Q3 2020 Vertex Pharmaceuticals Inc Earnings Call

This is Michael Partridge, Senior Vice President of Investor Relations for vertex.

Geoffrey Christopher Meacham: Robert Rutteridge, Senior Vice President of Investor Relations for Vertex. Making prepared remarks on the call tonight, we have Dr. Reshma Kewalramani, Vertex's CEO and President, Stuart Arbuckle, Chief Commercial Officer, and Charlie Wagner, Chief Financial Officer. Dr. David Altshuler, Chief Scientific Officer, will join the Q&A portion of the call following the prepared remarks. 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.

Making prepared remarks on the call Tonight, we have Dr. Irish market, while remaining for Texas, CEO and president.

Arbuckle, Chief commercial officer, and Charlie Wagner, Chief Financial Officer, Dr., David Altschiller, Chief Scientific Officer will join the Q and a portion of the call following the prepared remarks.

We recommend to 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 <unk>.

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 the statements, including without limitation those regarding vertexs marketed CF medicines pipe.

Unknown Executive: 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, while actual outcomes and events could differ materially.

Pipeline and Vertexs future financial performance.

Based on management's current assumptions.

Actual outcomes and events could differ materially.

Unknown Executive: I would also note that select financial results and guidance we will review on the call this evening are non-GAAP. I will now turn the call over to Dr. Reshma Kewalramani. Thanks, Michael.

I would also note that select financial results and guidance, we will be on the call. This evening our non-GAAP.

I will now turn the call over to Dr. freshmen give all the money.

Thanks, Michael I'll begin Tonight with a few general comments across the business and then provide details on our R&D programs before turning it over to Stewart for a review of the commercial performance.

Reshma Kewalramani: I'll begin tonight with a few general comments across the business and then provide details on our R&D program before turning it over to Stuart for a review of the commercial performance. First, I'll start with CF. 2020 continues to be a remarkable year for our growing CF business. Our performance through the third quarter was driven by the strong Trikafta launch in the U.S., and we are building on that progress as we launch Captrio, as the triple combination is known in Europe. Based on our year-to-date performance, we are again revising upwards our 2020 product revenue guidance to $6 to $6.2 billion. There are two important aspects that characterize our outlook in CF, and I want to be sure to provide a perspective on both. The first is growth, which has been exceptional.

First starting with yeah.

2020 continues to be a remarkable year for our growing Si es business.

Our performance through the third quarter was driven by the strong truck half the launch of the U.S. and we're building on that progress as we launch capture you as a triple combination is known in Europe.

On a year to date performance, we are again revising upward our 2020 product revenue guidance to six to 6.2 billion.

There are two important aspects that characterize our outlook in Seattle and I want to be sure to provide a perspective on both prefer.

The first is growth we.

Which has been exceptional 2020 poised to deliver more than 50% growth in revenue over 2019.

Reshma Kewalramani: 2020 is poised to deliver more than 50% growth in revenue over 2019, and we see significant top and bottom line growth beyond 2020. Driven by three factors, expansion of the triple combination geographically, expansion of our medicines to lower age groups, and additional mutations, as well as the development of a treatment for the last 10% of CF patients who cannot benefit from CFTR modulators. There are two ways to think about this growth.

We see significant top and bottom line growth beyond 2020.

Driven by three factors expansion of the Triple combination geographically.

We actually have our medicines to lower age group.

Additionally mutation.

As well as the development of a treatment for the last 10% the CF patients who cannot benefit from sea of GR modulators.

There's two ways to think about this growth near term even for the CF population, who are currently eligible unreimbursed for medicine. There are many patients who have yet to begin treatment.

Reshma Kewalramani: In the near term, even for the CF population who are currently eligible and reimbursed for our medicines, there are many patients who have yet to begin treatment. And beyond that, there are at least 20,000 more who we anticipate will become eligible through label, geographic, and reimbursement expansion. Stuart will go into more detail on these growth drivers in a moment. The other aspect of our business I want to address is leadership.

And beyond that there are at least 20000 more we anticipate will become eligible to label geographic and reimbursement expansion Stuart will go into more detail on these growth drivers in a moment.

