Vertex Pharmaceuticals Incorporated

Good evening. This is Michael Partridge. Welcome to the Vertex fourth quarter and full year 2021 financial results conference call. On tonight's call, making prepared remarks, we have Dr. Reshma Kewalramani, Vertex's CEO and President, Stuart Arbuckle, Chief Operating Officer, and Charlie Wagner, Chief Financial Officer. We recommend that you access the webcast slides as you listen to this call. This 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 in 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.

Thanks, Michael. I'm pleased to discuss our performance and progress in 2021 and to share our vision for where Vertex is headed. 2021 was a very important year for the company, during which we expanded our leadership position in CF, significantly advanced the mid- and late-stage pipeline, and further strengthened our financial position, and one which sets us up for high-value milestones in 2022 and a very bright future for years to come. Our revenue and earnings continue to reflect the significant growth of our global CF franchise, and based on our success in treating more CF patients, we again delivered exceptional financial results. generating nearly $7.6 billion in product revenues, representing 22% growth year-on-year and 27% growth over Q4 2020. Also in 2021, we initiated two global Phase III studies with our next-in-class CF regimen, VX121 Tezicaftor VX561, completed enrollment in the pivotal studies of CTX001, delivered proof of concept with VX147 in a type of APOL1-mediated kidney disease known as FSGS, delivered early but very promising results with VX880 in type 1 diabetes, and advanced VX548 into two proof of concept studies in acute pain, the results of which are expected this quarter. These advancements span small molecule, gene editing, and cell therapies, and six disease areas, including CF. Fueled by our success in cystic fibrosis, our financial profile and balance sheet have been further strengthened, enabling both continued investment in internal and external innovation and industry-leading operating margins. We provided a detailed overview of Vertex at our webcast two weeks ago at the J.P. Morgan Conference. Tonight, our prepared remarks will recap the high points around our CF franchise and our pipelines, and also review our commercial performance and financial expectations for 2022, starting with CF. For the 90% of CF patients who can benefit from a CFTR modulator, we see continued significant growth ahead, as we have more than 25,000 patients who could benefit from Trikafta and our other CF medicines, but who are not yet on treatment. Stuart will discuss the opportunity ahead of us and our high confidence that we will reach these patients in his prepared remarks. Approved first in the U.S. in October of 2019, Trikafta has set a high bar in terms of both clinical trial and real-world data and has become the standard of care for patients with CF today. To recap, in late 2021, we shared 96-week data from the extension of the Trikafta pivotal trial, where we saw no decline in mean lung function. This was the first for any CFTR modulator. We now have the first real-world data for Trikafta from the USCF Foundation Registry. Across approximately 16,000 patients treated with Trikafta and represented in the registry in 2020, relative to patients eligible for Trikafta in the year prior to approval, we see an 87% reduction in the risk of lung transplant, a 77% reduction in pulmonary exacerbations, and a 74% reduction in the risk of death. Nonetheless, If it is possible to deliver better clinical outcomes than Trikafta, we are determined to be the ones who do so. And our next-in-class triple combination of VX121-Tezacaftor-561, which holds that potential, is already in pivotal development. We expect completion of enrollment in both Phase III Skyline trials in late 2022 or early 2023. This combination has the potential for greater clinical benefit, more convenient once-daily dosing, and a significantly lower royalty obligation. For the last 10% of CF patients who do not make any CFTR protein, with our partners at Moderna, we've now demonstrated that we can not only efficiently deliver full-length CFTR mRNA to human bronchial epithelial cells in vitro, but also to bronchial epithelial cells in non-human primates. solving a long-standing delivery challenge and marking a significant step forward in bringing a treatment for the last 10% of CF patients. Based on these results, IND-enabling studies for our CFTR mRNA program are now underway. We plan to file the IND this year with clinical trials beginning thereafter. Beyond CF, we have a pipeline that is broad and deep and delivering and considerably more advanced compared to a year ago. I'll review a few of our clinical stage programs, each of which is a first-in-class or best-in-class program, has the potential to serve a large number of patients, and represents a multibillion-dollar opportunity. Beginning with CTX001, our one-time gene editing treatment with the potential to provide a functional cure for