therapies, so they're aspirational target for VTX-958 is to close that gap because of our superior target coverage where we can cover IC-90 for much of the day. Moving on to Slide 26.

Focusing on IBD, we know from biologic agents that higher doses and we think that read through to higher target coverage is required for Crohn's disease.

You can see here for Skyrizi, Tremfya and Stelara that you need four to six times as much biologic to see efficacy in Crohn's disease if you do it Psoriasis and this greater TYK2 pathway inhibition that's required for IBD efficacy six from biologics suggests that higher exposures will be required with other drugs as well for efficacy in Crohn's disease versus psoriasis.

I already noted that Deucravacitinib Phase 2 and ulcerative colitis failed at the six milligrams BID dosing. But we know that despite the fact that doses already associated with skin side effects, that there's zero hours of IC-90 coverage. So this is sort of unexpected results.

Higher doses of VTX-958 may approach biologic or monoclonal antibody like suppression of the IL-12 and IL-23 pathway. And because of this, the profile, this profile of VTX-958 may unlock a major market opportunity in Crohn's disease, which is currently greater than a $13 billion global opportunity. Moving on to Slide 27.

So how do we think about what's next in terms of the development opportunities, we will later this year began Phase 2 trials that will explore a broad range of dose finding studies enabling optimal Phase 3 dose selection based on the safety and maximizing target coverage.

Specifically, we plan to initiate three Phase 2 trials in the fourth quarter of this year in psoriasis, Crohn's disease and psoriatic arthritis. We're also looking at additional indications in Phase 2, which could include lupus, given the unique profile of VTX-958. This Phase 2 trials will be dosed with an immediate release or IR tablet.

Modified release formulation is in development to approximate the BID exposures with the QD solid world post mortem. And we would pursue a bridging study before Phase 3. There's precedent for this, this was done with Rinvoq and Xeljanz and other drugs. And we see it as a straightforward proposition. Moving on to Slide 28.

So how does this wrap up? This shows you the landscape of the IL-23 and IL-17 biologics and the oral agents Apremilast, Deucravacitinib, and the aspirational target product profile for VTX-958.

We see very strong efficacy for psoriasis in IL-23 and IL-17, as we've already discussed, and we believe that with our target coverage VTX-958 could do similarly, we see strong psoriatic arthritis treatment with those agents as well. And we anticipate the same for VTX-958.

For Crohn's disease, we think that anti IL-23 is probably best in class, you can't really use IL-17 in Crohn's disease or ulcerative colitis, not applicable to Apremilast.

We don't know yet what Deucravacitinib, but based on the data I showed you earlier, I would speculate that the studies looking at 6 milligrams BID or 12 milligrams once a day are unlikely to be effective in Crohn's disease, whereas we accepted VTX-958 will have a biologic like effect. Same story for ulcerative colitis, and finally for lupus.

So if we summarize this VTX-958 has an excellent safety profile class leading TYK2 coverage, potentially superior therapeutic window compared to anything else in the world classes. There's a unique opportunity in inflammatory bowel disease, and we're well positioned to capitalize on several biologic dominated autoimmune markets.

Slide 29; and this is just to make the point that these markets are big, almost 11 million patients in the United States across these indications. And on the right as Raju said earlier, almost a $50 billion global market.

This is dominated by psoriasis, Crohn's disease and ulcerative colitis was smaller contributions from psoriatic arthritis and lupus. And as I showed you on the previous slide, we have the opportunity to make to markedly impact each of these markets.

So VTX-958, will enable clinical differentiation across multiple indications has the potential to offer a differentiated clinical profile in psoriasis, psoriatic arthritis and lupus by dosing two levels of TYK inhibition that are greater than that that can be achieved with competitors, with a more narrow therapeutic window be uniquely positioned among TYK inhibitors to address Crohn's disease and IBD indications where IL-12/IL-23 and IL-12 antibodies is proven effective at higher doses than is what you do.

And so, I will stop here and hand it back to Raju to wrap up. Please move on to Slide 30. .

Yes, I think that's really sums it up, Bill. Thank you again.

And, I think in interest of time, why don't we open up to Q&A?.

[Operator Instructions] Our first question comes from the line of Yasmeen Rahimi from Piper Sandler. Your question, please..

Good afternoon, team. First of all, congrats to the really stellar data. An outstanding job. Thank you for taking my question. Couple of clarification questions in the math portion when you refer to some of the skin rash that it wasn't related to the drug? How do we know it's not an on-target effect? You could just elaborate a little bit there.