The other aspect of our business I want to address his leadership.

We have a strong leadership position in cystic fibrosis, and we believe its lasting very long time into at least the late Twentys Thirtys as a base case when considering the high bar set by the significant benefit of Tri calf care to patients and the patent coverage for this regimen.

Reshma Kewalramani: We have a strong leadership position in cystic fibrosis, and we believe this will last a very long time, into at least the late 2030s, when considering the high bar set by the significant benefit of Trikafta to patients and the patent coverage for this regimen. Now, turning to the pipeline. Our pipeline reflects a deliberate strategy of investing in serial innovation, both internally and externally, to develop first-in-class or best-in-class treatments for serious diseases. The diseases we pursue are selected based on an understanding of causal human biology, target validation, and biomarkers with high fidelity from bench to bedside. Once we begin working on a disease, we are relentless in our pursuit of a transformative therapy. Because drug development is an inherently high-risk endeavor, we strive to increase our chances of success by advancing a portfolio of drug candidates for each disease so that we can bring the very best one to market. This strategy is working exactly as expected, and it is the reason for our success in CF. And this is exactly the same approach we are applying to every pipeline program.

Turning to the pipeline.

Our pipeline reflects a deliberate strategy of investing in cereal innovation, both internally and externally to develop first in class or best in class treatments for serious diseases.

The diseases, we pursue were selected based on the understanding causal human biology argued validation and biomarkers with high fidelity from bench to bedside.

Once we begin working on a disease, we are relentless in our pursuit of a transformative therapy.

Because drug development is an inherently high risk endeavor, we strive to increase our chances of success by advancing our portfolio of drug candidates for each disease. So that we can bring the very best one tomorrow.

This strategy is working exactly as expected and it is the reason for our success is yeah.

And this is exactly the same approach we are applying to every pipeline programs.

With this strategy Vertexs has advanced a broad and deep portfolio with first in class programs in the clinic in five different disease areas outside of CF. The.

Reshma Kewalramani: With this strategy, Vertex has advanced a broad and deep portfolio with first-in-class programs in the clinic in five different disease areas outside of CF. The programs in sickle cell disease, beta-thalassemia, FSGS, and alpha-1 antitrypsin deficiency are already in patients, and the Type 1 diabetes program is projected to be in patients next year. A number of these programs have the potential to weed out important proof-of-concept data between now and the end of 21. Individually, each represents a potentially transformative treatment for a serious disease, and collectively, they represent a very large opportunity. Some compounds will inevitably fail, and some programs will not fulfill their early potential.

The programs in sickle cell disease beta thalassemia, Fs, yes, and Alpha one antitrypsin deficiency are already in patients and the type one diabetes program is projected to be in patients next year.

Number of these programs have the potential to weed out important proof of concept data between now and the end of 21.

Individually each represents a potentially transformative treatment for serious disease.

And collectively they represent a very large opportunity.

Some compounds will inevitably fail and some programs will not fulfill their early potential.

In terms of the vertex portfolio not all of the molecules will succeed and not all of them have to eat.

Reshma Kewalramani: In terms of the Vertex portfolio, not all of the molecules will succeed, and not all of them have to. Even if two or three of the programs succeed, and we firmly believe that they will, the return on investment for the innovations that emerge will create exceptional outcomes for patients and drive exceptional returns for our shareholders. That is our R&D and corporate strategy. Finally, a few words about the AATD program. This program is an example of our portfolio approach at work. The recent discontinuation of VX814 is disappointing, but it is neither unusual nor extraordinary to have a clinical program discontinued in early mid-stage development. This is potential for any molecule, and it is anticipated in our overall strategy, hence our portfolio approach.

Even if two once we have the programs succeed and we firmly believe that they will the return on investment for the innovations that emerge we'll create exceptional outcomes for patients and drive exceptional returns for our shareholders that.

That is our R&D and corporate strategy.

Lastly, a few words about the A.T.D. program. This program is an example of our portfolio approach at work so.

The recent discontinuation of VX eight one for is disappointing but.

But it is neither unusual nor extraordinary the hobby clinical program discontinued in early or mid stage development.

