Vertex Pharmaceuticals Incorporated

Good day and welcome to the Vertex Pharmaceuticals fourth quarter 2024 earnings 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. 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 as the Senior Vice President of Investor Relations, it is my pleasure to welcome you to our fourth quarter 2024 Financial Results Conference Call. On tonight's call, Making Prepared Remarks, we have Dr. Reshma Kewalramani, for Texas 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, beta thalassemia, and moderate to severe acute pain, 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'll now turn the call over to Reshma.

Thanks, Susie. Good evening, all, and thank you for joining us on the call today. Before diving into Q4 and full-year earnings, I'd like to provide a quick update on some leadership changes planned for mid-2025, as noted in our press release. Stuart Arbuckle will be retiring on July 1 of this year, after an almost 40-year career in biopharma and a stellar dozen-plus years at Vertex, first as Chief Commercial Officer and then as COO. Stewart reimagined the Vertex commercial organization as the company transitioned from Hepatitis C and Encevic to establishing itself in CF. And since then, he has led as Vertex's Chief Commercial Officer and Chief Operating Officer with great skill and innovation. Stuart has been at the helm through the launches and commercialization of all of our CFTR modulators, beginning with Kalydeco and all the way through to Eliftrek. He has also helped develop and lead the organization into this new era of commercial diversification with the launches of Cascevi and Jurnavix. Anyone who has had the privilege to work with Stuart, as I have, knows Stuart to be a consummate professional, an incredible leader, and an excellent developer of talent. He is uncommonly poised, leads with integrity, and always puts patients first. As part of our carefully planned succession, Stuart is fully on board at Vertex until July, which will allow for a seamless transition. While we still have many months before he retires, I want to take this opportunity to convey my deep gratitude for his partnership and for all that Stuart has done for Vertex. We are very thoughtful and deliberate in how we plan for senior leader succession, and we always do so with a long time horizon in mind. Thanks to this careful planning, we have never been in a stronger position to pass the baton from Stuart to other experienced senior leaders, and we are very confident that the transition will enable us to execute seamlessly on the significant opportunities ahead. In that regard, I am very pleased to announce that Charlie Wagner, who joined as CFO in April of 2019, and whom all of you know very well, will take on the additional role of COO on July 1st. I am equally pleased to announce that Duncan McCutney, our longtime SVP and head of the North American Commercial Team, will be promoted to EVP and Chief Commercial Officer also on July 1st. Duncan had over 20 years experience in the industry across a wide range of strategic, operational, and commercial roles in multiple disease areas and geographies at both GSK and Novartis prior to joining Vertex 12 years ago. Duncan has been working side-by-side with Stuart since 2013, during which time he played an instrumental role architecting the successful launches of all of our CF medicines, as well as the Caschevy and Genomics launches in the U.S. In addition to his role as the commercial head of North America since 2022, Duncan has also led the global health economics as well as the global value and access functions across the entire Vertex portfolio. I'm proud of the deep bench of outstanding talent we have at Vertex, and I'm looking forward to working directly with Duncan as he joins the executive committee and steps into the CCO role, and as Charlie continues as CFO and adds COO responsibilities in July. Moving to earnings, fourth quarter performance wrapped up another strong year as the continued outstanding commercial execution in CF helped us drive double-digit revenue growth for our 10th consecutive year, and the launch of Kastjevi set us on the course of revenue diversification. We continue to reach more patients and delivered $2.91 billion in revenue in the fourth quarter, representing 16% growth versus Q4 2023. For the full year 2024, revenue reached a new milestone of just over $11 billion, plus 12% versus 2023, and exceeded our full year product revenue guidance of $10.8 to $10.9 billion. From this strong base, in 2025, we are focused on driving a significant expansion and the patients we serve with the ongoing launch of Caschevy and two recent USNDA approvals. Oliftrec, our next generation, fifth CF medicine approved on December 20th and Jernavix approved for moderate to severe acute pain on January 30th. The Drenavix approval is landmark as it represents the first oral non-opioid pain signal inhibitor and the first new class of pain medicine in over 20 years. We see this approval as significant for millions of patients, for Vertex, and for society as an important option to support public health efforts to curb the opioid epidemic. Our R&D teams have worked on this program for many years, and it is indeed my privilege to acknowledge their efforts and also to thank the patients and healthcare providers who participated in the clinical trials and made this approval possible. With these two recent approvals for LiftTrek and Jernavix in hand and the continuing Cascevi Global launch, we have a keen focus on commercialization and our teams are working to secure broad access and reimbursement for patients who are waiting. As I detailed in January, as the number of inline approved medicines grow and the late stage pipeline advances, we anticipate significantly expanding the number of patients we serve over the coming years. In 2024, our transformative therapies have the potential to serve approximately 160,000 patients with CF, sickle cell disease, and transfusion-dependent beta-thalassemia. Now, we can add 80 million acute pain patients to that reach, thanks to the approval of Jernabix. And beyond moderate to severe acute pain, focusing just on the mid and late stage pipeline, we seek to serve more than 5 million more patients, including those with type 1 diabetes and certain renal diseases, and then another 10 million plus patients with peripheral neuropathic pain in the U.S. alone. To give you a sense of our momentum, we are on track for key clinical development milestones in three pivotal studies this