Ventyx Biosciences(VTYX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Ventyx Biosciences, Inc., including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, statements of cash flows, and accompanying notes, covering the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets The company's total assets decreased from $276.6 million at December 31, 2024, to $230.0 million at June 30, 2025, primarily due to a reduction in marketable securities. Total liabilities also decreased, while total stockholders' equity saw a decline | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $230,009 | $276,563 | | Current Marketable Securities | $176,658 | $190,062 | | Long-term Marketable Securities| $— | $35,621 | | Total Liabilities | $20,626 | $22,518 | | Total Stockholders' Equity | $209,383 | $254,045 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a net loss of $27.0 million for the three months ended June 30, 2025, an improvement from $32.0 million in the prior year period. For the six months, net loss was $54.4 million, down from $70.5 million, driven by reduced research and development expenses | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Total Operating Expenses | $29,333 | $35,712 | | Net Loss | $(26,987) | $(31,950) | | Net Loss Per Share (Basic and Diluted) | $(0.38) | $(0.45) | | Metric | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Total Operating Expenses | $59,430 | $77,480 | | Net Loss | $(54,427) | $(70,522) | | Net Loss Per Share (Basic and Diluted) | $(0.76) | $(1.07) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $254.0 million at December 31, 2024, to $209.4 million at June 30, 2025, primarily due to the accumulated net loss, partially offset by stock-based compensation expense and foreign currency translation adjustments | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $209,383 | $254,045 | | Accumulated Deficit | $(608,736) | $(554,309) | - Stock-based compensation expense for the six months ended June 30, 2025, was $9,606 thousand[72] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities decreased to $47.0 million for the six months ended June 30, 2025, from $72.2 million in the prior year. Investing activities provided $51.6 million in cash in 2025, a significant change from using $33.8 million in 2024, mainly due to marketable securities maturities. Financing activities provided minimal cash in 2025 compared to $95.3 million in 2024 due to a private placement | Cash Flow Activity (Six months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------------------- | :------------------ | :------------------ | | Net cash used in operating activities | $(46,995) | $(72,163) | | Net cash provided by (used in) investing activities | $51,607 | $(33,755) | | Net cash provided by financing activities | $68 | $95,278 | | Cash, cash equivalents and restricted cash, end of period | $33,276 | $41,900 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements, covering the company's organization, significant accounting policies, fair value measurements, balance sheet details, commitments, stockholders' equity, leases, stock-based compensation, net loss per share, related party transactions, and segment information 1. Organization and Business Ventyx Biosciences, Inc. is a clinical-stage biopharmaceutical company focused on developing innovative oral therapies for autoimmune, inflammatory, and neurodegenerative diseases, incorporated in Delaware in November 2018 - Ventyx Biosciences, Inc. is a clinical-stage biopharmaceutical company[31] - The company develops innovative oral therapies for autoimmune, inflammatory, and neurodegenerative diseases[31] - Ventyx was incorporated in Delaware in November 2018[31] 2. Summary of Significant Accounting Policies The financial statements are prepared in accordance with U.S. GAAP and SEC regulations for interim information, with no changes to significant accounting policies from the prior annual report. The company provides specific reconciliations for cash and cash equivalents and details on net loss per share calculation - Financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial information[33] - There have been no changes to the company's significant accounting policies from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[34] | Cash, Cash Equivalents and Restricted Cash (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------------------------------------------- | :------------ | :------------ | | Cash and cash equivalents | $32,301 | $40,925 | | Restricted cash | $975 | $975 | | Total cash, cash equivalents and restricted cash | $33,276 | $41,900 | Recent Accounting Pronouncements The company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures), both not yet adopted. ASU 2023-07 (Segment Reporting) was adopted in January 2024 with no significant impact - ASU 2023-09 (Income Taxes): Effective for annual periods beginning after December 15, 2024; impact on financial statements is currently under assessment[39] - ASU 2024-03 (Expense Disaggregation Disclosures): Effective for annual periods beginning after December 15, 2026; impact on financial statement disclosures is currently under evaluation[40] - ASU 2023-07 (Segment Reporting): Adopted for the annual reporting period beginning January 1, 2024; had no significant impact on financial statement disclosures[41] 3. Fair Value Measurements The company measures financial assets and liabilities at fair value on a recurring basis, primarily categorizing cash equivalents and marketable securities into Level 1 (quoted prices in active markets) and Level 2 (observable inputs other than Level 1). There were no transfers between fair value levels during the reported periods - Fair value hierarchy categorizes inputs into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[42][43] | Total Assets at Fair Value (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Level 