Q1 2020 Earnings Call

Good evening welcome to the vertex first quarter 2020 financial results Conference call. This is Michael Partridge, Senior Vice President of Investor Relations.

Geoffrey Christopher Meacham: Good evening. Welcome to the Vertex First Quarter 2020 financial results conference call. This is Michael Partridge, Senior Vice President of Investor Relations for Vertex. Making prepared remarks on the call tonight are Dr. Reshma Kewalramani, Vertex's CEO and President; Stuart Arbuckle, Chief Commercial Officer; and Charlie Wagner, Chief Financial Officer.

For vertex.

Making prepared remarks on the call Tonight, we have Dr. <unk> money, Vertexs, CEO and President Stuart Arbuckle, Chief Commercial Officer, and Charlie Wagner Chief Financial Officer.

Unknown Executive: We recommend that you access the webcast slides on our website as you listen to this call. This conference 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 our filings with the Securities and Exchange Commission. These statements, including without limitation those regarding Vertex's marketed CF medicines, our pipeline, and Vertex's future financial performance, are based on management's current assumptions. However, actual outcomes and events could differ materially. I will now turn the call over to Dr. Reshma Kewalramani.

We recommend that you access the webcast slides on our website as you listen to this call. This conference call is being recorded at 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 our filings with the Securities and Exchange Commission. These statements, including without limitation those regarding Vertexs markets, you have medicines, our pipeline and Vertexs future financial performance are based on managements current assumptions.

Actual outcomes and events could differ materially.

I will now turn the call over to Dr. based Mckay while their money.

Thanks, Michael It is an honor as Vertexs, new CEO and President to welcome you to this conference call.

Reshma Kewalramani: Thanks, Michael. It is an honor, as Vertex's new CEO and President, to welcome you to this conference call. The COVID-19 pandemic has been a significant challenge for people around the world. These are tough times.

The cobot 19 pandemic has been a significant challenge for people around the world.

These are tough times, we know and we see the lives of people in every country around the world has been disrupted.

Reshma Kewalramani: We know and we see that the lives of people in every country around the world have been disrupted. We grieve with those who have lost loved ones, and we salute the heroic work being done by those on the front lines of fighting the pandemic. Acknowledging that this is a difficult time for everyone, I want to begin by telling you why we believe that, despite the pandemic, the future of Vertex remains brighter than ever. In many ways, Vertex is a unique company. A company with a proven track record as a serial innovator with four approved CF medicines, including Trikafta, a medicine we believe can treat up to 90% of CF patients around the world with high efficacy. A company with a broad clinical and late preclinical stage pipeline using multiple modalities to treat and potentially cure serious diseases outside of CF. A company with current and future top and bottom line growth and a strong balance sheet.

We agreed with those who have lost loved ones and we salute the heroic work being done by that wasn't the frontline fighting the pandemic.

Acknowledging that this is a difficult time for everyone.

Want to begin by telling you why we believe that despite the pandemic the future vertex remains brighter than ever.

In many ways vertex is a unique company.

The company with a proven track record as a serial innovator with four approved CF medicines, including try CAFTA in medicine, we believe can treat up to 90% of CF patients around the world with high efficacy.

A company with a broad clinical.

And late preclinical stage pipeline using multiple modalities to treat and potentially cure serious diseases outside of Seattle.

It company with current and future top and bottom line growth and a strong balance sheet.

Reshma Kewalramani: And finally, a company with an extraordinarily talented senior leadership team and a diverse, inclusive workforce. In short, exactly the kind of company I want to be a part of going forward. At my core, I am a physician-scientist driven by a deep passion to advance science and medicine in the interest of patients.

And finally, a company with an extraordinarily talented senior leadership team and a diverse inclusive workforce.

In short exactly the kind of company I want to be part of going forward.

At my core Imus physician scientists driven by deep passion to advanced science in medicine in the interest to patients.

Reshma Kewalramani: Since joining Vertex, I have witnessed the ingenuity and drive that have enabled this company to tackle unprecedented challenges in discovery, development, and commercialization of new medicines. For example, our rapid advancement of our triple combination program through research and development and early approval in the U.S. Today, the majority of eligible patients in the U.S. are already on Trikafta. It's hard to believe, but true, that the original PDUFA date for Trikafta was March 20, 2020.

Joining vertex I witnessed the ingenuity and drive that have enabled this company to tackle unprecedented challenges in discovery development and commercialization of new medicines. For example, a rapid advancement of our Triple combination program through research and development and the early approval in.

The U.S.

Today, the majority of eligible patients in the U.S. are already on try CAFTA.

It's hard to believe but true, but the original PDUFA date for try CAFTA was March 20th 2020.

Reshma Kewalramani: Another example is pioneering the use of CRISPR gene editing with our partners at CRISPR Therapeutics to potentially cure diseases like sickle cell and beta thalassemia. I am humbled to have the opportunity to follow Geoff in leading this unique company. Now on to our Q1 performance. Vertex's business, as demonstrated in our record first quarter financial results announced today, is stronger than ever. Our Q1 CF product revenues compared to last year are up 77% to $1.52 billion, driven by the highly successful launch of Trikafta in the U.S. and the growth of Orkambi and Simkevi outside the U.S. Our non-GAAP operating income rose 133% to $877 million. Our strategy is working, and we continue to grow our revenues and earnings while also investing significantly in innovation. As we look to the future, we are confident in the continued growth of our CF franchise for several reasons. First, our CF medicines are changing the lives of the patient populations they serve. And by addressing the underlying cause of the disease, they are an important part of patients' efforts to remain as healthy as possible.

Another example is pioneering the use of CRISPR gene editing with our partners a CRISPR therapeutics to potentially cure diseases like sickle cell I'm beta thalassemia.

Hi, I'm humbled to have the opportunity to follow Jeff in leading this unique company.

Now onto our Q1 performance Vertexs business as demonstrated in our record first quarter financial results announced today is stronger than ever.

Our Q1 see of product revenues compared to last year are up 77% to 1.52 billion.

Driven by the highly successful launch of try kaftan the U.S.

And the growth of ORKAMBI and some kabi outside the U.S.

Our non-GAAP operating income rose, 133% to 877 million.

Our strategy is working and we continue to grow our revenues and earnings while also investing significantly in innovation.

As we look to the future. We're confident the continued growth of I see a franchise for several reasons first our CF medicines are changing the lives of the patient populations they serve and by addressing the underlying cause of disease. They are an important part of patients efforts to remain as healthy as possible.

Reshma Kewalramani: Second, our supply chain to manufacture and distribute our medicines is robust, and we remain confident in our ability to continue to supply our medicines uninterrupted to CF patients around the world for the long term. Finally, while the course of the pandemic is unpredictable, we retain a clear line of sight to securing approval and launching the triple combination regimen in more countries around the world and in younger age groups and sustaining our CF leadership well into the next decade. Our vision has been for Trikafta to be able to treat 90% of all CF patients, and that vision remains very much intact. Given the strong performance of our CF products in Q1, we are raising our revenue guidance for the year to a range of $5.3 to $5.6 billion.

Second our supply chain to manufacture and distribute our medicines is robust and we remain confident in our ability to continue to supplier medicine on interrupted to CF patients around the world for the long term.

Finally, while the course of the pandemic is unpredictable we retain a clear line of sight to securing approval and launching the triple combination regimen in more countries around the world Andy younger age groups and sustaining our CFO leadership well into the next decade.

Our vision has been for truck CAFTA to be able to treat 90% of all CF patients and that vision remains very much intact.

Given the strong performance of our CF products in Q1, we are raising our revenue guidance for the year to a range of 5.3 to 5.6 billion.

Reshma Kewalramani: Stuart and Charlie will review the factors underlying our new guidance in a few moments. Let me now turn to our pipeline and discuss how we are taking specific actions to continue to progress our clinical programs while protecting patients and healthcare providers. As you will see, each program is somewhat unique and different.

Stuart and Charlie will review the factors underlying our new guidance in a few moments.

Let me now turn to our pipeline and discuss how we're taking specific actions to continue to progress our clinical programs, while protecting patients and health care providers as you will see each program is somewhat unique and different.

Reshma Kewalramani: First, our regulatory and development teams have been working diligently to stay on track with our submissions to regulators and to adapt our ongoing clinical studies as needed to ensure that they can be completed successfully. We continue to make progress in our ongoing CF trials. For example, our CF regulatory team completed the submission of the SNDA in the US, as well as a type 2 variation to the EMA in Europe for Kalydeco for infants with CF down to four months of age. Similarly, we have been able to progress our FSGS program. Our clinical team for our APOL1-mediated kidney diseases program has been able, in the past few weeks, to initiate our phase 2 study of VX147 in APOL1-mediated FSGS, and we now have 13 sites open.

First our regulatory development teams have been working diligently to stay on track with our submissions to regulators and to adapt our ongoing clinical studies as needed to ensure that they can be completed successfully.

We continue to make progress in our ongoing see of trials for example, I see of regulatory team completed the submission of the San Diego the U.S.

As well as a type two variation to the email in Europe for Kalydeco for infants with CF down to four months of age.

Similarly, we've been able to progress RFS G.S. program, our clinical team for our April one mediated kidney diseases program I've been able in the past few weeks to initiate our phase two study a VX one for seven in April one mediated Fs, yes, and we now have 13 sites open.

On the other hand, we have recently temporarily paused enrollment or treatment in some ongoing clinical studies, including the phase two study a VX eight one for you know a T program.

Reshma Kewalramani: On the other hand, we have recently temporarily paused enrollment or treatment in some ongoing clinical studies, including the Phase II study of VX814 in our AAT program. Every program and every clinical study is different, and we have analyzed each situation closely and have made decisions based on the need to keep patients safe and to respect the need to preserve the resources of the health care system for where they are needed most. In addition to our clinical progress, we are working to maintain momentum in our late-stage pre-clinical programs so that we can move forward, when it is possible to do so, into first-in-human studies. Though we have reduced the on-site occupancy at our sites to protect employees and our facilities, our research labs have stayed open, and we have prioritized activities that are IND-enabling for our next medicines entering development.

Every program and every clinical study is different and we've analyzed each situation closely and it made decisions based on the need to keep patient safe and two respects the need to preserve the resources of the health care system for where they are needed most.

In addition to our clinical progress we're working to maintain momentum in our late stage preclinical programs. So that we can move forward when it is possible to do so into first in human studies.

