Vertex Pharmaceuticals Incorporated

...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, everyone. My name is Suzy Lisa, and as the Senior Vice President of Investor Relations, it is my pleasure to welcome you to our fourth quarter and full year 2023 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 medicines for cystic fibrosis, sickle cell disease, and beta thalassemia, 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 foreign exchange is presented inclusive of our Foreign Exchange Risk Management Program. I will now turn the call over to Reshma.

Thanks, Susie. Good evening, all, and thank you for joining us on the call today. We've delivered another excellent quarter to finish 2023, established a strong foundation for continued growth, and started off 2024 with tremendous momentum, with additional approvals for Kastjebi, positive Phase III results for VX548 in acute pain last week, and positive results for the Vanzecafter Triple Program in CF this afternoon. In 2023, Vertex continued to reach more CF patients and achieved full-year CF product revenues of $9.87 billion, representing 11% growth versus 2022. Following the historic approvals of Caschevi, the first-ever CRISPR-Cas9-based therapy, Our launch is often running globally, as we are now approved in both sickle cell disease and beta thalassemia in the U.S., Great Britain, the Kingdom of Saudi Arabia, and Bahrain. Caschevy is a one-time, precise, durable CRISPR-Cas9 gene-edited therapy that is generating strong enthusiasm from physicians and patients and excellent support from payers. We're also working toward multiple additional near-term commercial opportunities driving toward our five launches in five years' goal. The recent approvals for Caschevy in both sickle cell disease and beta-thalassemia deliver the first two. Now, with the positive Phase III results from BX548 in acute pain and for the Vanzecafter triple therapy in CF, these are potentially the next two. And with a strong clinical stage pipeline with first-in-class or best-in-class assets, we are well on our way to our goal of five launches by 2028. In addition to the rapidly advancing clinical stage pipeline, the next wave of innovation also continues to make progress. And as we announced last month, we are pleased to be advancing two new disease areas into the clinic. First, myotonic dystrophy type 1, or DM1, a serious disease with high unmet need and no approved therapies. This disease affects approximately 110,000 patients in North America and Europe. Our DM1 program represents our ninth disease area to advance into the clinic. We already initiated a Phase 1-2 study in patients, that is to say a study that will be able to assess both safety and efficacy late last year. And second, we expect to advance into our 10th disease area in autosomal dominant polycystic kidney disease, or ADPKD. the most common genetic kidney disease that affects approximately 250,000 patients in the U.S. and EU alone, into the clinic with a healthy volunteer study in the first half of this year. With that overview, let me now turn to a more detailed pipeline review. This quarter, I'll limit my comments to the programs with significant recent updates. Cystic fibrosis, sickle cell disease, beta thalassemia, and pain, so as to leave time for your questions. Starting with cystic fibrosis and our next in class Vansecafta triple combination therapy. This afternoon, we reported positive results from the phase three program, including the Skyline 102 and 103 studies in patients 12 years and above, and the Ridgeline study in patients ages six to 11. We are very pleased with these results and the arc of progress in treating patients with CF as we continue to advance our ultimate goal of bringing all eligible patients to carrier levels of sweat chloride. Treatment with the VANSA triple met all primary and secondary endpoints in the three Phase III studies, and once again, our proprietary HBE assays were both qualitatively and quantitatively predictive. In the Skyline 102 and 103 trials, the Vanza-kafta triple combination met its primary endpoint of non-inferiority versus Trikafta on PPFEV1, consistent with our expectations. The difference in PPFEV1 in the Tri- and Vanza-treated groups was negligible. In Skyline 102, the LS mean difference was 0.2, numerically favoring VANZA, and meeting non-inferiority with a p-value of less than 0.0001. And in the Skyline 103 study, again, the difference in PPFEV1 in the tri- and VANZA-treated groups was negligible, and numerically favored Vanzecafter, with Ellis mean difference of 0.2, meeting non-inferiority with a p-value of less than 0.0001. Recall, the improvement in PPFEV1 in treatment-naive patients in the original TRI Phase III program was approximately 14%. In addition, all key secondary endpoints were met across Skyline 102 and 103 and showed a statistically significant and clinically meaningful reduction in sweat chloride. The sweat chloride results were measured in three key secondary endpoints. First, the overall achieved sweat chloride levels in the two RCTs were lower in the Vanza-treated group versus the Trikafta-treated group. The LS mean difference was minus 8.4 with a p-value of less than 0.0001 in Skyline 102. The LS mean difference was minus 2.8 with a p-value of 0.0034 in Skyline 103. The key difference, of course, in Skyline 102 and 103 was the genotype studied. Skyline 102 included FMF patients who have more severe disease and therefore higher sweat chloride levels at baseline. And Skyline 103 included FF and other responsive mutations with lower baseline sweat chloride levels. Next, the second key secondary endpoint, a proportion of sweat chloride, less than 60 millimoles, pooled across two studies. 