1 | $85,337 | $72,949 | | Level 2 | $113,980 | $166,272 | | Total Assets | $199,317 | $239,221 | - No transfers between Level 1, Level 2, and Level 3 occurred during the six months ended June 30, 2025, and 2024[44] Fair Value Measurements-Recurring Basis As of June 30, 2025, marketable securities totaled $176.7 million, with U.S. Treasury securities ($67.7M) and commercial paper ($73.2M) being the largest components. The company held 26 marketable securities in an unrealized loss position, all for less than 12 months, and determined these losses were not credit-related | Marketable Securities (in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :----------------------------------- | :----------------------- | :--------------------------- | | U.S. Treasury securities | $67,670 | $59,411 | | U.S. government agency securities | $20,753 | $34,882 | | Corporate debt securities | $8,012 | $18,882 | | Commercial paper | $73,208 | $104,588 | | Asset backed securities | $7,015 | $7,920 | | Total marketable securities | $176,658 | $225,683 | - As of June 30, 2025, twenty-six available-for-sale marketable securities were in an unrealized loss position, all for less than 12 months[47] - The company believes none of the unrealized losses are the result of a credit loss as of June 30, 2025, and did not record an allowance for credit losses[49] 4. Consolidated Balance Sheet Details This section provides details on property and equipment, net, and accrued expenses. Property and equipment, net, decreased to $0.5 million at June 30, 2025, from $0.6 million at December 31, 2024. Accrued expenses increased to $9.4 million from $8.6 million, primarily due to higher accrued clinical trial costs | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Property and equipment, net | $549 | $614 | | Accrued expenses | $9,418 | $8,594 | Property and Equipment, net Property and equipment, net, decreased to $0.5 million at June 30, 2025, from $0.6 million at December 31, 2024. Construction in progress increased significantly from $15 thousand to $82 thousand | Property and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Property and equipment, net | $549 | $614 | | Construction in progress | $82 | $15 | Accrued Expenses Accrued expenses increased to $9.4 million at June 30, 2025, from $8.6 million at December 31, 2024. This increase was primarily driven by a substantial rise in accrued clinical trial costs from $1.6 million to $4.2 million, partially offset by a decrease in accrued payroll liabilities | Accrued Expenses (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Accrued research and development costs | $802 | $646 | | Accrued clinical trial costs | $4,176 | $1,575 | | Accrued payroll liabilities | $3,403 | $5,347 | | Other accrued liabilities | $873 | $943 | | Accrued related party liabilities | $164 | $83 | | Total accrued expenses | $9,418 | $8,594 | 5. Commitments and Contingencies The company is not aware of any pending legal proceedings expected to materially impact its financial position. Two previously filed lawsuits, a securities class action and a shareholder derivative action, both related to the VTX958 trial results, were voluntarily dismissed in February 2025 - The company is not aware of any pending legal proceedings expected to have a material impact on its financial position or results of operations[53] - A putative securities class action (Yuksel v. Ventyx Biosciences, Inc., et al.) was voluntarily dismissed without prejudice on February 10, 2025[54] - A shareholder derivative action (Schwing v. Mohan, et al.) was voluntarily dismissed without prejudice on February 24, 2025[55] 6. Stockholders' Equity This section details changes in stockholders' equity, including a March 2024 private placement of common stock raising $95.0 million net, and a September 2024 private placement of Series A non-voting convertible preferred stock to Sanofi, generating $26.6 million net proceeds | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Stockholders' Equity | $209,383 | $254,045 | March 2024 Private Placement In March 2024, the company issued 11,174,000 shares of common stock at $8.95 per share, generating approximately $95.0 million in net proceeds - Date of private placement: March 11, 2024[56] - Issued 11,174,000 shares of common stock at $8.95 per share[56] - Received approximately $95.0 million in net proceeds[56] September 2024 Issuance of Series A Non-Voting Convertible Preferred Stock from Private Placement In September 2024, the company issued 70,601 shares of Series A non-voting convertible preferred stock to Sanofi for gross proceeds of $27.0 million ($26.6 million net). Each share is convertible into 100 common shares at $3.8243 per common share. Sanofi also received a right of first negotiation for VTX3232 - Date of private placement: September 23, 2024[57] - Issued 70,601 shares of Series A non-voting convertible preferred stock to Aventis Inc. (Sanofi)[57] - Gross proceeds of approximately $27.0 million; net proceeds of approximately $26.6 million[57][58] - Each preferred share is convertible into 100 shares of common stock at an as-converted price of $3.8243 per common share[57] - Granted Sanofi a right of first negotiation (ROFN) for VTX3232, the company's CNS-penetrant NLRP3 inhibitor[58] ATM Sales Agreement The company has an At-The-Market (ATM) Sales Agreement with Jefferies for up to $150.0 million in common stock sales. No shares were issued under this agreement during the six months ended June 30, 2025, or the year ended December 31, 2024 - Sales Agreement with Jefferies allows for up to $150.0 million in common stock sales[59] - No shares of common stock were issued under the Sales Agreement during the six months ended June 30, 2025, or the year ended December 31, 2024[59] Common Stock The company is authorized to issue up to 900,000,000 shares of common