Vertex Pharmaceuticals Incorporated

Welcome. This is Michael Partridge, Senior Vice President of Investor Relations. Tonight, we will review with you Vertex's business progress and provide our first quarter financial results. Making prepared remarks on the call tonight, we have Dr. Jeff Lydon, Chairman and CEO, Stuart Arbuckle, Chief Commercial Officer, and I would like to welcome to the call Charlie Wagner, Vertex's new Chief Financial Officer, Dr. Reshma Kewalramani, Chief Medical Officer, and Paul Silva, our Corporate Controller and Chief Accounting Officer, will join us for Q&A. We recommend that you access the webcast slides on our website as you listen to this call. This conference call is being recorded and a replay will be on our website. We will make forward-looking statements on this call that are subject to the risks and uncertainties discussed in detail in today's press release and our filings with the Securities and Exchange Commission. These statements, including without limitation those regarding Vertex's marketed CF medicines, the ongoing development and potential commercialization of our triple combination regimens for cystic fibrosis, Vertex's other programs, and Vertex's future financial performance are based on management's current assumptions. Actual outcomes and events could differ materially. I will now turn the call over to Dr. Jeff Lydon.

Thanks, Michael. Good evening, everyone. During the last several years, Vertex has continued to pursue its strategy of investing in scientific innovation to create transformative medicines for serious diseases, and then bringing these medicines to more patients around the world to drive significant revenue and operating income growth. In 2019, our success in executing against this strategy can be measured by the many important clinical, regulatory, and commercial milestones that we expect to achieve this year in both CF and in our non-CF pipeline. As we look forward to the next several years, we are more confident than ever that the continued execution of this strategy will allow us to create more new medicines that change patients' lives and in so doing, deliver outstanding value to our shareholders. In CF, we're bringing our approved medicines to more patients globally through recent label expansions for Kalydeco and Orkambi and the approval and successful launch of Symdeco. Approximately half of all people with CF are today eligible for a Vertex CF medicine. Our goal in CF is to develop medicines for all people with this disease. And we've made significant progress toward that goal with our triple combination regimens that we believe could treat up to 90% of all people with CF in the future, providing many patients with the first medicine to treat the underlying cause of their disease, and also providing enhanced benefit for the vast majority of patients currently eligible for our three approved medicines. With both of our triple combination regimens, we have now reported phase three data that showed potentially transformative clinical benefit for CF patients with two F508-del mutations, as well as for those with one F508-del mutation and one minimal function mutation. In the second quarter, we expect to obtain the final 24-week data from our Phase III triple combination programs, which will allow us to choose the best regimen to submit for regulatory approvals globally. We remain on track to submit an NDA in the US in the third quarter, followed by an MAA in Europe later this year. We look forward to updating you on our plans and to sharing additional data for our chosen triple combination regimen later this quarter. I want to also highlight our recent progress outside of CF, where we are advancing potentially transformative medicines for pain, Alpha-1 antitrypsin deficiency, sickle cell disease, beta thalassemia, focal segmental glomerulosclerosis and other serious diseases. Our discovery efforts are focused on validated targets in diseases in which we have a deep understanding of the underlying biology and genetics. By using early clinical markers to predict the potential for these medicines to have transformative benefit, we believe we will significantly increase our probability of success in early proof-of-concept trials, enabling rapid development timelines. In our AAT program, we initiated clinical development of our first small molecule corrector, VX814, in late 2018, and are now moving this molecule through phase one development. Today, we announce that we have received fast-track designation from the FDA for this molecule. We're also advancing other small molecule correctors of AAT through late preclinical development and expect to begin clinical development of a second small molecule AAT corrector in 2019. In pain, we've established proof of concept for NAV1.8 inhibition across multiple Phase II studies of VX150 in acute, neuropathic, and musculoskeletal pain conditions. Data from these studies, together with data from a Phase II dose-ranging study of VX150, will inform our potential development paths in pain. In addition to our lead molecule, VX150, we have a portfolio of multiple additional NAV1.8 inhibitors in late preclinical development and expect to advance the first of these molecules into the clinic in 2019. In sickle cell disease and beta thalassemia, we are making rapid progress with our partner, CRISPR Therapeutics, on the development of the gene editing therapy CTX001. Earlier this year, the first patient with beta thalassemia was infused with CTX001, marking a significant scientific milestone for the field of gene editing and also a remarkable milestone for our collaboration with CRISPR. We remain on track to dose the first patient with sickle cell disease with CTX001 in the middle of the year. In addition to our internal R&D efforts, we are focused on gaining access to new technologies, platforms, and development assets through external partnerships that fit our strategy of developing transformative medicines for serious specialty diseases. Toward that end, we have entered into multiple collaborations over recent months, including those with Arbor Biotechnologies, Merck KGAA, Genomics PLC, and XChem, which together provide us with access to a broad range of new scientific capabilities. And with our growing free cash flow, we have increased flexibility to enter into additional collaborations to further bolster our pipeline and provide access to new technologies. Before I close, I'd like to welcome Charlie Wagner to Vertex as our new Chief Financial Officer. Charlie joins us from Ortho Clinical Diagnostics, where he served as CFO and Executive Vice President of Finance. Charlie has served as CFO for public and private companies for more than 10 years, including roles as CFO for Bruker, Progress Software, and Millipore. Charlie brings to Vertex significant financial and operational expertise that will help guide us over the coming years as our business becomes more complex through continued global expansion, the treatment of many more patients, and the future launches of new medicines. In welcoming Charlie, I'd also like to thank Paul Silva for his leadership over the last three months as our interim CFO. Paul will continue to play an integral role within the finance organization just as he has since joining the company in 2007. I'll now turn the call over to Stuart to review our commercial progress.

