Vertex Pharmaceuticals Q3 2021 Earnings Call Transcript

Quartr
Provided by Quartr
November 1, 2021

There are 13 speakers on the call.

Operator

Good evening. This is Michael Partridge. Welcome to the Vertex Third Quarter 2021 Financial Results Conference Call. On tonight's call, making prepared remarks, we have Doctor. Reshma Kewalramani, Vertex's CEO and President Stuart Arbuckle, Chief Operating Officer are Charlie Wagner, Chief Financial Officer Doctor.

Operator

Bastian Ossana, Executive Vice President and Chief of Cell and Genetic Therapies at Vertex will join us for Q and A. Call, we recommend that you access the webcast slides as you listen to this call. This call is being recorded. A replay will be available on our website.

Speaker 1

Call, we

Operator

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. Call, these statements, including without limitation, those regarding Vertex's marketed CF medicines, our pipeline and Vertex's future financial performance call 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 Doctor.

Operator

Reshma Kewalramani.

Speaker 2

Thanks, Michael. I'm very pleased to be here with you tonight to discuss Vertex's progress through the 1st 3 quarters of 2021. During this year, we've meaningfully increased our leadership in cystic fibrosis, both with our approved CFTR modulators and with the CF programs advancing in our pipeline. We've expanded and accelerated our R and D pipeline beyond CF And these programs are now delivering clinical results. We have continued to demonstrate exceptional financial performance with significant growth in revenue, high operating margins and increasing cash flow.

Speaker 2

Let me elaborate more on each of these three points. Starting with CF. From a commercial perspective, 3rd quarter product revenues were $1,980,000,000 representing almost 30% growth year over year, this growth was driven by the performance of Trikafta in the U. S, including the launch in children ages 6 to 11 And strong uptake OUS, where Captrio has been reimbursed, including most recently in France and Italy. Based on the strong performance, we are again increasing our revenue guidance and now expect total product revenues for 2021 to be between call, dollars 7,400,000,000 $7,500,000,000 As we look forward, we expect that our CF business will continue to show growth in the years ahead, as there are approximately 30,000 CF patients yet to be treated with our CFTR modulators.

Speaker 2

We've made important progress with our CF R and D pipeline programs this year as well. Based on strong preclinical and clinical results From our next in class triple combination regimen of VX-one hundred and twenty one, tezacaftor and VX-five sixty one that demonstrate the potential for superior benefit to existing CFTR modulators, we've accelerated this program into pivotal studies. Both of the Phase 3 studies are head to head trials versus Trikafta. Both studies are up and running and enrolling patients. And we are not stopping there.

Speaker 2

We have identified even more promising regimens in our labs, building on 20 years of success, Translating our proprietary insights in CF biology into groundbreaking medicines. We are confident that these regimens will allow us to reach our long standing call of bringing all CF patients to carrier levels of sweat chloride. For the approximately 10% of people with CF who cannot benefit from a CFTR modulator were working on genetic therapies, including an mRNA approach. We and our partner Moderna have for some time now been able to synthesize mRNA constructs that restore CFTR protein function in vitro. The biggest challenge for us and for everyone in the field has been delivery of the mRNA to the target cells.

Speaker 2

I am very pleased to report that we and Moderna have made a significant breakthrough in delivery call, we have now demonstrated that we can efficiently deliver full length CFTR mRNA to human bronchialepithelial cells call, in vitro to provide high levels of CFTR function and in vivo through the delivery of nebulized lipid nanoparticles to the bronchial epithelial cells in non human primates. Based on these results, IND enabling studies for our CFTR mRNA therapy we are already underway and we plan to file an IND and start clinical development in 2022. To close out on CF, I will note that just a few months from now, we will mark the 10th anniversary of the first approval of KALYDECO, our first CFTR modulator and last month marked 2 years since the U. S. Approval for Trikafta.

Speaker 2

From the Phase 3 clinical trials, RCF medicines have always been appreciated for their outstanding short term benefits, not just significant increase in PPFEV1, but decreases in pulmonary exacerbations, increases in weight and increases in quality of life. We're now in a position where we have tens of thousands of patient years of safety data and we could appreciate more fully the breadth of clinical benefit with analysis call, we are now on track to discuss our progress on an average of 6 years of follow-up in patients 6 years and older, and that includes a 78% reduction in the mortality rate And an 89% reduction in the rate of lung transplantation compared to patients who were not eligible for treatment. With Trikafta, we now have data showing no decline in lung function after 2 years of follow-up from the pivotal trials. And this is a first for any CF Medicine. I'd like to emphasize that from our perspective, it is these kinds of long term data that ultimately determine physician and patient choice of regimens, call, particularly in CF, where patients take CFTR modulators chronically over a lifetime.

Speaker 2

Let me turn to our pipeline outside of CF. First, to our Type 1 diabetes programs and the unprecedented clinical data we recently shared. The pathophysiology of Type 1 diabetes is well known. It results from the autoimmune destruction of pancreatic islet cells. Daily injections of insulin have call, we will now be conducting a

Speaker 1

few questions. We will now be conducting a few questions. We will now be conducting a few questions. We will now be conducting a few questions. We will now be conducting a few questions.

Speaker 1

We will now be conducting a

Speaker 2

few questions. We will now be conducting a few questions. We will now be conducting a few questions. Thank you, Resulting in premature mortality and unfortunately, the treatment itself can lead to severe hypoglycemic episodes call, that can be associated with unresponsiveness, seizures and even death. Therefore, the Holy Grail for Type 1 diabetes for decades has been to replace the damaged pancreatic islet cells and restore insulin production.

