Ventyx Biosciences (NASDAQ: VTYX) stock rises on positive analyst ratings. But, with economic uncertainty making investors nervous, is VTYX stock an attractive long-term investment?
What Is Ventyx Biosciences?
Ventyx Biosciences, Inc. is a clinical-stage biopharmaceutical company focused on developing innovative oral medicines for patients with autoimmune and inflammatory disorders.
The company specializes in developing novel small molecule therapeutics.
We believe our ability to efficiently discover and develop differentiated drug candidates will allow us to address important unmet medical need with novel oral therapies that can shift immunology markets from injectable to oral drugs.
Its current pipeline includes three clinical-stage internally discovered programs targeting tyrosine kinase 2 (TYK2), S1P1R and NLRP3.
Lead candidate VTX-958 is a Phase 1 TYK2 inhibitor for treating a broad range of autoimmune diseases. VTX-002 is a Phase 2-ready S1P1 receptor modulator for treating ulcerative colitis, and VTX-2735 is a Phase 1-ready peripheral inhibitor of the NLRP3 inflammasome, a mediator of multiple inflammatory conditions.
The company was founded on November 21, 2018, and is headquartered in Encinitas, California. The company has two wholly owned subsidiaries, Oppilan Pharma Limited (Oppilan) and Zomagen Biosciences Ltd (Zomagen).
Ventyx Biosciences serves customers worldwide.
Why is VTYX Stock Up?
VTYX stock rose after analysts made favorable comments. Bristol Myers Squibb Co (NYSE: BMY) had its psoriasis drug Sotyktu approved without a black-box warning. Sotyktu is a TYK2 inhibitor drug like Ventyx Biosciences' lead candidate VTX-958.
Jeff Jones and Leland Gershell at Oppenheimer wrote:
we see this as a significant win for deucravacinitib, VTYX and other TYK2 developers, substantially differentiating the TYK2 inhibitors from the JAK 1-3 inhibitors.
Black-box warnings, are required by the US FDA for certain medications that carry serious safety risks.
How Does Ventyx Biosciences Make Money?
Ventyx Biosciences does not make money as it is an emerging growth company heavily involved in R&D.
The company needs cash to pay for the clinical development of its various pipeline products, to fund research activities and pre-clinical development of its other programs and for general business running costs.
Therefore, the company may seek funding from investors or the capital market to raise funds.
VTYX Q2 Financial Results
Ventyx Biosciences reported its latest quarterly results on August 15, 2022. In Q2, its lead candidate, VTX-958, demonstrated an excellent safety profile and class-leading target coverage in its Phase 1 trial, proving well tolerated by 96 healthy adult volunteers who took part in the study.
The company reported cash, cash equivalents and marketable securities of $258.4m as of June 30, 2022. This is expected to support its operations into the first half of 2024.
R&D expenses amounted to $14.7m for the quarter, up from $9.5m Y/Y.
General expenses were $5.7m in Q2, up from $1.7m Y/Y.
The company made a net loss of $20m in Q2, compared to $15.6m Y/Y.
Raju Mohan, the CEO, said:
We are thrilled to announce positive topline results from the Phase 1 trial of VTX-958, our novel allosteric TYK2 inhibitor. We believe these data demonstrate a potential best-in-class safety and target coverage profile, which may drive clinical differentiation in relevant disease populations. We look forward to initiating Phase 2 trials for VTX-958 in psoriasis, Crohn’s disease, and psoriatic arthritis beginning in the fourth quarter of 2022.
We made significant progress across our pipeline in the second quarter, as we announced positive topline data from the Phase 1 trial of VTX2735, our peripheral NLRP3 inhibitor, and continued to execute the Phase 2 trial of VTX002, our selective S1P1R modulator, in ulcerative colitis.
Ventyx Biosciences (VTYX) will report its next quarterly earnings period on November 16. FactSet estimates have an EPS consensus of -$0.44 and no sales.
Ventyx Biosciences Pipeline Updates
VTX-958 (TYK2 Inhibitor): In its Phase 1 study, VTX-958 demonstrated an excellent safety profile. Based on the results, VTX-958 should advance into Phase 2 trials in psoriasis, Crohn’s disease and psoriatic arthritis in Q4 this year.
VTX-002 (S1P1R Modulator): The company has begun enrolling subjects in its Phase 2 randomized, placebo-controlled trial of VTX-002 in patients with moderate-to-severe active ulcerative colitis (UC). Top-line results are expected in 2023. The company believes this ongoing Phase 2 trial may serve as the first of two pivotal trials required for registration in UC.
VTX-3232 (Orally-bio-available CNS-penetrant NLRP3 Inhibitor): The company expects to initiate a Phase 1 trial in healthy volunteers in Q1 2023. It believes VTX-3232 may be the first CNS-penetrant NLRP3 inhibitor to enter the clinic and may provide therapeutic utility in a broad range of neuroinflammatory diseases.
VTX-2735 (Peripheral NLRP3 Inhibitor): Ventyx Biosciences announced positive top-line data from its Phase 1 trial of VTX-2735 in healthy volunteers during Q2. The company now plans a Phase 2 trial in Q4. Ventyx believes the clinical profile of VTX-2735 offers the opportunity to fully explore the therapeutic potential of systemic NLRP3 inhibition across a range of chronic inflammatory conditions, including cardiovascular, dermatologic, and rheumatologic diseases.
VTYX Stock Financials
Year-to-date, the VTYX stock is up by 15.62%, while the S&P 500 is down by -15.2% over the same period.
Over the past year, VTYX stock has traded between $9.50 and $27.65. Today it trades at around $36.34, rising over 60% in pre-market trading.
FactSet analysts have a consensus Buy rating on VTYX stock with a target share price of $47.11. Analysts from both Oppenheimer and Jefferies have recently rated VTYX a Buy with share price targets of $65 and $60, respectively.
VTYX stock has a P/BV of 4.8 and does not pay a shareholder dividend.
Ventyx Biosciences Growth Potential
The diseases that Ventyx Biosciences hopes to treat with its range of inhibitors are growing in prominence, with total addressable market size of around $48bn in global sales.
The company says there is a high unmet need for safe and effective oral agents in markets dominated by injectable biologics. Thus, Ventyx believes its current pipeline positions it to become a leader in developing oral immunology therapies.
VTYX Stock Risks
The company is burning through cash, with a notable rise in losses in Q2, as admin and R&D costs rise.
Inflation and a potential recession could reduce the ability of companies like Ventyx to raise cash. It could also cause share price suppression and volatility in VTYX stock.
The success of VTYX depends on the success of its product candidates. There are no guarantees that its product candidates will successfully complete development, receive regulatory approval, or be successfully commercialized.
What’s the Difference Between Biologics and JAK Inhibitors?
Biologics are a special type of powerful drug that slows or stops damaging inflammation. Most biologics are very large, complex molecules or mixtures of molecules.
Biologics are genetically engineered proteins that are made in a lab. Many are produced using recombinant DNA technology.
Both medicines suppress an overactive immune system, which is your body’s defense against germs.
Ordinarily, biologics are administered via injection and JAK inhibitors via a pill.
Is Ventyx Stock a Good Investment?
Ventyx stock is investigating potential candidates for treating diseases in an area of high demand, so if it brings a drug to market, the potential for the company to make money is attractive.
However, Ventyx has a long journey ahead in getting through clinical trials. Therefore, VTYX stock is highly speculative, so whether you invest depends on your appetite for risk.