And then my second question was do nicely showed cholesterol levels? Did you measure triglycerides and 90-IC. So it was just cholesterol, just one of the biomarkers showing this representation of a long list of Lipid biomarkers that were assessed? And then two more small questions for you..

Yes, so let me let me have been addressed the rash ones, but I can I can speak to the Lipid’s. So we did measure triglycerides, there was no change. We looked at Lipid cholesterol, there was no change. There was no danger of any Lipid’s, or cholesterol in this study. We just highlighted cholesterol for brevity here. But there was no change at all.

Any fatty acid composition, stone or Lipid’s, no triglycerides, no cholesterol. .

Yes, the judgment of relatedness for the rash is really done by the investigators. So it's sort of up to them. I take your point and don't disagree with us, the two papules seen in the highest dose groups of 350, BID could easily be related to the medication. But I think the key point is that it was very clean up to that point.

And even those two cases, one completely resolved under continued therapy, and the other partially resolved.

If you go back and look in detail at the dermatologic adverse events and the Phase 1 healthy volunteers with Deucravacitinib, there were a number of cases where the skin manifestations lead to early discontinuation of the treatment during the MAD study..

Thank you, Dr. Sandborn, and thank you, Raju. The one case of where ALT genes BID increased, and those were classified as mild, I assume mild means nothing over, greater than 2x of the upper limit, just define what you mean with mild and then that just occurred before they got COVID.

And they went down just to kind of or just they started off with slightly elevated liver enzymes. And then so once they're in 350, got increased just some color around that. And then the last question is, what's more, they got COVID.

And they went down just to kind of, or did they start off with slightly elevated liver enzymes? And then so once around 350 got increased just some color around that.

And then the last question is, what's sort of the dose ranges you're planning to go into your psoriasis study and into your Crohn's study? Or at least him discuss all that? And thank you for taking my questions..

Yes, for the for the patient where there was COVID. you can often see a low level of enzyme bouncing around. But the rise really occurred in the context of about when the COVID infection started. And the second case, as I indicated, was a mild elevation that occurred immediately after the interferon-alpha challenge.

And, in terms of doses, I think we're not prepared to outline exactly today that doses will take into Phase 3, but it would take into account the totality of the efficacy and or the, the safety data and the target coverage. And we anticipate exploring doses cover most of the Deucravacitinib..

Thank you, Dr. Sandborn. And congrats again, team..

Thanks..

Thank you..

And our next question comes from the line of Michael Yee with Jefferies. Your question, please..

Hey, guys, thanks for the question. And congrats on the great data. Maybe just a question for Bill or the team. Now that you have all this great data in hand, I know a lot of people are turning to the class as a bigger picture and Deucravacitinib proposal we'll get approval soon.

So, any thoughts around how to think about the scenarios with what that class label might look like? And how we should think about the implications for second generation TYK2 particularly with a much better coverage, but also in the context of risk benefit in these types of indications versus say psoriasis.

So maybe Bill can answer that or anyone on the team can answer that. Thanks..

Yes, thanks, Mike. And what a surprising question. The good news is, less than four weeks from now we'll be on the other side of it. But anyway, it's a good question.

And maybe Marty Auster, maybe Marty, want to take this one?.

My chance to get some exercise in? Hi, Mike, thank you for the question. So it's obviously as we all know, do privacy they ran a really nice Phase 3 program with the 6 milligram QD dose really should superiority on it, because TYK2 and showed a really nice safety profile.

That leaves us probably similar to, their bristol in terms of optimism about the provability that drug. I think, right there. There's already a pretty clear differentiation in terms of the regulatory path from what you've seen with like JAK inhibitors. Obviously, it's Deucravacitinib, a couple a couple of setbacks for JAK's looking at that indication.

So I think there's already pretty clear signs of differentiation from regulators around the TYK2 class versus JAK inhibition, obviously, like you were, eagerly waiting to see what that label looks like.

And obviously, the more or the less restrictive the label, we think the faster the TYK2 classes going to kind of gain ground within the $20 billion plus psoriasis market. And we're obviously very excited about the prospects there and our advisors and our cables are incredibly optimistic about TYK2S in psoriasis as well.

So we're looking for that update as you are. Hope this answer this one, Bill..

I think that's great. Right, so we'll see what happens in less than four weeks. Thank you..

Thank you. .

And our next question comes from the line of Josh Schimmer with Evercore ISI. Your question, please..