Speaker 2

Early clinical studies using cadaveric islets have demonstrated the curative potential of this approach. The problem has been producing sufficient quality and quantity of islet cells to treat the millions of people with this disease. Vertex has developed a proprietary process to make industrial quantities of allogeneic stem cell derived fully differentiated islet cells that could serve the more than 2,500,000 patients with Type 1 diabetes. The clinical data from this first patient treated in our VX-eight eighty program with these cells are truly remarkable, call, with a single infusion at half the target dose combined with standard immunosuppression routinely used in transplantation, we observe substantial improvements across multiple measures of islet cell function that were rapid, robust and durable through day 90. Our stem cell derived islets produce basal levels of insulin and increased insulin secretion call appropriately in response to glucose stimulation.

Speaker 2

And in the 90 days following infusion, there was a significant reduction in blood glucose

Speaker 1

call, as measured by

Speaker 2

hemoglobin A1c, despite a 91% reduction in exogenous insulin requirements. On the safety side, VX-eight eighty was generally well tolerated. These cells are the product. Cells alone program, we use standard pharmacologic immunosuppressive. In the next program, we're using our proprietary device for immuno protection of these cells.

Speaker 2

The IND enabling studies for this program are already underway and we plan to file the IND in 2022. And these same cells are the starting product for our gene editing program designed to produce hypo immune islet cells that can evade the immune system. In Cell and Gene Therapies, it is clear that the curative potential of these approaches is very high, And therefore, these therapeutics have potentially rapid paths to registration involving a reasonable number of patients and a reasonable amount of follow-up. It is with this in mind that we're working with urgency on the VX-eight eighty program. Moving on to CTX-one.

Speaker 2

CTX-one is our nonviral ex vivo gene editing therapy that is designed as a one time curative approach for sickle cell disease and beta thalassemia. It also stands out as a clear example of how we have accelerated our pipeline in 2021. CTX-one is our most advanced program outside of CF and continues to have strong momentum. We've now fully enrolled target number of patients in both the sickle cell disease and beta thalassemia clinical studies. Based on the clinical data we've presented to date, physician and patient interest in these trials has been high and we have additional patients beyond target 45 in each trial, who are now completing eligibility assessments and will be enrolled this month.

Speaker 2

We anticipate closing out our regulatory discussions in the near term and submitting regulatory filings for approval of CTX-one by year end 2022 based on these clinical results, we have high confidence that CTX-one will be our next launched medicine. Stuart will call, Stuart will comment on the progress of our commercial preparedness in his remarks. On to VX147, where we will have results from the Phase 2 proof of concept study this quarter. This Phase 2 study of VX-one hundred and forty seven is fully enrolled and focuses on patients with a form of FSGS that is mediated by APOL1. Our goal is to establish APOL1 inhibition as a new mechanism that can be used more broadly beyond FSGS in APOL1 mediated non diabetic Pertneric kidney disease.

Speaker 2

Based on the human genetics, call, the strongly validated target and the performance of VX147 across a number of in vitro and in vivo assays, we see our APO-one mediated kidney disease or AMKD program as having a high probability of call, some of the preclinical data from this program are the subject of a presentation at the American Society of Nephrology meeting taking place later this week. In this Phase 2 study, we're assessing the safety of VX-one hundred and forty seven and the key efficacy marker is reduction of proteinuria. Pertinuria is the clinically relevant endpoint and one that regulators have expressed openness to accepting call, it would represent a 1st in class demonstration of proof of concept for an APOL1 mediated kidney disease And would propel us into pivotal development in the AMKD population, which includes, but is not limited to FSGS. In total, this represents approximately 100,000 people with AMKD. I'll conclude the pipeline discussion with a few words on our pain program.

Speaker 2

We have high confidence in the NAV1.8 target for 3 main

Speaker 1

1,

Speaker 2

with our very own 3 positive Phase 2 proof of concept studies in acute, neuropathic and musculoskeletal pain. And third, our lead molecule in the program, VX548 has the key drug like properties that we are looking for, plasti with VX-five forty eight are well underway. Based on enrollment progress, we currently expect data from these studies in Q1 of 2022. With that, I'll now turn it over to Stuart to review the commercial progress.

Speaker 3

Thanks, Reshma. I'll begin by reviewing the Q3 revenue performance of our CF medicines, which reached nearly $2,000,000,000 in Q3. U. S. Revenues were $1,380,000,000 an increase of 13% compared to the prior year, driven by the performance of Trikafta, including the launch in the 6 to 11 year old population.

Speaker 3

The launch in the 6 the 11 year old is progressing rapidly, which is not surprising given the profile of the medicine and the recognition of the importance of early treatment of this relentlessly progressive disease. Outside the U. S, revenues were $601,000,000 an increase of more than 90% over the Q3 last year, driven by the ongoing launch of Captrio in the 12 plus population. In particular, Captrio is off to a strong start in France and Italy, 2 major markets where we achieved reimbursement in June of this year. We also signed a letter of intent for public reimbursement of Trikafta in patients 12, Nova in Canada.

Speaker 3

And since then, we've achieved multiple provincial reimbursement agreements and some 90% of patients covered by government insurance call, we now have reimbursed access to Trikafta. We have achieved reimbursement agreements for CaFtrio Trikafta in more than 20 countries outside the U. S. Call, just over 1 year since approval. And importantly, we've continued to achieve reimbursement at levels that reflect the high value of the triple combination regimen.

Speaker 3

As Reshma mentioned in her remarks, the profile of our CF medicines continues to be enhanced by long term data. The start of the North American CF Conference is tonight. And among several important abstracts are data from the ongoing 192 week open label extension study of Trikafta, which shows there has been no loss of lung function during long term follow-up. This is a first for any CFTR modulator to date, an important milestone for the field. Call, all previous long term data for our other medicines showed a slowing of lung function decline.