stock with a $0.0001 par value. As of June 30, 2025, 71,234,510 shares were issued and outstanding - Authorized to issue up to 900,000,000 shares of common stock with a par value of $0.0001[60] - 71,234,510 shares of common stock were issued and outstanding as of June 30, 2025[17] Series A Preferred Stock The company is authorized to issue up to 100,000,000 shares of preferred stock. As of June 30, 2025, 70,601 shares of Series A non-voting convertible preferred stock were issued and outstanding, with specific powers, preferences, rights, qualifications, limitations, and restrictions detailed in the Certificate of Designations - Authorized to issue up to 100,000,000 shares of preferred stock with a par value of $0.0001[61] - 70,601 shares of Series A non-voting convertible preferred stock were issued and outstanding as of June 30, 2025[17] - The powers, preferences, rights, qualifications, limitations, and restrictions of the Series A Preferred Stock are set forth in the Certificate of Designations[61] 7. Leases The company's headquarters lease in San Diego commenced in July 2023, with a term ending July 2031, involving annual payments of approximately $2.0 million with 3% annual increases. A Ghent, Belgium lease expired in June 2024 but was extended to June 2026. Two Encinitas, California leases were terminated in February 2024 - San Diego headquarters lease commenced July 2023, term ends July 31, 2031, with approximately $2.0 million annual payments and 3% annual increases[62] - Ghent, Belgium lease expired June 30, 2024, and was extended through June 30, 2026[63] - Two non-cancellable leases for office facilities in Encinitas, California, were terminated in February 2024[64] - Weighted average remaining lease term was approximately 6.1 years and the discount rate was 10.1% at June 30, 2025[66] Lease Terminations In February 2024, the company terminated two non-cancellable leases for office facilities in Encinitas, California, writing off $0.8 million in ROU assets and $0.9 million in operating lease liabilities - In February 2024, the company entered into two separate lease termination agreements for Encinitas office facilities[64] - Wrote off $0.8 million in ROU assets and $0.9 million in operating lease liabilities associated with the terminated leases[65] Future minimum payments under non-cancellable leases As of June 30, 2025, total future minimum lease payments are $13.8 million, with a present value of lease liabilities of $10.3 million | Lease Payments (in thousands) | Amount | | :---------------------------- | :----- | | Total future minimum lease payments | $13,810 | | Less: imputed interest | $(3,515) | | Present value of lease liabilities | $10,295 | | Less: lease liabilities, current | $(1,138) | | Lease liabilities, net of current portion | $9,157 | 8. Stock-Based Compensation Total stock-based compensation expense for the six months ended June 30, 2025, was $9.6 million, down from $12.3 million in the prior year. The 2021 Equity Incentive Plan saw an automatic increase of 3,556,502 shares on January 1, 2025 | Stock-Based Compensation Expense (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $4,561 | $5,434 | | General and administrative | $5,045 | $6,880 | | Total stock-based compensation expense | $9,606 | $12,314 | - On January 1, 2025, the number of shares available for issuance under the 2021 Plan automatically increased by 3,556,502 shares[70] Equity Incentive Plans The company operates under the 2021 Equity Incentive Plan, which automatically increases available shares annually. On January 1, 2025, 3,556,502 shares were added, bringing total authorized shares under the plans to 15,968,281, with 3,514,879 remaining available for grant - The 2021 Equity Incentive Plan automatically increases shares available for issuance annually[70] - On January 1, 2025, 3,556,502 shares were added to the 2021 Plan[70] | Equity Incentive Plan Shares | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | Total authorized for issuance | 15,968,281 | 12,366,264 | | Remaining available for grant | 3,514,879 | 3,454,152 | Stock Options Stock options outstanding increased to 13,342,969 shares at June 30, 2025, from 9,838,142 at December 31, 2024, with a weighted average exercise price of $8.51. The weighted average grant date fair value for options granted in the six months ended June 30, 2025, was $1.75 per share | Stock Option Activity | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Outstanding Shares | 13,342,969 | 9,838,142 | | Weighted Average Exercise Price | $8.51 | $11.52 | - Weighted average grant date fair value of stock options granted during the six months ended June 30, 2025, was $1.75 per share (compared to $2.50 in 2024)[73] - Unrecognized stock-based compensation for stock options was $23.4 million as of June 30, 2025, expected to be recognized over a weighted average period of 3.0 years[75] Restricted Stock Awards All previously granted restricted stock awards were fully vested by December 31, 2024, and no new awards were granted during the six months ended June 30, 2025, resulting in no unvested restricted stock awards - All restricted stock awards granted were fully vested by December 31, 2024[76] - No restricted stock awards were granted during the six months ended June 30, 2025[76] - There were no unvested restricted stock awards as of June 30, 2025[76] Restricted Stock Units Unvested restricted stock units decreased to 219,775 shares at June 30, 2025, from 266,815 at December 31, 2024. Unrecognized compensation cost for RSUs was $2.3 million, to be recognized over 0.8 years | Restricted Stock Units | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Unvested balance | 219,775 | 266,815 | - Unrecognized stock-based compensation cost for restricted stock units was approximately $2.3 million as of June 30, 2025, to be recognized over a weighted average