Vertex Pharmaceuticals Incorporated

Good evening. Welcome to the Vertex first quarter 2020 financial results conference call. This is Michael Partridge, Senior Vice President of Investor Relations for Vertex. Making prepared remarks on the call tonight, we have Dr. Reshma Kewalramani, Vertex's CEO and President, Stuart Arbuckle, Chief Commercial Officer, and Charlie Wagner, Chief Financial Officer. 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 available 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, Our pipeline 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. Reshma Kewalramani.

Thanks, Michael. It is an honor, as Vertex's new CEO and president, to welcome you to this conference call. The COVID-19 pandemic has been a significant challenge for people around the world. These are tough times. We know and we see that the lives of people in every country around the world has been disrupted. We grieve with those who have lost loved ones, and we salute the heroic work being done by those on the front lines of fighting the pandemic. Acknowledging that this is a difficult time for everyone, I want to begin by telling you why we believe that despite the pandemic, the future of Vertex remains brighter than ever. In many ways, Vertex is a unique company, a company with a proven track record as a serial innovator with four approved CF medicines, including Trikafta, a medicine we believe can treat up to 90% of CF patients around the world with high efficacy, a company with a broad clinical and late preclinical stage pipeline using multiple modalities to treat and potentially cure serious diseases outside of CF. A company with current and future top and bottom line growth and a strong balance sheet. And finally, a company with an extraordinarily talented senior leadership team and a diverse, inclusive workforce. In short, exactly the kind of company I want to be a part of going forward. At my core, I'm a physician scientist driven by a deep passion to advance science and medicine in the interest of patients. Since joining Vertex, I've witnessed the ingenuity and drive that have enabled this company to tackle unprecedented challenges in discovery, development, and commercialization of new medicines. For example, our rapid advancement of our triple combination program through research and development and the early approval in the U.S. Today, the majority of eligible patients in the US are already on Trikafta. It's hard to believe, but true, that the original PDUFA date for Trikafta was March 20th, 2020. Another example is pioneering the use of CRISPR gene editing with our partners at CRISPR Therapeutics to potentially cure diseases like sickle cell and beta thalassemia. I am humbled to have the opportunity to follow Jeff in leading this unique company. Now on to our Q1 performance. Vertex's business, as demonstrated in our record first quarter financial results announced today, is stronger than ever. Our Q1 CF product revenues, compared to last year, are up 77% to $1.52 billion, driven by the highly successful launch of Trikafta in the U.S. and the growth of Orkambi and Simkevi outside the U.S. Our non-GAAP operating income rose 133% to $877 million. Our strategy is working, and we continue to grow our revenues and earnings while also investing significantly in innovation. As we look to the future, we are confident in the continued growth of our CF franchise for several reasons. First, our CF medicines are changing the lives of the patient populations they serve. and by addressing the underlying cause of disease, they are an important part of patients' efforts to remain as healthy as possible. Second, our supply chain to manufacture and distribute our medicines is robust, and we remain confident in our ability to continue to supply our medicines uninterrupted to CF patients around the world for the long term. Finally, while the course of the pandemic is unpredictable, We retain a clear line of sight to securing approval and launching the triple combination regimen in more countries around the world and in younger age groups and sustaining our CF leadership well into the next decade. Our vision has been for Trikafta to be able to treat 90% of all CF patients and that vision remains very much intact. Given the strong performance of our CF products in Q1, we are raising our revenue guidance for the year to a range of $5.3 to $5.6 billion. Stuart and Charlie will review the factors underlying our new guidance in a few moments. Let me now turn to our pipeline and discuss how we are taking specific actions to continue to progress our clinical programs while protecting patients and healthcare providers. As you will see, each program is somewhat unique and different. First, our regulatory and development teams have been working diligently to stay on track with our submissions to regulators and to adapt our ongoing clinical studies as needed to ensure that they can be completed successfully. We continue to make progress in our ongoing CF trials. For example, our CF regulatory team completed the submission of the SNDA in the U.S., as well as a type 2 variation to the EMA in Europe for Kalydeco for infants with CF down to four months of age. Similarly, we have been able to progress our FSGS program. Our clinical team for our APOL1-mediated kidney diseases program have been able, in the past few weeks, to initiate our Phase II study of VX147 in APOL1-mediated FSGS, and we now have 13 sites open. On the other hand, we have recently temporarily paused enrollment or treatment in some ongoing clinical studies, including the Phase II study of VX814 in our AAT program. Every program and every clinical study is different, and we have analyzed each situation closely and have made decisions based on the need to keep patients safe and to respect the need to preserve the resources of the healthcare system for where they are needed most. In addition to our clinical progress, we are working to maintain momentum in our late stage preclinical programs so that we can move forward when it is possible to do so into first in human studies. Though we have reduced the onsite occupancy at our sites to protect employees and our facilities, our research labs have stayed open and we have prioritized activities that are IND enabling for our next medicines entering development. This includes our cell therapy program for type 1 diabetes, where we continue to have a goal of starting clinical development in patients in late 2020 or early 2021. We are also continuing to progress our business development strategy and investing in external innovation. This week, we announced a new collaboration with Affinia Therapeutics. This collaboration supports the discovery and development of novel AAV capsids for in vivo delivery of genetic therapies in a number of disease areas. We're pleased to bring this capability into the cell and gene therapy toolbox that we are building. Finally, despite the pandemic, we continue to grow our senior leadership team with several important new hires and promotions in Q1. The first is Dr. Carmen Bozic, who was promoted to chief medical officer earlier this month. Carmen now has responsibility for clinical development, medical affairs, drug safety, global clinical operations, biometrics, and other related functions. Carmen has extensive experience in clinical drug development and joined Vertex in 2019 from Biogen, where she oversaw the development and regulatory approval of nine important medicines, including Tecfidera and Spinraza. The second is Dr. Basiana Sana, who joined Vertex when we acquired SEMA in 2019, where he was CEO. We have expanded Bastiano's role, and he is chief of cell and genetic therapies at Vertex. In this new role, he now leads all of our gene editing, gene therapy, and cell therapy programs, as well as related technologies for sickle cell disease, beta thalassemia, DMD, type 1 diabetes, and others. Bastiano has extensive experience and expertise in cell and genetic therapies from prior roles at Magenta and Novartis, and I am confident that his skill set will enable us to build capabilities at Vertex that are second to none. I am absolutely delighted to have Carmen and Bastiano on the team. In summary, this extraordinary moment in time in which we find ourselves right now will pass. We will all get through this together. Despite these unusual circumstances, Vertex is well positioned to continue to serve our CF patients, grow revenues and earnings, and advance our pipeline of transformative medicines in disease areas beyond CF. Let me turn it over to Stuart.