Speaker 3

In contrast, these data show no loss of lung function for patients on Trikafta after 96 weeks of follow-up. Real world data also being presented at the conference on KALYDECO show call, at an average of 6 years of follow-up, a 78% reduction in the mortality rate and an 89% reduction in the rate of lung transplantation compared to patients who were not eligible for the treatment. These data are very important for patients and the medical community because they more fully illustrate how our medicines address the long term progression and complications of the disease. Call, these data also have important implications for the future competitive landscape as they raise the bar in terms of what will be required to compete effectively. Now turning to some of the other opportunities in our pipeline beyond CF.

Speaker 3

Our commercial experience in CF conference call provides foundational capabilities, which we will be able to leverage to commercialize our next wave of transformative medicines. Call, as Reshma mentioned, regulatory submissions for CTX-one are planned for the end of 2022, and so our launch preparation activities are well underway to ensure we are able to bring this potential medicine to patients globally immediately upon approval. Call, we see CTX-one as a potential one time curative approach for the approximately 32,000 patients with severe sickle cell disease call, we've developed a deep understanding of the sickle cell and beta thalassemia markets, call, including where patients with these diseases are and the role that key referral and treatment centers will play to facilitate the treatment journey for patients. Consistent with our own internal market research, published physician surveys in the U. S.

Speaker 3

Consistently indicate call, they would expect a quarter to a third of their patients with sickle cell disease to be good candidates for a one time curative approach using the current conditioning regimen, call, which is in line with the estimates of the numbers of patients with severe disease, approximately 25,000 sickle cell disease patients. Call, we are focused on 3 key areas of launch preparation for CTX-one. First, people. We've hired many of the key people who will support the launch. 2nd, manufacturing.

Speaker 3

This is an area we have focused on from the earliest days of our work on CTX-one to ensure we can supply a consistent and high quality product call to the large number of patients we believe will benefit from the medicine on day 1 of the launch. Importantly, we are using the same manufacturing sites and processes call for commercialization that we are using for our clinical trials. And third, patients, making sure we really listen, call, understand them and their experience, so we can provide them at launch with the information, resources and support they need call, as they consider treatment with CTX-one. Now turning to pain. With our acute pain study is well underway, I thought I would remind you of the large market opportunity there.

Speaker 3

Acute pain accounts for 1,800,000,000 treatment days a year in the U. S. Alone. And despite more than 90% of prescriptions being generic, this is still today a $4,000,000,000 market. Call, at typical branded pain medicine pricing of approximately $10 a day, a new medicine that takes even a portion of the current treatment days call, it has multibillion dollar potential.

Speaker 3

In light of the unprecedented data for VX-eight eighty, it's also worth highlighting the market opportunity in Type 1 diabetes, which is very large. Let me start with the disease. Type 1 diabetes is a disease affecting more than 2 point 5,000,000 people in the U. S. And Europe alone.

Speaker 3

It is a severely debilitating and life shortening disease in which, due to autoimmune destruction of pancreatic islet cells, the body produces little to no insulin. Call, there are 2 patient populations to consider. First, those with severe enough diabetes for whom the benefit risk profile is positive call, for the cells alone plus standard immunosuppressive therapy and secondly, the broader population who would be candidates for the cells encapsulated in our proprietary device call, all hypo immune cells where immunosuppression would not be needed. There are at least 60,000 patients with Type 1 diabetes in the U. S.

Speaker 3

And Europe call, who are potential candidates for the first approach with VX-eight eighty. This group is made up of people who have severe, difficult to control forms of Type 1 diabetes characterized by impaired awareness of hypoglycemia and severe hypoglycemic events that can be life threatening. There are approximately 45,000 patients in this category. And then there are people with Type 1 diabetes who have had previous organ transplants, primarily kidney and so are already on immunosuppression. There are about 15,000 patients in this category.

Speaker 3

Cadaveric islet and whole pancreas transplants are already performed, albeit in small numbers of these patients and give some sense of the value of this type of intervention in a patient with severe disease. For illustrative purposes, if you use the benchmark price in the U. S. Call for a pancreatic transplant of approximately $400,000 per patient as the price for a cell based treatment, treating even a minority of the eligible patients would represent a multibillion dollar opportunity. Beyond VX-eight eighty, the cells plus device program, call, which encapsulates the same cells for which we recently reported the unprecedented clinical data into our proprietary device that protects these cells from the immune system, call, we could address the broader type 1 diabetes population, 2,600,000

Speaker 4

patients in the U. S. And Europe. Call, in summary, I'm pleased with our continued progress in bringing our CF medicines to more patients around the world call, I'm excited about the many opportunities in our pipeline. And with that, I'll turn it over to Charlie.

Speaker 4

Thanks, Stuart. In the Q3 of 2021, Vertex's long term track record of strong revenue growth continued. Total product revenues were $1,980,000,000 a 29% increase compared to the Q3 of 2020. Notably, Trikafta represented nearly 80% of 3rd quarter revenues call, as most eligible patients have switched to Trikafta. Our 3rd quarter revenues included $1,380,000,000 in the U.

Speaker 4

S. Call, we will be conducting a reconciliation of $601,000,000 outside the U. S. Ex U. S.

Speaker 4

Revenues for the quarter grew 92% over the prior year, call, driven by continued strong uptake for Captrio. Our 3rd quarter combined R and D and SG and A expenses were $561,000,000 compared to $497,000,000 for the Q3 of 2020, driven largely by investment in our clinical stage programs and our research pipeline. We expect our R and D investments will continue to be substantial as we advance our mid and late stage programs call, we will be conducting a few additional questions on our financial results and make

Speaker 1

further clinical and regulatory progress across the pipeline.

Speaker 4

Our continued growth in revenues combined with disciplined growth in OpEx call, translates to a year to date operating margin of 59%. And with our strong revenue and profitability, we ended the Q2 with $7,000,000,000 in cash. Now to guidance. Call, we are again revising our 2021 guidance upward for total product revenues in the range of $7,400,000,000 to $7,500,000,000 call, this increase reflects continued outperformance as well as the rapid uptake we have seen with new launches. Year over year, this guidance represents 20% growth call at the midpoint.

