Vertex Pharmaceuticals Incorporated

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, Charlie, and good evening all. Vertex continues to make strong progress towards our goal of reaching all CF patients eligible for our medicines, Based on the continued uptake of Trikafta in the U.S., as well as in the international region, our Q2 CF product revenues grew 22% year-on-year to $2.2 billion. And based on this uptake, as well as the new reimbursements recently secured, we are updating revenue guidance from $8.4 to $8.6 billion to $8.6 to $8.8 billion. We're also making rapid progress in advancing our R&D portfolio with programs in five disease areas now entering or progressing through late-stage clinical development and the next wave of innovation getting ready to enter the clinic. Our expanding leadership in CF coupled with the broad, deep, and advanced research and clinical stage pipeline brings Vertex to this new inflection point highlighted last quarter. This inflection point is rooted in our differentiated R&D strategy, which is designed to increase the odds of success in drug discovery and development. This strategy is working. First in CF and more recently, we have seen it deliver potentially transformative, if not curative therapies in multiple disease areas, including sickle cell disease, beta thalassemia, ApoL1-mediated kidney disease, acute pain, and type 1 diabetes, programs that are all now past the proof-of-concept stage. Each of these programs individually represents a multi-billion dollar market opportunity, and taken together, they represent enormous potential for patients and for Vertex. In addition, we continue to use our strong balance sheet to pursue external innovation that complements or accelerates our internal efforts. The Viacide acquisition, for example, has the potential to accelerate development of our type 1 diabetes programs. The early stage assets from Catalyst and the Verve collaboration complement our internal efforts in sandbox diseases. With our strong revenue growth and rapidly advancing pipeline, we are continuing to invest in internal and external innovation, as you see us do today with the increase in OPEX guidance to $3 to $3.1 billion and the multiple business development deals we've announced this quarter. Let me now turn to the pipeline and review some of our recent R&D progress. starting with CF. For patients who can benefit from CFTR modulators, Trikafta has set a very high bar. But if it is possible to develop more effective medicines, we are determined to be the ones who do so. Our next-in-class triple combination, VX121-Tezacaftor-VX561, is now in Phase III development, enrolling patients 12 years and older, and we remain on track to complete enrollment by the end of this year or early next. With the progress in the Skyline 1 and Skyline 2 trials, we've also recently initiated pivotal development of VX121-TES-VX561 in patients 6 to 11 years old. Lastly, for patients who do not make any CFTR protein and cannot benefit from a CFTR modulator, we're developing an mRNA therapy with our partners at Moderna. We are on track to file the IND for the mRNA program in the second half of this year. Moving to CTX001. Our most advanced pipeline program outside of CF is our Exacell or CTX001 gene editing program in severe sickle cell disease and beta thalassemia. In June, we presented data for more patients treated with Exacell and with longer follow-up at the annual meeting of the European Hematology Association. These data, which included 75 patients with up to 37 months of follow-up, continue to demonstrate that Exocel holds the potential to be a durable, one-time functional cure for these patients. And the safety data continue to be consistent with myeloblative conditioning and autologous bone marrow transplant. In terms of next steps, We have recently concluded our discussions on the filing package with EMA and MHRA and have reached agreement on the filing package. We remain on track to submit the MAAs in both sickle cell disease and beta thalassemia in the EU and the UK in Q4 of this year. We expect to wrap up our conversations with the FDA regarding the filing package, in particular, the number of patients and duration of follow-up in the coming weeks. And we look forward to updating you after that. Turning now to inoxiplin or VX147 in APOL1-mediated kidney disease or AMKD. Inoxiplin is a small molecule inhibitor of APOL1 that targets the underlying cause of AMKD. Based on the unprecedented phase 2 proof-of-concept results, which showed a 47.6% reduction in proteinuria, inoxiplin received breakthrough therapy designation in the U.S. and priority medicines or prime designation in the EU. The pivotal trial is a single, adaptive, phase 2-3 randomized placebo-controlled trial, and the primary endpoint is the reduction in the rate of decline of kidney function in patients who have been treated for approximately two years. Importantly, the study is designed to have a pre-planned, interim analysis at 48 weeks of treatment. If the interim analysis is positive, it will serve as the basis for us to seek accelerated approval in the U.S. We initiated the Naxiplin pivotal trial in late March. Site activation, patient screening, and enrollment are all ongoing. Moving to pain. NVX548, a novel first-in-class NAV1.8 inhibitor. We have high expectations from this program because NAV1.8 is both a genetically and pharmacologically validated target across acute, neuropathic, and musculoskeletal pain. And VX548 demonstrated a very desirable benefit-risk ratio profile in Phase II. Additionally, the VX548 program represents a near-term commercial opportunity. To recap, earlier this year, we shared positive proof-of-concept results from VX548, which demonstrated statistically significant and clinically meaningful relief of pain