Vertex Pharmaceuticals Incorporated

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. Dr. David Altshuler, Chief Scientific Officer, and Dr. Bastian Osana, Chief of Cell and Genetic Therapies, will join the Q&A portion of the call following the prepared remarks. 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 select financial results and guidance we will review on the call this evening are non-GAAP. I will now turn the call over to Dr. Reshma Kewalramani.

I'll begin this evening's call with comments on our 2020 performance and then turn to the pipeline, including an overview of a number of our R&D programs and upcoming milestones. 2020 was an unprecedented year for governments, businesses, and people around the globe. It was also a remarkable year for Vertex. Despite the challenges we all faced against the backdrop of the pandemic, Vertex delivered extraordinary commercial performance, generating $6.2 billion in product revenues, representing more than 50% growth compared to 2019. We also meaningfully advanced the pipeline and significantly strengthened our financial position. Vertex has discovered and developed medicines that have transformed the treatment of cystic fibrosis. and the latest of these, Trikafta, or Captrio as it's known in the EU, has the potential to treat up to 90% of patients with cystic fibrosis. In 2020, the first full year after Trikafta approval in the U.S., the number of patients with CF treated with our medicines increased substantially, and by the end of the year, the vast majority of eligible patients 12 years and older in the U.S. were on Trikafta. In Q3, We received early approval for CAF TRIO in the EU and also secured reimbursement in England. By the end of the year, with direct access at marketing authorization in Germany, portfolio agreements in Ireland and Denmark, and the reimbursement deal in the UK, thousands of patients across the EU gained access to CAF TRIO. In terms of next steps in CF, We have line of sight to continued significant growth as we expand access to the triple combination to more patients in the EU, secure approvals in new geographies, as well as extend treatment to patients with rare mutations and younger populations, starting with the 6 to 11-year-olds in the U.S. We're also advancing additional small molecule combination regimens and other approaches that will further define our long-term leadership in CF. Our goal remains to bring transformative therapies to all people with this disease. 2020 was also an important year for our pipeline. We delivered proof of concept in two disease areas and advanced several clinical programs spanning multiple modalities. And we are now poised to move the VX880 program into the clinic for type 1 diabetes, our seventh disease area in clinical development, and our first cell-based therapy. Turning to our financial position, which continues to strengthen. As we treat more patients, our revenues and profitability are growing, and we finished the year with $6.7 billion in cash. We are steadfast in our belief that the best way to drive continued growth and create long-term value is to reinvest this capital in innovation, both internal and external. With respect to external innovation, Our strategy remains the same. Invest in assets that complement our internal CF pipeline, seek assets that fit our R&D strategy, and identify tools to add to our toolkit. What has changed is our position in CF and our growing financial firepower. Given where we are with Trikafta and Caftreo, plus line of sight to novel regimens and treatment for the last 10%, and given our balance sheet, we are now in a position to focus on assets that fit our R&D strategy and consider assets in mid and late stage. Moving on to an update on the pipeline. I'll focus on our R&D portfolio outside of CF and provide additional detail, including upcoming milestones on a number of programs. In total, we're active in clinical development in seven disease areas spanning multiple modalities, including small molecule, gene editing, and cell therapy, with each program holding the potential to transform the course of the targeted disease. I'll start with CTX001, our most clinically de-risked program outside of CF, which we're developing with our partner, CRISPR Therapeutics. In December, groundbreaking clinical data in sickle cell disease and transfusion-dependent beta thalassemia were published in the New England Journal of Medicine and presented in a plenary session at the American Society of Hematology annual meeting. These data demonstrated proof of concept and showed that CTX001 has the potential to be a one-time functional cure for people living with these diseases. We're also pleased to share that the first patient treated in the thalassemia study recently completed two years of follow-up and has enrolled in the long-term follow-up study. We are advancing through clinical development with urgency, and our goal is to be able to bring this therapy to patients as soon as possible. Over the course of 2021, there are three key milestones that will mark our progress with CTX001. First, the presentation of additional clinical data for more patients and for a longer duration of follow-up that will further define the efficacy and durability of this therapy. The completion of enrollment of our two ongoing studies of CTX001. And third, the progression of our discussions with regulators about the data needed for a filing package for approval of CTX001. In our Alpha-1 Antitrypsin Deficiency, or AATD program, we're focused on the development of small molecule correctors to address the ZAAT protein folding defect, the underlying cause of this disease, and thereby treat both lung and liver manifestations of the disease. Our most advanced molecule is VX864, which is progressing through a dose-ranging phase two proof-of-concept study. The goal of the study is to assess safety, PK, and levels of functional AAT protein. The study continues to enroll in dose patients, and we expect to have the results in the first half of this year. Consistent with our portfolio approach, that is to say our strategy of advancing multiple molecules simultaneously through early clinical development for each target across our disease areas, we are also on track to advance an additional small molecule AAT corrector into the clinic in 2021. Our lead molecule in the APOL1-mediated FSGS program, VX147, is also currently being studied in a Phase II proof-of-concept study evaluating the safety, PK, and reduction of proteinuria over 13 weeks. We expect to have results from this study in 2021. We also have a second molecule for ApoL1-mediated kidney disease that is now completing phase one. In our pain program, we have a molecule that continues to progress through phase one, and we have at least one additional NAV1.8 inhibitor that we expect to enter the clinic this year. Lastly, we submitted the IND for VX880, our first cell therapy for type 1 diabetes, towards the end of last year, and we are very pleased that the FDA recently cleared the IND. This allogeneic cell transplant program has the potential to transform the treatment of type 1 diabetes. In type 1 diabetes, insulin-producing islet cells are destroyed. Our approach is to replace these cells with fully differentiated stem cell-derived pancreatic islet cells. This approach follows the well-established precedent of cadaveric islet cell transplants, which have proven clinical benefit. Advancement of VX880 is a significant achievement. It is Vertex's first cell-based therapy to enter the clinic, and it is the only fully differentiated pancreatic islet cell program in development. We expect to initiate the Phase I-II clinical trial, which is a single-arm study of people with severe, difficult-to-control type 1 diabetes in the coming months. The goal of this study is to assess safety and measures of glycemic control. We are focused on quickly getting the clinical trial up and running, and we look forward to updating you as we make more progress over the course of this year. With that overview, I'll now hand it off to Stuart.