Speaker 4

As Stuart highlighted, the 6 to 11 launch in the U. S. And the uptake in France and Italy are proceeding very rapidly. Call, even with the outstanding growth in the number of patients treated this year, we have approximately 30,000 patients left to treat with our CFTR modulators. Given our proven track record of securing new reimbursement agreements in additional markets, executing successful launches call, we are confident that we will be able to reach the vast majority of these patients with our medicines.

Speaker 4

Call, we are maintaining our non GAAP OpEx guidance for full year 2021 at $2,250,000,000 to 2,300,000,000 and for our non GAAP tax rate, we continue to guide to a range of 21% to 22% this year. In conclusion, 2021 will be another year of rapid growth for Vertex and we are confident in our continued growth trajectory in CF call, our ability to lead in this therapeutic area over the long term. Trikafta is an exceptional medicine that sets a very high bar for efficacy and safety with IP that extends to the late 2030s. With the emerging profile of our next regimens beyond Trikafta, as well as the progress we are making in genetic therapies for CF, we are well on our way to fulfilling our vision for achieving carrier levels in all CF patients. Call, the VX-one hundred and twenty one tezacaftor VX-five sixty one regimen is the only regimen we have a clinical data that shows the potential to meet or exceed the performance of Trikafta and is years ahead of any other regimens in development.

Speaker 4

Our pipeline beyond CF is both advancing and delivering. Progress with CTX-one and more recently VX-eight eighty call, continues to demonstrate the value we can create by investing in external innovation. We look forward to sharing additional data with you as ongoing trials come to completion in the coming months. We anticipate Phase 2 data for VX147 in APOL1 mediated FSGS call, and Phase 2 data for VX-five forty eight in acute pain in the near term. With growing revenues call and margins at the top of our peer group, we will deliver strong cash flows as we continue to reinvest in internal and external innovation to drive future growth.

Speaker 4

Call, we are confident that the execution of our business strategy will continue to drive exceptional results for patients and the medical community as well as for our shareholders. We will now open up the call to questions.

Speaker 5

Our first question comes from Salveen Richter with Goldman Sachs. Your line is open.

Speaker 6

Good afternoon. Thanks for taking my questions. 2 on the pipeline here. With regard to your collaboration with Moderna, I recognize that you're moving forward nicely with delivering mRNA via LNP. Could you just talk about where you stand with using mRNA to explore the use of gene editing in lung cells.

Speaker 6

And then secondly, on the Development plan in Type 1 diabetes, maybe you could touch base on the expanded collaboration with Arbor and how that fits into the outlook here?

Speaker 2

Yes. Hey Salveen, this is Reshma. Two questions in there. One about the mRNA program with Moderna And another question I think on Type 1 diabetes, but specifically with regard to our collaboration with Arbor call, and how we're thinking about the hypo immune cell program. Let me break it up into 2 parts and maybe I'll expand a little bit on Type 1 call, I'm excited about the recent breakthrough we made and that I shared in my prepared remarks on the mRNA program for the last 10% Patients with CF who simply don't make any CFTR protein, right?

Speaker 2

And when you step back and think about what call, you really need to do to make a breakthrough here. It's really about 3 things. It's about the HBE cells. It's about the mRNA construct itself and then for sure it's about delivery. And it's this last one delivery that's been a vexing problem for us call, the field as a whole and that's really the exciting news for today.

Speaker 2

With regard to the HBE cells, these have been the work course for the 4 medicines that we have brought forward already. And I say that because they are the only model that translates from the bench to the bedside, right? And it's not only qualitatively so, but quantitatively so. And it's these HBE cells that have also been the workhorse for the program with Moderna. The second is the mRNA construct itself.

Speaker 2

And a number of years ago, we have struck up a partnership with Moderna, arguably the best company in the space of mRNA. And in all honesty, we have for some time been able to express full length CFTR mRNA, the protein and demonstrate its functionality. We've been able to do all that in vitro in HBE. But over the last several months, what we have now been able to do is demonstrate that we can deliver using nebulized LNPs To the appropriate cells, so that is to say to bronchial epithelial cells and we've done this in small animals and large And we can see that we've delivered them to deliver the mRNA construct to the bronchial epithelial cells. No one else has claimed to do this and certainly no one else has been able to do this.

Speaker 2

So that's the big advancement that allows us to go and start, our GLP, enabling studies, those are already underway and I do expect the IND to go in next year. On Type 1 diabetes, Salveen, There are the cells themselves and then there are the mechanisms to cloak the cells, Right. In the first program with VX-eight eighty, we used simple off the shelf pharmacologic immunosuppressants. In the second program, it's cells plus device. Those IND studies are already underway IND next year.

Speaker 2

The 3rd program is using these same cells and for the cloaking we use our plan to use Gene editing, for example, to make hypo immune cells. I'm going to ask Bassiano to comment just a little bit more on the hypo immune program. Bassiano?

Speaker 7

Absolutely. Thanks Reshma and thanks for the question. So like Reshma said, the product is actually the cells, the fully differentiated allogeneic beta cells. Ateens cells to cloak them from the immune system is a complex scientific challenge in general, specific to type 1 diabetes is a present, are even more complicated because call, Type 1 diabetes is an autoimmune disease. So we have to cloak the cells from the general allogeneic response, but also from the autoimmunity.

Speaker 7

And of course, it's fairly obvious that allogeneic rejection is something that has been worked on the past, I would say, 2 decades. And of course, knocking out MHC Class call, I'll turn it back to you.

Speaker 1

Thank you. Thank you. Thank you. Thank you. Thank you.

Speaker 1

Thank you. Thank you. Thank you. Thank you.

