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 second quarter financial results. Making prepared remarks on the call tonight, we have Dr. Jeff Lydon, Chairman and CEO, Dr. Reshma Kewalramani, Chief Medical Officer, and Charlie Wagner, Vertex's Chief Financial Officer. Stuart Arbuckle, Chief Commercial Officer, will join us for Q&A. We recommend that you access the webcast slides on our website as you listen to the 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. It's with great pride and appreciation for all that our employees and leadership team are achieving that I'd like to take a few moments to talk about our progress and to affirm our strategy going forward. I'm pleased to say that our business is outperforming on multiple fronts. As we enter the second half of the year, we are on track to achieve or exceed our 2019 goals, and we're well positioned for continued innovation and growth in the future. We're treating more people with CF than ever before with our approved medicines, which continues to drive significant revenue growth to support investment aimed at creating future medicines. We have rapidly grown our pipeline beyond CF, and we now have ongoing development programs evaluating seven different potentially transformative medicines spanning five specialty diseases. We have also established multiple new collaborations and acquisitions over the past year aimed at complementing our productive internal research engine. First, the CF. Our progress in CF has been extraordinary. In 2019 alone, we have received nine new regulatory approvals or label expansions for our CF medicines globally, reached new reimbursement agreements in 10 countries outside the U.S., and completed the Phase III program for our triple combination regimens involving nearly 1,000 patients. And just last week, we announced the submission of a new drug application for the triple combination of VX-445, Tezacaftor, and Ivacaftor to the U.S. FDA. marking the most significant milestone to date in our efforts to create new CF medicines over the past two decades. The Phase III data we announced in May for the VX445 triple combination regimen were unprecedented, showing improvements in lung function and other measures of the disease that were among the highest magnitude ever seen in any of our CF studies. CF is a progressive and debilitating disease. We share the urgency of patients who are waiting for a new medicine to treat the underlying cause of their CF. And we therefore moved quickly to complete our NDA for the VX445 triple combination within just weeks of receiving the final data. Outside the US, we are focused on reaching new reimbursement agreements for our current CF medicines. And wherever possible, we are seeking portfolio agreements that will also provide patients with access to future CF innovations from Vertex. Beyond CF, our pipeline is expanding and advancing rapidly. We have seven potentially transformative new medicines in clinical development across five serious specialty disease areas, including alpha-1 antitrypsin deficiency, A4L1-mediated kidney diseases, pain, sickle cell disease, and beta thalassemia. We are also increasing our external investment to build a toolkit to develop future breakthrough medicines in specific diseases we're interested in. The most recent example of these efforts are the recently completed acquisition of Exonix Therapeutics, and our expanded collaboration with CRISPR Therapeutics aimed at the development of new genetic therapies for DMD and DM1. These agreements provide us with development candidates that have shown promising preclinical results and also enable us to integrate cutting-edge scientific technology and expertise in diseases that are highly aligned with our business strategy. We plan to execute more of these types of deals as we further expand our pipeline of transformative medicines over the coming months and years. Our strategy to create medicines by investing in serial scientific innovation is working as demonstrated by our continued strong performance in the first half of 2019. Importantly, our commercial success allows us to invest both internally in our own pipeline and externally through new collaborations to fuel our future growth. The results of our substantial and highly directed investments in R&D are evident in the significant progression of our pipeline. And we have the potential to achieve risk lowering clinical data in several programs in 2020. Before I end my prepared remarks, I'd like to say a few words about the leadership transition that will happen eight months from now, where I will become executive chairman and Reshma will become Vertex's new president and CEO. First, let me say that it's been a tremendous pleasure and honor to lead this company since 2012. I'm very proud of what the team has accomplished during that time. Vertex has never been stronger. Our business is growing rapidly and will continue to grow for the next decade as we bring AlexaCaptor to the vast majority of CF patients worldwide and then deliver on our clinical stage pipeline in multiple other serious diseases. Based upon our success in CF, we now have the financial strength to invest in both internal and external innovation to deliver even more transformative medicines to more patients with serious diseases. Finally, we have an outstanding senior leadership team with a proven track record of executing against our strategy. Together, these factors differentiate us and position us for long-term success. Having worked closely with Reshma for the last several years, I know that she is the perfect choice to succeed me as CEO and is fully prepared to lead Vertex into the future. As a physician scientist, she has a deep commitment to our strategy of serial innovation as well as our inclusive culture of outstanding science. She's an excellent communicator and a strong collaborative leader with a proven ability to execute against our strategy and deliver results. Importantly, she has a track record of putting patients first and driving innovation to have a transformative impact on patients' lives. Of course, you all aren't getting rid of me quite yet. As you probably know, smooth, non-disruptive succession has historically been one of the biggest challenges for biotech companies. Recognizing this, the board and I have worked for several years on a succession plan that would ensure both strategic and operational continuity. As part of this plan, I'm looking forward to playing a continued active role in the company as executive chairman, supporting Raishman and our team through a smooth transition through Q1 2023. Specifically, Raishman and I have agreed that I will maintain an active role in four areas of the company. business development, helping to get deals done and secure our access to external innovation and products, building our new Boston research site dedicated to genetic therapies, investor relations, and public affairs and government relations where I've established important relationships at the state, federal, and international levels over the last seven years. I look forward to continuing to engage with you as the company progresses. I'll now turn the call over to Reshma.

