SEC Filing – Ventyx Biosciences, Inc.

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-40928

Ventyx Biosciences, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	83-2996852
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
662 Encinitas Blvd., Suite 250 Encinitas, CA	92024
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (760) 593-4832

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

VTYX

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 10, 2022, the registrant had 50,917,801 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	92
Item 3.	Defaults Upon Senior Securities	92
Item 4.	Mine Safety Disclosures	92
Item 5.	Other Information	92
Item 6.	Exhibits	93
Signatures		94

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts included in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements in this Quarterly Report include, but are not limited to, statements about:

•

our expectations regarding our product candidates and their related benefits;

•

our beliefs regarding the perceived benefits and limitations of competing products, and the future of competing products and our industry;

•

details regarding our strategic vision and product candidate pipeline;

•

our beliefs regarding the success, cost and timing of our development activities and current and future clinical trials, including study design;

•

the anticipated timing of releasing data for any current or future clinical trials;

•

the anticipated timing of commencement, enrollment, and completion of any current or future clinical trials for our product candidates;

•

the timing or likelihood of regulatory filings or other actions and related regulatory authority responses;

•

any impact of the COVID-19 pandemic, or responses to the COVID-19 pandemic, on our business, clinical trials or personnel, including, without limitation, disruptions in the supply chain, including raw materials needed for manufacturing, animals used in research, delays in site activations and enrollment of clinical trials;

•

any impact of the ongoing conflict in Ukraine and the imposition of sanctions against Russia and Belarus;

•

the ability and willingness of third parties to engage in research and development activities on our behalf involving our product candidates, and our ability to leverage those activities;

•

our expectations regarding the ease of administration associated with our product candidates;

•

our expectations regarding the patient compatibility associated with our product candidates;

•

our beliefs regarding the potential markets for our product candidates and our ability to serve those markets;

•

the ability to obtain and maintain regulatory approval of any of our product candidates, and any related restrictions, limitations and/or warnings in the label of any approved product candidate;

•

our ability to commercialize any approved products;

•

the rate and degree of market acceptance of approved products, if any;

•

our ability to attract and retain key personnel;

•

the accuracy of our estimates regarding our future revenue, operating expenses, capital requirements and needs for additional financing;

•

our ability to obtain funding for our operations, including funding necessary to complete further development and any commercialization of our product candidates;

•

our ability to obtain, maintain, protect and enforce intellectual property protection for our product candidates and not infringe, misappropriate or otherwise violate the intellectual property of others; and

•

regulatory developments in the United States and foreign countries.

You should refer to Part II, Item 1A (Risk Factors) of this Quarterly Report for a discussion of other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted a thorough inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

iii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Ventyx Biosciences, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share amounts and par value data)

(unaudited)


	June 30,			December 31,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	45,343		$	70,791
Marketable securities		205,109			187,785
Prepaid expenses and other assets (includes related party amounts of $39 and $29, respectively)		1,741			4,444
Total current assets		252,193			263,020
Property and equipment, net		287			254
Operating lease right-of-use assets		1,733			—
Marketable securities		7,900			28,148
Other long-term assets		72			60
Total assets	$	262,185		$	291,482

Liabilities and stockholders' equity
Current liabilities:
Accounts payable (includes related party amounts of $77 and $0, respectively)	$	5,805		$	4,661
Accrued expenses (includes related party amounts of $74 and $175, respectively)		11,483			7,622
Current portion of operating lease liabilities		386			—
Total current liabilities		17,674			12,283
Operating lease liabilities, net of current portion		1,359			—
Total liabilities		19,033			12,283
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, $0.0001 par value; 900,000,000 shares authorized at June 30, 2022 and December 31, 2021; 50,959,950 and 50,526,702 shares issued at June 30, 2022 and December 31, 2021, respectively; 50,899,066 and 50,408,830 shares outstanding at June 30, 2022 and December 31, 2021, respectively		5			5
Additional paid-in capital		404,987			397,051
Accumulated other comprehensive loss		(1,291	)		(58	)
Accumulated deficit		(160,549	)		(117,799	)
Total stockholders' equity		243,152			279,199
Total liabilities and stockholders' equity	$	262,185		$	291,482

The accompanying notes are an integral part of these condensed consolidated financial statements.