Speaker 7

Thank you. Thank you. Thank you. Thank you. Thank you.

Speaker 7

Thank you. Thank you. Thank you. Thank you. Thank you.

Speaker 7

Thank you. Call, we will take care of both types of immunity, the allogeneic rejection and the autoimmunity.

Speaker 6

Great. Thank you.

Speaker 5

Our next question comes from Michael Yee with Jefferies. Your line is open.

Speaker 8

Hi, good morning. Good afternoon. I had two questions. It's been a long day. One is actually the announcement this quarter that you had moved your new CF program into Phase 3.

Speaker 8

And I would like for you to comment about it in the context of how much clear differentiation you're confident it is from Trikafta, but also in the context of the fact that everybody knows there's a competitor with data coming and how we should interpret that in the context of your data that you put out in the press release and How differentiated they could be. The second question is more a question around the fact that you had commented about M and A earlier this year, in fact Reshma had commented even about areas like Huntington's. And I just wanted you to refresh that view in the fact that you haven't really commented about that so much like you did earlier to share in recent prior quarters. Thank you.

Speaker 2

Sure. Hey, Michael, good afternoon. Let's question first and then I'll come to capital allocation and M and A. So we have obviously established ourselves as a leader in CF over the last decade plus. And over the recent few years, we've expanded that leadership first with Trikaftor that can serve up to 90% of people with CF.

Speaker 2

And then with the specific program that you're asking about VX-one hundred and twenty one-five sixty one-ten thousand six hundred and twelve, which pre clinically in these HPE cells that RA model that translates from bench to bedside have demonstrated the potential to have even better efficacy than Trikafta And in the clinical program from the Phase 2 results that we shared earlier in the year where it looks that X1 test has the ability to provide even more benefit than Trikafta. Now make no mistake about it, Trikafta sets an incredibly high bar. It's an extraordinary medicine with a very high benefit risk profile. But 121 frankly is the competitor to Trikafta. It's years ahead of anything else in the field.

Speaker 2

If I just stand back and look at this, Mike, we have the best medicine for CF today in the form of Trikafta. We have VBEST medicine for CF tomorrow in the form of 121-561-five sixty one tezacapter. Call, and as I look long term, when you really think about CF, a chronic disease, children are born with this disease, They're going to take medicine for a lifetime chronically. You're going to need long term data, the kind of data that Stuart talked about in his prepared remarks mortality, lung transplantation, rate of decline And to be clear, the only company that has the short term data and the long term data is Vertex. Call.

Speaker 2

With regard to capital allocation, Charlie, I'll ask you to comment on that one.

Speaker 4

Yes. Thanks, Krishna and Mike, thanks for the question. Listen, it's very clear to us that innovation is the greatest driver of value in this industry. And we have shown that in CF innovation that leads to transformative medicines for a serious disease creates tremendous value both for patients and for shareholders and we hope to do that in a number of other disease areas that are represented across our broad pipeline. So when it comes to capital allocation, our primary focus is on reinvestment in innovation, both internally and externally.

Speaker 4

You can see in the numbers, we've never invested more internally than we are today. And you can also see in the pipeline, the benefit of some of the smart external investments that we've made over the last couple of years. Call, I would call out CRISPR and Sema specifically, but there are many others. And so from a capital allocation standpoint, that reinvestment in innovation will continue to be the top priority. We've not commented specifically on types of deals because we're not looking for a certain type of deal.

Speaker 4

Call, we're looking for tools and technologies and assets that fit and are well aligned with our research strategy. And as we identify those, you can expect that we'll continue to be

Speaker 5

Our next question comes from Phil Nader with Cowen and Company. Your line is open.

Speaker 9

Good evening. Thanks for taking our questions. 2 from us, if that's okay. 1 commercial, 1 pipeline. On the commercial, the growth quarter over quarter was Pretty impressive.

Speaker 9

Could you give us some sense of where you think you are penetrating the 6 to 11 year olds in the U. S? And then those ex U. S. Markets that you highlighted like France, Italy and Canada, and whether the type of growth that we've seen this quarter could continue into future quarters?

Speaker 9

And then second on the pipeline in FSGS as the data approaches, we're just curious to hear your most recent thoughts on what would be proof of concept for the molecule and what gives you confidence to go from the narrow FSGS population to the broader APOL1 mediated kidney disease population

Speaker 2

Yes. Hey, good afternoon, Bill. I'm going to ask Stuart to comment on the question around CF and how we see growth and then I'll come back and tell you a little bit more about FSGS program. Stuart?

Speaker 3

Hey, Phil. Yes, thanks very much for the question. And yes, I'm enormously proud of our execution in this Q3 that led to the results that you commented on and led us to increasing our revenue guidance today. It's hard to comment specifically on kind of quarter on quarter what our growth rates going to be, but I'll give you a sense for where we are in our overall growth trajectory. As you said, we got the approval for the 6 to 11 year olds for Trikafta in June, so just prior to this quarter starting.

Speaker 3

We also secured new reimbursement agreements in important markets like Italy and France and also most recently in Canada and the launches there are underway. What I can tell you is that the level of enthusiasm for the 6 to 11 year old Trikafta here in the U. S. And overseas for Trikaftrio is exceptionally high in line with that we've seen in every other market where we've launched Trikafta, CaFtrio. So those launches are off to a strong start.

Speaker 3

Obviously, we're in the 1st few months of those launches. So looking ahead, what do I see? Despite the despite the fact that we've had really successful launches for Trikafta and CaFtrio, we're still actually only treating today about half of all the patients with CF who could benefit from our medicines overall, and specifically for CFTR modulators, there's about 30,000 patients we are yet to go in terms of patients who could benefit from our medicines. Now you might ask yourself, who are those patients? Well, those patients are patients in countries where we have reimbursement where we're early in the launch sequence, some of the markets I just described.