Very detailed, helpful overview. Maybe first, the Phase 2 trials if you could get your thoughts on expected size and duration. .

Yes, Bill?.

I don't know that I'm going to give it the exact details. But the way to the track record for how to do this is pretty well laid out with you craft a pseudonym. So psoriasis Phase 2 trials are generally in the face of about 200 patients and psoriatic arthritis, arthritis trials are something in that range as well.

For Crohn's disease, they'll do something, it’ll be appropriately powered, and give a range of doses. In terms of duration, we're anticipating sort of that 16-week range for psoriasis and psoriatic arthritis, and probably a 12-week range for Crohn's disease, we anticipate extension programs for each of those indications, as well..

Excellent. And then Slide 7, where you showed the IC-50 is for cytokines versus Deucravacitinib.

But I would have thought that there's decent enough selectivity for Deucravacitinib submit the IL-10 cytokines over the protective cytokines in order to pro MAD good efficacy coverage without safety concern, but the IL-02 looks like an outlier from that framework, it looks like it would be actually pretty challenging to inhibit the IL-10 cytokines without also inhibiting IL-10 for Deucravacitinib.

So can you discuss first, do you think the IL-10 inhibition is likely underlying some of Deucravacitinib toxicity and why would IL-10 specifically be an outlier? And then it's more sensitive to Deucravacitinib than some of the other cytokines that you've shown them that slide? Thank you..

Bill, you want to take that..

Well, for the dermatology adverse events, we do think that those are off target and non-art on not on target. And the reason for that is, as I pointed out the dosing profiles that have been done in inflammatory bowel disease or the IL-12 and IL-12/IL-23 inhibitors are very high and there's just no signs of dermatologic adverse events.

And likewise, the proof product for lupus or type one interferon antibody also doesn't show any skin side effects so difficult to believe that that those dermatology off target or adverse events are on target, meaning they must be off target. Whether they're exactly JAK-1 or something else, as you're pointing out, I think is a little hard to tell.

And no one knows for sure, but we see them as being off guard. .

And Josh, and you and I've talked about this before, there's some indication that IL-10 and IL-10/IL-22 acts as effects on barrier integrity. So the effects on direct effects on filigrain and chloroquine. And also on microbial defense.

So there's an affiliate link that can be established as Bill said, No, is it? Is it something that's directly linked to JAK-1, but suddenly, you can't explain it through targeting authentically to IL-22..

Got it. Thanks very much..

Thank you. And our next question comes Tiago Fauth from Credit Suisse.

Your question, please?.

Sure, so just two quick for me. So the first one is, again, I'll you have line of sight and I'm running three, Phase 3 trials for VTX-958. You also expect to run a Phase 2 for Caps for VTX-2735.

I'm curious if your plans have changed at all, or evolve in terms of potential partnerships? Or what point do you start to run into resource issues? Is this something that you can endeavor to take all the way across the finish line for the Phase 2s across the board, higher thinking strategically about that development? And then just on the modify release formulations, just curious if you can provide any additional details as of now on? What technologies are using to try to get that big exposure with the QD oral dosing? Again, kind of combining the benefits of the safety profile and the 24-hour coverage? Thank you..

Yes, so let me take the modified release. First, it's pretty straightforward. We're working with a terrific CRO, a tremendous experience in developing a modified formulations. We have multiple products, aiming for multiple formulations to go into a human studies and will start to share data as early as first half of 2023.

So non clinical data here and then including anti gene TYK and other in vitro studies, looks very promising. And that's essentially the design of the prototypes array confident we'll have a update for you folks in first occupancy here. So I'm not going to go into the CROs.

But we're working with some highly experienced people, and a great company to work with. Right. So I think that's the answer. .

In terms of in terms of the financing question, so look, work. As Marty put out in his earnings release, we're well capitalized over $250 million at the end of Q2. And, frankly, rolling in from Phase 1, the team has a laser focus now on executing in our Phase 2 trials don't get our restarting three Phase 2 trials.

This year, in two alone, we're targeting a proof of mechanism for our caps, trial and other indications. And so, we are capitalized into the second half of 2024.

Now, with these, these targets that are number one, addressed large markets, diseases with high unmet need, and really of interest to pharma to not just TYK2 it without exception, take two S1P1 and NLRP-3, they're really under, interest of Pharma.

So, as we move along, we’ll look at every and all opportunities that present themselves very thoughtful about them. And those, as include non-dilutive options such as strategic partnerships that anyone as and when they come. So we have the luxury of having complete ownership of a company. They're all internally discovered.

