Vertex Pharmaceuticals Incorporated

Good day and welcome to the Vertex Pharmaceuticals fourth quarter and full year 2022 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Ms. Susie Lisa. Please go ahead.

Good evening, everyone. My name is Susie Lisa, and as the Senior Vice President of Investor Relations for Vertex, it is my pleasure to welcome you to our fourth quarter and full year 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. In addition, the impact of the foreign exchange is presented inclusive of our foreign exchange risk management program. I'll now turn the call over to Reshma.

Thanks, Susie. Good evening, all, and thank you for joining us on the call today. We are pleased to have closed out a strong 2022 with full-year global CF product revenue up 18% versus 2021. Our full-year 2023 product revenue guidance is $9.55 to $9.7 billion, representing 7% to 9% growth year-on-year inclusive of FX Headwind of approximately 1.5%. We have more than 20,000 patients still to reach with CFTR modulators, and we continue to work with focus and urgency to reach all patients with CF around the globe who may benefit from our therapies. It is an exciting time for Vertex. Our medicines have transformed CF, and the growth of our CF business has transformed Vertex. Our differentiated R&D approach led to our multiple life-changing therapies in cystic fibrosis and is designed to deliver transformative medicines for serious diseases at high rates of success, agnostic to modality. It is delivering just that. In aggregate, our mid- and late-stage clinical pipeline holds the promise to deliver potentially transformative benefit for patients across eight disease areas. as detailed on slide five. Each program holds the potential to be best in class and transform the disease, and each represents a multi-billion dollar market opportunity. Furthermore, we see the opportunity to launch new products into five of these disease areas within the next five years, or our five and five goal. And we're not done. The next wave of innovation is also making progress and advancing through preclinical development, including programs in Duchenne's muscular dystrophy and myotonic dystrophy type 1. This breadth of pipeline success, accelerated pace of clinical trial progress, and build-out of commercial capabilities for upcoming product launches warrant continued investments in 2023. As such, we are strategically investing and focusing on execution to drive forward this significant opportunity. With a uniquely strong and durable CF franchise, a deep, broad, and advancing R&D pipeline with multiple potentially near-term commercial opportunities, a strong balance sheet, and a deeply talented and committed team, 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. We'll continue our journey in cystic fibrosis as we serially innovate to bring highly efficacious therapies to all CF patients. Our next-in-class Vanzecafter triple combination completed enrollment in its two Phase III clinical trials, Skyline 102 and Skyline 103, in patients ages 12 years and older in Q4 of 2022. While Trikafta sets a very high bar, our enthusiasm for this Vanza-Kafta program is also high. This program could deliver even greater benefits to patients given, one, our highly predictive in vitro human bronchial epithelial or HPE cell assays showed the Vanza triple was superior to Trikafta in improving chloride transport, a direct measure of CFTR function. Two, Our Phase II clinical data also suggests the potential for greater efficacy for vanzecaftor versus Trikafta. And three, the vanzecaftor triple also has the benefit of once daily oral dosing and a substantially reduced royalty burden relative to Trikafta. The Phase III trials are currently in the 52-week dosing period, and we anticipate their completion towards the end of this year. Another important program is the VX522 program, our CFTR mRNA approach that we are developing in partnership with Moderna for CF patients who cannot benefit from our CFTR modulators. In December of 2022, the FDA cleared the IND for VX522 and the single ascending dose study in CF patients was initiated last year, a major milestone for Vertex and the field. We have high expectations given over five years of research that led to the discovery of VX522 with the following properties. One, delivery of mRNA at high efficiency into HBE cells. Two, expression of CFTR protein leading to high levels of chloride transport. And three, in both rodents and non-human primates, expression of CFTR protein in the desired cells. And lastly, a preclinical safety profile that supported advancement into human clinical trials. We are excited with the progress of VX522, which brings hope to the more than 5,000 CF patients who are still waiting for a treatment that targets the underlying cause of their disease. Turning now to Exacell, our gene editing program for severe sickle cell disease and transfusion-dependent beta-falcemia. This is our most advanced program outside of CF, and we expect Exacell to be our next commercial launch. In late Q4, we completed our regulatory submissions for Exacell for both sickle cell disease and beta thalassemia in the EU and UK. Both the EMA and the MHRA have recently validated the MAA submissions, and in the U.S., we remain on track to complete our rolling BLA submission by the end of this quarter. The remarkable clinical benefits are evident in the data we've shared to date. XSL holds the promise to be the first CRISPR-based gene editing treatment to be approved and represents a near-term and significant market opportunity, which Stuart will detail. Turning next to VX548 and our pain program. VX548 is our