86% of patients in the VANZA-treated groups and 77% of patients in the TRIKAFTA-treated groups achieved sweat chloride levels below 60 millimoles, leading to an odds ratio of 2.21 and a p-value of 0.0001. This means about two times greater likelihood in the odds of achieving sweat chloride less than 60 with VANZA versus TRIKAFTA. Last, the third key secondary endpoint, a proportion of sweat chloride, less than 30 millimoles, pooled across the two studies. 31% of patients in the VANSA-treated groups versus 23% of patients in the TRICAFTA-treated groups achieved sweat chloride levels below 30 millimolars, leading to an odds ratio of 2.87 and a p-value of 0.0001. This means about three times greater likelihood in the odds of achieving sweat chloride less than 30 with vanzecaftor versus Trikafta. The results were even more pronounced in the Ridgeline study evaluating children ages 6 to 11. The primary endpoint in this single arm study was safety, which I will come to in a minute. On efficacy, 95% of patients achieved sweat chloride below 60 millimole, the diagnostic threshold for cystic fibrosis. And more than half reached sweat chloride levels below the carrier level threshold of 30 millimoles. These sweat chloride results with the Vanser triple are both impressive and important. Let me take a step back to frame the significance of these results. While CF is a systemic multi-organ disease, historically the focus has been primarily on lung function as measured by PPFEV1, given it is the most visible symptom and typically the cause of death in CF patients. PPFEV1 is also the regulatory enabling endpoint. Given the strides we have made with Trikafta, we believe we may have reached the maximum potential benefit in lung function from CFTR modulators. Thus, our objective with Vanzicaftor moves beyond the focus on lung function to a broader, more ambitious goal to improve CFTR protein function as measured by lower sweat chloride levels and deliver even greater systemic benefit than Trikafta. To be clear, the goal with the VANSA Pivotal Development Program was to show the lung function benefit was non-inferior to Trikafta and, over and above that, to deliver additional benefit on sweat chloride, the direct marker of CFTR protein function. A note on CFTR protein. CFTR protein dysfunction is the underlying pathophysiology in CF. And while CF is often diagnosed by a genetic test at birth, it is confirmed via a sweat chloride test because it is the direct measure of CFTR protein dysfunction. Simply put, higher levels of sweat chloride associated with more severe disease. Therefore, the ultimate goal is to restore CFTR protein function as measured by sweat chloride back to normal or as close to normal as possible so that there is no manifestation of disease. And more specifically, sweat chloride values below 60 millimoles are associated with improved outcomes such as better and more stable lung function, fewer pulmonary exacerbations, better quality of life, and improved survival. Vertex's ultimate treatment goal is to restore sweat chloride levels to below 30, which is considered normal and are typical of CF carriers who do not have the disease. For instance, the parents of children with CF. Thus, our goal in designing the Vanza-kafta triple therapy studies was to test if even more patients treated with Vanza could achieve those sweat chloride thresholds of less than 60 and less than 30 than those treated with Trikafta. Switching to safety, the Vanza triple was generally safe and well-tolerated in all three studies. The adverse events seen in the Vanser Triple Pivotal Development Program are consistent with the underlying disease and with the incidence and nature of adverse events we have seen with previous CFTR modulators. As a reminder, and to round out the profile of the Vanser Captor Triple, this therapy offers the convenience of once-daily dosing for patients and a substantially lower royalty burden. In summary, we set a goal to establish a new and higher bar in the treatment of CF with CFTR modulators, and with these Phase III Vanser Triple results, we have the first evidence that we have done so. And with these results, we now know that the Vanser Triple has indeed surpassed the very high bar set by Trikafta in people with CF ages 6 and older. And by treating patients early with the Vanser Triple, we have the potential to possibly prevent systemic manifestations of CF in more people. These results also reaffirm our conviction that continued investment in scientific and serial innovation will allow us to complete our journey to transform CF by bringing all eligible CF patients down to carrier levels of sweat chloride where there are no manifestations of disease. I want to acknowledge the CF patients in our clinical trials who put their trust in us, as well as the Vertex San Diego team and the CF R&D teams, some of whom have worked on CF for more than 20 years to deliver yet another potentially transformative medicine. We are working rapidly to compile the regulatory submissions and anticipate filing in both the US and Europe for patients ages six and older by the middle of 2024. We will be using one of our priority review vouchers, entitling us to designate the VANZA NDA for priority review, which provides an expedited six-month review versus a standard 10-month review timeline. I'll close on CF with VX522. our