No we've reduced the onsite occupancy at our sites to protect employees and our facilities. Our research labs have stayed open and we have prioritized activities that are I in d., enabling for our next medicines entering development.

Reshma Kewalramani: This includes our cell therapy program for type 1 diabetes, where we continue to have a goal of starting clinical development in patients in late 2020 or early 2021. We are also continuing to progress our business development strategy and investing in external innovation. This week, we announced a new collaboration with Affinia Therapeutics. This collaboration supports the discovery and development of novel AAV capsids for the in vivo delivery of genetic therapies in a number of disease areas.

This includes our cell therapy program for type one diabetes, where we continue to have a goal starting clinical development in patients in late 2020 or early 2021.

We're also continuing to progress our business development strategy and investing in external innovation.

This week, we announced the new collaboration with Affinia Therapeutics.

This collaboration supports the discovery and development of novel Avi Capsids for Nvvault delivery of genetic therapies in a number of disease areas.

Reshma Kewalramani: We're pleased to bring this capability into the cell and gene therapy toolbox that we are building. Finally, despite the pandemic, we continue to grow our senior leadership team with several important new hires and promotions in Q1. The first is Dr. Carmen Bozic, who was promoted to Chief Medical Officer earlier this month. She now has responsibility for clinical development, medical affairs, drug safety, global clinical operations, biometrics, and other related functions. Carmen has extensive experience in clinical drug development and joined Vertex in 2019 from Biogen, where she oversaw the development and regulatory approval of nine important medicines, including Tecfidera and Spinraza. The second is Dr. Bassiano Sanna, who joined Vertex when we acquired SEMA in 2019, where he was CEO. We have expanded Bassiano's role, and he is Chief of Cell and Genetic Therapies at Vertex.

We're pleased to bring this capability into the selling gene therapy to box that we are building.

Finally, despite the pandemic, we continue to grow our senior leadership team with several important new hires and promotions in Q1.

The first is Dr. Carmen Bozak, who was promoted to Chief Medical Officer earlier. This month Carmen now has responsibility for clinical development Medical Affairs drug safety Global clinical operations biometrics and other related functions Carmen has extensive experience in clinical drug development and join vertex in Htwo.

He 19 from Biogen, where she oversaw the development and regulatory approval of nine important medicines, including tech for Dara and Spinraza.

The second is Dr. basi, Ana Sino who joined vertex when we acquired summer in 2019, where he was CEO.

We have expanded basi honors role and he's chief of cell and genetic therapies at vertex.

Reshma Kewalramani: In this new role, Bastiano now leads all of our gene editing, gene therapy, and cell therapy programs, as well as related technologies for sickle cell disease, beta thalassemia, DMD, type 1 diabetes, and others. Bastiano has extensive experience and expertise in cell and genetic therapies from prior roles at Magenta and Novartis, and I am confident that his skill set will enable us to build capabilities at Vertex that are second to none. I am absolutely delighted to have Carmen and Bastiano on the team. In summary, this extraordinary moment in time in which we find ourselves right now will pass. We will all get through this together. Despite these unusual circumstances, Vertex is well-positioned to continue to serve our CF patients, grow revenues and earnings, and advance our pipeline of transformative medicines in disease areas beyond CF. Let me turn it over to Stuart.

In this new role. He now leads all of our gene editing gene therapy and cell therapy programs as well as related technologies for sickle cell disease beta thalassemia, DMD type, one diabetes and others.

Lastly, I know has extensive experience and expertise in selling genetic therapies from prior roles at magenta and Novartis and I'm confident that his skill set will enable us to build capabilities at vertex that are second to none.

I'm, absolutely delighted that Carmen and Basi I know on the team.

In summary, this extraordinary moment in time in which we find ourselves right now we'll pass.

We will all gets flu this together.

Despite these unusual circumstances vertex is well positioned to continue to serve our CF patients grow revenues and earnings and advance our pipeline of transformative medicines in disease areas beyond CF.

Let me turn it over to Stewart.

Thanks restaurant.

Stuart A. Arbuckle: Thanks Reshma. I am pleased to review with you this evening our continued strong commercial performance in the first quarter of 2020. I am very proud of our commercial supply, market access, patient support, marketing, and field teams who were fully prepared for the early approval of Trikafta in the U.S. And we also want to recognize the remarkable job that CF centers and healthcare professionals have done to respond to both the approval and the high level of patient interest in starting the medicine. Our teams have executed what is, by every measure, a very rapid and successful U.S. launch of Tri Approved in October 2019, five months ahead of its PDUFA date, Trikafta has been widely adopted. We have seen strong demand across all groups of patients eligible for TRIKAF, and it is now being taken by the majority of the 18,000 eligible patients in the U.S. Total CF product revenues for Q1 2020 were $1.52 billion. And in its first full quarter, Trikafta accounted for $895 million of those revenues.

I'm pleased to review with you. This evening continued strong commercial performance in the first quarter of Twentytwenty.

I'm very proud of all commercial supply market access patient support marketing and field teams, who were fully prepared for the early approval of try catheter in the U.S. and.

We also want to recognize the remarkable job CF centers and health care professionals have done to respond to both the approval and the high level of patient interest in starting the mats.

Our teams have executed what is by every measure a very rapid and successful U.S. launch of try CAFTA.

CF patients 12 years, an older with at least one at five await del mutation.

Approved in October 2019, five months ahead of its PDUFA date try CAFTA has been widely adopted.

We have seen strong demand across all groups of patients eligible for try CAFTA and it is now being taken by the majority of the 18000 eligible patients in the U.S.

Total CF product revenues for Q1, 20 $21.52 billion and in its first full quarter try caster accounted for 895 million of those revenues.

This was due in large part to more rapid than expected adoption of try CAFTA in all eligible patient groups in the U.S.

Stuart A. Arbuckle: This was due in large part to more rapid than expected adoption of Trikafta in all eligible patient groups in the U.S. Geographically, for our CF product portfolio, we recorded approximately $1.19 billion in revenues in the U.S., and $328 million outside the U.S. Growth outside the US was driven by strong patient uptake of Orkambi and Simkevi following the completion of multiple reimbursement agreements in late 2019. In most countries outside the U.S. where our medicines are reimbursed, the majority of eligible patients have now initiated treatment. Based on our strong Q1 revenue performance, we have raised our revenue guidance for the year, as Reshma mentioned.

Geographically for our CF product portfolio, we recorded approximately $1.19 billion in revenues in the U.S. and $328 million outside the U.S.

Growth outside the U.S. was driven by strong patient uptake of ORKAMBI and some Kathy following the completion of multiple reimbursement agreements in late 2019.

In most countries outside the U.S., where our medicines are reimbursed the majority of eligible patients have now initiated treatment.

Based on our strong Q1 revenue performance, we have raised our revenue guidance for the year as rational I mentioned.

Stuart A. Arbuckle: The new guidance and range takes into account both the rapid uptake of TRIKAFTA we have seen since October 2019 as well as additional dynamics that we either saw during Q1 or that we anticipate as we move through the year. First, we did see some benefit in Q1 from early prescription refills by patients both in the U.S. and outside the U.S., as well as advance buying from some government payers outside the U.S. Second, while there are still new patients starting TRIKAFTA treatment, the pace of initial enrollment has slowed.

The new guidance and range. It takes into account both the rapid uptake of try CAFTA, we've seen since October 2019.

Well as additional dynamics that we either sold during Q1, all that we anticipate as we move through the year.

First we did see some benefit in Q1 from early prescription refills by patients, but in the U.S. and outside the U.S.

As well as advanced buying from some government pay is outside the U.S.

Second while there are still new patient starting to like after treatment the pace of initiation has slowed.

A high percentage of currently eligible patients already on track after in the U.S. and so we have reached the flatter part of the uptake.

Stuart A. Arbuckle: A high percentage of currently eligible patients are already on Trikafta in the US, and so we have reached the flatter part of the uptake curve. Additionally, COVID-19 has resulted in some CF centers limiting their non-emergency interactions, and this could impact the rate of future initiation. Third, given that we have only just completed the first full quarter of the TRIKAFTA launch, we know that we have yet to see the full impact of persistence and compliance rates on the ongoing utilization of this medicine. As with all of our medicines, the revenue impact of persistence and compliance does not become fully reflected until several quarters after launch. Looking ahead, the focus of our efforts to serve patients is twofold. First, ensuring that we can continue to meet the strong demand for our medicines with uninterrupted supply.

Additionally, cobot 19 has resulted in some CF centers limiting their non emergency interactions.

It could impact the rate of future initiation.

Hi, good given that we have only just completed the first full quarter of the try CAFTA launch we know that we have yet to see the full impact of persistence and compliance rates on the ongoing utilization of this medicine.

As with all of our medicines the revenue impact of persistence and compliance does not become fully reflected until several quarters after launch.

Looking ahead, the focus of our efforts to serve patience is twofold.

First ensuring that we can continue to meet the strong demand for all medicines with uninterrupted supply.

Our team as closely analyzed our existing supply chain and his work during the emergence of the pandemic to ensure that there was no change in our ability to provide medicines to patients.

Our manufacturing facilities have remained fully operational and we have continued to produce new supply avast CF medicines.

We are confident that this will remain the case moving forward.

Stuart A. Arbuckle: Our team has closely analyzed our existing supply chain and has worked during the emergence of the pandemic to ensure that there was no change in our ability to provide medicines to patients. Our manufacturing facilities have remained fully operational, and we have continued to produce new supplies of our CF meds. We are confident that this will remain the case moving forward.

Second we are progressing with urgency to expand the number of patients eligible for and able to access our CF medicines.

We anticipate several important milestones in the coming 12 months, which are expected to drive access to our CFO <unk> portfolio for even more patients.

The M&A for the Alexa CAFTA Triple combination is filed an under review with the European Medicines Agency.

Stuart A. Arbuckle: Second, we are progressing with urgency to expand the number of patients eligible for and able to access our CF medicine. We anticipate several important milestones in the coming 12 months which are expected to drive access to our CF portfolio for even more patients. The MAA for the Alexacafta triple combination is filed and under review with the European Medicines Agency. Approval by EMA would significantly increase the number of patients eligible for the triple combination and enable us to begin reimbursement discussions across many European countries, as well as provide rapid access in some countries where we have a portfolio agreement. We have also now submitted the Alexacafda triple combination for approval in Switzerland and Australia. In Switzerland, we have just entered a portfolio reimbursement agreement for both Symdeco and Orkambi, and we look forward to treating more CF patients there.

