Vertex Pharmaceuticals Incorporated

Good evening. Welcome to the Vertex second 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 K. Walramani, 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 would also note that all of the financial results and guidance that we will review on this call this evening are non-GAAP. I will now turn the call over to Dr. Reshma Kewalramani.

Thanks, Michael. 2020 continues to be a year of remarkable progress for Vertex across all aspects of our business, as measured by the continued strong performance of the Trikafta launch in the U.S. The recent positive CHMP opinion for the triple combination regimen in Europe, completion of a landmark reimbursement agreement to expand access to the triple combination for patients in England, and the advancement of our late preclinical and clinical stage pipeline programs. Most notably, our proof of concept data for CTX001 that underscores the curative potential of this therapy in both beta thalassemia and sickle cell disease. I'm especially proud that the Vertex team has been able to accomplish all of this despite the challenges presented by the COVID-19 pandemic and want to acknowledge the resilience and commitment of all of our employees to continue to deliver on our goals for patients. Turning first to our CF medicines, today the vast majority of our eligible patients in the U.S. have begun treatment with Trikafta, reflecting the significant and fundamental benefit that this medicine provides by addressing the underlying cause of disease. The rate of uptake for Trikafta and the speed at which we have obtained broad reimbursement speak to the appreciation of the therapeutic profile of this medicine. which we believe will be the foundation of CF therapy for many years to come. Outside the U.S., in June, we received a positive CHMP opinion for the triple combination regimen, which, if approved, will be known in Europe as CAF TRIO. This positions us for an earlier than expected approval in Europe in the coming months, which would provide up to 10,000 new patients with the first medicine to treat the underlying cause of their disease. Following the anticipated approval later this year in Europe, we plan to seek a potential expansion of the CAPTRIO label to include patients with one F508-dell mutation and a residual function or gating mutation based on the positive Phase III data reported earlier this month that showed CAPTRIO adds significant additional benefit in these patients. We are also pleased that we were recently able to expand our reimbursement agreement with NHS England to include Keftrio, allowing thousands of patients in England to begin receiving this medicine once European Commission approval occurs. This is truly a landmark achievement for patients and builds on our other innovative reimbursement agreements such as those in Ireland and Denmark that include Keftrio as well as our other medicines. Reaching these agreements in advance of regulatory approval is uncommon and reflects a shared belief in the value and benefit of our medicines in treating the underlying cause of cystic fibrosis. Based on our year-to-date performance, driven primarily by Trikafta, we are again revising upward our 2020 revenue guidance, which Stuart and Charlie will discuss in more detail in a moment. Beyond 2020, We retain clear line of sight to reaching our longstanding goal of bringing the triple combination to 90% of all CF patients worldwide as we obtain additional regulatory approvals, including approvals to treat younger patients and reimbursement agreements globally. Turning to our programs beyond CF, where we are advancing a differentiated and broad pipeline of small molecule, cell, and genetic therapies for a range of serious diseases. Despite the challenges of the COVID-19 pandemic, we have now been able to reinitiate enrollment and dosing in all of our clinical trials, and we've also been able to initiate new clinical studies during this period. Let me go into more detail on a few of these programs. In our CRISPR-Cas9 gene editing program with CTX001, we and our partner, CRISPR Therapeutics, announced new clinical data at the EHA meeting last month. that highlighted the curative potential of gene editing in two serious diseases, beta thalassemia and sickle cell disease. A total of seven patients had been treated with CTX001 as of the AHA meeting, and all of these patients had successfully engrafted, which is an important yet early sign of their potential response to treatment. Of note, we have now resumed conditioning and dosing in both studies of CTX001. and have dosed additional patients across the program in recent weeks. This program continues to gain momentum as we enroll and treat even more patients, and we expect to report additional data later in 2020. In AAT, we have now reinitiated enrollment in the Phase II study of VX814 at all sites that have indicated the ability to resume clinical trials. This means that some, but not all, clinical trial sites have been reopened and are screening and enrolling patients in the VX814 study. We have also now initiated a similar Phase 2 study with our second AAT corrector, VX864. Ultimately, the pace of enrollment will dictate the timing for data readouts from VX814 and VX864. We now expect data from the VX814 study toward the end of 2020 or Q1 2021. In the next several months, we will have a much clearer picture of enrollment dynamics for these studies and when to expect data for each molecule. Our goal is to evaluate data from each Phase II study and to pick the best molecule to advance into late-stage development. This is consistent with our strategy of cracking the biology and then pouring on the chemistry. to allow us to discover multiple molecules that we can simultaneously advance through proof of concept and pick the best molecule then for further development, just as we did in CF. In APOL1-mediated FSGS, multiple clinical trial sites are now open for screening and enrollment in our Phase II study of VX147, evaluating the reduction of proteinuria over 13 weeks. We expect to obtain data from this study in 2021. And with our cell therapy for type 1 diabetes, we're tracking for an IND submission in late 2020 to support initiation of our first study to evaluate the islet cells alone in patients with type 1 diabetes. The advancement of key IND-enabling activities and the generation of preclinical data to support the IND package in type 1 diabetes were key priorities in the first half of the year and have remained on track through the COVID-19 pandemic. With that summary of the business and review of the R&D portfolio, let me turn it over to Stuart.