This is a potential for any molecule and it is anticipated in our overall strategy. Hence our portfolio approach that is to say the advancement of multiple molecules in parallel new research and into early clinical development.

Reshma Kewalramani: That is to say, the advancement of multiple molecules in parallel through research and into early clinical development. Nevertheless, our enthusiasm for the AAPD program is not diminished, and it does not change how we think about VX864 or our follow-on molecule. Let me now turn to reviewing some of our R&D programs in more detail and highlight some specific upcoming pipeline events. Starting with CF, we have completed the study of Trikafta in patients 6 to 11 years of age and are on track for filing this quarter with a potential approval in 2021. The Phase 3 study in Trikafta for 2-5-year-olds is also now underway.

Our enthusiasm for the a P. D program is not diminished and it does not change how we think about VX 864 for our follow on molecule.

Let me now turn to reviewing some of our R&D programs in more detail and highlight some specific upcoming pipeline events.

Starting with yes.

We have completed the study of <unk> in patients six to 11 years of age and are on track for filing this quarter with a potential approval in 2021.

The phase three study in try catch up four to five year olds is also now underway and lastly, we continue our efforts you nucleic acid therapies to bring forward to treatment to the last 10% of CF patients, who do not make any sea MTR proteins and hence cannot be served by sea of GR modulators on this front I'm pleased with our.

Reshma Kewalramani: And lastly, we continue our efforts in nucleic acid therapies to bring forward a treatment for the last 10% of CF patients who do not make any CFTR protein and hence cannot be served by CFTR modulators. On this front, I am pleased with our second collaboration with Moderna and the preclinical progress using mRNA to serve the last 10% of CF patients. Moving to AATD

Second collaboration with mature enough and the preclinical progress using m. Arnie to serve the last 10% of CF patients.

Moving to Eightd the phase two study of the Xcede exports ongoing and continues to enroll and goes patients.

Reshma Kewalramani: The Phase 2 study of VX864 is ongoing and continues to enroll dose patients. This Phase 2 study is a dose-ranging proof of concept study in approximately 40 people with AATD. The duration of treatment is 28 days followed by 28 days of safety follow-up.

This phase two study is a dose ranging proof of concept study in approximately 40 people with a T.D. So.

Duration of treatments 28 days, followed by 28 days of safety follow up.

We expect to see results from this program in the first half of 2021.

Reshma Kewalramani: We expect to see results from this program in the first half of 2021. We're also advancing additional small molecule correctors through preclinical development with a goal of at least one new corrector entering the clinic next year. Next, the CTX-001 program, our gene editing program in transfusion-dependent beta thalassemia and sickle cell disease, is gaining momentum. As you will recall, data at the EHA conference in June included the results for two patients in the beta thalassemia study, which provided clinical proof of concept for CRISPR-Cas9 ex vivo gene editing in this disease. Results were also presented for one patient with sickle cell disease.

We're also advancing additional small molecule correctors to preclinical development with a goal of at least one new corrector entering the clinic next year.

Next let's see T X years, your one program our gene editing program in transfusion dependent beta thalassemia and sickle cell disease is gaining momentum as you will recall data at the A.J. Conference. In June included the results for two patients in the beta Thalassemia study, which provided clinical.

Proof of concept for CRISPR Casnine ex vivo gene editing in this disease.

Results were also presented for one patients with sickle cell disease.

Also in the summer we updated you on enrollment and dosing progress knowing that a total of seven patients had been treated with TTX 001, and all had successfully engrafted.

Reshma Kewalramani: Also in the summer, we updated you on enrollment and dosing progress, noting that a total of seven patients had been treated with CTX001, and all had successfully engrafted. Since then, we have enrolled and dosed additional patients across both studies. Given the progress across these trials, we look forward to reporting additional clinical data, including more patients and longer durations of follow-up, by the end of this year. With regard to the A4L1-mediated FSGS program, enrollment is ongoing in our Phase 2 proof of concept study of VX147, evaluating the safety, pharmacokinetics, and reduction in proteinuria over 13 weeks.

Since then we have enrolled and dosed additional patients across both studies.