Approval by email would significantly increase the number of patients eligible for the triple combination and enable us to begin reimbursement discussions across many European countries as well as provide rapid access in some countries, where we have a portfolio agreement.

We have also now submitted the Alexa CAFTA triple combination for approval in Switzerland, and Australia.

Also in Switzerland, we have just entered a portfolio reimbursement agreement for both syndicate and ORKAMBI and we look forward to treating more CF patients that.

The Swiss agreement is also designed to include the triple combination in the future.

And with label expansion efforts, we are on track to submit the SMB or in the U.S. So try CAFTA for the treatment of CF patients aged six to 11 with at least one five await del mutation in the second half of Twentytwenty.

We are pleased with the rate of uptake that we have seen for try capture in the U.S. and for ORKAMBI and some kv outside the U.S.

We continue to see the potential to reach 90% of CF patients worldwide would try CAFTA and we believe that this will continue to drive revenue growth of vertex in the future.

Stuart A. Arbuckle: The Swiss agreement is also designed to include the triple combination in the future. And with labor expansion efforts, we are on track to submit the SNDA in the U.S. for Trikafta for the treatment of CF patients aged 6 to 11 with at least one F508 del mutation in the second half of 2020. We are pleased with the rate of uptake that we have seen for Trikafta in the US and for Orkambi and Simkevi outside the US. We continue to see the potential to reach 90% of CF patients worldwide with Trikaf, and we believe that this will continue to drive revenue growth for Vertex in the future. I will now turn the call over to Charles.

I will now turn the call over to Charlie.

Thanks Stuart.

Will provide additional comments this evening regarding our Q1 2020 financial results and will also discuss our revised 2020 financial guidance.

All of the results and guidance I will discuss our non-GAAP.

First quarter total CF product revenues were 1.52 billion, 77% increase compared to 2019.

Try cap to sales in the first full quarter. After launch were 895 million and remarkably try CAFTA now generates more revenue than all of our other CF medicines combined the growth of try capped a reflects rapid uptake among newly eligible patients as well as among patients switching from our other medicines.

Charles F. Wagner: Over to Charlie. Thanks, Stuart.

Charles F. Wagner: I will provide additional comments this evening regarding our Q1 2020 financial results and will also discuss our revised 2020 financial guidance. All of the results and guidance I will discuss are non-GAAP. First quarter total CF product revenues were $1.52 billion, a 77% increase compared to 2019. Tricapta sales in the first full quarter after launch were $895 million, and remarkably, Tricapta now generates more revenue than all of our other CF medicines combined. The growth of Trikafta reflects rapid uptake among newly eligible patients, as well as among patients switching from other medicines.

Importantly, ORKAMBI in some kabi continue to grow outside the U.S. based on rapid uptake in key markets, where we achieved reimbursement agreements in late 2019.

In the first quarter of 2020, CF product revenues were 328 million outside the U.S., an increase of 51% over the prior year.

Our first quarter 2020, combined R&D and SGN, a expenses were 477 million.

Compared to 388 million for the first quarter of 2019.

Overall, the combination of significant growth in revenues and more moderate growth in spending in the first quarter resulted in an operating margin of 58% and operating income of 877 million, an increase of 133% compared to the first quarter of 2019.

Charles F. Wagner: Importantly, Orkambi and Simkevi continue to grow outside the U.S. based on rapid uptake in key markets where we achieved reimbursement agreements in late 2019. In the first quarter of 2020, CF product revenues were $328 million outside the U.S., an increase of 51% over the prior year. Our first quarter 2020 combined R&D and SG&A expenses were $477 million, compared to $388 million for the first quarter of 2019. Overall, the combination of significant growth in revenues and more moderate growth in spending in the first quarter resulted in an operating margin of 58 percent and operating income of $877 million, an increase of 133 percent compared to the first quarter of 2019. Net income for the first quarter of 2020 was $674 million, compared to $296 million in the first quarter of 2019.

Net income for the first quarter 2020 was 674 million compared to 296 million in the first quarter of 2019.

Now I'll review 2020 guidance.

Today, we are revising upward our 2020 financial guidance for total CF product revenues to a range of 5.3 to 5.6 billion.

Which at the midpoint reflects 36% growth over 2019.

This range reflects both the very strong try cap the uptake that Stuart described in his prepared remarks.

As well as the moderating factor as he described for the remainder of 2020.

We are leaving our opex and tax guidance unchanged.

Now turning to capital allocation.

We finished Q1 2020 with 4.2 billion in cash and our top priority for capital allocation remains to reinvest in both internal and external innovation to create future medicines, and our thinking and strategy and business development have not changed.

We're focused on programs and technologies that can accelerate the creation of transformational medicines for the diseases and which we are interested.

For example, this week, we announced a new collaboration with Affinia Therapeutics. This collaboration gives us access to Affinia is innovative and novel Avi Capsids and allows us to leverage their avi expertise.

Charles F. Wagner: Now I'll review 2020 guidance. Today we are revising upward our 2020 financial guidance for total CF product revenues to a range of $5.3 to $5.6 billion, which at the midpoint reflects 36% growth over 2019. This range reflects both the very strong Trikafta uptake that Stuart described in his prepared remarks, as well as the moderating factors he described for the remainder of 2020. We are leaving our OPEX and tax guidance unchanged.

To advance the multiple gene editing and genetic therapy programs in development at vertex.

Finally, as we look ahead through 2020, we expect our strong cash flow to continue to support additional investments to fuel our long term growth.

Now back to Russia for a few concluding remarks.

In closing, it's obviously a difficult time for people and for businesses around the world.

You have heard Tonight that vertexs operating according to a set of clear principles and that we are committed to protecting the health and safety of our people and meeting the needs of the patients we serve.

Reshma Kewalramani: Now turning to capital allocation, we finished Q1 2020 with $4.2 billion in cash, and our top priority for capital allocation remains to reinvest in both internal and external innovation to create future medicines. Our thinking and strategy for business development have not changed. We are focused on programs and technologies that can accelerate the creation of transformational medicines for the diseases in which we are interested. For example, this week we announced a new collaboration with Afinia Therapeutics. This collaboration gives us access to Afinia's innovative and novel AAV capsids and allows us to leverage their AAV expertise to advance the multiple gene editing and genetic therapy programs in development at Vertex. Finally, as we look ahead through 2020, we expect our strong cash flow to continue to support additional investments to fuel our long-term growth. Now, back to Reshma for a few concluding remarks.

I'm proud of the many vertex employees, who are going above and beyond adapting to new circumstances, and continuing to advance our R&D programs and helping our business outperformed expectations.

I'm also proud of our many recently announced philanthropic programs to help support the people and communities in which we live and work.

The vertex foundation has made a number of donations, including to the Boston Resiliency fund and organizations around the globe, providing health supplies to frontline workers and to support vulnerable populations through food care and education I look forward to sharing further news of our progress.

In the months ahead.

Thank you and we'll now open the call to questions.

Thank you to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.

Reshma Kewalramani: In closing, it's obviously a difficult time for people and for businesses around the world. You have heard tonight that Vertex is operating according to a set of clear principles and that we are committed to protecting the health and safety of our people and meeting the needs of the patients we serve. I am proud of the many Vertex employees who are going above and beyond, adapting to new circumstances and continuing to advance our R&D programs and helping our business outperform expectations. I am also proud of our many recently announced philanthropic programs to help support the people and communities in which we live and work. The Vertex Foundation has made a number of donations, including to the Boston Resiliency Fund and to organizations around the globe providing health supplies to frontline workers and to support vulnerable populations through food, care, and education. I look forward to sharing further news of our progress in the months ahead. Thank you, and we'll now open the call to questions.

And our first question come from building to do with Cowen and company. Your line is open.

Great. Thanks for taking my question and congrats on all the progress.

Two part question for me first you talked about the Splotch any manufacturing continuing apace are there any pinch points that you can identify in your distribution networks that could hinder patients access.

To your therapies anything from that being able to get their deliveries at home too.

Lack of ability to care told medicine reorganizations for prescriptions that have already been written.

I wanted my second question is just on the pipeline I think we're all focused on the 80 programs you have a sense when you'll be able to provide guidance on when the data from the phase two study could be available. Thank you.

Phil It's Stuart I'll take the first question on supply chain and patients being able to get all medicines and then rational will cover 80. So.

In terms of the supply chain and manufacturing.

We don't see any pinch points really that are not anything that can be overcome.

Operator: Thank you. To ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. And our first question comes from Phil Nadeau with Cowen & Company. Your line is open. Good afternoon. Thanks for taking my question and congratulations on all the progress. There is just a two-part question for me.

So far as I mentioned in our prepared remarks, our manufacturing facilities of May remain fully operational our ability to supply medicines around the world has continued clearly with things like commercial flights being reduced there have been some.

Challenges, but it's really that delays of a number of days and things like that certainly nothing that is.

Disrupting patients ability to get that medicines, when they need them and so we continue to feel very confident that we're going to be at a continued to supply both.

Phil Nadeau: First, you talked about the supply chain and manufacturing continuing at pace. Are there any pinch points that you can identify in your distribution networks that could hinder our patients' access to your therapies, anything from not being able to get their deliveries at home to, Thank you.

Patients who are currently all medicines and be able to supply launches if we get subsequent approvals.

Ill hand, it over to rush better heavily AC question, Yeah, Phil This is ratio.

Just to remind everyone. This study that you're talking about is the VX one for.

Stuart A. Arbuckle: Phil, it's Stuart. I'll take the first question on the supply chain and patients being able to get our medicines, and then Reshma will cover AAT. So in terms of the supply chain and manufacturing, we don't see any pinch points that are really not anything that can't be overcome. So far, as I mentioned in our prepared remarks, our manufacturing facilities have remained fully operational. Our ability to supply medicines around the world has continued. Clearly, with things like commercial flights being reduced, there have been some challenges, but these are really delays of a number of days and things like that, and certainly nothing that is disrupting patients' ability to get their medicines when they need them. And so we continue to feel very confident that we're going to be able to continue to supply both patients who are currently on our medicines and launch new products if we get subsequent approval. And with that, I'll hand it over to Reshma to handle the AAC question.

Study in the Eightd disease area. This is the phase two dose ranging study proof of concept study.

It's about 50 people three doses of placebo, it's 28 days of treatment with another one month of follow ups that that's the study we're talking about.