Thank you, Reshma. I am pleased to review with you our continued strong commercial performance. Our Q4 global revenues were $1.6 billion, with full-year revenues of $6.2 billion. This reflects significant growth over 2019, as we launched Trikafta and Kaftrio in the U.S. and EU, respectively. As expected, in addition to considerable continued U.S. demand for our medicines, we saw a significant increase in revenues from outside the U.S. in the fourth quarter. following the approval and launch of CAF TRIO. Starting in the U.S., it is now well over a year since the launch of Trikafta, and we have made tremendous progress in bringing Trikafta to nearly all eligible patients 12 and older, as reflected in our Q4 revenues. In 2021, our commercial focus now turns to maintaining the very high rates of persistence and compliance that we have seen to date, and we anticipate that these rates will normalize over the coming months. We expect the majority of near-term growth for Trikafta in the U.S. to come from approvals in rare mutations and younger age groups. Trikafta was recently approved for patients 12 and older with rare mutations, and the FDA recently accepted the SNDA for 6 to 11-year-olds and granted it priority review. We expect an approval around mid-year. In Europe, enthusiasm and interest in Cafetrio amongst the CF community is high. Our fourth quarter revenues reflect substantial uptake of CAF TRIO across all countries where patients have access, most notably in the larger markets of Germany and England, where the majority of eligible patients have already been initiated. We are seeing similar uptake in other countries where we have secured reimbursement agreements, including Ireland, Scotland, Wales, and Denmark. We remain focused on continuing the launch in these countries, as well as completing new reimbursement agreements to provide all eligible patients across the EU with access to our medicines. We have high confidence that, as was the case in the US, ultimately the vast majority of CF patients in the EU will be treated with CAF TRIO. However, while the destination is the same, the journey to get there will be different. In addition to the time and work required to secure new reimbursement agreements, the COVID-19 pandemic also presents significant uncertainties around the rate of uptake for our medicines. We are conducting fully virtual launches in the EU amidst evolving country-level COVID lockdowns. The ability of patients to attend in-person consultations with their physicians as the pandemic continues is a dynamic we are monitoring closely. I will now outline what's next for Vertex's CF franchise and how to think about future growth. We recently shared with you an updated and expanded view of the CF market opportunity based on an accumulation of new data from registries and other sources around the world. We now estimate that there are 83,000 patients living with CF in the US, Europe, Canada, and Australia. Today, we are treating around half of these patients. Notably, this leaves more than 30,000 additional patients in these regions who could benefit from our medicines and who are not treated today. Approximately two-thirds are 12 and older, and we expect to reach these patients through the continued launch, uptake, and reimbursement of CAF TRIO in the EU and through approvals and reimbursement agreements in other countries, such as Australia and Canada. The remaining one-third of patients are in lower age groups or have other mutations, and we are making progress toward reaching these patients through label expansions. Finally, I'd like to take a moment to recognize the CF teams at Vertex, both in the U.S. and internationally, for their unwavering dedication, despite the unprecedented global challenges of the past year. And I would also like to thank the CF community, for their partnership as we work together to bring transformative medicines to patients around the world. Charlie will now review our fourth quarter and full-year results and financial guidance.