sickle cell disease and beta thalassemia. This is our most advanced program outside of CF, and we expect this will be our next commercial launch. We're wrapping up discussions with regulators to finalize our submission data package for CTX001, including the number of patients and duration of follow-up. This program accelerated significantly last year based on strong physician and patient interest. We completed enrollment in both Phase III studies. Both were oversubscribed, and to date, we've dosed more than 70 patients. We look forward to sharing more clinical data with CTX001, longer-term follow-up, and many more patients at a medical forum later this year. On the way to our planned global regulatory filings by year-end 2022. Moving on to VX147 and the APOL1-mediated kidney disease program. In renal medicine... One of the most important genetic discoveries of the last decade was the realization that mutations in the APOL1 gene are a key driver of significant kidney disease. VX147, our small molecule inhibitor, specifically targets this APOL1 protein and in so doing targets the underlying cause of APOL1-mediated kidney disease. In the Phase II single-arm study of 16 patients with APOL1-mediated FSGS, VX147 demonstrated unprecedented reductions in proteinuria, a marker of kidney damage, and was generally well-tolerated. Importantly, the 47.6% mean reduction in proteinuria was on top of standard of care. These Phase II results propel the advancement of VX147 into pivotal development. Our next step is an end-of-Phase II meeting with the FDA, and our goal is to initiate pivotal development targeting the broad AMKD population of approximately 100,000 patients, including but not limited to those with APOL1-mediated FSGS later this quarter. Turning to type 1 diabetes and VX880. Type 1 diabetes results from autoimmune destruction of pancreatic islet cells, and we have known for some time that whole pancreas or cadaveric islet cell transplantation can be curative. The challenge has been quality and quantity of donor tissue. We believe we've overcome this challenge. We are the only company that has shown we can make allogeneic, stem cell-derived, fully differentiated, insulin-producing islet cells and make them at industrial scale. Our goal... with our type 1 diabetes program is to develop a functional cure for this disease, including for the more than 2.5 million people living with type 1 diabetes in the U.S. and Europe. We shared day 150 results approximately two weeks ago from the first patient treated with VX880. This patient had severe, long-standing type 1 diabetes and prior to treatment with VX880 had difficult to control sugar levels and multiple severe hypoglycemic events with no detectable endogenous insulin as measured by C-peptide. He had a hemoglobin A1c of 8.6% and was taking 34 units of exogenous insulin daily. The results from this first patient treated with half the targeted dose of VX880 are remarkable. Fasting C-peptide, a measure of endogenous insulin production, is now over 400 picomoles. Hemoglobin A1c is down to 6.7%, and the patient is on minimal exogenous insulin. VX880 was generally well-tolerated, and the patient remains free of symptomatic hypoglycemic events since the perioperative period. I mentioned at the J.P. Morgan conference earlier this month, and it bears repeating why these results are so foundational. Achieving durable results in type 1 diabetes requires two things, high-quality insulin-producing islet cells, we have that, and a method to protect these cells from the immune system. We can address the immune response in several different ways. Today, with VX-880, we're combining the stem cell islets with standard immunosuppression in the Phase I-II study. We can shield these same stem cell islets with an immunoprotective device. In this approach, immunosuppressives would not be needed. This approach is in IND-enabling studies, and we expect to file the IND later this year, with clinical trials beginning thereafter. And in earlier stages, we're using gene editing technology to make so-called hypoimmune pancreatic islets, yet another approach that eliminates the need for immunosuppressives. The VX880 Phase I-II clinical trial is up and running at multiple sites. The trial continues to enroll in dose patients. We anticipate sharing data from more patients and longer duration of follow-up this year. I'll conclude the pipeline overview with VX548, a novel selective inhibitor of NAV1.8, which is in clinical proof-of-concept studies for acute pain. Two proof-of-concept studies in acute pain were initiated in the second half of 2021, one in patients following abdominoplasty surgery and one in patients following bunionectomy. These studies are dose-ranging, placebo-controlled studies, and both include an opioid reference arm. The abdominoplasty study has now completed enrollment and dosing, and the bunionectomy study will complete in the coming weeks. We anticipate having results from both studies this quarter and announcing both results together. With that, I'll turn it over to Stuart.