And you're right, we had temporarily pause screening and enrollment.

And where we are today is that we are in the process.

Of re initiating screening and enrollment on a site by site country by country region by region basis.

Those areas that are opening and are now able to resume clinical trial activity.

With regard to when will the results be available.

So this now depends on the dynamics around enrollment and will only know that when we have a little bit more time under our belt, because I said it site by site region by region country by country. We are in the process of re initiating screening and enrollment.

We need a little bit more time to determine what those enrollment dynamics will be.

Reshma Kewalramani: Phil, this is Reshma. Just to remind everyone, the study that you're talking about is the VX814 study in the AATD disease area. This is the phase two dose-ranging study, proof of concept study. It's about 50 people, three doses plus placebo.

We will know what that it's going to take a little bit of time and when we know why we'll certainly update you that day is not today.

That's very helpful. Thanks for taking my questions.

Thank you.

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

Thanks, and congrats on the progress as well great quarter I am I guess two questions forward walking you have a European approval.

Reshma Kewalramani: It's 28 days of treatment with another one month of follow-up, so that's the study we're talking about. And you're right; we have temporarily paused screening and enrollment. And where we are today is that we are in the process of re-initiating screening and enrollment on a site-by-site, country-by-country, region-by-region basis in those areas that are opening and are now able to resume clinical trial activity. With regard to when will the results be available? So this now depends on the dynamics around enrollment, and we'll only know that when we have a little bit more time under our belts, because, as I said, it's site-by-site, region-by-region, country-by-country. We are in the process of reinitiating screening enrollment, but we need a little bit more time to determine what those enrollment dynamics will be. We will know what that is. It's just gonna take a little bit of time. And when we know, I will certainly update you. But that day is not today.

Potentially coming can you just talk about how the dynamics of your existing portfolio deals, where remind me, which countries have that and the patient adoption of some of your recent other deals for the doublets could help accelerate the timing of uptake and launch and some of those other countries for try CAFTA, maybe just talk about how.

How you think about that versus prior history of your other chip traction you're up this year and then the second question relates going back to 80 appreciate the comments.

She that you didn't mention VX six four was there anything to say about that.

Study completed maybe just make a comment about that I thought that wish finishing phase one thanks so much.

Okay Mike.

Yes.

Yeah I'll take the other question on.

Reimbursement Mike.

Thanks for the congratulations on the quarter, we feel I'm thrilled with how well the businesses performed in this first quarter of Twentytwenty.

In terms of the.

You approval for the Triple combination and reimbursement as you know we filed and the fall was.

Phil Nadeau: That's very helpful. Thanks for taking my questions. Thank you. Our next question comes from Michael Yee with Geoffrey. Your line is open. Thanks, and congratulations on the progress as well. Great quarter.

Accepted in October of last year and is currently.

Under review I really think of the the access to patients.

Outside of the U.S. really being in kind of three categories. There's obviously a country like Germany, which provides immediate access while you then negotiate.

Michael J. Yee: I guess I have two questions. Forward looking: you have European approval potentially coming. Can you just talk about how the dynamics of your existing portfolio deals were, reminding which countries have that and the pace and adoption of some of your recent other deals for the doublets could help accelerate the timing of uptake and launch in some of those other countries for Trikafta. Maybe just talk about how you think about that versus the prior history of your other CF drugs in Europe this year. And then the second question relates going back to AAT. I appreciate the comments.

The the price that they will pay you want to prospective basis, then as you say, there's a number of countries, where we have portfolio reimbursement agreements.

Thats countries like Island, Denmark also we recently concluded a similar agreement in Switzerland.

All the portfolio agreements are all slightly different some of them include just the currently approved patient populations.

Some of them like in island for instance, also include the at MFS population as well.

Michael J. Yee: I see that you didn't mention VF864. Was there anything to say about that? Was that study completed? Maybe just make a comment about that. I thought that was finishing phase one.

But we would imagine that soon off the getting regulatory approval.

We would be working with those countries to get hopefully access very very quickly after the regulatory approval.

Stuart A. Arbuckle: Okay, Mike, it's Stuart here. Yeah, I'll take the question on reimbursement, Mike. Firstly, thanks for the congratulations on the quarter. We feel thrilled with how well the business has performed in this first quarter of 2020. In terms of the EU approval for the triple combination and reimbursement, as you know, we filed, and the file was accepted in October of last year and is currently under review. I really think of access to patients outside of the US really being in kind of three categories. There's obviously, you know, a country like Germany that provides immediate access while you then negotiate the price that they will pay you on a prospective basis. Then, as you say, there's a number of countries where we have portfolio reimbursement agreements.

When is the remaining countries, where we don't have portfolio agreements, where the regulatory approval really at the beginning.

Oh that reimbursement process.

I do hope that our reimbursement processes can move more quickly and I think there awesome reasons to be optimist and optimistic about that Mike.

At least because we have reimbursement agreements in the vast majority of countries now and that sets two things it sets a price in the marketplace and it also sets a profile of benefit risk in the marketplace.

Feel very good about the benefit risk profile of the triple combination compared to even all right.

Transformative medicines, and so I'm hopeful that will provide a a tailwind obviously from a pay a perspective label dependent the triple combination could increase the number of eligible patients which would be an increase in budget impact and show that's something we're gonna have to negotiate with them, but that's how we see the reimbursement landscape playing out.

Stuart A. Arbuckle: That's countries like Ireland, Denmark; we recently concluded a similar agreement in Switzerland. All the portfolio agreements are slightly different. Some of them, like in Ireland, for instance, also include the FMF population as well. But we would imagine that soon after getting regulatory approval, we would be working with those countries to get, hopefully, access very, very quickly after regulatory approval. And then there are the remaining countries where we don't have portfolio agreements, where regulatory approval really is the beginning of that reimbursement process. I do hope that our reimbursement processes can move more quickly, and I think there are some reasons to be optimistic about that, Mike, not least because we have reimbursement agreements in the vast majority of countries now, and that sets two things.

Subsequent to the regulatory approval and ill throw it over to Russia, yes. So my thanks.

A question MBX 864, so VX eight one for is the one we just went through where we had temporarily pause screening and further enrollment that's the one where we're in the process of re initiating both screening and enrollment and that's the one that's already in phase two dose ranging.

VX eight six for is the next.

In our Eightd program that one has completed its phase one study we've had a chance to look at the safety and PK that one is going to be ready to go into it phase two proof of concept dose ranging study and I anticipate that that's going to happen.

In this year the second half of this year.

Okay. Thanks for that.

Appreciate it.

Stuart A. Arbuckle: It sets a price in the marketplace, and it also sets a profile of benefit-risk in the marketplace. And as you know, we feel very good about the benefit-risk profile of the triple combination compared to even our own transformative medicines. And so, you know, I'm hopeful that that will provide a tailwind. Obviously, from a payer perspective, label-dependent, the triple combination could increase the number of eligible patients, which would be an increase in budget impact, and sure, that's something we're going to have to negotiate with them. But that's how we see the reimbursement landscape playing out subsequent to regulatory approval.

Thank you.

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

Good afternoon, and congratulations on the launch Walt.

Talked about guidance you mentioned, a couple of buckets here and would it be possible to quantify how to think about the early prescription refills MDM and the buying patterns from other countries that will pulled forward and then secondly.

Persistence and patient compliance, where do you see that level typically.

A level off based on historically, what's been team is franchise.

And then thirdly I guess.

The pipeline should we expect one for step in data in April one mediated kidney disease to be on track for the year and maybe you could just frame for us what that clinical bar is here. Thank you.

Reshma Kewalramani: So Mike, thanks for the question on VX864. So VX814 is the one we just went through where we temporarily paused screening and further enrollment. That's the one where we're in the process of re-initiating both screening and enrollment, and that's the one that's already in phase two dose ranging. VX864 is the next molecule in our AATD program. That one has completed its phase one study. We've had a chance to look at its safety and its PK. That one is going to be ready to go into its phase two proof of concept dose ranging study, and I anticipate that that's going to happen this year, the second half of this year.

Yes, I'll be let me ask Charlie to tackle the question around guidance.

And then I'll come back and talk to you about 1.7 Charlie.

As you noted we've increased guidance for the year to that to the range of 5.3 to 5.6 and really the primary driver behind that.

The launch in the significant Haitian uptake.

In Q1.

There are always mindful that folks don't look at a single quarter performance and extrapolate from there. So I think it's important steward outlined in the call.

Let's see we did see some.

Patients refilling prescriptions early in the first quarter as well.

Countries.

Accelerating their purchases, which resulted in a little bit earlier revenue recognition for us we're not going to we're not going to dollar I said, specifically, but I think you can conclude since we mentioned that it was significant enough that we thought it was worth calling out.

Michael J. Yee: Okay, thanks for that. I appreciate it. Thank you. Our next question comes from Salveen Richter with Goldman Sachs. Your line is open.

And then.

Stuart talked about the fact, where we are in terms of the ramp up on patients. There are still some patients to get one drug of course.

Salveen Richter: Good afternoon, and congratulations on the launch as well. When you talked about guidance, you mentioned a couple of buckets here. And would it be possible to quantify how to think about the early prescription refills and the buying patterns from other countries that were pulled forward? And then, secondly, with persistence and patient compliance, where do you see that level typically level off based on what's been seen historically with this franchise? And then thirdly, I guess, on the pipeline, should we expect 147 data in 8.0.1 mediated kidney disease to be on track for the year? And maybe you could just frame for us what the clinical bar is here. Thank you.

Of new initiation flowing.

Could see some delays in future quarters as result of Jason policies at CF centers Cobot, and then lastly around persistence and compliance I think the way to think about it is when patients first initiate on a medicine their persistence and compliance rates essentially at 100%.

Number only goes down from there over subsequent quarters until it.

Leveled out at more of a steady state.

So we've talked about in the past persistence and compliance.

A combination of those two factors, even if you're at 90 plus percent on both.

You do the math on that you can see them yet to come down from 100%. So.

Charles F. Wagner: Salveen, let me ask Charlie to tackle the question about guidance, and then I'll come back and talk to you about 147.

Those will those will have an increasing impact over the balance of the second half of the year and as part of what we considered.

Together.