period of 0.8 years[77] Employee Stock Purchase Plan The 2021 ESPP allows employees to purchase stock at a discount. On January 1, 2025, 711,300 shares were added to the plan. During the six months ended June 30, 2025, 66,468 shares were issued at an average price of $1.03 - On January 1, 2025, 711,300 shares were automatically added to the 2021 ESPP[78] | ESPP Shares Issued (Six months ended June 30) | 2025 | 2024 | | :-------------------------------------------- | :----- | :----- | | Shares Issued | 66,468 | 56,903 | | Average Share Price | $1.03 | $2.01 | 9. Net Loss Per Share Basic and diluted net loss per share were $(0.38) for the three months and $(0.76) for the six months ended June 30, 2025, an improvement from $(0.45) and $(1.07) respectively in 2024. Potentially dilutive securities, totaling 20.7 million shares, were excluded due to the net loss position | Net Loss Per Share (Basic and Diluted) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | | Net loss per share | $(0.38) | $(0.45) | | Net Loss Per Share (Basic and Diluted) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------- | :----------------------------- | :----------------------------- | | Net loss per share | $(0.76) | $(1.07) | | Potentially Dilutive Securities (in common stock equivalent shares) | June 30, 2025 | June 30, 2024 | | :---------------------------------------------------------------- | :------------ | :------------ | | Shares issuable upon exercise of stock options | 13,342,969 | 10,793,201 | | Shares issuable upon conversion of Series A non-voting preferred stock | 7,060,100 | — | | Unvested restricted stock units | 219,775 | 444,718 | | Shares purchasable under the 2021 Employee Stock Purchase Plan | 91,398 | 56,879 | | Total | 20,714,242 | 11,294,798 | - Potentially dilutive securities were not included in the diluted net loss per share calculation because the company was in a net loss position, making them anti-dilutive[38][80] 10. Related Party Transactions The company has a Research and Development Support Services Agreement with Bayside Pharma, LLC, a related party owned by an employee. Expenses recognized under this agreement were $0.252 million for the three months and $0.501 million for the six months ended June 30, 2025, consistent with the prior year - The company has a Research and Development Support Services Agreement with Bayside Pharma, LLC, a related party owned by an employee[81] | Related Party R&D Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Research and development - Bayside | $252 | $249 | | Related Party R&D Expense (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Research and development - Bayside | $501 | $503 | - Accounts payable and accrued expenses due to related parties were $0.2 million at June 30, 2025, and $0.1 million at December 31, 2024[82] 11. Segment Information The company operates as a single operating segment, focusing on pre-clinical and clinical research and development for inflammatory diseases. Resource allocation decisions are based on program-specific R&D expenses and clinical trial progression - The company views its operations and manages its business as one operating segment[83] - The Chief Operating Decision Maker (CODM) is the chief executive officer, who assesses performance and allocates resources based on research and development expenses incurred at the program-specific level[83][84] | Operating Expenses by Program (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | | VTX2735 | $3,156 | $1,654 | | VTX3232 | $7,442 | $3,359 | | Tamuzimod (formerly VTX002) | $1,667 | $9,232 | | VTX958 | $991 | $6,362 | | Other segment items | $16,077 | $15,105 | | Total operating expenses | $29,333 | $35,712 | | Operating Expenses by Program (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------- | :----------------------------- | :----------------------------- | | VTX2735 | $5,069 | $2,644 | | VTX3232 | $12,913 | $5,205 | | Tamuzimod (formerly VTX002) | $5,487 | $20,025 | | VTX958 | $2,983 | $16,577 | | Other segment items | $32,978 | $33,029 | | Total operating expenses | $59,430 | $77,480 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting its status as a clinical-stage biopharmaceutical company, its product pipeline, financial performance, liquidity, and critical accounting policies. It details the decrease in net loss and R&D expenses, while emphasizing the ongoing need for substantial funding Overview Ventyx Biosciences is a clinical-stage biopharmaceutical company developing oral therapies for autoimmune, inflammatory, and neurodegenerative diseases. The company has incurred significant operating losses since inception, with a net loss of $54.4 million for the six months ended June 30, 2025. Key product candidates include NLRP3 inhibitors (VTX2735, VTX3232) and IBD therapies (tamuzimod, VTX958). VTX958 development is being de-emphasized due to Phase 2 trial results. The company expects to need substantial additional funding - Ventyx Biosciences is a clinical-stage biopharmaceutical company developing innovative oral therapies for autoimmune, inflammatory, and neurodegenerative diseases[88] - Key clinical product candidates include VTX2735 (peripheral NLRP3 inhibitor), VTX3232 (CNS-penetrant NLRP3 inhibitor), tamuzimod (S1P1R modulator for UC), and VTX958 (allosteric TYK2 inhibitor)[88] - VTX2735: Reported positive topline Phase 2 results in CAPS (Q1 2024); initiated Phase 2 trial in recurrent pericarditis (Jan 2025), with topline results anticipated in Q4 2025[88] - VTX3232: Reported positive topline Phase 1 results in healthy adults (Q1 2024); initiated Phase 2a trial in early Parkinson's disease (Aug 2024) with positive topline results (June 2025); initiated Phase 2 trial in obesity (Dec 2024), with topline results anticipated in early Q4 2025[88] - Tamuzimod: Announced positive Phase 2 results in UC (Q4 2023) and long-term