Four months ago, privately held NodThera Limited announced positive weight loss data for their NLRP3 inhibitor in a diet-induced obesity (DIO) mouse model. Investors quickly extrapolated these positive early results to other companies with NLRP3 drugs in development. The most notable beneficiary was Ventyx Biosciences (Nasdaq: VTYX), whose languishing stock soared off the NodThera data, allowing them to shortly thereafter raise $100mm to help fund their push into obesity.
Ventyx spiking off another company’s mouse data shows how frothy the obesity trade was earlier this year. The biotech market has cooled off recently, particularly for smaller, more speculative names. Ventyx ran to $10/share off the NodThera preclinical data, raised their $100mm at $8.95/share, and now trades around $5/share, giving it a market cap only slightly over its $300mm treasury balance. The frothiness of the obesity trade may have subsided, but the obesity theme remains top of mind amongst investors. Even in a more-tempered biotech tape, can Ventyx recapture investors’ interest when, sometime this month, it delivers its first catalyst for its early-stage NLRP3 obesity program……their own DIO mouse model data?
In All Seriousness
While being slightly facetious about the importance of Ventyx’s impending DIO mouse data for their NLRP3 inhibitor, VTX3232, in all seriousness, there is a considerable buzz around oral small molecule NLRP3 inhibitors that can penetrate the CNS. This is seen as a novel approach to managing obesity and other diseases. While drugs like glucagon-like peptide-1 (GLP-1) agonists are believed to have benefits through the “gut-brain axis”, NLRP3 inhibitors that target the CNS are thought to have weight loss potential through the “brain-gut axis”. These distinct approaches offer hope for additive benefits when combining gut-targeting drugs with brain-targeting ones. NodThera’s preclinical data hinted at an additional weight loss benefit when their NLRP3 was combined with a GLP-1. This month, the preclinical data Ventyx will unveil will include VTX3232 monotherapy and a combination with the GLP-1 semaglutide.
Mouse vs Man
Ventyx’s DIO mouse data could be the catalyst that reignites investor interest in the company. If not, maybe NodThera can again provide the spark for the NLRP3 class when it releases top-line data from its proof-of-concept (PoC) obesity study. On May 22nd, NodThera updated the study’s status on clinicaltrials.gov to reflect that the study was “completed” on April 15th. This would imply that NodThera should have 28-day top-line data from this 67-patient randomized controlled study shortly. If history is any indicator, results from NodThera could be extrapolated by investors to other NLRP3 companies.
Ventyx is not far behind NodThera in the NLRP3 obesity race. The company has already completed a Phase 1 healthy volunteer study with VTX3232. Ventyx has guided that it will start its own Phase 2 obesity study in 2H24, which, based on other PoC obesity study timelines, could mean top-line data as early as 1Q25.
Pipeline Distractions
Ventyx is going through an interesting transition. A year ago, the company was trading around $35/share and carried a valuation that tickled $2b. The narrative that sustained that lofty valuation had little to do with NLRP3 and nothing to do with obesity. Investors were focused on two mid-stage assets, VTX002 and VTX958, with imminent data readouts in large autoimmune indications. In October 2023, the company announced that VTX002, an S1P1 modulator, met the key endpoints in a Phase 2 ulcerative colitis study. Although the company reported the outcome as positive, investors were not convinced the data were strong enough to compete with the other more advanced S1P1 modulators, and the stock took a nosedive.
A month later, Ventyx compounded investors’ grief when they announced top-line data from a Phase 2 plaque psoriasis study with VTX958, a TYK2 inhibitor. Once again, the drug met the study’s primary endpoints, but in this instance, the company acknowledged that the results were not competitive enough to warrant advancing VTX958 into later-stage studies and terminated the program. The stock again took a nosedive and remained in investors’ doghouse until the aforementioned NodThera mouse data sparked interest in the company’s NLRP3 program(s).
The challenge is that VTX002 and VTX958 remain on the company’s pipeline chart. Although the company does not plan to invest further into VTX002, it believes the Phase 2 ulcerative colitis data are strong enough to attract a partner. Therefore, VTX002 remains on the pipeline chart with an anticipated milestone of “Identify partner for Phase 3”.
The VTX958 story is more complex. Although the company discontinued its plaque psoriasis program, it still has a 93-patient Phase 2 Crohn’s study ongoing. The study is fully enrolled, and top-line data are expected early in 2H24. Listening to the company’s recent 1Q24 earnings call of the dozen or so questions from analysts, there was only one related to VTX958 and the imminent Crohn’s readout – strange considering these are the next human data for the company. One institutional investor we spoke with suggested that the street has already discounted VTX958 to zero. This could be the case and imply that the VTX958 Crohn’s readout is like a free-call option with limited to no downside. The other view is that VTX958 is a distraction, and investors wanting to own Ventyx as a pure-play NLRP3 company will stay on the sidelines until the Crohn’s data readout is in the rearview mirror.
NLRP3 Pure-Play
It seems apparent that Ventyx is pushing towards cleaning up its pipeline chart to focus exclusively on NLRP3. Obesity is undoubtedly the most thematic of the indications the company plans to pursue, but it also plans on taking VTX3232 into Parkinson’s disease. Parkinson’s may not be as “popular” an indication as obesity, but arguably, NLRP3 inhibition in the CNS and its impact on neuroinflammation has a more mechanistic rationale in Parkson’s. NodThera has already generated provocative proof-of-concept data in Parkinson’s patients with their CNS penetrating NLRP3 inhibitor NT-0796. Ventyx has guided that it will start its Phase 2 Parkinson’s study in 2H24.
Ventyx has a second NLRP3 asset, VTX2735, that targets inflammation in the periphery. The company has already completed a small proof-of-concept study with VTX2735 in a rare autoinflammatory condition called cryopyrin-associated periodic syndromes (CAPS). The company plans to advance VTX2735 into larger cardiovascular disease indications but has yet to provide firm timelines for initiating these studies.
Can Obese Mice Make The Stock Sing Again?
There are many layers to the Ventyx story. There’s the recent sting of underwhelming clinical results and the uncertain future of those legacy clinical assets. There’s also optimism and excitement around the potential of the NLRP3 class, with Ventyx very well positioned to be a leader in the space with both CNS and peripheral-acting drugs. Over the coming weeks, Ventyx will be reporting data from both its shiny NLRP3 portfolio and its tarnished legacy portfolio. Investors may also see data from NLRP3 peer NodThera, which could have implications for Ventyx.
How Ventyx stock behaves as the company navigates through these impending catalysts is difficult to predict, especially in this biotech tape. Could the DIO mouse model spark the stock again? Has the street prematurely written off VTX958? Did speculative investors in micro/small cap biotech “Sell in May and Go Away”? Fortunately, the company opportunistically raised capital earlier this year, giving it over two years of runway, enough time to aggressively invest in its NLRP3 franchise while sorting out what to do with its legacy assets. Yes, there are many layers to the Ventyx story, but maybe we are also overthinking it.