And we'll look at every opportunity to strengthen our capital position in the coming months and quarters. But maybe Marty has something to add to that. .

Sure. Thank you, Raju. Yes, I would just add Thiago. We have a great deal of flexibility.

Obviously, what we do going forward the cash balance 258.4 million indicates you actually can get us to meaningful data readouts for our S1P1 Ulcerative Colitis for our VTX firm psoriasis, potentially for data readouts and psoriatic arthritis and Crohn's as well as the VTX-2735 CAP's program.

So there's a lot of robustness built into you sort of the data readouts. We'll see off that capital position and again, as we're looking to kind of continue to expand that runway so we don't have any delays or hiccups and moving from Phase 2 into Phase 3 over the next couple of years.

We'll be looking to sort of bolster that through a combination of different things including potential for equity financing potential for strategic partnerships..

Now congrats again on the update, and thanks for taking the question..

Thank you. Our next question comes from the line of Sam Slutsky from LifeSci Capital. Your question, please..

Hey, good afternoon, everyone. Thanks for the questions in progress on the data. Couple for me, for the IC-90 coverage you mentioned, that's consistent across cytokines of interest being IL-12/IL-23, and interferon-alpha, I guess as we interpret data... .

Operator, can we maybe shift to the next one and come back to him?.

Certainly. [Operator Instructions] And our next question comes from live Jeff Jones from Oppenheimer. Your question, please..

Good afternoon. Thanks for taking the question, guys. And congrats on the data. I guess two questions. Three questions for me.

Is your development strategy on VTX-958 impacted at all by whether Deucravacitinib segment gets a quote unquote, clean label or not? So does that sort of impact your study designs or otherwise? In terms of the S-1/A indication? What is sort of are their dating items in terms of your decisions to move forward? Obviously, three, Phase 2 takes you a long way on VTX-958.

Without even without us only in the short term. And I guess the third question on the S1P program.

Can you give any further clarity around the timeline beyond 2023? Are we any reason to think first half versus second half? Or can you provide anything beyond? The 2023?.

Thank you. Yes, so the label question lupus and S1P1. So let's just start with Bill..

Yes, so I think the label probably doesn't materially impact our thinking. Our belief is that it's certainly possible that there will be a blackbox warning, we think it's not very likely that there will be a line of use restriction. And as long as that's the case, then that, really wouldn't impact our thinking about the design.

In terms of S1, lupus, as you saw with the markets in the last slide, the largest markets are our psoriasis and inflammatory bowel disease, psoriatic arthritis is third and lupus is smaller, although that, is frankly, probably partially a lack of effective therapies. And we could participate that to get bigger over time.

We have a lot on our plate, and we need to, to some of it before we move on. But we think glucose is a very attractive indication in due course, but that's sort of how it played out. We will plan to update our S1P1 program sometime later in the year. What I would say is we're making really good progress now with recruitment. .

Great, thank you very much..

Thank you. And our next question is from Sam Slutsky from LifeSci Capital.

Your question please?.

Hey, thanks to for me. .

Yes.

Can you hear me?.

Yes, thanks. So for IC-90 coverage, you mentioned as consistent across cytokines of interests, which are IL-12/IL-23.

And then interferon-alpha, as we're interpreting data from others, do you know if IC-90 data are always inclusive of each of these cytokines? Or is it just sometimes a few of them?.

I think IC-90 depends on your, hitting the target starts with IC-50. And you can set up an IC-90. So we know from the private system and from their public data and various papers and so on what their IL-12 coverages. And as Bill says IL-23 has to be deduced because there is no human whole blood assay for IL-23.

And the same is going to be an alpha BMS as published there. IC-50 and IC-90 on alpha. And for other folks, we’ve seen everyone offer data perhaps on a poster from Nimbus. But no, the answer is no, you don't like it cover all of the cytokines with the same potency the same. Each of them has their own threshold. And we certainly hit IL-23.

More importantly, than we do, IL-12, the same goes for alphas when we do cover IL-12 very comfortable we're also hitting IL-23 And then I'm going to offer in the same assays right now. Okay, so that's that next one..

Yes.

And then next question is just general kind of PK/PD questions just is there any data that was VTX-958? And whether there's a food effect, EDI, QT prolongation, or just anything else notable?.

Yes, so we don't we don't expect any cardiovascular effects with this molecule thus far. But of course, we'll do a formal study or acuity studying the future, there's no one. There's no hints of any, any changes right now in any normal cardiac function from what we've seen thus far. And we do very careful monitoring in our in our studies.