CFTR mRNA therapy in development with our partners at Moderna for the more than 5,000 CF patients who do not make any CFTR protein and therefore cannot benefit from CFTR modulators. Late last year, we completed enrollment and dosing in the single ascending dose portion of our study for VX522 and initiated the multiple ascending dose portion of the study. This study continues to screen, enroll, and dose patients, and we expect data late this year or early next. Turning now to Caschevy, a precise, durable CRISPR-Cas9 gene-edited therapy that delivers a potential one-time functional cure for patients with sickle cell disease and transfusion-dependent beta-thalassemia. Caschevy represents an enormous advancement for the estimated 35,000 people living with severe sickle cell disease and transfusion-dependent beta-thalassemia. across the U.S. and Europe, as well as thousands of patients in other regions, such as the Kingdom of Saudi Arabia and Bahrain. Kastjevi represents a significant commercial opportunity as well, and Stewart will discuss the strong start to the launch following the rapid approvals in multiple countries. While these launches are underway, we are awaiting approval in the EU, where Kastjevi has received CHMP positive opinion for both sickle cell disease and beta-thalassemia. Kastjevi is also under review in Switzerland, and we anticipate filing in Canada this quarter. Lastly, on Caschevy, recognizing the importance of treating patients with sickle cell disease and beta thalassemia early in life to minimize organ damage and other complications of the disease, we are conducting studies in both sickle cell disease and beta thalassemia to expand the label to younger age groups. To that end, we recently completed enrollment in our two global Phase III studies in patients 5 to 11 years of age, and dosing in these studies is underway. Moving to the pain program and VX548, our novel, highly selective NAV1.8 pain signal inhibitor. With VX548, we finally have the possibility of a medicine that has the compelling combination of both strong efficacy and strong safety that can be used for multiple moderate to severe pain types across multiple settings of care. Last week, we detailed the positive results from the three phase three trials that comprise our pivotal program for VX548 in acute pain, including randomized placebo-controlled trials in two different pain models, abdominoplasty, a soft tissue pain model, and bunionectomy, a hard tissue pain model, and a single-arm safety and effectiveness trial in a broad range of surgical and non-surgical pain conditions. Both the abdominoplasty and bunionectomy RCTs met the primary endpoint with statistically significant improvement in pain compared to placebo on the primary endpoint of SPID48. The SPID48 is derived from a change in the numeric pain rating scale or NPRS. Practicing physicians tell us that in addition to SPID48, they focus on this reduction in the NPRS from baseline, and this change in baseline in NPRS score is also how clinical meaningfulness is assessed in the field. In acute postoperative pain studies, clinical meaningfulness is defined by at least a two-point change in NPRS from baseline or at least a 30% reduction in NPRS from baseline. In that context, both RCTs demonstrated that treatment with VX548 led to rapid, clinically meaningful reductions on the NPRS with more than three points of pain reduction or roughly a 50% reduction from baseline in the VX548 arms. The single-arm safety and effectiveness trial was conducted in a broad range of surgical and non-surgical pain conditions and supported longer-term safety and effectiveness. VX548 was safe and well-tolerated across all three studies, including multiple acute pain types and settings. Of importance with respect to safety in the two RCTs, the incidence of adverse events in the VX548 arms was lower than placebo, an uncommon and noteworthy finding. We believe the results of this comprehensive Phase III program support a broad, moderate to severe acute pain label and, if approved, should enable prescribing and usage across multiple care settings. VX548 has already secured fast-track and breakthrough designations, and we are working with urgency to file the NDA by mid-2024. Moving now to neuropathic pain. Two months ago, we also reported positive results from our Phase II study of VX548 in diabetic peripheral neuropathy, one type of peripheral neuropathic pain, and another area of high unmet need. We look forward to our end of Phase 2 meeting with the FDA towards the end of this quarter and starting our Phase 3 program thereafter. We also continue to enroll and dose our second Phase 2 neuropathic pain study of VX548 in lumbosacral radiculopathy, or LSR. Ultimately, we seek a broad neuropathic pain label and believe by studying two of the largest pain segments, DPN and LSR, which together represent more than 60% of all peripheral neuropathic pain, we have a pathway to that broad indication. Just as we transform the treatment of CF, we believe we have the potential to transform the treatment of pain, both acute and neuropathic, based on the compelling and consistent results we have seen with VX548. We now have results in hand from the Phase 3 program in acute pain, as well as the Phase 2 results in DPN. We are underway with the phase two study in LSR, and we are continuing to execute our portfolio approach of serial innovation. We are well on our way to helping address the unmet need of 90 million patients suffering with pain. With that, I'll now turn it over to Stuart.