Thank you, Jeff. I'm honored to become Vertex's next CEO. Over the last eight years, your strategic vision and relentless dedication to science and serial innovation has transformed the company, revolutionized the treatment of CF, and produced a pipeline of breakthrough medicines for other serious diseases. The success of our serial innovation strategy has also resulted in unprecedented financial strength. I believe strongly in our differentiated strategy, and I have no plans to change it. Our commitment to finish the journey in CF and to create multiple transformative medicines for other serious diseases has never been stronger. I look forward to continuing to work alongside Jeff and our outstanding senior leadership team at a time of such great opportunity for the company and to deliver on our promises to bring more transformative medicines to patients with serious diseases who are waiting for them. Now, Turning to key updates on our medicines in clinical development. 2019 has been a year of important clinical and regulatory milestones for our CF medicines and our pipeline beyond CF. In CF, we recently submitted our NDA for the VX-445 triple combination regimen and remain on track to complete our application in Europe in the fourth quarter of this year. Our NDA included a request for priority review, which, if granted, would provide a PDUFA date sometime late in the first quarter of next year. If approved, this regimen would not only be the first medicine to treat the cause of CF for the FMF population, the largest remaining group of people with CF without a medicine for the underlying cause of their disease, but it would also be a significant enhancement for the FF population. The VX445 triple combination regimen represents a significant advance over currently available medicines and may be able to treat up to 90% of people with CF in the future. We want to bring this medicine to as many patients as quickly as possible, and we've already begun our efforts towards gaining approval for this regimen in younger patients through an ongoing Phase III study in children ages 6 to 11. Outside of CF, We have clinical development efforts ongoing across five different diseases and expect important clinical data readouts from multiple programs in 2020. In our AAT program, we have completed evaluation of single and multiple ascending doses of our first small molecule corrector, VX814, in healthy volunteers. Based on the safety, tolerability, and pharmacokinetic data from this study, we have decided to advance VX814 into a Phase II dose-ranging study in AATD patients who have two Z mutations. We expect to obtain clinical data from our AAT program in people with two Z mutations in 2020. And consistent with our approach of developing a portfolio of multiple potential medicines in each of our programs, we have also recently advanced a second AAT corrector, VX864, into Phase I development. Both VX814 and VX864 have received fast-track designation from the FDA. In pain, we have established proof of concept for NAV1.8 inhibition in multiple Phase II studies in acute, neuropathic, and musculoskeletal pain conditions. We've identified a number of selective NAV1.8 inhibitors, and our plan is to obtain clinical data from multiple compounds in order to choose the best molecule or molecules to advance into late stage development. We announced today that we are initiating a phase one study of a novel NAV 1.8 inhibitor, VX961. In sickle cell disease and beta thalassemia, we've now dosed two patients in our hemoglobinopathies program with our partner, CRISPR Therapeutics, using the novel gene editing therapy, CTX001. The first sickle cell patient was dosed in the middle of this year, which follows the first patient with beta-thalassemia who was dosed in the first quarter of the year. Before I turn the call over to Charlie, I'd like to spend a few minutes talking about a new area for Vertex, APO-L1-mediated kidney diseases, which includes FSGS, or focal segmental glomerular sclerosis. There have been few to no medicines developed and approved specifically to address the underlying cause of kidney diseases. So as a nephrologist who has treated these patients, I find this program exciting both scientifically and personally. Our approach to the treatment of APOL1-mediated kidney diseases will initially focus on the inhibition of APOL1 function in patients with FSGS. We estimate that there are approximately 10,000 people with FSGS in the U.S. who are homozygous for APOL1 mutations. These patients exhibit high levels of protein in the urine, known as proteinuria, and typically progress to reduce kidney function and or kidney failure. We have developed proprietary cell and animal models to evaluate our compounds in FSGS. And based on our preclinical data, we believe that inhibiting ApoL1 protein function will reduce proteinuria and also the course of this progressive disease. I am pleased to report that we recently began dosing healthy volunteers in a phase one study of our first oral small molecule inhibitor of ApoL1 function. This molecule, known as VX147, is the first of multiple potential medicines for ApoL1-mediated kidney diseases that we are advancing in late stage research. If we are successful in phase one, our plan is to initiate a phase two proof of concept study in 2020, where we would evaluate the ability of VX147 to reduce protein levels in the urine. A demonstrated reduction in proteinuria in FSGS would represent an important biological proof of concept for this program. In summary, we've made outstanding progress in CF and in multiple other disease areas in 2019, and are positioned to obtain important clinical data from multiple diseases in our pipeline in 2020. I'll now turn the call over to Charlie.