Thanks, Reshma. I'm pleased to review tonight our continued strong commercial performance. Our CF business performed exceptionally well in the fourth quarter and for the full year in 2021. Our Q4 global revenues were $2.07 billion. Full year revenues were $7.6 billion, an increase of 22% over 2020. U.S. CF product revenues grew 10% to $5.3 billion in 2021, driven mainly by the launch of Trikafta in the 6- to 11-year-old patient population following its approval last June. Our product revenues outside the U.S. increased 66% over 2020 to $2.3 billion. We signed more than 15 new reimbursement agreements in 2021, and following these agreements, we have seen strong uptake of Captrio and Trikafta matching the launch dynamics in the U.S. Looking to the future in 2022 and for the next several years, we expect significant continued revenue growth. as there are more than 25,000 patients remaining who are addressable with our CFTR modulators, but who are not yet treated. These patients fall into three categories. Patients who have not yet initiated treatment, largely in countries where we are recently reimbursed and therefore are early in the launch curve. This includes countries such as Canada, Spain, and the Netherlands. Patients in geographies where we are not yet reimbursed, such as Australia. And finally, younger patients. who will be addressed through ongoing label expansions. We continue to make progress in addressing younger and younger patients. As examples, we secured approval for Caftrio in 6- to 11-year-old patients in Europe and the UK just a few weeks ago, and our submission for approval of Trikafta in these younger patients is also currently under review in Canada. And in 2022, we plan to file for approval for Orkambi in patients 12 to 24 months of age in the U.S. and Europe, based on the recently completed Phase III study. In addition, with our mRNA program in IND-enabling studies, we are making real progress in developing a medicine for the additional 5,000-plus patients that we cannot address with our current CFDR medicines, but who are potentially addressable with the successful development of an mRNA therapy. The recent long-term and real-world data, as discussed by Reshma in her prepared remarks, have significantly strengthened our competitive position and highlight the benefits of our medicines for CF patients. For a genetic disease like CF where patients start medicines at an early age and take them chronically over their lifetime, long-term and real-world data like these are incredibly important to patients and physicians. They take many years and thousands of patients to generate and set a very high bar for any future therapy to meet. I would now like to provide a commercial perspective on two programs that are in or entering pivotal development that highlight our future diversification beyond cystic fibrosis. I'll start with CTX001, our CRISPR-Cas9-based gene editing therapy for hemoglobinopathies, which we plan to file for regulatory approval before the end of this year. In terms of market opportunity, we see tremendous potential for CTX001. We estimate that there are more than 150,000 patients in the U.S. and Europe who have beta thalassemia or sickle cell disease, approximately 32,000 of whom have severe disease. 25,000 of these are patients with severe sickle cell disease, and the vast majority of these are in the U.S., Published physician surveys in the U.S. consistently indicate that they expect a quarter to a third of their sickle cell disease patients would be good candidates for a one-time curative approach using the current busulfan-based conditioning regimen, which is in line with our own estimates of the numbers of severe patients. With global regulatory submissions planned for CTX001 toward the end of this year, our launch preparation activities are well underway. including building our market access, patient support, and healthcare professional-facing teams, as well as finalizing our manufacturing and supply chain network. Finally, as Reshma noted, we plan to advance VX147 to pivotal development this quarter, so I would like to comment on the opportunity we see in APOL1-mediated kidney disease, or AMKD. In the Phase 2 study, we enrolled patients with two APOL1 mutations who had focal segmental glomerulosclerosis, FSGS, as demonstrated by biopsy. This was an ideal population to test the clinical hypothesis of APOL1 inhibition. There are approximately 10,000 patients with APOL1-mediated FSGS. However, we estimate that the population of people with two APOL1 mutations and kidney disease primarily driven by APOL1 is much larger, approximately 100,000 patients. This is the initial target population that we will seek to address with VX147, and so this represents a multibillion-dollar opportunity. Awareness of, diagnosis, and genotyping of patients with AMKD are all low. So in parallel with the planned progression of VX147 to pivotal development in 2022, we expect to begin increasing awareness of APOL1-mediated kidney disease with treating physicians, with a focus on the importance of genotyping. I'll close by noting that we are about to celebrate the 10th anniversary of the approval of our first CF medicine, Kalydeco. It has been an extraordinary 10 years as we have developed and launched not only Kalydeco, but three additional transformative medicines to address the underlying cause of disease for CF patients. I'm excited for the opportunity in 2022 to bring Trikafta-Kaftrio to even more patients around the globe and the potential to commercialize multiple potentially transformative therapies outside of CF in the near future, starting with sickle cell disease and beta thalassemia. I will now turn it over to Charlie.