Reshma Kewalramani: Yeah, thanks, Salveen. You know, as you noted, we've increased guidance for the year to the range of 5.3 to 5.6, and really, the primary driver behind that is the success of the launch and the significant patient uptake, and you see that reflected in Q1. You know, that said, we're always mindful that folks don't look at a single quarter performance and extrapolate from there, so I think it's important, as Stuart outlined in the call, we did see some patients refilling prescriptions early in the first quarter, as well as some countries, OUS, accelerating their purchases, which resulted in a little bit earlier revenue recognition for us. And then lastly, around persistence and compliance, you know, I think the way to think about it is when patients first start on a medicine, their persistence and compliance rates are essentially at 100%, and that number only goes down from there over subsequent quarters until it levels out at more of a steady state.

But importantly, the midpoint of the guidance implies 36% growth year over year, it's an acceleration over last years, 32%.

We are shaping up for another great year, and it really highly differentiated this.

Particularly at this very uncertain.

Savi. This is ray smile with regard to your question around one for seven just to remind everyone. This is our program in April one mediated Fscs NFS yesterday.

April one mediated fscs I should say the homogeneous kidney disease that is characterized by heavy proteinuria and unfortunately for these patients it sort of a relentless course of a declining kidney function with one of only two outcomes, one is going onto dialysis or transplantation.

The other one unfortunately is.

Clearly a disease with high unmet need.

This program that key endpoints that we're looking for in terms of efficacy is noria and we're looking for a decrease in crude.

The renal community regulators and in the U.S., the FDA and academics and as those involved in.

Reshma Kewalramani: Salveen, this is Reshma. With regard to your question around 147, just to remind everyone, this is our program in APOL1-mediated FSGS, and FSGS is a, APOL1-mediated FSGS, I should say, is a homogeneous kidney disease that is characterized by heavy proteinuria, and unfortunately, for these patients, it's sort of a relentless course of a One is going on to dialysis or transplantation, and the other one, unfortunately, is death. Clearly, a disease with high unmet needs. In this program, the key end point that we're looking for in terms of efficacy is proteinuria, and we're looking for a decrease in proteinuria. I think it would be very fair to say that Proteinuria, which is the endpoint we are measuring in this phase two proof of concept study that I just described that we are now up and running in, that would be the endpoint of importance in phase three and in terms of patients. That's what we are looking for, and that's what we're monitoring.

Research and kidney disease that had many conferences around the topic of endpoints and.

I think it would be very fair to say that noria, which is the endpoint. We are measuring in this phase two proof of concept study that I. Just described that we are now up and running in that would be the endpoint of importance in phase that we add in terms of patients that's what we.

We are looking for and that's what we're monitoring for.

Thank you.

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

Hey, guys. Thanks to the question on an addiction dots on the quarter.

Just had a couple Stewart when I look at the guidance the run rate is higher.

Guidance is the delta primarily from the expected decline.

From some of the Cowen ORKAMBI, just switching to try CAFTA or is it that you guys are being conservative.

And then beyond the 10% of CF patients that can't address.

Any updates to the commercial efforts to expand the trick have to see a patient base for example, and Latin America, South Africa or other regions beyond the ones that you're expecting to go in.

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

Geoff Meacham: Hey guys, thanks for the questions and a big congrats on the quarter. Just had a couple. Stuart, when I look at the guidance, the run rate is higher than your guidance. Is the delta primarily from the expected decline from Symdeco and Arkambi just switching to Trikafta, or is it that you guys are being conservative? And then beyond the 10% of CF patients that you can't address today, are there any updates to the commercial efforts to expand the Trikafta CF patient base, for example, in Latin America, South Africa, or other regions beyond the ones that you're expected to go into? And just for Reshma, real quick on the pipeline, you guys have been pretty active on the BD front and have a ton of different assets and indications, but the question is, does the acceleration in the uptick in CF really change your urgency or the size of future BD deals? Thank you.

And just for Racino real quick on the pipeline you guys have been pretty active on the beauty front.

And have a ton of different assets and indications but.

Question as it does acceleration in the uptick in CF really change or urgency or the size of a future BD deals.

Sure, Jeff Let me ask Stuart to go first and talk a little bit about the.

Launching some launch dynamics.

And I'll just make a quick comment we have seen uptake of try captain the U.S. in all eligible populations and we've just been soap these to be able to serve all patients who are eligible Stuart.

Yeah, Jeff is rational says the uptake of try captives been.

Very strong across all eligible patients and that includes transitioning from our existing medicines, where the indications are overlapping so kalydeco or ORKAMBI and.

Syndicate to patients have been moving over from those medicines to to try CAFTA.

Reshma Kewalramani: Sure, let me ask Stuart to go first and talk a little bit about the launch and some launch dynamics, you know, and I'll just make a quick comment. We have seen uptake of Trikafta in the U.S. in all eligible populations, and we've just been so pleased to be able to serve all patients who are eligible.

In our results, that's obviously balanced by the growth we've seen outside the U.S. with ORKAMBI and some Kevin as it's called outside of the U.S.

Following the new reimbursement agreements. So we've really got that kind of those two different dynamics going on some cannibalization in the U.S. and continued growth outside of the U.S.

Stuart A. Arbuckle: Stuart?

Stuart A. Arbuckle: Yeah, Geoff, as Reshma says, the uptake of Trikafta has been very strong across all eligible patients, and that includes transitioning from our existing medicines where the indications are overlapping, so Kalydeco, Orkambi, and Symdeco patients have been moving over from those medicines to Trikafta. In our results, that's obviously balanced by the growth we've seen outside the U.S. with So we've really got those two different dynamics going on, some cannibalization in the U.S. and continued growth outside of the U.S. As Charlie referenced earlier, we did see in the first quarter some early refills by patients and also some advanced purchasing by some governments outside the U.S., presumably in response to the early days of the pandemic.

As Charlie referenced earlier, we did see in the first quarter some.

Early refills by patients and also some advance purchasing by some government outside the U.S., presumably in response to the early days of the a of the pandemic.

That essentially is is something that we would expect to sort of even out over the course, so all of this year.

In terms of the dynamics, which we are anticipating could potentially play out for the the balance of the year as Charlie said that the biggest single factor really is going to be persistence and compliance as he said.

Patient when they initiate therapy, there are 100% persistence and can persist into the compliant and as we know those numbers are only going to drift downwards from that now we expect them to be high with a with try CAFTA because of the benefit risk profile.

Stuart A. Arbuckle: That essentially is something that we would expect to sort of even out over the course of this year. In terms of the dynamics, which we are anticipating could potentially play out for the balance of the year, as Charlie said, the biggest single factor really is going to be persistence and compliance. As he said, you know, a patient, when they initiate therapy, they're 100 percent persistent and compliant.

But those will have an impact on our on our future a future revenues and that is incorporated as he is a slowing of initiation.

Into our revised guidance and as Charlie said.

$5.3 billion to $5.6 billion, that's still represents at the midpoint, 36% growth over 2019, which isn't actually actually an acceleration of the revenues. We delivered in a in 2019. So were pleased to be able to increase our guidance at this.

Stuart A. Arbuckle: And as we know, those numbers are only going to drift downwards from there. But we expect them to be high with Trikafta because of the benefit-risk profile. But those will have an impact on our future revenues, and that is incorporated, as is a slowing of initiations, into our revised guidance. And as Charlie said, at $5.3 to $5.6 billion, that still represents, at the midpoint, 36 percent growth over 2019, which is actually an acceleration of the revenues we delivered in 2019. So we're pleased to be able to increase our guidance at this uncertain time. And then on the kind of capital allocation and BD question, I think I'll hand that one over to Reshma.

Time.

And then on the kind of capital allocation and BD question, I think I'll I'm not one of at a restaurant.

Sure.

So with regard to our strategy around BD.

The truth of the matter is that the strategy is exactly the same and nothing has changed and for those of you haven't.

Heard me say it or haven't heard I say, let me just say very simply we pillars and IBT strategy. The first as we look at anything that moves in CF, regardless of modality, regardless of stage of development. The second is we look for early stage assets that fit into.

Our corporate and R&D strategy and that fit into our sandbox and I see early stage because up until recently the assets and later stages of development have been fully priced if not overpriced and our ability to bring value is in our research development and regulatory and commercial.

Reshma Kewalramani: Sure. So with regard to our strategy around BD, the truth of the matter is that the strategy is exactly the same, and nothing has changed. And for those of you who haven't heard me say it or haven't heard us say it, let me just say it very simply.

Reshma Kewalramani: We have three pillars in our BD strategy. The first is that we look at anything that moves in CF regardless of modality or stage of development. The second is we look for early stage assets that fit into our corporate and R&D strategy and that fit into our sandbox. And I say early stage because, up until recently, assets in later stages of development have been fully priced if not overpriced, and our ability to bring value is in our research, development, regulatory, and commercialization engine. And the third is to add tools to our toolbox. And you've seen us be very active in this area, including today's announcement with Afinia. We've done deals in small molecules. We've done deals with AAV manufacturing. We've done deals with CRISPR, as well as Encel and other genetic therapies. And so those three pillars are gonna stay exactly the same.

They should engine.

And the third is to add tools to our tool box and you've seen us be very active in this area, including today's announcement with Affinia, we've done deals and.

Molecules, we've done deals with a heavy manufacturing weve dealt deals with CRISPR as well as in cell and other genetic therapies and so those three pillars are going to stay exactly the same.

Maybe what's changed for where we find ourselves in terms of time is what we bring to the table, it's probably even stronger today than at any previous on time.

I mean by that is we know exactly what we want as I described our strategy is really very clear and it's been it's been there for some time. So we're very clear on what we're looking for the second is our capacity to do deals and our ability to consummate deals is I think very strong and you see that that we were able to do the.

Affinia deal. Despite this cobiz situation that is a upon us and the third is our balance sheet is is strong and growing and I think that is an important element in this moment in time.

Thank you and we have I'll call a question from Paul Matteis with Stifel. Your line is open.

Reshma Kewalramani: Maybe what's changed for where we find ourselves in terms of time is what we bring to the table is probably even stronger today than at any previous time. What I mean by that is, we know exactly what we want. As I described, our strategy is really very clear, and it's been there for some time. So we're very clear on what we are looking for. The second is our capacity to do deals, and our ability to consummate deals is, I think, very strong. And you see that we were able to do the Afinia deal despite this Covid situation that is upon us. And the third element is that our balance sheet is strong and growing. And I think that is an important element at this moment in time.

Great.

So much for taking my question I want to test one commercial question and one pipeline question on.

After launch I was wondering did comment on physician patient dynamic in the pandemic as it relates to prescribing.