Speaker 3

They're in countries where we have regulatory approvals with most of the world now, but where we have yet to secure reimbursement agreements. And they're in younger age groups, obviously, 6 to 11 year olds outside the U. S. Side of the U. S, we don't yet have an approval and also we're going to be pursuing approvals for Tricapacap trio down to even younger age groups as we have done with KALYDECO And or Canby.

Speaker 3

So given our track record in securing approvals, getting reimbursement and successfully launching, I have no doubt that we're going to get to the vast majority of those 30,000 patients over the coming years and so I see substantial growth for our CF franchise between now and the middle of the next decade. And then as we announced today, we've also made great progress with our mRNA program, which has the prospect of developing question for the 10% of so patients who don't respond to CFTR modulators. So I think we've got substantial growth runway yet to go in CF. And Reshma, back to you.

Speaker 2

Still on the question of the VX-one hundred and forty seven program, Okay. So on that one, I have high confidence in the Phase 2 proof of concept study and I say that for really three reasons. The first is the human genetics for APOL1 mediated kidney disease are strong. In fact, they're very strong. People who have kidney disease, who have peutinuria, have 2 APOL1 alleles, They have universally poor outcomes and the target therefore is really exceptionally well validated.

Speaker 2

Call, the second is our in vitro and in vivo studies. We've done a portfolio of studies in vitro as call, as in animal studies, we find good potency, good selectivity and really strong reductions in proteinuria. And the third is that VX-one hundred and forty seven is all of the drug like properties that we seek. As a nephrologist, I find this opportunity really very exciting for the following reasons. So in Phase 2, we're studying APOL1 mediated FSGS, that is one kind of APOL1 mediated kidney disease.

Speaker 2

It's a very aggressive form of renal disease, about 10,000 people who have that. But APOL1 mediated proteinuric, let's say primary proteinary kidney disease, I know it's a mouthful, there's about 100,000 people who have that. And if the Phase 2 study is positive in FSGS, what that really tells you is that we have now for the first time Found a small molecule that interdicts on APOL1 and can potentially Be a therapy for the broad FSGS, not only FSGS, but the broad AMKD market. So the full 100,000. And then with regard to what would we consider successful.

Speaker 2

Okay. So the Phase 2 study is in FSGS, right? And the entry criteria is such that it's a very severe population. It's APOL1 mediated FSGS With a high burden of proteinuria and we allow stable doses of standard of care therapy. So these patients are already on ACEs, ARBs immunosuppressive and steroids.

Speaker 2

So in that kind of patient population with an aggressive disease With high levels of proteinuria already in standard of care, double digit improvements in proteinuria, That would be impressive. Now of course, higher is better, but double digit improvements in proteinuria, that would not only be important, it would be something that we've not

Speaker 5

Our next question comes from Brian Abrahams with RBC Capital. Your line is open.

Speaker 10

Hey, guys. Congrats on the quarter and thanks for taking my questions. I

Speaker 1

would love to

Speaker 10

learn more about the mRNA program. And I guess I'm curious call, how translatable non human primate lungs are to human CF lungs, especially given the, I guess, the mucus layer. Do you have any sense of what the, I guess, the half life or the resident time in the lung would be in terms of what type of frequency of administration one might look at our general range and might you see any opportunity down the line for this to be usable perhaps in combination for the other 90% of patients who don't have nonsense mutations but with CF. Thanks.

Speaker 2

Hey, Brian, really important questions on the mRNA program and there's a few different questions in there. So let me parse it out. There's a question in there about the dose targeting it to the right cells and how translatable the model is. And then there's another question in there about how do we think about the 90%. Okay.

Speaker 2

So I'm going to be circumspect with my comments. The insights are commercially sensitive, but here's what I can tell you. We have been very, very diligent and deliberate about dose call, and making sure that the mRNA transcript and protein expression are in the right cells. I would say that in drug development in this area, that's the most important part that many others have not gotten right. And that's specifically why I talked about the HPE assays in vitro and the small and large animal studies and the targeting of the mRNA construct to the relevant cells, which are the bronchial epithelial cells.

Speaker 2

And I feel very good about the dose selection, question about the schedule of dosing and the targeting to the appropriate cells. Now with regard to the question About down the line, do we think this could be extended to the other 90%. I would actually look at it the other way. CS is a systemic disease. It's not only a lung disease.

Speaker 2

And so the real value of small molecule correction Of the CFTR protein is that you get systemic benefit. So in the setting of the last 10%, what I would contemplate is if our we are successful with our mRNA program when we're in the clinic next year, It's combining the mRNA with a small molecule. We're obviously the only ones who could do that and I think the opportunity to bring benefit to the last 10%

Speaker 5

Our next question comes from Robyn Karnauskas with Tuohy Securities. Your line is open.

Speaker 11

Great. Thanks for taking my question. So two quick ones. So for patients on TRYCAFD, you show that great data showing lung stability. In the real world, what percentage of the population would benefit from you think the new drugs that you're developing, meaning that their sweat Fluoride levels are below the normal range and you might be able to put them into that bucket.

Speaker 11

And second question I've had is for your device For diabetes, how does the device I know that you've talked about how getting the cells in, they go to the liver and then blood vessels form and that's how they interact with the liver To function, how does the device not only protect the cells from being attacked by the immune system, but also allow them to have interaction with blood vessels to work and function. So how does it work?

Speaker 2

So I

Speaker 11

was just wondering if it might not Be able to interact with the blood vessels because it's in a device. Thank you. Yes.