And then, and then what we're going to do is we're going to disclose our entirety of our PK/PD data. At a later discussion, it's really not, it’s, there's no impact on our on our face to strategy. It's going to be a big data dump that we'll do at a meeting and appropriate forum there.

But what I would like to do is, let's see if there's any more questions. Okay. Just don't give it a Jim Curogan opportunity to weigh in as well. So, yes, it's going to happen. Next question. Jim. Up or there is another question in there. .

Yes, absolutely. One moment for our final question. And our final question comes from the line of Edward Nash from Canaccord, your question, please. .

Hi, this was a Shaline Way [ph] for Edward, thank you for taking our questions. And congratulations on the positive data. The first question that I have is still about that goes for the Phase 2 studies that's about to initiate to later this year. From your slides just presented to us that the trials will explore a broader range of doses.

And based on those Phase 1 data today we see the two 175 and 350 BID doses seems to be pretty good. So could you please share more colors? Why you would like to explore a wider range of doses. And I have a couple of shorter questions later..

Well, generally, you'd like to explore some less effective doses as well as what you think the optimal dose or doses would be. So that's part of the dose range, we actually are anticipating and psoriasis setting both QD and BID doses. So there will be a range of doses there, which is typical for Phase 2 trials..

Okay, thank you.

And for the Phase 2 studies, or the I guess, what are the key parameters that will be monitored on both on the targets? Coverage part and also on the general monitor of patients progression?.

Bill?.

Well, I think the path is pretty well through IC for psoriasis. The PASI-75 is a typical outcome measure, we think with the robustness of our target coverage that we're interested in seeing how we would differentiate in on PASI-90 and PASI-100. And, as well, we plan a sub study to study the translational medicine aspects in skin biopsy.

So that's all pretty standard for psoriatic arthritis. It's, ACR, 20, and 50 and 70.

And typical things and again, we're very interested in seeing how we might differentiate with the more robust outcome measures in Crohn's disease, the outcomes or clinical remission and endoscopic improvement, and then dystopic remission, and we will be, studying all of those things with Crohn's disease, you have the opportunity for biopsies, and that, of course, gives you the opportunity for translational medicine studies as well.

We do emphasis..

Thank you. That's very helpful. Very last question from me, I formulas.

So among the three indications, are there any order of priority from the company that which one would be the most, I guess the resources are going to, yes, the priorities?.

Yes, so good. Thank you. So we've guided folks that will start all three trials in the fourth quarter this year and we also guided folks that our first trial will be in psoriasis and there's no priority amongst one of the others. We're planning to start all three trials, and we're capitalized to do so. So stay tuned. .

As a father, I'm going to say I love all my kids..

Thank you..

Yes, thank you. So, we’ve got, of course, our IBD experts here in house, Bill Sanborn. But I'm going to invite Jim Kruger, who is a KOL, in the dermatology space.

And maybe Jim, could you give your thoughts on Phase 1 data that you just had a chance to see and put the data in context of, you’ve worked with a lot of drugs? You've worked with biologics? And certainly, with small molecules? So Bob TV, on this?.

Sure, sure. So I mean, I think what we've seen here are perfectly sensible. Maybe even..

Jim, we’re losing your audio..

So you may want to stop and this activity, maybe I'll just speak up a little bit, I'm not quite sure how I can increase the mic volume, I'll just sit close to the computer. So very, very interesting. .

Still not coming to?.

I really don't know what to do other than scream and just say it's fascinating data are?.

No, just take time just relax, technical stuff happens. .

Okay. I don't think it did my hope not. I think….

No, it's not what, he’s not coming through. So I did hear you say it's fascinating data. Were very excited by it. Yes. And, we’ll get lucky. what, I've always believed in second chances. Maybe you one more chance here. So try again..

Okay. I don't know if you can hear me.

It might just coming through?.

Yes. Okay. .

So, as I say, I think that the data portend very well for what's going to happen in psoriasis. And they make a lot of sense. It makes more sense. And some other small molecules studies. .

No, not working. So let's stop now. And there’ll be ample opportunities for folks to interact with Jim.

So again, Marty, do you want to sum up?.

Thank you, everyone, for joining us today. Obviously, resume Bill did all the heavy lifting here. Thank you so much. And Jim, thanks for joining us as well appreciate it. And we're available to follow up with your questions. Let's call. Thank you. .

Thank you. .

All right. Thank you. .

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day..