Do you physicians need to see their patients in person to prescribe this medicine and how might that Barry.

In Europe.

Second on the deep program.

Wondering if you've had an evolving thought on what might constitute a great outcome in that study.

Reshma Kewalramani: Thank you. And we have a call, a question from Paul Matisse with Stifel. Your line is open. Great, thanks so much for taking my question. I wanted to ask one commercial question and one pipeline question. Regarding the TriPAPTA launch, I was wondering if you could comment on physician-patient dynamics in the pandemic as it relates to prescribing. Do physicians need to see their patients in person to prescribe this medicine, and how might that vary in the U.S. and Europe? And then second, on the AAC program, I was wondering if you've had any evolving thoughts on what might constitute a great outcome in that study. What AAC-level threshold do you think is kind of a home run and almost unequivocal in its implications for clinical benefit versus what level range might be a little bit harder to kind of extrapolate as we think about future outcomes? Thanks so much.

What the sea level threshold do you think it's kind of a whole brawn and almost unequivocal its implications of clinical benefit versus what level range might be a little bit harder to kind of extrapolate as we think about future outcomes. Thanks, so much.

Hey, Paul It should here on the physician patient dynamic for sure that ER physician patient dynamic has been disrupted by the by the pandemic for the reasons you can imagine many of these physicians are actually on the front line certainly the idle pulmonary physicians.

The dealing with the pandemic and as you well no.

Patients do fall into that category of patients, who would potentially be vulnerable, where they too are to become infected and so it certainly has disrupted the dynamic what we do know, though is that physicians and patients have managed to maintain very very.

Active.

Dialogue many of them moving to more remote digital ways of of interacting and those interaction levels are all very high although overseas face to face interactions have been reduced in many places for all but a emergency situations.

Stuart A. Arbuckle: Hey, Paul, it's Stuart here. On the physician patient dynamic, for sure, that physician patient dynamic has been disrupted by the pandemic for the reasons that you can imagine. Many of these physicians are actually on the front lines, certainly the adult pulmonary physicians dealing with the pandemic. And, as you well know, CF patients do fall into that category of patients who would potentially be vulnerable were they to become infected.

That doesn't seem to have interrupted initiation too much in the first quarter given the strength that we saw in the first quarter, but it is something that we also Lee conscious solve and I'll are aware may have an impact on the rates of future initiation and it's one of the factors we've tried to take into account when establishing our revised guidance range.

Stuart A. Arbuckle: And so it certainly has disrupted the dynamic. But what we do know, though, is that physicians and patients have managed to maintain a very, very active dialogue, many of them moving to more remote digital ways of interacting. And those interaction levels are very high, although obviously, face-to-face interactions have been reduced in many places for all but emergency situations. That doesn't seem to have interrupted initiations too much in the first quarter, given the strength that we saw in the first quarter. But it is something that we are certainly conscious of and are aware may have an impact on the rate of future initiations, and it's one of the factors we've tried to take into account when establishing our revised guidance. Now, I'll hand over to Reshma. Sure.

Yes.

And 80, I'll hand over to restaurant sure.

So you know what I can tell you is what are we looking for how well we know that we've had success with our proof of concept study.

So there are few.

Portal parameters that we're monitoring as we think about the phase two dose ranging study. The first is safety. Obviously this is the first.

The correctors of the 80 protein in a population of people who have this disease. So safety is critical and its right up there. The second is PK and exposure. We're looking to ensure that we have the right exposure that we have the right dosing interval and that we.

Our seeing the kind of impact that we are projecting based on our first in human study.

Reshma Kewalramani: So, you know, what I can tell you is what we're looking for? How will we know that we've had success with our proof of concept study in AAPI? So there are a few important parameters that we're monitoring as we think about the phase two dose-ranging study. The first is safety. Obviously, this is the first use of the correctors of the AAT protein in a population of people who have this disease, so safety is critical, and it's right up there. The second is PK and exposure.

And then lastly, im probably what you are alluding to is the A.T. levels and that's really important what I'm looking for here with our studies is that the level go up not only in terms of antigenic levels, but in terms of the functional 80 level.

And the reason I see that I'm looking forward the levels to go up and I'm not really focused on any particular number is that.

You know when we think about drug development here at vertex, we really divided into cracking the biology, and then pouring on the chemistry in this disease area. Unlike in CF. The stage that were really act and the part that's very very difficult is cracking the biology, and our ability to look at safety exposure.

Reshma Kewalramani: We're looking to ensure that we have the right exposure, that we have the right dosing interval, and that we are seeing the kinds of impact that we are projecting based on our first human study. And then lastly, and probably what you are alluding to, are the AAT levels. And that's really important. What I'm looking for here with our studies is that the levels go up, not only in terms of antigenic levels but in terms of functional AAT levels. And the reason I say that I'm looking for the levels to go up and I'm not really focused on any particular number is this.

And note that the level of both.

Genic and functional are going up tells us that weve crack the biology.

And then it's a matter of pouring on the chemistry and that is amongst the to the easier and I certainly don't mean to imply that the chemistries easier, but it is the easier part of that equation.

Thanks very much.

Thank you our next question comes from.

Oh, Thea young with Cantor Fitzgerald Your line is open.

Hey, guys. Thanks for taking my question or two congrats on a very good quarter.

One I guess, just philosophically with what's going on we kind of it I mean de prioritize kind of the near term pipeline. The same way I mean, some of those tie then the what we've been talking about with 80 and getting that trial back up and running versus an f. SGS certainly people with lung maybe a little bit more prone to these challenges and then my second question just as I went to talk little bit about the of in adult.

Reshma Kewalramani: You know, when we think about drug development here at Vertex, we really divide it into cracking the biology and then pouring in the chemistry. In this disease area, unlike in CF, the stage that we're really at, and the part that's very, very difficult, is cracking the biology. And our ability to look at safety, exposure, and note that the levels of both Antigenic and Functional are going up tells us that we've cracked the biology. And then it's a matter of pouring on the chemistry, and that is, amongst the two, the easier part, and I certainly don't mean to imply that the chemistry is easier, but it is the easier part of that equation.

Today, and what you think that your capacity in DMD and CF. Thanks.

I think.

Just a little bit, but I think at the first question was around coal bid and clinical trial.

Well just I want my to understand like if this change the prioritization of your pipeline itself like in light of what disruption you have with your clinical trial studies some of them sure sure.

So with regard to the Covance 19 situation and our clinical trials.

Our priorities remain very much sustain our trials in Seattle are progressing and we've been able to continue that quite well we move to telephonic visits.

Reshma Kewalramani: Thanks very much. Thank you. Our next question comes from... Elcia Young with Cantor Fitzgerald. Your line is open. Hey, guys, thanks for taking my question or two and congratulations on a very good quarter.

Moving more to remote monitoring as such but obviously, our the safety about patients is our top priority, we're making sure that the integrity of our trial remains that we have been able to continue our work is quite well and the remainder of our pipeline outside.

Unknown Executive: One, I guess, just philosophically, you know, with what's going on with COVID, I mean, do you prioritize kind of the near-term pipeline the same way? I mean, some of this ties in with the way we've been talking about with AAT and getting that trial back up and running versus an FSGS. Certainly, people with lung cancer may be a little bit more prone to these challenges. And then my second question is just that I want you to talk a little bit about the AFINA deal today and what you think the ads are and your capacity in DMD and CF. Thanks.

As I said the a TV program, we have already we initiated our activities to have a screening and enrollment restart in the eight one for program. The Fscs program is actually exactly on time with the.

Site getting started up in April and huge credit I'm. So proud of our vertex team that if just stepped up and gone above and beyond to get this worked on.

If you think about clinical trials as a whole as I said in my prepared remarks, you know each disease area.

Each study is quite different it depends on the phase of this study it depends on whether there was established benefit risk and it even depends on some more nuanced factors around whether the study sites our hospital affiliated in the hospital itself or.

Operator: I think you cut out just a little bit, but I think that the first question was around COVID and clinical trials. Well, just, I wanted to understand if this changes the prioritization of your pipeline itself, like, in light of what the through...

Transcription Outsourcing, LLC.: Transcripts provided by Transcription Outsourcing, LLC.

Institutions separate buildings of course, the disease area matters, because physicians in certain sub specialties are more pulled into the pandemic than in others.

Reshma Kewalramani: With regard to the COVID-19 situation and our clinical trials, our priorities remain very much the same. Our trials and CF are progressing, and we've been able to continue that quite well. We've moved to telephonic visits, we've moved more to remote monitoring and such, but obviously, the safety of our patients is our top priority. We're making sure that the integrity of our trials remains, but we have been able to continue our work in CF quite well. And the remainder of our pipeline outside of CF, as I said, the AATD program, we have already reinitiated our activities to have screening and enrollment restart in the 814 program. The FSGS program is actually exactly on time, with the sites getting started up in April.

With regard to Affinia.

What this really is another tool in our tool box and you see not methodically carefully in very deliberately go around and assemble what I think is really a one of the best if not the best actual boxes in the industry. This particular strategic partnership has to do.

Research activities to develop a engineer capsid that have greater affinity and tropism for certain tissues like muscle for DMD Indian one as well as for some of our other disease areas of interest and given the president and our great interest in genetic therapy.

This is a key tool in October.

Thank you and our next question comes from Evan Seigerman with Credit Suisse. Your line is open.

Hi, guys. Thanks, you for taking my question Congrats on the progress so looking towards potential reimbursement negotiations outside of the United States for try CAFTA, assuming approval do you see any risk of access delays or issues. If government budgets are impacted due to the economic decline.

Reshma Kewalramani: And huge credit, I am so proud of our Vertex team that has just stepped up and gone above and beyond to get this work done. And if you think about clinical trials as a whole, as I said in my prepared remarks, each disease area, each study is quite different. It depends on the phase of the study, it depends on whether there is established benefit-risk, and it even depends on some more nuanced factors around whether the study sites are hospital-affiliated, i.e., in the hospital itself, or separate institutions, and separate buildings.

As a result of the ongoing pandemic and how flexible would you be to open up access for patients with these.

Reshma Kewalramani: Of course, the disease area matters because physicians in certain sub-specialties are more pulled into the pandemic than in others. With regard to Afinia, what this really is is another tool in our toolbox. And you've seen us methodically, carefully, and very deliberately go around and assemble what I think is really one of the best, if not the best toolboxes in the industry. This particular strategic partnership has to do with research activities to develop and engineer capsids that have greater affinity and tropism for certain tissues, like muscle, for DMD and DM1, as well as for some of our other disease areas of interest. And given the presence of and our great interest in genetic therapies, this is a key tool in our toolbox.