Thanks, Jeff. Tonight, I'll review our commercial performance for the first quarter. driven by the strong underlying demand for our medicines in the US and internationally. In the first quarter, we continue to increase the number of patients being treated with our CF medicines globally, resulting in product revenues of $857 million. Compared to the fourth quarter of 2018, our first quarter 2019 revenues were negatively impacted by channel inventory build that occurred at the end of 2018, and by higher gross to net adjustments that we typically experience early in the year, as we highlighted on our call in January. The first quarter included $320 million of Symdeko revenues, including $32 million of Symkevi revenues from outside the U.S., primarily from Germany. Symkevi launch in Germany is off to a strong start, with demand coming from patients who never initiated treatment with Orkambi, as well as patients who discontinued or have switched from Orkambi. Throughout 2019, we anticipate additional patients will initiate treatment with Symdeko in the US and EU, including younger patients ages 6 to 11 in the US following potential FDA approval later this year. With Kalydeco and Orkambi, we continue to see new patients initiating treatment as we've secured new reimbursement agreements and received new regulatory approvals for young children around the globe. Based on our performance in the first quarter, we remain on track to deliver total CF product revenues of $3.45 to $3.55 billion for the full year. Outside the US, we continue to make progress achieving reimbursement for our CF medicines. We are focused on obtaining long-term agreements that provide access to all eligible patients. We are seeking agreements that appropriately value our scientific innovation and enable us to continue to invest in the discovery of future CF medicines and medicines for other serious diseases. I'm pleased that in the first quarter of this year, we've achieved multiple pricing agreements and reimbursement milestones. In Germany, we successfully expanded our pricing agreement for Orkambi, prompted by the EMA approval of the product in children ages 6 to 11 years. We've seen strong demand for Orkambi in Germany since the medicine was approved for these younger patients in January of last year. and this recent pricing agreement is further validation of the value that Orkambi provides. In Ireland, as part of our previously reached portfolio agreement, our medicines have now become available to children as young as one year old for Kalydeco, children as young as two years old for Orkambi, and patients ages 12 and older for Synkevi, including those with a residual function mutation. We've also reached multiple new reimbursement agreements in smaller countries like Israel and Sweden, reflecting our commitment to bringing our CF medicines to all eligible patients around the world. And in Australia, we recently received a positive recommendation for Symdeko from the Pharmaceutical Benefits Advisory Committee, an important first step toward formal reimbursement in patients ages 12 and older. The positive recommendation of Symdeko comes as a result of our prior agreement in Australia for Orkambi, where we also defined a pathway for rapid access to Symdeko. In summary, I'm pleased that we are bringing our medicines to more patients around the globe and with the resulting strong revenue performance in the first quarter of the year. With that, I will now turn the call over to Charlie to further review our financial results.