year. First, completing enrollment and dosing in the Zamyla Cell Phase 1-2-3 study in type 1 diabetes. which would position us to file for regulatory approval once this cohort has follow-up with one year of insulin independence. Second, completing enrollment in the interim analysis cohort of pobitacicept in IGAN, which would position us to file for potential US accelerated approval once that cohort reaches 36 weeks of treatment. And third, completing enrollment in the interim analysis cohort for Anaxipline for AMKD, which would position us to file for potential U.S. accelerated approval once that cohort reaches 48 weeks of treatment. In addition, we continue to execute the Phase III study of sucetragine in patients with diabetic peripheral neuropathy. We're also making strong progress with VX993, the next-generation NAV1.8 inhibitor, in both moderate to severe acute pain and diabetic peripheral neuropathy. We also have ongoing trials of potentially transformative medicines like VX670 in myotonic dystrophy type 1, povitacicept in a basket study in indications beyond IGAN, and expect to move VX407 for autosomal dominant polycystic kidney disease into phase 2 this summer. It's truly an exciting era of broad diversification at Vertex in terms of the revenue base, our pipeline, and our geographic presence. Given the detailed clinical update we provided in January, I'll focus the R&D updates tonight on CF and our clinical stage renal pipeline. Starting with CF, the U.S. launch is underway for a lift track, the fifth vertex CFTR modulator regimen, while we are also working to secure approval in international regions. As we work to get a lift track to patients around the globe, we are already in the clinic with our next generation CFTR modulator regimen. With each CFTR modulator regimen that gains approval, we raise the bar ever higher for ourselves and the field as a whole as we continue our mission to bring all patients with CF to normal levels of CFTR function. We term Trikafta, Caftrio, the next generation CFTR modulator or NG1.0. A left track is NG2.0. The NG 3.0 regimen consists of VX828, a CFTR corrector, VX118, a CFTR potentiator, and Tezacaftor. This NG 3.0 triple combo regimen has shown even greater efficacy. In other words, even greater improvement in CFTR-dependent chloride transport than in LIFTREC in our CF human bronchial epithelial cell assays, which have been shown to be highly predictive of clinical outcomes. We expect this regimen to be in the clinic in a study of CF patients this year. We also continue to enroll and dose the MAD portion of the Phase 1-2 study of VX522 for the 5,000-plus patients who cannot benefit from our CFTR modulators. Results from the MAD portion of the study are expected later this year. Moving on now to what I see as a real renaissance in renal therapeutic drug development, we are focused on advancing potential therapeutics that hold the promise to treat the underlying cause of disease in three different severe renal conditions. First, enaxiplin for APOL1-mediated kidney disease, or AMKD. As mentioned, we are working towards our goal of completing enrollment of the interim analysis cohort of the pivotal amplitude study this year. Amplitude is a study of primary AMKD, that is to say patients with 2APOL1 alleles and no additional renal comorbidities. After completing enrollment, when this cohort reaches 48 weeks of treatment, we'll conduct the interim analysis. If positive, we will be able to file for potential accelerated approval in the U.S. In addition, I'm pleased to announce that last month we initiated a new study, Amplified, which is a Phase II proof-of-concept study of enoxiplin in patients with AMKD and other comorbidities, including type 2 diabetes. Second, povitacicept. a dual antagonist of the April and BAF cytokines, which play key roles in the pathogenesis of B-cell-mediated autoimmune diseases. This dual inhibition mechanism of action, the preclinical and clinical data to date, plus POVI's once-monthly dosing frequency and small-volume subcutaneous route of administration give us high confidence in its promise as a transformative medicine for patients with IGAN and other B-cell-mediated diseases. As mentioned in January, we expect a complete enrollment of the interim analysis cohort of the POVI study in IGAN this year. To this end, I am pleased to report that we have now opened more than 100 clinical trial sites in more than 20 countries, including in the U.S., Europe, and Asia, and enrollment and dosing are well underway. Once this cohort has 36 weeks of follow-up, we'll conduct the interim analysis, and if positive, it would support filing for a potential accelerated approval in the U.S. And third, an earlier stage renal program that represents an additional significant opportunity, VX407 in autosomal dominant polycystic kidney disease, or ADPKD, where we are nearing completion of the Phase I trial. ADPKD is the most common severe monogenic disease amongst Caucasians and the most common inherited cause of end-stage renal disease in the U.S. and globally. An estimated 300,000 people in the US and Europe are living with ADPKD, yet there are no treatments that address the underlying cause of disease. It is a life-shortening disease that is characterized by the growth of numerous cysts that impair kidney function and can ultimately lead to kidney failure. Around half of patients with ADPKD experience kidney failure by the age of 60. The majority of ADPKD cases are caused by variants in the PKD1 gene, which encodes the polycysteine 1 or PC1 protein. These inherited variants lead to the loss of PC1 function that leads to the proliferation of kidney epithelial cells, increased fluid secretion, and the formation and expansion of fluid-filled cysts. The progressive cyst formation causes an increase in kidney size and decline in kidney function. VX407 is a first-in-class small molecule protein folding corrector that is designed to target the underlying cause of ADPKD by correcting PC1 folding to restore function. This has the potential to arrest cyst growth. By way of its mechanism of action, VX407 has potential in a subset of patients with protein folding mutations of PKD1, estimated at up to 30,000 patients or about 10% of the overall ADPKD population. As we're doing in CF, we seek to serially innovate and over time reach the full 300,000 patients with ADPKD. For VX407, we expect to complete our Phase 1 study soon, and if the results are supportive, advance to Phase 2 later this year. With that review, I'll turn it over to Stuart for a commercial update.