Last week, Ventyx Biosciences (Nasdaq: VTYX) provided a pipeline update. There were no surprises in the update, with the company restating the timing of three Phase 2 data readouts scheduled for this year. The expectation is that the company will report data from a Parkinson’s disease (PD) study with their CNS-penetrant NLRP3 inhibitor VTX3232 early in 2Q2025, followed by data from an obesity/cardiometabolic study also with VTX3232 early in 2H2025 and lastly data from a recurrent pericarditis (RP) study with their peripheral NLRP3 inhibitor VTX2735 in 2H2025. In our last note on Ventyx, we reviewed each of these programs, so we will not repeat ourselves other than to restate the obvious – the company is expecting a data-rich year.
The company’s pipeline update may have been uneventful, but a few other developments since our last note are worth highlighting. Listening to all the company’s webcasts in November and December, it is apparent that Sanofi’s (NYSE: SNY) interest in VTX3232 is predominantly focused on PD. A reminder that in September, Ventyx announced that it had received a $27mm equity investment ($3.82/share) from Sanofi for the exclusive right of first negotiation (ROFN) for certain rights for VTX3232. The press release announcing Sanofi’s investment was scarce in detail. However, during the company’s recent Stifel and Piper Sandler presentations, CEO Raju Mohan clarified that PD is where Sanofi is predominantly focused, stating at Piper in December, “…the real interest from them (Sanofi) is this path that says neuroinflammation will control neurodegenerative disease, that’s the primary angle for them…” Sanofi’s interest may rest predominantly in PD, but CEO Mohan stated in November at Stifel that the ROFN will be automatically triggered after the “second data set,” implying Sanofi has some interest in the Phase 2 obesity/cardiometabolic data expected in early 2H2025.
Stroking Cheques
Sanofi hasn’t been the only one stroking a cheque to demonstrate their interest in Ventyx. In November, CEO Mohan invested ~$1M (500K shares between $1.83 and $2.01) in the open market. Then, in December, Ventyx’s Executive Chair, Sheila Gujrathi, invested $300K (130K shares at $2.31). Investments from Sanofi, the CEO, and the Executive Chair are encouraging votes of confidence ahead of impending data readouts.
Fortunes Haven’t Reversed Quite Yet
Besides a transient spike during the frothy obesity trade in early 2024, Ventyx has been in a prolonged funk. Nonetheless, we stand by our September note: “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…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.”
Speaking Of Data-Rich And In A Funk…..
Another company that should be data-rich this year but whose equity has also had a tough start to the year is Protara Therapeutics (Nasdaq: TARA). Protara had a good close to 2024, reporting strong non-muscle invasive bladder cancer (NMIBC) data with their lead drug, TARA-002, followed by a $100mm equity offering ($6.25/share). The start of 2025 hasn’t been as kind. A few theories have circulated about the reasons for Protara’s decline, including recent news from Johnson & Johnson (NYSE: JNJ) regarding their NDA submission for TAR-200 in BCG-unresponsive NMIBC patients and Pfizer’s (NYSE: PFE) Phase 3 data for sasanlimab (subcutaneously administered PD-1) in BCG-naive NMIBC patients.
The J&J news is highly relevant, given Protara’s lead program is in BCG-unresponsive NMIBC. However, J&J’s NDA submission was telegraphed, it was expected. Investors should already know where Protara stands in the BCG-unresponsive development race. As we highlighted in our last note on Protara, the company may have closed the data gap with its NMIBC peers with its strong December data, but there’s no way to close the development gap meaningfully. But the same is true for other development-stage NMIBC names, CG Oncology (Nasdaq: CGON) and enGene Holdings (Nasdaq: ENGN), yet those stocks haven’t been punished nearly the same amount as Protara.
The Pfizer news has a more tenuous relevancy for Protara. Pfizer reported that sasanlimab combined with BCG had a statistically significant improvement in event-free survival versus BCG alone in high-risk BCG-naive patients. Yes, Protara is studying TARA-002 in BCG-naive patients, and yes, the company does plan to pursue a pivotal study with TARA-002 in BCG-naive patients (pending a meeting with FDA). However, it seems highly premature to be concerned about a competitor for an indication that the company has yet to elucidate its clinical plans fully.
