Vertex Pharmaceuticals Incorporated

Good day and welcome to the Vertex Pharmaceuticals third quarter 2022 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Susie Lisa. Please go ahead, ma'am.

Good evening, all. My name is Susie Lisa, and I'm thrilled to have joined Vertex as the new Senior Vice President of Investor Relations. Welcome to our third quarter 2022 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. The 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 cystic fibrosis 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 that we will review on the call this evening are presented on a non-GAAP basis. I will now turn the call over to Reshma.

Thanks, Susie. We're delighted to have you on board. Good evening, all, and thank you for joining us on the call today. Vertex continues to execute exceptionally well and make significant progress towards our goals of, one, reaching all patients with cystic fibrosis, resulting in strong, sustainable growth. Two, advancing our diverse mid- and late-stage clinical pipeline to develop transformative medicines in multiple disease areas. Three, preparing for our next commercial launches And four, progressing the next wave of innovation towards the clinic. In the third quarter, global CF product revenues increased 18% year-on-year to $2.3 billion as more patients initiated treatment with our CFTR modulators. Based on this strong performance, we are raising full-year 2022 product revenue guidance from $8.6 to $8.8 billion to $8.8 to $8.9 billion. Despite the growing numbers of CF patients on CFTR modulators, we still have many more patients to reach. And as you will hear from Stuart, we are working with focus and urgency to reach all patients around the globe who may benefit from our therapies. As previously discussed, we are at an important inflection point for the company. Each of our clinical stage programs, sickle cell disease and beta falcemia, acute pain, AMKD, type 1 diabetes, and AATD is a first-in-class or best-in-class approach that holds the promise to transform the disease and each represents a multi-billion dollar opportunity. With a uniquely strong and durable CF franchise, a broad and deep R&D pipeline with multiple potentially near-term commercial opportunities, a strong balance sheet, and the capacity to invest in both internal and external innovation, and deeply talented people, Vertex is well-positioned to deliver for patients and shareholders for years to come. With that overview, I'll turn to the details of recent R&D progress, starting with CF. Trikafta sets a very high bar in terms of safety and efficacy in the registrational trials, as well as in real-world and long-term studies. That said, If it is possible to develop even more effective medicines for CF patients, we are determined to be the company that does so. Our next-in-class triple combination, BX121-Tezacaftor-BX561, holds that potential. The triple, now referred to as Vanzecafter, Tezacafter, and Dutivacafter, or the Vanzecafter triple, is progressing rapidly through phase 3 development, with our studies in patients ages 12 and older now projected to complete enrollment this year. As a reminder, this combination demonstrated greater activity in our human bronchial epithelial assay versus Trikafta and greater clinical benefit in Phase II than we have seen with any of our prior medicines. Additionally, it offers the convenience of once-daily dosing and royalties in the low single digits versus low double digits for Trikafta. For the 5,000 patients who do not make any CFTR protein, we're working on an mRNA therapy with our partners at Moderna. We have completed IND-enabling studies, and we remain on track to submit an IND for this program this quarter, with clinical trials starting thereafter. And we're not done. Our work continues to identify even better potential therapies that could bring more patients with CF to carrier levels of sweat chloride. Turning to Exacell, previously known as CTX001, our gene editing program for severe sickle cell disease and transfusion-dependent beta thalassemia, or TDT. This is our most advanced program outside CF, and we expect Exacell to be our next commercial launch. In June, we presented data from 75 patients with up to 37 months of follow-up from our pivotal trials of Exacell. The data demonstrated XSL's potential to provide a one-time functional cure for these patients. Last month, we announced that in addition to having granted virtually all available U.S. regulatory designations, the FDA has now also granted XSL a rolling review. We plan to begin our BLA submissions for both sickle cell disease and beta-thalassemia in the U.S. next month. and complete the submissions by the end of the first quarter of 2023. In Europe, we previously shared that we reached agreement on the filing package with the EMEA and MHRA in the EU and UK, respectively. We remain on track to submit these MAAs by the end of this year. Our teams are intensely focused on preparing these multiple, complex submissions with three separate regulatory agencies in order to bring XSL to patients as quickly as possible. Given that priority, we will not be sharing new clinical data at ASH, but instead look forward to sharing updated clinical data in the first half of 2023. XSL holds the promise for a one-time curative therapy for thousands of patients with severe sickle cell disease and transfusion-dependent beta thalassemia. This therapy, potentially the first CRISPR-based gene editing treatment to be