Given the progress of golf across these trials, we look forward to reporting additional clinical data, including more patients and longer duration as a follow up by the end of this year.

With regard to the April one mediated Fscs program enrollment is ongoing in our phase two proof of concept study of VX 147, evaluating the safety pharmacokinetics and reduction in personnel area over 13 weeks weeks.

We expect to obtain initial data from this study in 21.

Reshma Kewalramani: We expect to obtain initial data from this study in 2021. And with our cell therapy for type 1 diabetes, we have completed the required IND-enabling studies and manufacturing work, which were key priorities in the first half of the year. And we are on track to submit an IND application to the FDA before the end of this year. We expect the first study to focus on islet cells alone, and I am optimistic about the progress we are making.

And with our cell therapy for type one diabetes, we have completed the required I, indeed, enabling studies and manufacturing work, which were key priorities in the first half of the year and we are on track to submit a 90 application to the FDA before the end of this year [noise] weeks.

We expect the first study you focused on island sales alone and I'm optimistic about the progress we're making.

This program is important in so many ways, including the number of patients who are living with the disease and the approach which holds the potential to truly transform this condition.

Stuart A. Arbuckle: This program is important in so many ways, including the number of patients who are living with this disease and the approach, which holds the potential to truly transform this condition. In summary, we made strong progress across the business in Q3, and we are well positioned for continued growth in CF and continued advancement of our portfolio of small molecules, cell, and genetic therapies across multiple different disease areas. Now, over to Stuart.

In summary, Weve made strong progress across the business in Q3, and we are well positioned for continued growth in Seattle and continued advancement of our portfolio of small molecules, so and genetic therapies across multiple different disease areas.

And now over to Stewart.

Thank you Russia.

Stuart A. Arbuckle: Thank you, Reshma. I am pleased to review with you this evening our continued strong commercial performance. It is amazing to think that Trikafta was first approved in the U.S. just a little over a year ago. The response to the product has been incredibly positive, and payers have recognized the value of the medicine and provided almost immediate access for eligible patients.

I'm pleased to review with you. This evening our continued strong commercial performance.

It is amazing to think that try captive was first approved in the U.S., just a little over a year ago.

The response to the product has been incredibly positive.

Payers recognize the value of the medicine and provided almost immediate access eligible patients.

The CF community enthusiastically welcome to the approval and CF centers have worked tirelessly to initiate treatment for patients even during the disruption caused by the COVID-19 pandemic.

Stuart A. Arbuckle: The CF community enthusiastically welcomed the approval, and CF centers have worked tirelessly to initiate treatment for patients even during the disruption caused by the COVID-19 pandemic. As a result, today, the vast majority of eligible patients in the U.S. are now being treated with TriCas9. Total CF product revenues for the third quarter were $1.54 billion, reflecting this impressive uptake in the U.S. We continue to observe that patients are maintaining the relatively high levels of personal inventory that they built up at the beginning of the pandemic. Moving forward, we are focused on maintaining the high rates of patient persistence and compliance that have been important factors contributing to our revenue performance in the year to date. In late August, we were delighted to receive earlier than expected approval for CAF TRIO in Europe, and we have begun to execute what is our first fully remote launch.

As a result today the vast majority of eligible patients in the U.S. on now being treated with Tri County.

Total CF product revenues for the third quarter were $1.54 billion, reflecting this impressive uptake in the U.S.

We continue to observe the patients on maintaining the relatively high levels of personal inventories. So they built up at the beginning of the pandemic.

Moving forward, we are focused on maintaining the high rates of patient persistence and compliance that have been important factors contributing to our revenue performance in the year to date.

In late August we were delighted to receive an earlier than expected approval for Caf trio in Europe.

We have begun to execute what he's off first fully remote launch.

Stuart A. Arbuckle: Despite the challenges posed by COVID-19, which continues to surge in Europe, our team has enabled patients to access Cafetrio in multiple countries. Germany, which provides immediate access to new medicines, and other countries where we secured reimbursement for the triple combination ahead of approval, including England, Ireland, Scotland, Wales, and Denmark. We are also working to secure reimbursement and access for all eligible patients in countries where we don't yet have agreements in place. As in the U.S., enthusiasm in the CF community is high.