extension (Oct 2024); seeking a partner for future development[88] - VTX958: Phase 2 Crohn's disease trial did not meet its primary endpoint (Q3 2024); company does not anticipate committing significant internal resources to further development[88][89] | Metric | Three months ended June 30, 2025 (in millions) | Three months ended June 30, 2024 (in millions) | | :----- | :--------------------------------------------- | :--------------------------------------------- | | Net Loss | $(27.0) | $(32.0) | | Metric | Six months ended June 30, 2025 (in millions) | Six months ended June 30, 2024 (in millions) | | :----- | :------------------------------------------- | :------------------------------------------- | | Net Loss | $(54.4) | $(70.5) | - Accumulated deficit of $608.7 million as of June 30, 2025[91] - The company expects to incur significant operating losses for the foreseeable future and will need substantial additional funding[91][92] - Received approximately $26.6 million in net proceeds from a September 2024 private placement of Series A non-voting convertible preferred stock to Sanofi, granting Sanofi a right of first negotiation for VTX3232[93][94] - Received $95.0 million in net proceeds from a March 2024 private placement of common stock[95] - Macroeconomic factors, including global economic uncertainty, military conflicts, and changes in trade policy (e.g., OBBBA tax changes), could materially and adversely affect the business[98][99][100][101] Research and Development Expense R&D expenses decreased by $5.5 million (15.5%) to $22.3 million for the three months ended June 30, 2025, and by $16.4 million (26.6%) to $45.2 million for the six months, primarily due to the close-out of Phase 2 trials for tamuzimod and VTX958, partially offset by increased spending on VTX2735 and VTX3232 | R&D Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change | | :------------------------- | :------------------------------- | :------------------------------- | :----- | | VTX2735 | $3,156 | $1,654 | $1,502 | | VTX3232 | $7,442 | $3,359 | $4,083 | | Tamuzimod (formerly VTX002)| $1,667 | $9,232 | $(7,565)| | VTX958 | $991 | $6,362 | $(5,371)| | Compensation-related expenses | $6,828 | $6,836 | $(8) | | Indirect expenses | $2,182 | $362 | $1,820 | | Total R&D expenses | $22,266 | $27,805 | $(5,539)| | R&D Expense (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | | :------------------------- | :----------------------------- | :----------------------------- | :----- | | VTX2735 | $5,069 | $2,644 | $2,425 | | VTX3232 | $12,913 | $5,205 | $7,708 | | Tamuzimod (formerly VTX002)| $5,487 | $20,025 | $(14,538)| | VTX958 | $2,983 | $16,577 | $(13,594)| | Compensation-related expenses | $14,221 | $14,413 | $(192) | | Indirect expenses | $4,491 | $2,688 | $1,803 | | Total R&D expenses | $45,164 | $61,552 | $(16,388)| - Expected R&D costs to increase for VTX2735 and VTX3232 due to continued development, and decrease for tamuzimod and VTX958 due to close-out of Phase 2 trials[105] - Indirect expenses for the three and six months ended June 30, 2025, increased by $1.8 million, partly due to a $2.1 million UK R&D tax credit received in the prior year period (2024) that did not recur[111][117] General and Administrative Expense G&A expenses decreased by $0.8 million (10.5%) to $7.1 million for the three months ended June 30, 2025, and by $1.7 million (10.4%) to $14.3 million for the six months, primarily due to lower compensation-related expenses and professional service fees | G&A Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change | | :------------------------- | :------------------------------- | :------------------------------- | :----- | | General and administrative | $7,067 | $7,907 | $(840) | | G&A Expense (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | | :------------------------- | :----------------------------- | :----------------------------- | :----- | | General and administrative | $14,266 | $15,928 | $(1,662)| - The decrease in G&A expenses was primarily due to lower compensation-related expenses and professional service fees[122][125] Other (Income) Expense Total other income decreased by $1.4 million to $(2.3) million for the three months ended June 30, 2025, and by $2.0 million to $(5.0) million for the six months, primarily due to lower interest income from reduced average cash balances and interest rates | Other (Income) Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change | | :------------------------------------ | :------------------------------- | :------------------------------- | :----- | | Interest income | $(2,367) | $(3,783) | $1,416 | | Other expense | $21 | $21 | $— | | Total other (income) expense | $(2,346) | $(3,762) | $1,416 | | Other (Income) Expense (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | | :------------------------------------ | :----------------------------- | :----------------------------- | :----- | | Interest income | $(5,033) | $(7,010) | $1,977 | | Other expense | $30 | $52 | $(22) | | Total other (income) expense | $(5,003) | $(6,958) | $1,955 | - The decrease in interest income was primarily due to lower average cash balances and interest rates[126] Liquidity and Capital Resources The company has funded operations primarily through equity and debt, holding $209.0 million in cash, cash equivalents, and marketable securities as of June 30, 2025. It anticipates needing substantial additional funding for ongoing development and potential commercialization, expecting current funds to last at least 12 months - Operations have been funded primarily through the issuance of equity and debt securities[127] - As of June 30, 2025, the company had $209.0 million in cash, cash equivalents, and marketable securities (excluding $1.0 million restricted cash)[127] - The company believes existing cash, cash equivalents, and marketable securities will