in two Phase II studies of acute pain, one in the post-bunionectomy setting and one in the post-abdominoplasty setting. Based on these results, VX548 has received breakthrough therapy designation, highlighting the significant need for highly efficacious and well-tolerated non-opioid pain medicines. We are very pleased to have completed our end of Phase II meeting with the FDA and reach agreement on the VX548 Pivotal Program in Acute Pain. The Phase 3 program will include two randomized placebo-controlled trials that will evaluate VX548 post-bunionectomy and abdominoplasty, the exact same post-surgical acute pain settings we explored in Phase 2. These trials are short in duration, approximately two days of treatment, followed by 14 days of safety follow-up. Both of these phase three studies will also include an opioid treatment arm. A third single arm study will evaluate the safety and effectiveness of dosing with VX548 for up to 14 days across multiple other types of moderate to severe acute pain. We remain on track to initiate the pivotal development program by the end of this year. In addition, we have completed our preclinical studies to support initiating a Phase II dose-ranging proof-of-concept study of VX548 in neuropathic pain towards the end of this year. Turning now to type 1 diabetes. In June, our VX880 clinical data were featured in an oral presentation at the ADA Scientific Sessions. We've previously shared that we achieved proof-of-concept with the results from the first two patients who were treated in Part A with half the targeted dose. Both achieved glucose-responsive insulin secretion improvements in hemoglobin A1c with concurrent reductions in, or as in the case of the first patient, elimination of exogenous insulin. The new data that we presented at ADA included glucose time and range measurements. Time and range is important because it gives much more granular and comprehensive data than hemoglobin A1c alone. and is correlated with the risk of developing micro- and macrovascular complications. Patient 1 achieved a glucose timing range of 99.9% at days 270 versus 40.1% at baseline and remained insulin independent. Patient 2 showed a glucose timing range of 51.9% at day 150 versus 35.9% at baseline with a 30% reduction in exogenous insulins. The trial, which has remained open in Canada and resumed enrollment in the United States last month, continues to screen and enroll patients in Part B. To close, a word on the next wave of innovative therapies. These are programs in late preclinical development that are rapidly approaching the clinic. For the CFTR mRNA program, our Cells and Device Program in Type 1 Diabetes, and our next-generation AATD molecules we expect to file INDs this year. Lastly, our gene editing program in DMD is in IND-enabling studies, and we plan to file the IND for this asset in 2023. With that, I'll hand it over to Stuart for a commercial overview.

Thanks, Reshma. I'm pleased to review tonight our continued strong performance in CF the path toward future growth, and the commercial opportunity and plans for some of the most advanced disease areas in our pipeline. I'll start with CF. Our CF business continued its rapid pace of growth this quarter, with impressive performance in both the U.S. and internationally. In the U.S., we continued to add new Trikafta patients, with most of them being younger patients in the 6 to 11 age group, and persistence and compliance remained very high across all patient groups. Outside the U.S., we have seen rapid uptake of Caftreo across multiple European countries where we recently reached reimbursement agreements, notably France, Spain, and Italy. We've now turned our focus in Europe to the launch of Caftreo in children ages 6 to 11. Additionally, the launches of Trikafta in Canada and Australia are both off to a strong start. We began the year with more than 25,000 patients in North America, Europe, and Australia and who could benefit from a CFTR modulator but were not yet on therapy. These patients fell primarily into one of three categories. One, patients who had not yet initiated therapy, largely in countries where we are recently reimbursed and therefore early in the launch curve. Two, patients in geographies where we are not yet reimbursed. And three, younger age groups who will be addressed through ongoing label expansions. We are confident in our ability to reach the vast majority of these patients over time. We have made good headway securing new reimbursements and launching our medicines in the first half of 2022. Additionally, we continue to make important progress in expanding access to younger patients. For instance, we completed the study of Trikafta in patients two to five years old with positive efficacy results on the endpoints of lung clearance index and sweat chloride and no new safety signals. We expect to present these data at a medical meeting later this year and are on track to submit global regulatory filings by the end of the year. Additionally, we submitted regulatory filings in the U.S. and Europe for Orkambi in patients 12 months to less than 24 months of age. The PDUFA date for this filing is September 4th. We were pleased to present compelling long-term and real-world data on Trikafta at the European Cystic Fibrosis Society's conference in June. These data underscore the outcomes with Trikafta, specifically improved lung function, a 77% reduced risk of pulmonary exacerbations, an 87% lower risk of lung transplant, and a 74% lower risk of death for patients with CF. Finally in CF, as Reshma mentioned, we are developing a CFTR mRNA therapy to treat patients who do not make any CFTR protein and thus cannot benefit from a CFTR modulator. We estimate there are approximately 5,000 of these patients in North America, Europe, and Australia. Outside of