Given these potential economic issues.

Yeah. Thanks for the question Evan clearly a the koby 19 pandemic and governments responses around the world has put a significant strain on on finances, no more so than in there a a various health services and we'll have to see how that a situation plays out obviously.

We're not actually in those reimbursement negotiations in the vast majority of countries yet because those really any commence at the point of regulatory approval.

So we're really have to see what approach they take it at that point in time as Ray Smith said, though it have you have prepared remarks. You know this is a situation that we will pass over time, and we're really going to be negotiating reimbursement agreements, which are hopefully going to be long lasting because.

Reshma Kewalramani: Thank you, and our next question comes from Evan Seigerman with Credit Suisse. Your line is open. Hi guys, thank you for taking my question and congrats on the progress. So looking towards potential reimbursement negotiations outside of the United States for Trikafta, assuming approval, do you see any risk of access delays or issues if government budgets are impacted due to the economic decline as a result of the ongoing pandemic? And how flexible would you be to open up access for patients with these given these potential economic issues?

This is a a terrific medicine, one that we feel very strongly has an incredible benefit risk profile and therefore, we believe that deserves to add to be rewarded with a a premium price.

That is respect reflective of the value that it brings to a brings to patients. So.

There's really not much more we can say about those discussions because we really haven't got into them with the various government authorities are involved.

Evan Seigerman: Yeah, thanks for the question, Evan. You know, clearly, the COVID-19 pandemic and governments' responses around the world have put a significant strain on finances and more so than on their various health services. And we'll have to see how that situation plays out. Obviously, we're not actually in those reimbursement negotiations in the vast majority of countries yet because those really only commence at the point of regulatory approval. So we'll really have to see what approach they take at that point in time. As Reshma said, though, in her prepared remarks, you know, this is a situation that will pass with time. And we're really going to be negotiating reimbursement agreements, which are hopefully going to be long-lasting, because this is a terrific medicine, one that we feel very strongly has an incredible benefit-risk profile and therefore, we believe deserves to be rewarded with a premium price that is reflective of the value that it brings to patients. So there's really not much more we can say about those discussions because we haven't really got into them with the various government authorities All right, thank you for that.

Alright, thank you for that.

Thank you. Our next question comes from Robyn Karnauskas with Suntrust. Your line is open.

Hi, guys. Thanks for taking my question and I think you've done a great job sort of outlining a lot of the questions that we have so great job in the call Chris job in the quarter.

I'm just a follow up a couple things so rest and I know you said that.

Your business development, it's it hasn't really changed as far as strategy, but you did highlight that you have more capacity to deal two deals you have more cashing your balance sheet strong. So what does that mean does that mean, we could see bigger deals overtime and second question is you know people believe vertex very protected given so many are patients our GAAP.

Permit reimbursed what are you seeing in the United States as far as any signals that there could be a disruption to reimbursement of your drug on in the coming quarters as coping moves forward and people.

They have challenges with obtaining employment. Thank you.

Stuart A. Arbuckle: Thank you for that. Thank you. Our next question comes from Robyn Karnauskas with SunTrust. Your line is open.

Yeah.

Thanks for those questions Robyn.

With regard to be the what can you expect from my you can expect us to continue to be disciplined.

Robyn Karnauskas: Hi guys, thanks for taking my question. And I think you've done a great job sort of outlining a lot of the questions that we have. So great job on the call. Great job in the quarter. I just want to follow up on a couple of things. So Reshma, I know you said that, you know, your business development is

Our strategy is really clear to us and we're very very disciplined about executing on the strategy as I laid it out you're right about the fact that our balance sheet is strong and getting stronger by the day and you've seen us transact on a number.

Transcription Outsourcing, LLC.: Transcripts provided by Transcription Outsourcing, LLC.

Sure of deal be partnerships in the researcher arena or as you saw us do towards the tail end of 2019, two acquisitions, one with Exxon Ics and one with pharma and let me just tell you I am absolutely delighted with both of those acquisitions and very excited.

Robyn Karnauskas: Vertex is very protected given some of your patients are government reimbursed.

Robyn Karnauskas: What are you seeing in the United States as far as any signals that there could be a disruption to reimbursement for your drug?

Robyn Karnauskas: in the coming quarters as COVID moves forward, and people may have challenges with obtaining employment. Thank you.

Out the integration that has happened and the more we get into it you know the sweeter it gets and so those have been very very positive for us the capacity that we've built here is increased to do deals I'm very pleased with how the integrations have gone and Charlie has been running those so our ability to do acquisitions and integrate.

Reshma Kewalramani: Thanks for those questions, Robyn. With regard to BD, what can you expect from us? You can expect us to continue to be disciplined. Our strategy is really clear to us, and we're very, very disciplined about executing on the strategy as I laid it out. You're right about the fact that our balance sheet is strong and getting stronger by the day. And you've seen us transact on a number of deals, be it partnerships in the research arena, or, as you saw us do towards the tail end of 2019, two acquisitions, one with Exonix and one with Sema. And let me just tell you that I am absolutely delighted with both of those acquisitions and very excited about the integration that has happened.

It's also advair.

And the the fact that we have done this have been recognize to be able to do it I think is is.

Something that will do well by us as we go forward. So can you expect us to do more deals, yes will they be greater in November.

Going to have Ted let some time half, but that wouldn't surprise me are they going to be deals that are huge are we going to buy revenues no. Though that's not part of our strategy and that's not what you're going to see us.

Reshma Kewalramani: And the more we get into it, the sweeter it gets. And so those have been very, very positive for us. The capacity that we've built here is increased to do deals. I'm very pleased with how the integrations have gone, and Charlie's been running those. So our ability to do acquisitions and integrate is also advanced. And the fact that we have done this, and have been recognized to be able to do it, I think is something that will serve us well as we go forward.

Enrollment on the.

A question of coverage here in the U.S.

Actually the majority of all payer mix is actually commercial rather than a government. During the course of the quarter, we really haven't seen any change in our payer mix. Obviously, that's something that we are monitoring closely.

Sensitive to the increase in unemployment the that has been and that those uncertainties. We're one of the reasons why we widened guidance range, whilst at the same time, increasing Oh guidance, we'll say widened dog guidance range. Because there are a number of uncertainties that we are going to have to see how they play out over.

Reshma Kewalramani: So can you expect us to do more deals? Yes. Will they be greater in number? We're going to have to let some time pass, but that wouldn't surprise me. Are they going to be deals that are huge? Are we going to buy revenues? No. That's not part of our strategy, and that's not what you're going to see us do.

Time, but certainly in the first quarter, we didn't see any change in all our pay a mix so a endorsed signals of disruptions.

Stuart A. Arbuckle: Robyn, on the question of coverage here in the US, the majority of our pay-as-you-go is actually commercial rather than government. During the course of the quarter, we really haven't seen any change in our pay-a-mix. Obviously, that's something that we are monitoring closely, sensitive to the increase in unemployment that there has been, and those uncertainties were one of the reasons why we widened our guidance range. While at the same time increasing our guidance, we also widened our guidance range because there are a number of uncertainties that we are going to have to see how they play out over time. But certainly, in the first quarter, we didn't see any change in our pay-a-mix or signals of disruptions to coverage for patients.

To to coverage for patients.

Thank you. Our next question comes from Mohit Bansal with Citi. Your line is open.

Great. Thanks for taking my question congrats on the progress.

Just moving a little bit on the pipeline side regarding go diabetes program. It seems like your approach to use is a highly differentiated better so while the other approaches including progenitor cells. You could you. Please help us understand how these defensive could ultimately impact the and dessert and.

Mohit Bansal: Thank you. Our next question comes from Mohit Bansal with Citi. Your line is open. Great, thanks for taking my questions and congratulations on the progress.

Why one could be better than other culture. Thank you.

Mohit Bansal: Just moving a little bit on the pipeline side, regarding your data...

No I think you're asking about how our approach to type one diabetes.

Reshma Kewalramani: Diabetes Program. It seems like your approach uses a fully differentiated beta cell, while there are other approaches including progenitor cells. So could you please help us understand how these differences could ultimately impact the end result and why one could be better than other approaches? Thank you.

This program may be different from other approaches.

Let me let me just.

Little bit about our approach and then.

I can do a little bit of compare and contrast for you. So our program that came into us with our acquisition of Semih is really a program that is based on 20 plus years of work done by Doug melts and who is the preeminent beta cell fuzzy.

Reshma Kewalramani: Mohit, I think you're asking about how our approach to type 1 diabetes and the CELF program may be different from other approaches. Let me just tell you a little bit about our approach, and then I can do a little bit of a compare and contrast for you.

Reshma Kewalramani: So our program that came to us with our acquisition of SEMA is really a program that is based on 20-plus years of work done by Doug Melton, who is the preeminent beta cell physician scientist in the world. And what SEMA was successful in doing, and the reason that we were so excited about the acquisition, is that they found a process and a methodology to not only develop, grow, and in an industrial manner make pancreatic islet cells. These islet cells are fully differentiated, and they have also come up with a technology that allows for a device in which these cells can be placed that can be put into patients with type 1 diabetes, and with the device, the big idea would be that no immunosuppression would be needed.

Mission scientists in the world and what that what some was successful in doing in the reason that we were so excited about the acquisition is they have found.

A process and a methodology to not only develop grow and in an industrial manner make pancreatic islet cells. These highlights cells are fully differentiated and they have also come up with a technology that allows for a.

Device in which these cells can be placed that can be put into type patients with type one diabetes and with the device. The big idea would be no immunosuppression would be needed. Obviously immunosuppression is going to be required for the make itself I would say that.

Reshma Kewalramani: Obviously, immunosuppression is going to be required for the naked cells. I would say that there are a few differences compared to other approaches, but the highlights are the following. The approach that we are pursuing pertains to fully differentiated islet cells, and two, that we have an approach here that has been tested in large animal models with the device that has shown itself to be a device that can be placed over time without the troubles that many others have seen.

A few differences compared to other approaches the highlights of the following the approach that we're pursuing pertains to fully differentiated islands cells and too that we have an approach here that has been tested in large animal models with the device that is shown itself to be.

A device that can.

To be placed over time without the troubles that many others have seen.