commercialized for patients with a genetic disease, also represents a near-term and significant market opportunity. Turning to VX548 and our pain program. VX548 is a novel, selective NAV1.8 inhibitor that offers the potential of highly effective pain relief without the side effects or addictive potential of opioids. NAV1.8 is both a genetically and pharmacologically validated target. Recall that VX150, an earlier generation NAV1.8 inhibitor, demonstrated positive proof of concept in acute, neuropathic, and musculoskeletal pain. VX548 has been studied in two Phase II placebo-controlled acute pain studies and showed statistically significant and clinically meaningful pain relief compared to placebo and was generally well-tolerated. The study also included an opioid reference arm to support the evaluation of VX548. With regard to the regulatory status, VX548 has been granted fast-track and breakthrough therapy designation in the U.S., We reached agreement with the FDA on the design of the Phase III program in support of a broad label in moderate to severe acute pain and recently initiated the pivotal studies. The Phase III development plan for VX548 in acute pain consists of two randomized control trials. The design of the RCTs in the pivotal program is very similar to our Phase II completed studies. Same pain states. post-bunionectomy, and post-abdominoplasty. Same treatment duration, 48 hours, and the same primary endpoint, the sum of pain intensity difference or SPID over 48 hours of VX548 compared to placebo. A third single-arm study rounds out the Phase III program. This study will enroll patients with multiple other types of moderate to severe acute pain with a treatment period of up to 14 days. Given our experience in executing these types of trials efficiently, the short treatment duration, and the high unmet need for effective pain relief without the significant side effects or addictive potential of opioids, we view VX548 as a near-term and significant market opportunity. We also plan to study VX548 in neuropathic pain. and remain on track to initiate a Phase II dose-ranging proof-of-concept study in patients with painful diabetic neuropathy towards the end of this year. Moving to inoxiplin, or VX147, the first potential medicine to treat the underlying cause of APOL1-mediated kidney disease, or AMKD. Inoxiplin has breakthrough therapy designation in the U.S. and both prime and orphan drug designation in Europe. Anaxipline is being studied in a single, adaptive, randomized, double-blind, placebo-controlled, phase 2-3 pivotal trial, and the primary endpoint is a reduction in the rate of decline of kidney function in patients treated with Anaxipline on top of standard of care compared to standard of care for approximately two years. Importantly, the trial has a pre-planned interim analysis at 48 weeks of treatment, which, if positive, could serve as the basis for accelerated approval in the U.S. This study is underway in enrolling patients. We now have more than 50 sites open for enrollment in the U.S. and internationally, with the goal to open more than 150 sites in total. We look forward to updating you on the enrollment and study progress as the trial advances. Next, moving on to type 1 diabetes. We have been advancing three programs in our portfolio. First, VX880, our stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy, which is in mid-stage clinical development. In this program, we use standard immunosuppressive therapy to protect the cells from the immune system. These same cells are the foundation for our other two programs in type 1 diabetes. Next, the Cells Plus Device Program, which encapsulates these fully differentiated islet cells in a proprietary device that shields the cells from the body's immune system and does not require immunosuppressants. We remain on track to file the IND for this program by the end of this year. Lastly, in our Hypoimmune Cells Program, which is in preclinical development, We are editing the same fully differentiated insulin-producing islet cells to cloak them from the immune system, obviating the need for immunosuppressants. Earlier this year, we achieved proof of concept for VX880 in type 1 diabetes with the first two patients dosed at half dose in Part A of the study. Part B of the study, which uses the full target dose, is underway and enrolling patients. The type 1 diabetes program holds enormous potential. There are more than 2.5 million patients in the U.S. and EU alone with type 1 diabetes who may benefit from a treatment with the potential to provide glucose control without the fear of hypoglycemia or the need for insulin. We look forward to sharing additional data from more patients and longer duration of follow-up at the appropriate time. a last word on our Type 1 diabetes programs. Having recently closed the acquisition of Viacite, I want to extend a warm welcome to our Viacite colleagues. Let me close with our Alpha-1 Antitrypsin Deficiency, or AATD, program. Earlier this month, we announced that the IND for VX634, the first in a series of next-wave AAT correctors, has cleared and and VX634 has entered first-in-human clinical trials. We also announced that a 48-week Phase II study of VX864, our first-generation AAT corrector, will soon initiate. This study will assess the impact of longer-term treatment on polymer clearance from the liver, as well as on serum levels of functional AAT. With those R&D highlights, I'll hand it over to Stuart for a review of our commercial progress.