Despite the challenges posed by code 90, which continues to surge in Europe.

Team has enabled patients to access catriona in multiple countries.

Germany, which provides immediate access to new medicines and other countries, where we secured reimbursement for the Triple combination ahead of approval, including England, Ireland, Scotland Wales in Denmark.

We are also working to secure reimbursement and access for all eligible patients in countries, where we don't yet have agreements in place.

As in the U.S. enthusiasm in the CF community is high.

Over time, we expect the vast majority of patients will be treated.

Stuart A. Arbuckle: And over time, we expect the vast majority of patients will be treated. We expect the impact of the Caftrio launch to become a significant driver of growth, starting in the fourth quarter. All of these factors and their potential impact on results for the fourth quarter and full year of 2020 are reflected in our revised revenue guidance, which Charlie will review in more detail. I am pleased by the progress we've made in bringing our medicines to patients today. Our teams are working hard to ensure that we are able to reach all eligible patients with CF as quickly as possible after regulatory approval, and we expect to see continued revenue growth in CF beyond 2020. Our goal remains, as it has always been, to treat the 90% of all CF patients who might benefit from our CFDR modulators. While we have made great progress towards this goal, our job is far from done.

We expect the impact of the Caf Creo launch to become a significant driver of growth starting in the fourth quarter.

All of these factors and their potential impact on results for the fourth quarter and full year of Twentytwenty are reflected in our revised revenue guidance, which Charlie will review in more detail.

I'm pleased by the progress we've made in bringing all medicines to patients today.

Our teams are working hard to ensure that we are able to reach all eligible patients with CF as quickly as possible also regulatory approval.

We expect to see continued revenue growth in Seattle beyond Twentytwenty.

Our goal remains as it has always been to treat the 90% of all CF patients who might benefit without cfd all modulation.

While we have made great progress towards this goal our job is far from done.

Stuart A. Arbuckle: Today, there are still many patients who, although they are eligible and have reimbursement and access to our medicines, have yet to start treatment. These patients are primarily in Europe, and our teams are working toward treating all of these patients. As we think about our CF business heading into 2021 and beyond, there are more than 20,000 patients who we believe will become eligible for our medicines as we achieve additional regulatory approvals and secure future reimbursement agreements. The key expected drivers for our near and long-term growth in CF include First, reaching reimbursement agreements for CAF TRIO in additional countries in the EU Next, regulatory and reimbursement approvals for the triple combination in additional geographies, such as Australia, Third, regulatory approval and reimbursement of the triple combination in children ages 6 to 11.

Today, there are still many patients who although they are eligible and have reimbursement and access to our medicines have yet to start treatment.

These patients are primarily in Europe, and our teams are working toward treating all of these patients.

As we think about our CF business heading into 2021 and beyond there are more than 20000 patients who we believe will become eligible for all medicines as we achieve additional regulatory approvals and secure future reimbursement degree.

The key expected drivers for our near and long term growth in CF include.

First reaching reimbursement agreements for Caf trio in additional countries in the EU.

Next regulatory and reimbursement approvals for the triple combination in additional geographies such as Australia.

The regulatory approval and reimbursement at the Triple combination in children ages six to 11.

And finally continued label expansions and reimbursement in younger age groups and additional mutations for our portfolio of CF medicines.

Stuart A. Arbuckle: And finally, continued label expansions and reimbursement in younger age groups, and additional mutations for our portfolio of CF meds. We remain steadfast in our belief that we will be able to treat 90% of all CF patients with RCFTR modulators in the years to come, and we look forward to continuing to update you on our program. I am very grateful to the CF teams at Vertex in both the U.S. and internationally who have delivered tremendous results during these challenging times, all in service of our shared dedication to patients living with this life-shortening disease. It is because of this commitment to delivering for our patients that I have high confidence in our ability to reach all eligible patients with our CFTR module.

We remain steadfast in our belief that we will be able to treat 90% of all CF patients with us the ft. All modulators in the years to come.

And we look forward to continued to update you on our progress.