be sufficient to fund obligations for at least 12 months from the issuance of the condensed consolidated financial statements[131] - Substantial additional funding will be needed for ongoing development activities, clinical trials, regulatory approval, and potential commercialization[130] Sources of Liquidity and Capital Resources Since inception, Ventyx has raised significant capital through various equity and debt financings, including a $158.8 million IPO in October 2021, a $165.2 million private placement in September 2022, a $95.0 million private placement in March 2024, and a $26.6 million Series A preferred stock private placement in September 2024 - Initial Public Offering (October 2021): Received approximately $158.8 million in net proceeds[127] - Private Placement (September 2022): Received approximately $165.2 million in net proceeds[127] - Private Placement (March 2024): Received approximately $95.0 million in net proceeds[127] - Series A Private Placement (September 2024): Received approximately $26.6 million in net proceeds from the sale of Series A non-voting convertible preferred stock[127] Future Funding Requirements The company expects significant increases in expenses for R&D, clinical trials, regulatory approvals, and potential commercialization. It will need substantial additional funding, likely through equity, debt, or collaborations, as it does not generate product revenue - Expenses are expected to increase significantly due to ongoing development activities, clinical trials, regulatory approval, and potential commercialization[130] - Anticipates needing substantial additional funding for continuing operations[130] - Future cash needs are expected to be financed through a combination of equity, equity-linked, and debt financings, collaborations, strategic alliances, and/or licensing arrangements[136] - Short-term liquidity needs for operating leases are approximately $2.3 million; long-term needs are approximately $11.7 million[133] Cash Flows Net cash used in operating activities decreased to $47.0 million for the six months ended June 30, 2025, from $72.2 million in 2024. Investing activities provided $51.6 million in 2025, a significant shift from using $33.8 million in 2024. Financing activities provided $0.1 million in 2025, down from $95.3 million in 2024 | Cash Flow Activity (Six months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------------------- | :------------------ | :------------------ | | Net cash used in operating activities | $(46,995) | $(72,163) | | Net cash provided by (used in) investing activities | $51,607 | $(33,755) | | Net cash provided by financing activities | $68 | $95,278 | - Net cash used in operating activities decreased primarily due to a lower net loss and changes in operating assets and liabilities[139][141] - Net cash provided by investing activities in 2025 was primarily from proceeds from maturities of marketable securities, offsetting purchases[142] - Net cash provided by financing activities in 2024 was significantly higher due to $95.0 million net proceeds from a common stock private placement[145] Critical Accounting Policies and Estimates The company's financial statements rely on estimates and judgments for areas like clinical trial costs, fair value measurements, and stock-based awards. No material changes to these policies were reported for the six months ended June 30, 2025 - Key estimates and judgments include prepaid and accrued clinical trial and R&D costs, fair value of stock-based awards and marketable securities, operating lease assets and liabilities, and impairment evaluation of long-lived assets[146] - No material changes to critical accounting policies and estimates occurred during the six months ended June 30, 2025[147] Other Company Information Ventyx regained "smaller reporting company" (SRC) status as of June 30, 2024, due to its market value falling below $560 million and no revenue, allowing for scaled disclosure relief - The company regained qualification as a "smaller reporting company" (SRC) as of June 30, 2024[148] - Qualification was based on the market value of stock held by non-affiliates being less than $560 million and no revenue generated[148] - As an SRC, the company elected to comply with scaled disclosure relief[148] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Ventyx Biosciences is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[150] Item 4. Controls and Procedures Management, with CEO and Interim Principal Financial Officer participation, concluded that disclosure controls and procedures were effective as of June 30, 2025. No material changes in internal control over financial reporting occurred during the quarter Evaluation of Disclosure Controls and Procedures The CEO and Interim Principal Financial Officer evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, providing reasonable assurance for timely and accurate reporting - Management, including the CEO and Interim Principal Financial Officer, evaluated disclosure controls and procedures as of June 30, 2025[151] - Concluded that disclosure controls and procedures were effective to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[151] Changes in Internal Control over Financial Reporting No changes in internal control over financial reporting were identified during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect internal control over financial reporting[152] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section incorporates by reference the information on commitments and contingencies from Note 5 of the financial statements, which details the voluntary dismissal of a securities class action and a shareholder derivative action - Information regarding legal proceedings is incorporated by reference from Note 5, "Commitments and Contingencies," in Part I, Item 1 of this Form 10-Q[154] - A securities