Ventyx Biosciences, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Operating expenses:
Research and development (includes related party amounts of $230, $254, $433 and $462, respectively)	$	14,676		$	9,511		$	32,085		$	34,112
General and administrative (includes related party amounts of $0, $0, $0 and $116, respectively)		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	)
Other (income) expense:
Other (income) expense		(380	)		44			(395	)		44
Interest expense - related party		—			—			—			99
Change in fair value of notes and derivative - related party		—			—			—			11,051
Change in fair value of Series A tranche liability		—			4,329			—			5,476
Total other (income) expense		(380	)		4,373			(395	)		16,670
Net loss		(20,018	)		(15,559	)		(42,750	)		(53,204	)
Deemed dividend		—			—			—			(1,552	)
Net loss attributable to common shareholders	$	(20,018	)	$	(15,559	)	$	(42,750	)	$	(54,756	)
Net loss	$	(20,018	)	$	(15,559	)	$	(42,750	)	$	(53,204	)
Unrealized loss on marketable securities		(279	)		—			(1,221	)		—
Foreign currency translation		(54	)		(14	)		(12	)		(12	)
Comprehensive loss	$	(20,351	)	$	(15,573	)	$	(43,983	)	$	(53,216	)
Net loss per share attributable to common shareholders, basic and diluted	$	(0.39	)	$	(4.31	)	$	(0.84	)	$	(17.69	)
Shares used to compute basic and diluted net loss per share attributable to common shareholders		50,848,391			3,609,462			50,717,548			3,095,244

The accompanying notes are an integral part of these condensed consolidated financial statements.

Ventyx Biosciences, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

For the Three Months Ended June 30, 2022 and 2021

(in thousands, except share amounts)

(unaudited)


															Accumulated
	Series A Convertible				Series A-1 Convertible								Additional		Other						Total
	Preferred Stock				Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Equity
Balance at March 31, 2022		—	$	—		—	$	—		50,729,820	$	5	$	400,607	$	(958	)	$	(140,531	)	$	259,123
Issuance of common stock upon exercise of stock options		—		—		—		—		118,918		—		134		—			—			134
Issuance of common stock upon vesting of restricted common stock		—		—		—		—		41,254		—		—		—			—			—
Shares issued under employee stock purchase plan		—		—		—		—		9,074		—		115		—			—			115
Stock-based compensation expense		—		—		—		—		—		—		4,131		—			—			4,131
Unrealized loss on marketable securities		—		—		—		—		—		—		—		(279	)		—			(279	)
Foreign currency translation		—		—		—		—		—		—		—		(54	)		—			(54	)
Net loss		—		—		—		—		—		—		—		—			(20,018	)		(20,018	)
Balance at June 30, 2022		—	$	—		—	$	—		50,899,066	$	5	$	404,987	$	(1,291	)	$	(160,549	)	$	243,152


															Accumulated
	Series A Convertible				Series A-1 Convertible								Additional		Other						Total
	Preferred Stock				Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Deficit
Balance at March 31, 2021		6,283,401	$	55,301		18,766,496	$	57,437		3,410,694	$	—	$	8,034	$	2		$	(71,698	)	$	(63,662	)
Issuance of preferred stock		6,250,504		57,000		—		—		—		—		—		—			—			—
Conversion of tranche liability to Series A preferred stock and common stock		—		3,978		—		—		507,133		—		3,058		—			—			3,058
Issuance of common stock upon exercise of stock options		—		—		—		—		12,540		—		25		—			—			25
Issuance of common stock upon vesting of restricted common stock		—		—		—		—		25,606		—		—		—			—			—
Stock-based compensation expense		—		—		—		—		—		—		288		—			—			288
Foreign currency translation		—		—		—		—		—		—		—		(14	)		—			(14	)
Net loss		—		—		—		—		—		—		—		—			(15,559	)		(15,559	)
Balance at June 30, 2021		12,533,905	$	116,279		18,766,496	$	57,437		3,955,973	$	—	$	11,405	$	(12	)	$	(87,257	)	$	(75,864	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Ventyx Biosciences, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

For the Six Months Ended June 30, 2022 and 2021

(in thousands, except share amounts)

(unaudited)

Accumulated

Series A Convertible

Series A-1 Convertible

Additional

Other

Total

Preferred Stock

Preferred Stock

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders'

Shares

Amount

Shares