Thanks, Reshma. I am pleased to review with you this evening our continued strong commercial performance. Trikafta revenues for the second quarter were $918 million, reflecting very rapid uptake in the U.S. across the vast majority of all eligible patients. We have received rapid and broad reimbursement from both public and private payers, and feedback from patients and CF centers has been highly positive, consistent with the strong benefit-risk profile for this medicine. Our Trikafta revenues to date in 2020 have also benefited from very strong persistence and compliance trends and from increased patient inventory levels as a result of early refills amidst the COVID-19 pandemic. I am proud of the teams that have worked tirelessly to execute such a phenomenal launch, which has exceeded even our own expectations. And I am thankful for the commitment of the CF community to working with us to help get so many patients onto Trikafta since its approval in October last year. We now have the opportunity to build on this strong performance of the US launch with an earlier than expected potential approval in Europe. This approval, which is anticipated to come in the next few months, will allow up to 10,000 new patients with a minimal function mutation to be treated with a medicine for the underlying cause of their disease for the first time. Further accelerating our ability to bring this medicine to patients is the recent expansion of our agreement with England to include immediate reimbursement of CAF TRIO for patients ages 12 and older upon EC approval, as well as reimbursement for all future label expansions for Kalydeco, Orkambi, Simkevi, and CAF TRIO. This unique agreement provides the CF patient community in England with certainty that they will be among the first in Europe to receive our CF medicines. We are very pleased with this expanded agreement, which is a reflection of the importance and value of treating the underlying cause of CF with our medicines. We would like to thank NHS England and the CF patient community for their commitment to working collaboratively with us towards this agreement over recent months. and we are working with the other developed nations in the UK to finalize equivalent agreements as soon as possible. As a result of our strong start to 2020, we are again raising our revenue guidance for the year, and I will offer the following perspective regarding launch dynamics in the US and how we view the anticipated CAF TRIO launch in the EU. First, we are nine months into the Trikafta launch in the US, and the vast majority of all eligible patients have now begun treatment. Second, the compliance and persistence rates and patient inventory levels we have seen to date with the launch are high, and we expect them to normalize in the second half of the year. And third, we will be launching CAF Trio in Europe amidst an ongoing and rapidly evolving global pandemic. This may significantly impact patients' ability to see their physicians for treatment initiation visits and to conduct important laboratory and clinical work to support initiation of CAF Trio. It will also be the first time that our teams have had to execute a launch virtually. As in the U.S., we ultimately expect to treat the vast majority of eligible patients in Europe. However, the exact trajectory of the launch in Europe is uncertain. All of these factors and their potential impact on future quarters are reflected in our revised revenue guidance, which Charlie will review in more detail momentarily. We expect CF revenue growth beyond 2020. This growth will be driven primarily by additional approvals and reimbursement agreements for Caftreo outside the U.S. and by expanding the Trikafta and Caftreo labels to treat younger patients. As markers of our continued progress to reach more patients with our medicines, our regulatory submissions for the triple combination are complete in Australia and Switzerland. and following potential EU approval of CAF Trio later this year, we plan to begin discussions in countries where we are not yet reimbursed with the goal of providing access to this medicine for eligible patients as rapidly as possible. We also remain on track to submit a supplemental new drug application for Trikafta in the U.S. in the fourth quarter of 2020 for children ages 6 to 11 years of age with one F508 del mutation. If approved, some 1,500 new patients in the U.S. would be eligible for a medicine to treat the cause of their CF beginning in 2021. We expect this submission would be followed rapidly by similar label expansion efforts outside the U.S. and by additional Phase III studies to support approval in even younger children. In summary, Vertex remains on a trajectory of significant near-term and long-term revenue growth. as we bring Trikafta and Catrio to more patients globally in the coming months and years. I am pleased with the significant commercial progress we've seen to date in 2020, and will now turn the call over to Charlie.