class action and a shareholder derivative action, both related to VTX958 trial results, were voluntarily dismissed in February 2025[54][55] Item 1A. Risk Factors Investing in Ventyx Biosciences common stock involves a high degree of risk, including a history of operating losses, the need for substantial additional financing, dependence on product candidate success, and intense competition. The company's clinical trials face uncertainties, and its stock price is volatile - Investing in the company's common stock involves a high degree of risk[155] - Key risks include operating losses, need for additional financing, dependence on product candidate success, clinical trial failures, intense competition, and stock price volatility[156] Risk Factors Summary The company's business faces numerous risks, including a history of operating losses, the need for substantial additional financing, dependence on product candidate success, potential clinical trial failures, significant competition, reliance on Chinese suppliers, and stock price volatility - The company has a history of operating losses and expects to continue incurring significant losses, potentially never achieving profitability[156][158] - Substantial additional financing is required for product candidate development and commercialization, with failure to obtain capital potentially forcing delays or termination of efforts[156][160] - Business success is entirely dependent on the successful development, regulatory approval, and commercialization of product candidates, which is not guaranteed[156][168] - Clinical trials are lengthy, expensive, and have uncertain outcomes, with a high risk of failure to demonstrate adequate safety and efficacy[156][177][179] - The company faces significant competition from other biotechnology and pharmaceutical companies with greater resources[156][198] - Reliance on suppliers located in China for manufacturing and non-clinical research exposes the business to economic, political, and legal risks[156][243] - The company's stock price has been and may continue to be volatile, leading to potential investment losses[156][445] Risks Related to Our Business The company has a limited operating history, has incurred significant losses, and expects to continue doing so. Its business is entirely dependent on the successful development and commercialization of its product candidates, which face high risks of failure in clinical trials and require substantial additional funding. The company also faces risks related to manufacturing, supply chain, and competition - The company has incurred significant operating losses since inception, with an accumulated deficit of $608.7 million as of June 30, 2025[158] - Existing cash, cash equivalents, and marketable securities ($209.0 million as of June 30, 2025) are expected to fund obligations for at least 12 months, but substantial additional financing will be required[161] - The business is entirely dependent on the successful development, regulatory approval, and commercialization of product candidates, including VTX2735, VTX3232, and tamuzimod, with VTX958 development being de-emphasized[168][169] - Clinical trials are lengthy, expensive, and uncertain, with risks of delays, failure to demonstrate safety/efficacy, and unexpected adverse events[173][177][179][182] - Manufacturing of product candidates is complex and relies on third-party CMOs, posing risks related to production difficulties, quality control, and supply chain disruptions[233][235][236] - Reliance on suppliers in China for manufacturing and non-clinical research exposes the company to economic, political, legal, and trade policy risks, including potential impacts from the proposed BIOSECURE Act[243][247] - The company faces significant competition from other biotechnology and pharmaceutical companies with greater resources and established products[198][200] - Even if approved, product candidates may not achieve broad market acceptance among physicians, patients, and third-party payors, limiting revenue generation[280] - The company faces an inherent risk of product liability lawsuits from clinical testing and commercialization, which could result in substantial liabilities[274] - Success is highly dependent on attracting and retaining highly skilled executive officers, key scientific personnel, and employees, for whom competition is intense[304] - Future growth may be difficult to manage, imposing significant responsibilities on management and potentially disrupting operations[307][309] - Future acquisitions or strategic partnerships may increase capital requirements, dilute stockholders, and entail numerous integration and operational risks[313] - Reliance on trade secrets increases the possibility of discovery, misappropriation, or unauthorized disclosure by competitors or third parties[248][398] Risks Related to Government Regulation The company faces a lengthy, unpredictable, and costly FDA regulatory approval process, with no guarantee of success. Post-approval, it remains subject to extensive ongoing regulatory obligations, including surveillance and compliance with healthcare fraud and abuse laws, and changes in government policies or funding could cause delays or increased costs - The FDA regulatory approval process is lengthy, time-consuming, and unpredictable, with no prior NDA submission experience[328] - Clinical development can be delayed or terminated due to regulatory disagreements, enrollment difficulties, safety concerns, or manufacturing issues[329][331] - Product candidates may cause undesirable side effects, leading to clinical trial halts, more restrictive labeling, or denial of regulatory approval[226][227] - Obtaining regulatory approval in one jurisdiction does not guarantee approval in others, and foreign regulatory requirements can vary significantly and be costly[333][334] - Post-approval, the