Speaker 2

There are 2 different questions in there, Robin. 1 about Type 1 diabetes and the device and then a separate question about How we think about VX-one hundred and twenty one-five sixty one test and maybe I'll expand that to the next next generation of CFTR modulators. Let's do CF first and then we'll let's do Type 1 diabetes next. So, Robin, you know this, the Trikaftrio medicine can treat up to 90% of people with CF, call, and it has really extraordinary efficacy. And what we see is that large numbers of patients, as you saw in the clinical trials program, call, get benefit in the double digit improvements in PPFEV1, significant improvements in sweat chloride, in weight, in quality of life.

Speaker 2

Now what we are trying to do in our long term goal is to get all CF patients to carrier levels of sweat chloride. And the reason we want to do that is because caries really manifest almost no disease. And what I can tell you is 121561 test in our preclinical experiments in these HBE cells that have this quantitative and quantitative relationship to what we see in the clinic, The 121TEZ-five sixty one has the potential to be even better than Trikafta in that dimension, but we've we already identified another generation of molecules that in our HBE assays look like they're going to get us to that ultimate goal of getting all patients with CF to 90% to carrier levels. With regard to the device program, I'll ask Bassiano to comment. But here's the important thumbnail sketch of the field and what the real breakthrough that we have made.

Speaker 2

The problem with device Historically, has been foreign body reactions or fibrosis and the second challenge with devices has been Both of those challenges are what we tackled with our program and what we we do not see with our device. So what we do not see is fibrosis or foreign body reaction and what we do see is really excellent vascularization. I'll ask Bassiano to comment about the materials and the geometry and the configuration of the device that allows us to have call, the kind of effects that we have. Paciano?

Speaker 7

Thanks, Reshma. And Robin, I just want to maybe start with Making clear that this is a completely novel device that is made with different materials, different geometry, different configuration from everything else that has been described by others in the field. It was specifically designed, last name design to exactly address the causes of failure in the field of encapsulation like Reshma said, which is for embolic response And vascularization is called channel re device for that particular reason. It's purposely designed to really minimize fibrosis And to allow the device to integrate in the body, allow vascular beds to form throughout the device On top and the bottom, so the cells are always optimally distanced to a source of oxygen and nutrients, allowing for insulin and glucose, of course, to be exchanged. This is completely different from what we think that was in the field, and we have evidence in our preclinical models that we do not see further by the response, we see robust neovascularization, we see rapid insulin responsiveness and immuno protection even in immunocompetent animals.

Speaker 11

Great. Thank you.

Speaker 5

Our next question comes from Liisa Bayko with Evercore ISI, your line is open.

Speaker 6

Hi, thanks for taking the question. I wanted to ask about CTX001. So when you file at the end of next year, can you talk about sort of how much data and follow-up data you'll have on how many patients? And then I also want to ask, just a commercial question as you're doing, a lot of your commercial prep. Can you maybe describe like what the how many patients per year can be treated in the In kind of given that hospital environment and all that kind of stuff.

Speaker 6

So how should we think about kind of what at time of launch, What that will look like and then how that may evolve over time? Thank you.

Speaker 2

Lisa, I think you're asking about how we see commercial launch for CTX001.

Speaker 6

Yes. I kind of wanted to know like what the throughput of patients like capacity wise Is there some upper limit on that that we should think about as we think about the population is quite a big population in Yes. But I'm trying to understand what the capacity is in the United States at least. And how you think that may evolve over time, but From the onset, what that would look like?

Speaker 2

Yes. Yes, sure thing. Let me ask Stuart to comment on how we see the CTX-one launch And the launch dynamics, taking into account questions specifically about whether there are capacity constraints and such. And I'll come back and tell you a little bit more about how we see the filing. Stuart?

Speaker 3

Yes. Thanks, Lisa, for the question. So, let me start at the highest level with the overall opportunity and then I'll get to your question about the Kind of launch dynamics or our views on them at this kind of early stage. So in terms of people who have severe sickle cell disease and beta thalassemia between the U. S.

Speaker 3

And the EU, we think there's about 32,000. We estimate patients who have Severe disease in both of those in the combined populations of sickle cell and beta thalassemia. In sickle cell, it's about 25,000 and because of the nature of the disease, the vast majority of those are in the United States. And that number is kind of validated by external physician surveys, which would indicate that they think they would treat between 25% and a third of all of their sickle cell disease patients with a one time curative approach with the existing conditioning regimens. So we think that's about the order of magnitude of patients who might be eligible for this initial phase of a gene editing curative treatment.

Speaker 3

In terms of launch dynamics, it's really going to be a function of probably four things. The first one is sort of physician and patient interest in the technology and based on the results call, we've seen to date and enthusiasm we've seen in the field, particularly as it translates into interest in our clinical trials. We expect the enthusiasm from the community to be high. Share, and as you can imagine, we're working diligently on our manufacturing processes to make sure that we have capacity to treat patients, but the bottleneck is likely to be in treatment centers. And as you know, the treatment is going to be administered in transplant centers, there's a limited number of those in the U.

Speaker 3

S. And they also have competing priorities with malignant hematology conditions. And so that is likely to be the rate limiting step. We're obviously in the initial throes of evaluating those treatment centers and working with them. Again, we do think that enthusiasm to treat these patients is going to be high given the very significant unmet need in sickle cell disease and thalassemia and the

Speaker 1

outstanding results we've seen to date.

Speaker 3

So without commenting specifically, outstanding results we've seen to date. So without commenting specifically because I wouldn't know the exact answer to that at this early stage, Lisa, those are likely to be some of the pinch points as it were in terms of the launch dynamics. What I can tell you though is we are expecting demand to be very, very substantial amongst those 32,000 patients given the unmet need and the results we've seen.

Speaker 1

Call, please

Speaker 2

go ahead. On the question on where are we with our filing and how are we thinking about The size, the dataset size, I'll just step back for one moment to remind that We have had the benefit of having virtually every regulatory designation known both here and in the EU with RMAT and Orphan and Prime. That's allowed us to have a number of engagements with the agency and to be able to address a number of their questions. We're really at the tail end of those conversations and the 2 areas on which we're wrapping up our discussions are 1, What is the sample size that is that they will require? And 2, what's the duration of follow-up?