CF, we have made impressive strides with our clinical stage pipeline over the past 12 months. Today, I'd like to highlight the market potential for three of our late-stage clinical programs, XSL, Inaxiplin, and VX548, and some of our pre-commercial activities. Each of these programs serves a very high unmet need and is a first-in-class or best-in-class approach. and each represents a multibillion-dollar opportunity, beginning with our most advanced pipeline program, XSL. On our last few quarterly calls, we provided details on our launch preparation activities, so I'll briefly recap how we are thinking about the market size and our approach. There are approximately 32,000 patients who have severe sickle cell disease or transfusion-dependent beta thalassemia in the U.S. and E.U., Our initial launch will focus on these 32,000 patients with severe disease, of whom 25,000 are patients with severe sickle cell disease, with the vast majority of them living in the U.S. A small number of centers of excellence in the U.S. and Europe will treat the vast majority of these patients. Our research suggests that about 90% of U.S. patients reside in 24 states, and more than 75% of patients in Europe reside in four countries. We have identified the potential treatment centers and their referral networks in all of these countries. We are confident that we'll be ready to launch XSL following approval. We have hired the launch teams, including medical science liaisons, medical affairs, and access and reimbursement teams, and they are already active in the field. And finally, we are developing robust patient service programs to support patients throughout the treatment journey. Moving on to inaxiplin, or VX147, which is in pivotal development for patients with AMKD. We've previously talked about the number of AMKD patients, which we estimate to be approximately 100,000 in the US and Europe, with over 80% of them living in the US. Here, I'll touch on the work we are undertaking to raise awareness of AMKD. Awareness, diagnosis, and genotyping of patients with AMKD are all low within the medical and patient communities. which is not surprising given this is a newly defined disease without existing targeted therapies. To increase awareness of AMKD and of genetic testing options, we are working with the kidney disease community and with minority health organizations to support sponsored education campaigns and scientific workshops and seminars. Some examples of this work include sponsoring the American Kidney Fund's APOL1 education campaign, which will launch this year to provide educational materials and digital engagement tools for patients and providers. And we are also educating people about AMKD at Black Health Matters Health Fairs and Summits and through Nefcure's Health Equity Initiative. In addition to these disease awareness and education efforts, we and others are also working on important policy initiatives to support AMKD diagnosis. Specifically, we are advocating for federal legislation introduced in the spring entitled the New Era of Preventing End-Stage Kidney Disease Act that would establish a rare kidney disease research center at NIH, investigate the role of genetic screening in improving kidney disease outcomes, and address kidney health disparities in communities of color. And we're also advocating alongside the National Kidney Foundation as well as other stakeholders to increase kidney disease screening. You may have seen in the news recently that the US Preventive Services Task Force has added chronic kidney disease screening to the list of services they have under active consideration. If recommended, patients would have access to screening at no cost, which would make a huge difference in improving availability and access to screening for AMKD patients. Additionally, we are exploring pathways with diagnostic testing companies to make genetic testing more accessible to patients. Finally, VX548 in pain. Given we recently announced agreement with FDA on the pivotal development program for acute pain, I'd like to give you a summary of the market opportunity. There is a real need for effective, safe, and well-tolerated pain medicines, as there have been no novel pain medicines introduced in the past 20 years. We see utility for our NAV1.8 inhibitors in different types of pain, including acute, neuropathic, and musculoskeletal. Today, I'm going to focus on acute pain. In the U.S., there are approximately 1.5 billion treatment days for acute pain each year, and approximately two-thirds, or one billion of those, are driven by hospital prescribing. This includes treatment for inpatient and outpatient visits, and the patient's related pain management following discharge. Consistent with our business strategy, a small specialty commercial organization will allow us to reach a large proportion of this market, given the concentration of pain treatment driven by hospital prescribing. Today, oral treatment of acute pain is roughly a $4 billion market, even though over 90% of prescriptions are generic. Considering the price of a typical branded pain medicine is roughly $10 per day, a safe and effective new pain medication without addictive potential that captures even a partial share of that market represents a multi-billion dollar opportunity. Importantly, given the magnitude and severity of the ongoing opioid crisis in the U.S., the initiation of the phase three studies for VX548 later this year, and the relatively short duration of the trials, we will be working with urgency to build out our teams and go-to-market plans to bring this novel non-opioid pain medicine to patients. In closing, I'm excited about bringing Trikafta to even more patients around the globe and also commercializing multiple potentially transformative therapies outside of CF in the future.