In our opinion, neither of these recent news events from Protara’s “competitors” are responsible for the erosion in the stock price. The more likely culprit is the poor tape for micro/small cap biotech and maybe some weaker hands from the recent $6.25 financing throwing in the towel.
Bright And Early On The Big Stage
Protara presented at last week’s JP Morgan (JPM) Conference in the highly coveted 7:30 AM Thursday time slot. In all seriousness, Protara was probably one of, if not the smallest company, invited to present at the conference, and their inclusion arguably speaks to the disconnect between their current valuation and where it could be a year from now (JP Morgan bankers clearly see the potential for business on the horizon). Regardless, CEO Jesse Shefferman and his team shook off the early morning cobwebs and delivered a few worthwhile soundbites that warrant highlighting.
Setting a Floor
It should be evident to all investors that the 100% six-month complete response (CR) rate that Protara announced in December from the first four BCG-unresponsive NMIBC patients in ADVANCE-2 is unsustainable across the anticipated 100-patient study. The company acknowledged this during its JPM presentation while providing hints about what it might consider an efficacy floor for TARA-002. “While we don’t expect that our response rates in the BCG unresponsive setting will remain at 100% as we enroll more patients, what we’re encouraged by is that we do believe that even if it (CR rates) came down to where we are in the BCG-naive setting (67%), this is still a very effective drug…it’s also very competitive from other investigational drugs, and in line with the data that we know about BCG.” Although the study is still in the early innings of enrollment, this statement feels like the company is putting a stake in the ground for what they consider TARA-002’s efficacy floor. We remind investors this is an open-label study; the company can see data in real-time. We aren’t suggesting they have seen enough data at this stage to know where TARA-002’s efficacy floor is, but there appears to be growing confidence that they have, as they state, an “effective” and “competitive” drug.
Secret Weapon
Investors are rightfully focused on efficacy (CR rates) in an increasingly competitive NMIBC market. But there’s an argument to be made that the product with the highest CR rate may not necessarily be the most commercially successful, especially if it lacks convenience or ease of use. CEO Shefferman stated at JPM, “…there are sort of two plausible investment cases around NMIBC…complex high response rate therapeutics and easy low burden therapeutics, low burden on the practice, and low burden on the patient…”
***Protara January 2025 Corporate Presentation
Protara isn’t the only NMIBC company beating the ease-of-use drum, with enGene also highlighting the simplicity of their drug versus the complexity of the more advanced products in development (or approved).
***enGene November 2024 Corporate Presentation
Protara has one significant potential advantage over its NMIBC peers that would differentiate it from a convenience perspective – systemic priming. When discussing the convenience of the patient experience for NMIBC treatment, it’s important to highlight that all these drugs, including TARA-002, are delivered intravesically.
***Image Source Here
Having a catheter put into your bladder through your urethra is not pleasant; it is not convenient. Ideally, patients want to minimize the number of intravesical treatments they receive. TARA-002 is the only NMIBC drug in development that can be delivered systemically. The company has stated that it plans to investigate a systemic priming dose of TARA-002, followed by an intravesical induction course. If this treatment regimen demonstrates an earlier onset of effect, it opens the possibility of using systemic dosing for priming and maintenance dosing. As CEO Shefferman stated during his JPM presentation, “…imagine a world where you take transurethral administration of maintenance doses off the table and replace that with subcutaneous doses of OO2. That’s the world we want to move towards because that’s where once you’re sparing lots of bladders, the residual unmet need is that the route of (intravesical) administration for bladder cancer is heavily burdensome to the patient.” CEO Shefferman added that TARA-002 can still be part of the NMIBC treatment story without systemic priming, but with it, suddenly they’re “leading the (NMIBC) story.” Protara has indicated that it will have initial systemic priming data for TARA-002 before the end of the year.
A product with a competitive CR rate that is easier for physicians to use and more convenient for patients could be the formula that wins the NMIBC arms race. Although Protara’s management exudes confidence, it is too early to say confidently that TARA-002’s efficacy will be competitive with that of its more advanced NMIBC peers. Still, with its convenience advantages, TARA-002 may not need to win the CR rate race to win the commercial race, especially if its secret weapon, systemic priming, works.