Speaker 2

I expect we're going to finish those discussions in the next couple of months. And I do expect that the filing will go in towards the tail end of next year.

Speaker 6

Okay. Thanks.

Speaker 1

Operator, we'll take 2 more questions.

Speaker 5

Okay. Our next question comes from Cory Kasimov of JPMorgan. Your line is open.

Speaker 1

Hey, thanks. Good afternoon, guys. I wanted to follow-up as well on CTX001. And just to piggyback on the filing, I recognize we should get more clarity in the coming months. But can you talk about we should get more clarity in the coming months, but can you talk about your comfort level on the regulatory front when it comes call to addressing any CMC requirements, we see frequently see delays there with regards to cell and gene therapies.

Speaker 1

And then also you speak about the 32,000 patients between the U. S. And Europe. Wanted to ask about your comfort level with Europe as we recently saw Bluebird back out of that market with lenti globin for beta thal based on the fact They couldn't come to agreements on pricing. So your comfort level that you can get around this.

Speaker 1

Thank you.

Speaker 2

Hey, Corinne, let me start with telling you a little bit more about the regulatory process and comment a little bit more stream, which is your specific question, and then I'll ask Stuart to comment on Europe. Obviously, we are we have the opportunity, Not only in Europe, but we have opportunities certainly including Europe to lead from the front with our CTX-three zero one for both Beta thalassemia and sickle disease. Okay. So quick on the regulatory filing, Because of these designations, we had really had a benefit of multiple conversations with the agency. And call, as I said earlier, I've been able to address most of their questions and we're really now wrapping up conversations around 2 clinical points, which is How big is the database and what's the duration of follow-up?

Speaker 2

On the manufacturing side, We are using the same processes and actually the same sites as we did for the clinical trials for the commercial product. And in the grand scheme of things, when you think about what we are doing with CTX001, it's ex vivo gene editing. And really it's the Cas enzyme and the guide RNA. And in the grand scheme of things, that's just simply an easier Manufacturing situation than other manufacturing challenges. So I feel very good about our conversations with the agency.

Speaker 2

We've been able to derisk by addressing their questions along the way, And we are using the same processes in the same sites that we used in the clinical trials for the commercial product. Stuart, a couple of comments maybe from you about Europe and CTX-one.

Speaker 3

Yes, Corey, thanks for the question. I feel very confident in the team that we have on the ground in Europe and their ability to call, reimbursement and access for patients who have rare diseases for transformative medicines like this. I think they've got a demonstrated capability to capture and describe the unmet need in these types of conditions to gather and generate evidence on the both economic and clinical benefits of our medicines translate those into value propositions, which make sense to payers and then work creatively with payers to develop bespoke solutions country by country to secure reimbursement and access for our medicines. I think we've demonstrated that we have very, very successfully in CF and I'm looking forward to us being able to use those same capabilities to get access for patients with sickle cell disease and beta thalassemia in Europe.

Speaker 1

Great. Thank you, guys.

Speaker 5

Our next question comes from Geoff Meacham with Bank of America. Your line is open.

Speaker 12

Hi, guys. This is Olivia Breyer on for Jeff. Thanks for the questions. I've got two follow ups on the next gen triplet program. Can you give us a better sense for when we might start to see those Phase 3 data now that both of those trials are up and running?

Speaker 12

And whether there could be an opportunity for an earlier look at 1 or maybe both of those trials as we get into next year. And then I know you guys have talked about moving forward even more Gen triplets at some point. So are there specific areas where you're maybe more focused on when you think about the optimization Or differentiation of those newer assets. And just as a follow-up to that, could there be some potential ways to accelerate development timelines Once those agents move into the clinic.

Speaker 2

Yes. Hey, good afternoon. With regard to your questions, which really center around the next wave, whether it's 12156 1tezacaftor, which is already in the clinic in Phase III clinical trials or the molecules that we've identified In San Diego that are going to be coming into the clinic, how are we thinking about this? How quickly can we go? What's the overall goal?

Speaker 2

So To be clear, the goal here is to bring all patients with cystic fibrosis to carrier levels of sweat chloride. That is our long stated goal and that is what we are aiming for. And I feel really good about where we are with 1215 OneTEZ based on the preclinical results that I shared and the Phase 2 results that we shared earlier this year. And the next wave of molecules look Like they can be even better. So we are well on our path to bringing forward therapies that can bring all CF patients Two carrier levels of sweat chloride.

Speaker 2

With regard to speed and how fast can we go, right, I don't think that call, anybody can go faster than us in cystic fibrosis for a couple of reasons. One, we've already demonstrated that we can do this Very quickly, in Trikafta, we went from the bench, so first synthesis of the molecule to U. S. Approval in less call, it's been 4 years. Outside of oncology, it's one of the fastest drug development programs ever.

Speaker 2

The second reason I say that, we do this really fast is we have a lot of experience in this, right? We've already done it with 4 medicines on the market, the 5th one being 121, which has 561. And with regard to when should we expect results in such, remember the trials for Tri Kasta, we enrolled in about 6 months. So that's a benchmark for the last set of clinical trials we did. Call, I expect us to continue to use the what we know and our experience to move fast with 121-561 test call, and the molecules behind that.

Speaker 12

Okay, great. Thanks so much.

Speaker 1

Thank you all for tuning into the call tonight. If you have additional questions, please reach out to the Investor Relations team. We are in the office tonight and happy to follow-up. Have a good evening.

Speaker 5

This does conclude the program. You may now disconnect.

Powered by Quartr
Earnings Conference Call
Vertex Pharmaceuticals Q3 2021
00:00 / 00:00