Reshma Kewalramani: Very helpful. Thank you. And we have a question from Corey Kosmanoff with J.P. Morgan. Your line is open. Hey, good afternoon, guys.

Sorry that he has been thank you.

Thank you and we have a question from quite Cosmos.

With JP Morgan your line is open.

Good afternoon, guys. Thanks for taking my question just have one left for you on the topic of reimbursement I wanted to ask about the ice or report on the cost effectiveness of try CAFTA that was published earlier. This week would just love to get your thoughts on the current pricing versus their much lower recommendation and why do you think there's such a big discrepancy in do you foresee.

Corey Kosmanoff: Thanks for taking my question. I just have one left for you on the topic of reimbursement. I wanted to ask about the ISA report on the cost-effectiveness of Trikafta that was published earlier this week. We'd just love to get your thoughts on the current pricing versus their much lower recommendation. And why do you think there's such a big discrepancy? Do you foresee or think there's a risk of any pushback from payers as a result of this? Thanks.

We are I think as a risk if any pushback from payers as a result of this thanks.

Stuart A. Arbuckle: Corey, thanks for the question. As you know, we have and others have some significant methodological concerns with ISA and the way it approaches an assessment of a medicine's value, both the methods. [inaudible] in my new detail. In terms of the statistics, the most important statistic to me is that 99% plus of the patients who are eligible for Trikafta are covered by either government or commercial plans which are reimbursing the medicine and to me that's the most important statistic because it demonstrates that payers recognize the value of Trikafta and want to provide immediate access to it consistent with our label and if they hadn't done that we wouldn't have been able to deliver the great quarter that we've had and so we feel that's a much better mark of whether payers recognize the value of Trikafta and we are certainly going to be doing everything we can to ensure that the ISA report doesn't lead them to restricting coverage which I think would be a tragic day for CF patients. Okay, very helpful. Thank you.

Alright, thanks for the question.

As you know, we have and others have some significant methodological concerns with ice or in the way. It approaches an assessment of a medicines value, but the methods or some of the rather arbitrary thresholds that off our chosen.

And really it's inability to fully capture the benefits of transformative medicines with lifelong benefits.

Like all so we do have concerns with the the methodology isn't thresholds and I will go into them and in in mind you detail.

In terms of the statistics the most important statistic to me is that 99% plus all the patients who are eligible for try caf. There are covered by the government all commercial plans, which are reimbursing the medicine and to me that's the most important statistic.

'cause it demonstrates that pay is recognize the value of try CAFTA and want to provide a immediate access to it consistent with a label and if they haven't done that we wouldn't have been able to deliver a the great quarter that we've had and so.

We feel that's a much better mark of weather a pay as recognize the value of strike after him and we all certainly going to be doing everything we can to ensure that the I should report doesn't lead them to restricting coverage, which I think would be a tragic day for CF patients.

Okay very helpful.

Cory race.

Reshma Kewalramani: Reshma, Trikafta is a medicine with absolutely unprecedented efficacy, and the benefit risk is 100% clear. It is something that is recognized by physicians and patients around the globe. I do not expect any change in pricing or our approach in the U.S. or outside the U.S. You know that we have a long tradition of pricing our drugs for the value that they bring, and there is just no doubt about the value that this particular medicine, Trikafta, brings to patients.

Right.

A medicine with absolutely unprecedented efficacy the benefit risk is 100% clear. It is something that is recognized by physicians and patients around the globe I do not expect any change in pricing or our approach in the U.S.

Yes, or outside the U.S. you know that we have a long tradition of a pricing our drugs for the value that they bring and there is just no doubt about the value that this particular medicine try CAFTA brings to patients.

Very clear and helpful. Thanks, a lot.

Corey Kosmanoff: Thanks a lot.

Thank you we have a question from Brian Abrams with RBC capital markets. Your line is open.

Brian Abrahams: Thank you. We have a question from Brian Abrahams with RBC Capital Markets. Hey guys, thanks so much for taking my question and congratulations on a strong quarter. A commercial question and a pipeline question. On the commercial side, any surprises in growth to net, any additional inventory build given the rapidity of Trikafta uptake, and might you expect any benefits on persistence and compliance due to COVID-19 such that those may drip down less than would otherwise be expected? And then on the pipeline side, with the TKPD characterized for 864, just curious if there's any additional insights that you guys have on similarities and differences versus 814. Thanks.

Hey, guys. Thanks, so much for taking my question congratulations on a strong quarter.

Commercial question that pipeline question on the commercial side any surprises in gross to net any additional inventory builds to be rapidity of truck have to uptake and might you expect any benefits on persistence and compliance student cobot 19, such that it made those may drift down less than would otherwise been expected.

In the pipeline side I would the PK PD characterize for eight six for just curious if there's any additional insights that you guys have on similarities and differences versus eight one for thanks.

Stuart A. Arbuckle: Why don't I ask Stuart to just comment on persistence and compliance, and then I'll ask Charlie to comment on the rest of your questions.

I asked do it to just comment.

And then Australia to comment on.

The rest of your question.

Stuart A. Arbuckle: Yeah, Brian, on persistence and compliance, as we said in our prepared remarks, we did see patients refill early in the quarter, both here in the U.S. and outside the U.S. And so, you know, mathematically, that is an increase in compliance. However, we do expect that that is going to kind of play out over the course of the year. And I don't expect that COVID-19 will really have a substantial impact on persistence and compliance of TRIKAFTA. I think the thing that's going to drive the levels of persistence and compliance are the exceptional benefit-risk profile that Reshma just mentioned, and then on

Yes, Brian on persistence and compliance as we said it all up prepared remarks, we did see patients refill early.

In the quarter, both both here in the U. S and X U.S. and so yeah.

Mathematically that is an increase in compliance. However, we do expect that that is going to.

Going to play out.

Over the course, all of the year and I don't expect that covert 19 will really have a substantial impact on persistence and compliance of trike. After I think the thing that's going to drive the levels of persistence and compliance all the exceptional benefit risk profile that ratio just mentioned.

And then on the gross to net inventory changes all on that over to Charlie Yeah, Brian on a on gross to net nothing noteworthy in the quarter.

Charles F. Wagner: Yeah, Brian, on gross to net, nothing noteworthy in the quarter, you know, gross to net. I think we're on a little bit from quarter to quarter, depending on when we true up.

Gross to net.

Little bit.

[noise], but nothing noteworthy in the quarter here and then around inventory I guess I would distinguish you'll recall that in the fourth quarter, we talked about it.

Transcription Outsourcing, LLC.: Transcripts provided by Transcription Outsourcing, LLC. Bill. Unknown Executive, Mohit Bansal, Susie Lisa, William Pickering, Vertex Pharmaceuticals, more of a patient-driven or government- There's no incremental color in the first quarter.

Related inventory build that was more of a channel inventory build and what we're talking about your.

We're giving color on the first quarter results guide.

Are they using more of a patient.

Inventory build which is different.

We talked about in the fourth quarter Theres no incremental color in the first quarter.

Operator: Operator, now that we're past 6 p.m., we have time for just one more question. We have a question from Matthew Harrison with Morgan Stanley. Your line is open. Great. Good evening. Thanks for fitting me in. Stuart, I was just hoping maybe you could help us think about phasing out revenues broadly as we think about pushing into younger patients as well as Europe. Just maybe remind us about the sizes of those populations relative to the population that you've currently penetrated with Trikafta. Thanks.

Sandal inventory that.

Not changed significantly.

Color.

Getting on the first quarter.

Operator, another where past 60 M., we have time for just one more question.

We have a question from Matthew Harrison with Morgan Stanley. Your line is open.

Great. Good evening. Thanks for fitting me in I. I was just Stuart I was just having maybe you could help help us think about.

Phasing of revenues broadly as we think about pushing into the younger patients as well as as well as Europe, just maybe remind us about the size of those populations relative to the population that you currently penetrated but try CAFTA. Thanks.

Stuart A. Arbuckle: Yeah, thanks for the question. Obviously, from a long-term perspective, we believe Trikafta has the potential to treat up to 90% of CF patients because of the levels of efficacy we are able to deliver. And clearly, to do that, we need to do a couple of things. One, we need to get it approved outside of the U.S. for the 12-plus population, and then we submitted it at the back end of last year in Europe for Trikafta, or the triple combination, I should say, for the 12-plus population. Obviously, we don't know the label we are going to get there yet, so it's really impossible to tell you exactly how big the size of the eligible patient population is there. We have recently submitted applications in Australia and Switzerland, again for 12+.

Yeah. Thanks for the question you know obviously from a long term perspective, we believe try CAFTA has the potential to treat up to 90% of CF patients because of the levels of efficacy, we are able to deliver and clearly to do that we need to do a couple of things one we need to get it.

Approved outside of the you asked for the 12 plus population.

And then obviously, we need to increase the label that to expand it down into a lower age population.

We have submitted at the end this in the back end of last year.

In Europe for try CAFTA or the Triple combination I should say for the 12 plus population.

Obviously, we don't know the label, we're going to to get that yet so it's really impossible to tell you exactly how big the size of the eligible patient population is that we have more recently also submitted in Australia and Switzerland.

Again for a for 12 plus a in terms of the label expansions in terms of taking the age range down.

Stuart A. Arbuckle: In terms of the label expansions, in terms of taking the age range down, the 6-11 Trikafta SNDA here in the US, we anticipate submitting in the second half of this year. So really the primary drivers of our guidance and the increase in our guidance are really Trikafta in the 12-plus population here in the US and the growth that we've seen in Orkambi and Simkevi outside the US as a result largely of the reimbursement agreements that we put in place in the second half of 2019.

The six to 11 try CAFTA and D.A. here in the U.S., we anticipate submitting in the second half of this year. So really the the primary drivers of our guidance and the increase in our guidance are really try catheter in the 12 plus population here in the U.S.

And the growth that we've seen in ORKAMBI and some kv outside the U.S. as a result largely of the reimbursement agreements that we put in place in the second half of 2019.

Operator: Okay, operator. Thanks, everybody, for joining the call tonight. The investor relations team is either in the office or remote, and we'll be following up with analysts who didn't get a chance to ask a question, as well as any other questions you may have tonight. Really appreciate you dialing in and staying. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day

Okay operator.

Thanks, everybody for joining the call Tonight, the Investor Relations team.

Is either in the office or remote and will be following up with a analysts who didn't get a chance to ask a question as well as any other questions you may have tonight.

I really appreciate you dialing in and stay safe.

Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

[music].