company and its contractors are subject to ongoing regulatory obligations, including surveillance, cGMP compliance, labeling, advertising, and adverse event reporting[340][342] - Changes in FDA policies, potentially influenced by Supreme Court rulings (e.g., Loper Bright), executive orders, or agency reorganization, could delay approvals or increase compliance burdens[345][347] - The company is subject to federal and state healthcare fraud and abuse laws (e.g., AKS, FCA, HIPAA), pharmaceutical marketing, and price reporting requirements, with non-compliance leading to significant penalties[357][358][360] - Impermissible promotion of off-label uses for approved products can lead to substantial liability and government fines[362][363] - Sales of product candidates depend on adequate coverage and reimbursement from third-party payors, a costly and uncertain process that may limit profitability[366][368][369] - May not obtain or maintain orphan drug designation benefits, including market exclusivity, which could be impacted by judicial interpretations[324][326][327] - Subject to U.S. and foreign export and import controls, with non-compliance potentially leading to penalties and limitations on international market access[348][349] - Subject to U.S. FCPA and foreign anti-corruption laws; non-compliance can result in criminal/civil liability and harm to business[350][351] - Failure to comply with environmental, health, and safety laws, particularly regarding hazardous materials, could lead to fines or penalties[352][354] Risks Related to Intellectual Property The company's success depends on obtaining, maintaining, protecting, and enforcing patents and other proprietary rights, which is expensive, time-consuming, and uncertain. Risks include failure to obtain patents, challenges to validity, infringement by third parties, and difficulties in protecting trade secrets - Success is dependent on obtaining, maintaining, protecting, and enforcing patents and other proprietary rights in the U.S. and other countries[389][390] - Patentability in the biotechnology field is evolving and uncertain; pending applications may not result in issued patents, or issued patents may be challenged, invalidated, or circumvented[390][391][395] - Obtaining and enforcing patents is expensive and time-consuming, with risks of failing to identify patentable aspects or maintain protection[392] - Competitors or third parties may infringe patents, leading to costly and time-consuming litigation that diverts management attention[415] - Risk of being sued for infringing third-party intellectual property, potentially leading to injunctions, monetary damages, or the need to obtain licenses on unfavorable terms[418][419] - Reliance on trade secrets and proprietary know-how is difficult to trace and enforce, with risks of disclosure, misappropriation, or independent development by competitors[398][438][440] - Patent rights are national/regional; protecting IP globally is expensive, and foreign laws may offer less protection, impairing competitive advantage[402][404] - Changes in U.S. patent law (e.g., America Invents Act) or laws in other countries (e.g., European Unified Patent Court) could diminish the value of patents[425][427][428] - May be subject to claims challenging the inventorship or ownership of patents and other intellectual property, potentially leading to loss of rights[433][435] - Inability to license or acquire new or necessary intellectual property rights or technology from third parties could materially impact product development[431] - Patent terms may be inadequate to protect competitive position for a sufficient duration, leading to earlier competition from generic products[432] - Failure to adequately protect trademarks and trade names could hinder brand recognition and adversely affect the business[442] Risks Related to Our Common Stock The company's common stock trading market may not be liquid or orderly, and its price has been and is expected to remain volatile due to various factors, including clinical trial results, financing efforts, and market conditions. Future equity offerings could cause dilution, and certain charter provisions may hinder acquisition attempts - An active, liquid, and orderly trading market for common stock may not develop or be sustained, making it difficult to sell shares[444] - The market price of common stock has been and is likely to remain volatile due to factors such as clinical trial results, financing efforts, regulatory developments, and general market conditions[445][446] - Failure to comply with Nasdaq's continued listing standards could lead to delisting, adversely affecting liquidity and ability to raise funds[447][448] - Management has broad discretion in using capital raise proceeds, which may not be effective or align with stockholder expectations[449] - Future equity offerings or other equity issuances will result in substantial dilution to existing stockholders[450] - Sales of a substantial number of common stock shares in the public market could cause the stock price to decline[451][459] - The board of directors is authorized to issue preferred stock with rights senior to common stock, potentially causing dilution[460] - The company does not anticipate paying cash dividends for the foreseeable future, requiring investors to rely on stock price appreciation for returns[461] - Provisions in the amended and restated certificate of incorporation and bylaws may prevent or frustrate attempts by stockholders to change management or acquire a controlling interest[462][464] - Bylaws designate Delaware courts and federal district courts as exclusive forums for certain disputes, potentially limiting stockholders' ability to choose a favorable judicial forum[465][468][469] - Claims for indemnification by directors and officers may reduce available funds to satisfy