Ventyx Biosciences(VTYX) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's analysis of financial condition and operations, market risk disclosures, and internal controls and procedures Item 1. Financial Statements (Unaudited) This section presents Ventyx Biosciences' unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with accompanying notes Condensed Consolidated Balance Sheets Total assets decreased to $262.2 million by June 30, 2022, driven by reduced cash, while liabilities increased and stockholders' equity declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $45,343 | $70,791 | | Marketable securities | $213,009 | $215,933 | | Total current assets | $252,193 | $263,020 | | Total assets | $262,185 | $291,482 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $17,674 | $12,283 | | Total liabilities | $19,033 | $12,283 | | Total stockholders' equity | $243,152 | $279,199 | | Total liabilities and stockholders' equity | $262,185 | $291,482 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a $20.0 million net loss for Q2 2022 due to increased operating expenses, while the six-month net loss improved to $42.8 million Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $14,676 | $9,511 | $32,085 | $34,112 | | General and administrative | $5,722 | $1,675 | $11,060 | $2,422 | | Total operating expenses | $20,398 | $11,186 | $43,145 | $36,534 | | Loss from operations | ($20,398) | ($11,186) | ($43,145) | ($36,534) | | Net loss | ($20,018) | ($15,559) | ($42,750) | ($53,204) | | Net loss per share, basic and diluted | ($0.39) | ($4.31) | ($0.84) | ($17.69) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $27.5 million for the six months ended June 30, 2022, leading to a $25.4 million decrease in cash and cash equivalents Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($27,518) | ($12,922) | | Net cash provided by investing activities | $1,747 | $1,888 | | Net cash provided by financing activities | $335 | $113,590 | | Net (decrease) increase in cash and cash equivalents | ($25,448) | $102,544 | Notes to Unaudited Condensed Consolidated Financial Statements This section details accounting policies, acquisitions, lease standard adoption, fair value measurements, and stock-based compensation, supplementing the financial statements - In February 2021, the company acquired Oppilan Pharma and Zomagen Biosciences, which were treated as asset acquisitions, with $21.7 million expensed as in-process research and development (IPR&D)[60][61] - The company adopted the new lease accounting standard (ASC 842) on January 1, 2022, recognizing operating lease liabilities of approximately $1.4 million and corresponding right-of-use assets of $1.4 million[48][49] Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Research and development | $1,599 | $2,794 | | General and administrative | $2,532 | $4,781 | | Total | $4,131 | $7,575 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial condition and operations, discussing clinical pipeline, expense drivers, liquidity, and capital resources, projecting funding into early 2024 - The company is a clinical-stage biopharmaceutical firm with a pipeline of small molecule candidates for inflammatory diseases, including VTX958 (TYK2 inhibitor), VTX002 (S1P1R modulator), and VTX2735 (NLRP3 inhibitor)[107] - The company expects its cash, cash equivalents, and marketable securities of $258.4 million as of June 30, 2022, will be sufficient to fund operations into the first half of 2024[150][179] - The military conflict in Ukraine has interrupted clinical trial site operations for the Phase 2 trial of VTX002, creating uncertainty around enrollment timing and potentially increasing costs[113] Results of Operations Operating loss increased for Q2 2022 due to higher R&D and G&A expenses, while the six-month net loss decreased due to a non-recurring 2021 IPR&D expense Comparison of Operating Expenses - Three Months Ended June 30 (in thousands) | Expense Category | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $14,676 | $9,511 | $5,165 | | General and administrative | $5,722 | $1,675 | $4,047 | | Total operating expenses | $20,398 | $11,186 | $9,212 | Comparison of Operating Expenses - Six Months Ended June 30 (in thousands) | Expense Category | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $32,085 | $34,112 | ($2,027) | | General and administrative | $11,060 | $2,422 | $8,638 | | Total operating expenses | $43,145 | $36,534 | $6,611 | - The decrease in R&D expenses for the six-month period is primarily due to a $21.8 million non-cash IPR&D expense in 2021 related to the Oppilan and Zomagen acquisitions, which did not recur in 2022[139] Liquidity and Capital Resources The company held $258.4 million in cash and marketable securities as of June 30, 2022, funded by IPO proceeds, and anticipates needing additional capital for future operations - As of June 30, 2022, the company held $258.4 million in cash, cash equivalents, and marketable securities[147][157] - The company's IPO in October 2021 generated net proceeds of approximately $158.8 million[111][147] - The company expects its current capital to fund operations and capital expenditures into the first half of 2024, but this is based on assumptions that may prove wrong[150][179] 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 risk[169] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control - Management concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[170] - No changes occurred during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[171] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, defaults, mine safety, other information, and a list of exhibits Legal Proceedings The company is not involved in any legal proceedings expected to materially impact its financial position or results of operations - The company is not currently involved in any legal proceedings that are expected to have a material impact on its financial condition[64][173] Risk Factors This section details risks including historical operating losses, future funding needs, pipeline dependence, clinical development challenges, competition, and intellectual property concerns - The company has a history of significant operating losses ($160.5 million accumulated deficit as of June 30, 2022) and expects to continue incurring losses for the foreseeable future[176] - The business is entirely dependent on the success of its product candidates, which are in early stages of clinical development and may never receive regulatory approval or be successfully commercialized[182] - The company faces significant competition from other biotechnology and pharmaceutical companies with substantially greater resources and experience[209] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred, and the use of IPO proceeds remains consistent with the original registration statement - There were no sales of unregistered securities during the reporting period[474] - The use of proceeds from the IPO remains consistent with the plans outlined in the registration statement (Registration No. 333-259891)[475] Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - No defaults upon senior securities occurred during the period[476] Mine Safety Disclosures This item regarding mine safety disclosures is not applicable to the company's operations - Mine safety disclosures are not applicable to the company's operations[476] Other Information The company reports no other material information for this period - There is no other information to report for the quarter[477] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, a lease agreement, and officer certifications - The report includes several exhibits, such as corporate governance documents, a new lease agreement, and required officer certifications[478]