Thanks, Reshma. I am pleased to review with you this evening our continued strong commercial performance in the first quarter of 2020. I am very proud of our commercial supply, market access, patient support, marketing, and field teams who were fully prepared for the early approval of Trikafta in the U.S. And we also want to recognize the remarkable job that CF centers and healthcare professionals have done to respond to both the approval and the high level of patient interest in starting the medicine. Our teams have executed what is by every measure a very rapid and successful U.S. launch of Trikafta for CF patients 12 years and older with at least one F508 del mutation. Approved in October 2019, five months ahead of its PDUFA date, Trikafta has been widely adopted. We have seen strong demand across all groups of patients eligible for Trikafta, and it is now being taken by the majority of the 18,000 eligible patients in the U.S. Total CF product revenues for Q1 2020 were $1.52 billion, and in its first full quarter, Trikafta accounted for $895 million of those revenues. This was due in large part to more rapid than expected adoption of Trikafta in all eligible patient groups in the U.S. Geographically, for our CF product portfolio, we recorded approximately $1.19 billion in revenues in the U.S. and $328 million outside the U.S. Growth outside the U.S. was driven by strong patient uptake of Orkambi and Simkevi following the completion of multiple reimbursement agreements in late 2019. In most countries outside the U.S. where our medicines are reimbursed, the majority of eligible patients have now initiated treatment. Based on our strong Q1 revenue performance, we have raised our revenue guidance for the year, as Reshma mentioned. The new guidance and range takes into account both the rapid uptake of Trikafta we have seen since October 2019, as well as additional dynamics that we either saw during Q1 or that we anticipate as we move through the year. First, we did see some benefit in Q1 from early prescription refills by patients, both in the U.S. and outside the U.S., as well as advance buying from some government payers outside the U.S. Second, while there are still new patients starting Trikafta treatment, the pace of initiation has slowed. A high percentage of currently eligible patients are already on Trikafta in the U.S., and so we have reached the flatter part of the uptake curve. Additionally, COVID-19 has resulted in some CF centers limiting their non-emergency interactions, and this could impact the rate of future initiations. Third, given that we have only just completed the first full quarter of the Trikafta launch, we know that we have yet to see the full impact of persistence and compliance rates on the ongoing utilization of this medicine. As with all of our medicines, the revenue impact of persistence and compliance does not become fully reflected until several quarters after launch. Looking ahead, the focus of our efforts to serve patients is twofold. First, ensuring that we can continue to meet the strong demand for our medicines with uninterrupted supply. Our team has closely analyzed our existing supply chain and has worked during the emergence of the pandemic to ensure that there was no change in our ability to provide medicines to patients. Our manufacturing facilities have remained fully operational and we have continued to produce new supply of our CF medicines. We are confident that this will remain the case moving forward. Second, we are progressing with urgency to expand the number of patients eligible for and able to access our CF medicines. We anticipate several important milestones in the coming 12 months, which are expected to drive access to our CF portfolio for even more patients. The MAA for the Alexacafta triple combination is filed and under review with the European Medicines Agency. Approval by EMA would significantly increase the number of patients eligible for the triple combination and enable us to begin reimbursement discussions across many European countries, as well as provide rapid access in some countries where we have a portfolio agreement. We have also now submitted the Alexicafta triple combination for approval in Switzerland and Australia. Also in Switzerland, we have just entered a portfolio reimbursement agreement for both Symdeko and Orkambi, and we look forward to treating more CF patients there. The Swiss agreement is also designed to include the triple combination in the future. And with label expansion efforts, we are on track to submit the SNDA in the U.S. for Trikafta for the treatment of CF patients aged 6 to 11 with at least one F508 del mutation in the second half of 2020. We are pleased with the rate of uptake that we have seen for Trikafta in the U.S. and for Orkambi and Simkevi outside the U.S. We continue to see the potential to reach 90% of CF patients worldwide with Trikafta, and we believe that this will continue to drive revenue growth for Vertex in the future. I will now turn the call over to Charlie.