novel, selective NAV1.8 inhibitor that holds the promise of highly effective pain relief without the side effects or addictive potential of opioids. If approved, VX548 would represent the first new class of pain medicine in decades with the potential to address the staggeringly high unmet need in acute pain. VX548 acts on the peripheral nerves to block the pain signal and thus may be able to provide effective pain relief without the abuse potential, which is a central nervous system phenomenon. We have high expectations for this program because NAV1.8 is a genetically and pharmacologically validated target. Second, we have multiple positive proof of concept results with VX150. a predecessor molecule to VX548, and proof of concept with VX548 itself. And lastly, our phase three program in acute pain is substantially similar to the positive phase two trials we have already conducted. VX548 has been granted fast track and breakthrough therapy designation in the U.S. We initiated pivotal development last year, and we are enrolling patients across three Phase III studies with the goal of seeking a broad, moderate to severe acute pain label. We anticipate completing the Phase III pivotal program towards the end of this year or the beginning of next, creating another potentially significant and near-term commercial opportunity, which Stuart will also discuss. In addition to validation of NAV1.8 as a target in acute pain, it has also been validated as a target in neuropathic pain. I am pleased to share that in late Q4, we initiated a 12-week Phase II dose-ranging proof-of-concept study for VX548 in peripheral neuropathic pain. We look forward to updating you as this Phase II program progresses and to sharing more on the market opportunity on future calls. Transitioning now to enaxiplin or VX147, the first potential medicine to target the underlying cause of ApoL1-mediated kidney disease, or AMKD. Post the positive Phase II proof-of-concept study, Anaxipline is now being studied in a single, adaptive Phase II-III pivotal trial. This study has a pre-planned interim analysis at 48 weeks of treatment, which, if positive, could serve as the basis to seek accelerated approval in the U.S. Our goal is to complete the Phase 2 dose-ranging portion of the Phase 2-3 pivotal study this year. Select a dose and then continue on to the Phase 3 portion. We are also working to increase awareness, screening, and diagnosis through multiple initiatives given the high unmet need and the approximately 100,000 patients in the U.S. and Europe alone. With Anaxaplin, we see the potential of bringing a first-in-class treatment to patients with AMKD and unlocking a multi-billion dollar market opportunity. Moving to type 1 diabetes, where our goal is to deliver a transformative, if not curative, therapy for the more than 2.5 million patients with type 1 diabetes in North America and Europe. We are advancing multiple programs. First, VX880s are stem cell-derived, fully differentiated, insulin-producing islet cells which use standard immunosuppressives to protect the cells from the immune system. These cells are also foundational for the other two T1D programs. For VX880, we achieved proof of concept last year with the first two patients treated in Part A of the VX880 study. We have now fully enrolled Part B, where patients will receive the target dose on a staggered basis. The next phase is Part C, expected to initiate later this year, in which patients will be treated concurrently with the target dose. We look forward to sharing Vx880 data from more patients and with longer duration of follow-up at medical congresses this year. Second, VX264, or the Cells Plus Device Program, which encapsulates these same fully differentiated insulin-producing islet cells in a proprietary device that shields the cells from the body's immune system. And hence, there is no requirement for immunosuppressants. In late Q4, we simultaneously filed a CTA in Canada, as well as the IND in the U.S. As we shared last month, the CTA has cleared and we look forward to initiating enrollment and dosing of patients in Canada in the coming months. In the U.S., the IND has not cleared. We have received and responded to the FDA's questions. We look forward to working with the agency with urgency so that we can initiate the study in the U.S. as soon as possible. Third, in our hypoimmune program, we are editing the same fully differentiated insulin-producing islets to cloak them from the immune system, another path to obviating the need for immunosuppressives. This program continues to progress in preclinical development. Let me close the T1D section with an update on the Viacide acquisition through which we gained intellectual property, tools, and capabilities that hold the potential to accelerate our goal of developing transformative treatments for this disease. We have now completed our data and portfolio review and are very pleased with the progress to date. We have begun executing our integration plans. On the clinical side, a Phase 1-2 study of VCTX211, a hypoimmune cell program that originated with Viacite, and that Vertex is now developing in partnership with CRISPR Therapeutics, has been initiated and is ongoing. All other Viacite clinical trials have completed enrollment and dosing and are in the follow-up stage. I'll finish up with the Alpha-1 Antiterpsin Deficiency, or AATD, program. Both a Phase I study of VX634, the first in a series of next-wave AAT correctors, and a 48-week Phase II study of VX864, our first-generation AAT corrector, are ongoing. We look forward to updating you as these programs advance. I'll now ask Stuart to review our commercial progress.