Toe In The Water
Last month, Ventyx Biosciences (Nasdaq: VTYX) announced that it had received a $27mm equity investment ($3.82/share) from Sanofi (NYSE: SNY) for the exclusive right of first negotiation (ROFN) for certain rights for Ventyx’s CNS-penetrating NLRP3 inhibitor, VTX3232. The press release and 8-K were light on details, so investors are left wondering whether Sanofi’s ROFN pertains to the VTX3232 Parkinson’s disease (PD) program, obesity program, or both. Regardless, getting a validating partner to invest at >50% premium to the market for nothing more than a right looks like a good business to us. We are clearly in the minority, however, with the stock trading lower than when the Sanofi investment was announced. It has been a rollercoaster 12 months for Ventyx, something we touched on in an earlier note, and the company is evidently still in the “penalty box” with many investors. Nevertheless, we predict investor sentiment towards Ventyx will change in 2025, with the company expecting a data-rich year with readouts from three Phase 2 studies.
NLRP3 inhibition is an attractive mechanism. It is believed to have potential across several cardiometabolic and neuroinflammatory diseases. Sanofi may have just stuck their toe in the water with last week’s investment in Ventyx, but others, like Novo Nordisk (NYSE: NVO) have taken the full plunge.
Ventyx has the deepest and most advanced NLRP pipeline among publicly traded companies. However, they could face public market competition soon, as NodThera, with a pipeline similar to Ventyx’s, is rumored to be planning an IPO. A successful IPO for an NLRP3 peer should benefit Ventyx, drawing investors’ attention to the space and what will likely be a sizable valuation gap. Did we mention that Ventyx has a market cap of $150mm with a cash balance of $280mm (06/30)?
Trifecta of Data
Ventyx will have three studies up and running before year-end and should have data from each in 2025. The company is already enrolling a small open-label Phase 2 study with VTX3232 in PD patients. Earlier this year, NodThera completed a biomarker study, providing some early evidence of the potential benefit of NLRP3 inhibition in PD. Ventyx’s study will look similar to NodThera’s, focusing on biomarkers and neuroimaging. Could these PD data be the trigger for Sanofi’s ROFN?
Ventyx will also be testing VTX3232 in a Phase 2 study in obese patients with elevated cardiovascular risk. We sense that Ventyx management has a love-hate relationship with the obesity indication. They secured $100mm in financing ($8.95/share) earlier this year during the frothy first-quarter obesity tape, only to give it all back and more this summer after they delivered what was perceived by investors as disappointing mouse data (read our piece “The Mouse Giveth and Taketh Away” for background). In his recent Morgan Stanley presentation, Ventyx’s CEO, Raju Mohan, lamented how a subset of investors “…got fixated on obesity…”. The company’s Phase 2 study will include several biomarker endpoints besides weight loss. Like it or not, though, investors (and maybe Sanofi) will fixate on weight loss.
VTX3232 receives the lion’s share of investors’ attention, but the company’s peripheral NLRP3 inhibitor, VTX2735, shouldn’t be dismissed. Proof-of-concept data has already been generated with VTX2735, and the company will start enrolling a Phase 2 study in patients with recurrent pericarditis before year-end. Recurrent pericarditis is an indication that a small company can advance deep into the clinic on its own, unlike the large markets that are being pursued with VTX3232 (hence the Sanofi ROFN).
2025: The Year of NLRP3?
Ventyx is well-positioned to reverse its fortunes in 2025. It’s fully funded to deliver on three clinical trials, including a high-profile obesity readout. NodThera could have a splashy IPO attracting investor eyes to NLRP3. Sanofi has its toe in the water and could take the full plunge on VTX3232. It’s a name investors should have on their radar.
Countdown Is On
A few weeks ago, at the annual meeting of the American Society for Bone and Mineral Research (ASBMR), a session was held titled “Clinical Special Session: Update on the Strategy to Advance BMD as a Regulatory Endpoint (SABRE) for Clinical Trials.” We have discussed the SABRE project in a previous note, but as a refresher, the SABRE project is a partnership between industry, academia, NIH, and FDA to qualify bone mineral density (BMD) as an approvable endpoint for future osteoporosis medicines. In March of this year, FDA communicated to the SABRE team that it would decide on BMD as an approvable endpoint within ten months, setting the stage for a late-December or early-January decision.
With FDA’s decision on BMD expected shortly, the update on the SABRE project at ASBMR last month was timely. This session was even more interesting because it included a presentation by Theresa Kehoe, Director of FDA’s Endocrinology Division. We didn’t attend ASBMR and could not access the sessions virtually. Nonetheless, we believe FDA’s participation in the SABRE session speaks volumes about where the agency is likely going with its impending BMD decision. Does FDA participate and present at a session focused exclusively on getting BMD qualified as an approvable endpoint, only to reject it a few months later?
The company most leveraged to FDA’s BMD decision is Entera Bio (Nasdaq: ENTX). EB613, Entera’s oral parathyroid hormone (PTH 1-34), is Phase 3 ready and, assuming FDA qualifies BMD, will almost certainly be the first drug to enter a pivotal osteoporosis study using BMD as its primary endpoint. If clinically successful, EB613 could become the first new osteoporosis drug approved since 2019 and the first-ever approved oral anabolic agent. However, the first step is to get BMD qualified by FDA. The countdown to the decision is on.