Ventyx Biosciences(US:VTYX)2023-05-11 20:21PART I—FINANCIAL INFORMATION Item 1. Financial Statements This section presents Ventyx Biosciences, Inc.'s unaudited condensed consolidated financial statements for Q1 2023, showing a net loss of $38.9 million and total assets of $389.2 million Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2023, shows total assets of $389.2 million, an increase from $371.4 million, primarily due to marketable securities, with stockholders' equity rising to $371.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $389,169 | $371,400 | | Cash and cash equivalents | $63,669 | $64,819 | | Marketable securities | $313,246 | $291,794 | | Total Liabilities | $17,551 | $17,505 | | Total Stockholders' Equity | $371,618 | $353,895 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q1 2023, the company reported a net loss of $38.9 million, or $(0.68) per share, primarily due to a significant increase in research and development expenses to $35.4 million Statement of Operations Summary (in thousands, except per share data) | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Research and development | $35,437 | $17,409 | | General and administrative | $7,115 | $5,338 | | Total operating expenses | $42,552 | $22,747 | | Loss from operations | $(42,552) | $(22,747) | | Interest income | $(3,622) | $(132) | | Net loss | $(38,931) | $(22,732) | | Net loss per share | $(0.68) | $(0.45) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity increased to $371.6 million, primarily driven by $48.4 million in net proceeds from an at-the-market stock offering, partially offset by the net loss - The company raised $48.4 million in net proceeds from an at-the-market offering during the quarter23 - Stock-based compensation expense for the quarter was $6.6 million23 Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $30.9 million, while financing activities provided $48.6 million, largely from a stock offering, ending the period with $63.7 million in cash Cash Flow Summary (in thousands) | Activity | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(30,921) | $(12,726) | | Net cash used in investing activities | $(18,895) | $(16,503) | | Net cash provided by financing activities | $48,646 | $86 | | Net decrease in cash and cash equivalents | $(1,150) | $(29,101) | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail accounting policies, fair value measurements, the $48.4 million ATM stock offering, lease obligations, and a breakdown of $6.6 million in stock-based compensation expenses - The company is a clinical-stage pharmaceutical company developing a pipeline of small molecule product candidates for inflammatory diseases28 - In February 2023, the company sold 1,176,470 shares of common stock through its at-the-market (ATM) Sales Agreement for aggregate gross proceeds of $50.0 million, resulting in net proceeds of approximately $48.4 million54 Stock-Based Compensation Expense (in thousands) | Category | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Research and development | $3,214 | $1,195 | | General and administrative | $3,353 | $2,249 | | Total | $6,567 | $3,444 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2023 financial results, highlighting clinical pipeline advancements, an increased net loss of $38.9 million due to higher R&D, and a strong liquidity position of $376.9 million expected to fund operations into 2025 Overview Ventyx is a clinical-stage biopharmaceutical company developing small molecule candidates for inflammatory diseases, with lead programs VTX958, VTX002, and NLRP3 inhibitors, anticipating continued operating losses - The lead candidate, VTX958, is actively enrolling in three Phase 2 trials for psoriasis, psoriatic arthritis, and Crohn's disease, with topline data from the psoriasis trial expected in Q4 202384 - Topline data from the Phase 2 trial of VTX002 in ulcerative colitis is expected in the second half of 202384 - The company incurred a net loss of $38.9 million for the three months ended March 31, 2023, and had an accumulated deficit of $265.2 million86 Financial Operations Overview This section details financial operations, noting no revenue, with R&D expenses increasing by $18.0 million to $35.4 million due to clinical trials, and G&A expenses rising by $1.8 million Research and Development Expenses by Program (in thousands) | Program | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | VTX958 | $15,672 | $5,568 | | VTX002 | $8,455 | $3,880 | | VTX2735 | $270 | $3,340 | | Unallocated R&D | $11,040 | $4,621 | | Total R&D | $35,437 | $17,409 | - The $18.0 million net increase in R&D expenses was primarily driven by a $10.1 million increase in costs for VTX958 trials and a $4.6 million increase for the VTX002 trial104 - General and administrative expenses increased by $1.8 million, mainly due to a $1.1 million increase in stock-based compensation and a $0.3 million increase in other compensation-related expenses105 Liquidity and Capital Resources As of March 31, 2023, the company had $376.9 million in cash and marketable securities, bolstered by $48.4 million from an ATM offering, expected to fund operations into 2025 - As of March 31, 2023, the company had cash, cash equivalents and marketable securities of $376.9 million107 - In February 2023, the company received approximately $48.4 million in net proceeds from the sale of common stock through its Sales Agreement107 - The company expects its current cash, cash equivalents, and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements into 2025111 Cash Flows Net cash used in operating activities increased to $30.9 million, while investing activities used $18.9 million, and financing activities provided $48.6 million, primarily from a stock offering Summary of Net Cash Flow Activity (in thousands) | Activity | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Operating activities | $(30,921) | $(12,726) | | Investing activities | $(18,895) | $(16,503) | | Financing activities | $48,646 | $86 | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Ventyx is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Ventyx is not required to provide quantitative and qualitative disclosures about market risk128 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report130 - There were no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2023131 PART II—OTHER INFORMATION Item 1. Legal Proceedings The company is not aware of any pending legal proceedings expected to materially impact its financial position or results of operations - The Company is not aware of any pending legal proceedings that would reasonably be expected to have a material impact on the Company's financial position or results of operations52133 Item 1A. Risk Factors This section outlines significant risks, including a history of losses, need for financing, dependence on product candidate success, uncertain clinical development, regulatory approval, intellectual property, and stock price volatility Risks Related to Our Business This section details business risks, including a history of significant losses (accumulated deficit of $265.2 million), need for future capital, dependence on early-stage product candidates, and intense competition - The company has a history of significant operating losses, with an accumulated deficit of $265.2 million as of March 31, 2023, and expects to continue incurring losses for the foreseeable future136138 - The business is entirely dependent on the success of its product candidates, which are still in early stages of clinical development and may never receive regulatory approval or be successfully commercialized143 - The company faces significant competition from other biotechnology and pharmaceutical companies, such as BMS, that have substantially greater resources and experience172173175 Risks Related to Government Regulation This section highlights risks from the lengthy and unpredictable FDA approval process, compliance with federal and state healthcare laws, and potential adverse impacts from healthcare reform measures like the Inflation Reduction Act of 2022 - The FDA regulatory approval process is lengthy, time-consuming, and unpredictable, and the company has no prior experience submitting an NDA285 - The company is subject to numerous federal and state healthcare laws, including the Anti-Kickback Statute and False Claims Act, and non-compliance could result in significant civil and criminal penalties313 - Healthcare reform, including the Inflation Reduction Act of 2022, could lead to stricter coverage criteria and downward pressure on pricing, which may adversely affect the ability to sell products profitably331336 Risks Related to Intellectual Property This section outlines intellectual property risks, including challenges in obtaining and maintaining patent protection, potential infringement lawsuits, and increased uncertainties and costs due to changes in U.S. patent law - The company's success relies on obtaining and maintaining sufficient patent protection, but the patent process is uncertain and issued patents may not adequately protect against competitors342343 - The company may be sued for infringing on the intellectual property rights of third parties, which could be costly and time-consuming and could prevent or delay the development or commercialization of its product candidates369 - Changes in U.S. patent law, such as the America Invents Act, have increased the uncertainties and costs surrounding the prosecution and enforcement of patents377378 Risks Related to Our Common Stock This section details risks for investors, including stock price volatility, potential dilution from future equity offerings, no anticipated dividends, and significant control by executive officers and directors - The market price of the company's common stock is likely to be volatile, with its closing price ranging from a low of $11.95 to a high of $46.65 between March 31, 2022, and March 31, 2023395 - The company will need to raise additional capital, which may result in future equity offerings that could cause substantial dilution to existing investors398 - As of March 31, 2023, executive officers and directors beneficially owned a significant portion of the outstanding stock, enabling them to exert significant control over matters requiring stockholder approval407 General Risk Factors This section covers general risks, including the company's status as an "emerging growth company" and "smaller reporting company," costs of being public, internal control failures, and vulnerability to unfavorable global economic conditions - The company is an "emerging growth company" and a "smaller reporting company," which allows it to rely on exemptions from certain disclosure requirements, potentially making its common stock less attractive to investors418422 - Failure to establish and maintain effective internal controls over financial reporting could lead to a loss of investor confidence and a significant decline in the stock price425 - Unfavorable global economic conditions and instability in the financial services industry could adversely affect the company's business, financial condition, and ability to raise capital430 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered equity sales and no material change in the planned use of $158.8 million net proceeds from its October 2021 IPO - The company had no sales of unregistered securities during the reported period440 - There has been no material change in the planned use of the approximately $158.8 million in net proceeds from the company's Initial Public Offering on October 25, 2021441 Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - None442 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable443 Item 5. Other Information The company reports no other information for this period - None444 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and required officer certifications - The report includes a list of filed exhibits, such as corporate governance documents and required officer certifications446