I'm very grateful to the CF teams the checks in both the U.S. and internationally to have delivered tremendous results. During these challenging times.

Full in service of all shed dedication to patients living with this life shortening disease.

He is because of this commitment to delivering for all patients that I have high confidence in our ability to reach all eligible patients with us the ft on mortgages.

Stuart A. Arbuckle: Finally, I would like to thank once again the CF community for their commitment to collaborating with us to reach our shared goals. Charlie will now review our third quarter results and financial guidance. Thanks Stuart. In the third quarter of 2020, we continued our exceptional financial performance, headlined by the strong results with Trikafta in the U.S. Third quarter total product revenues were $1.54 billion, a 62% increase compared to 2019, bringing our year-to-date revenues to $4.58 billion. Our third-quarter revenues included $1.22 billion in the U.S. and $314 million in revenues outside the U.S.

Finally, I would like to thank once again, the CF community, but their commitment to collaborating with us to reach our shared goals.

Charlie will now review, our third quarter results and financial guidance.

Thanks, Stuart and.

In the third quarter of 2020, we continued our exceptional financial performance headlined by the strong results would try CAFTA in the U.S.

Third quarter total product revenues were 1.54 billion, a 62% increase compared to 2019.

Bringing our year to date revenues to 4.58 billion.

Our third quarter revenues included 1.22 billion in the U.S.

And 314 million in revenue outside the U.S.

Charles F. Wagner: Revenues from outside the U.S. in the third quarter grew 31% over the prior year, driven by continued uptake of our medicines following the completion of several reimbursement agreements late last year. And, as Stuart mentioned, Captrio launched late in the third quarter, so we expect to see increased contribution to international revenues in the fourth quarter and beyond. Our third quarter 2020 combined R&D and SG&A expenses were $497 million compared to $416 million for the third quarter of 2019, bringing our year-to-date expenses to $1.44 billion. Our expenses in 2020 reflect increased costs to support the rapid global expansion of our CF business, as well as targeted investment in the expansion of our pipeline into new disease areas and the progression of several important clinical programs.

Revenues from outside the U.S. in the third quarter grew 31% over the prior year.

Given by continued uptake of our medicines following the completion of several reimbursement agreements late last year.

And as Stuart mentioned kept Creo launch late in the third quarter. So we expect to see increased contribution to international revenue in the fourth quarter and beyond.

Our third quarter 2020, combined R&D and <unk> expenses were 497 million.

Fair to 416 million for the third quarter of 2019.

Bringing our year to date expenses to 1.44 billion.

Our expenses in 2020 reflect increased costs to support the rapid global expansion of our CF business as.

As well as targeted investment in the expansion of our pipeline into new disease areas and the progression of several important clinical programs.

Charles F. Wagner: The significant continued growth in revenues combined with more moderate growth in spending resulted in a year-to-date operating margin of 57% and year-to-date operating income of $2.6 billion, an increase of 118% compared to operating income in the first three quarters of 2019. Year-to-date net income for 2020 was $2.06 billion, compared to $945 million in the first three quarters of 2019. With our strong revenue and profitability, we finished the second quarter with $6.2 billion in cash.

The significant continued growth in revenue combined with more moderate growth in spending resulted in year to date operating margin of 57%.

And year to date operating income of 2.6 billion.

An increase of 118% compared to operating income in the first three quarters of 2019.

Year to date net income for 2020 was 2.06 billion compared to 945 million in the first three quarters of 2019.

With our strong revenue and profitability. We finished the second quarter was 6.2 billion in cash.

Charles F. Wagner: Consistent with our corporate strategy, our top priority for capital deployment is to reinvest in innovation, both in our internal R&D engine and in external innovation aligned with our R&D strategy to accelerate the development of transformative medicines for serious diseases. In summary, Vertex's exceptional financial performance represents an attractive combination of growth, profitability, and scale that is unique among large-cap biotechs. Now, guys.

Consistent with our corporate strategy, our top priority for capital deployment is to reinvest in innovation both in our internal R&D engine and an external innovation aligned with our R&D strategy to accelerate the development of transformative medicines for serious diseases.

In summary, Vertexs exceptional financial performance represents an attractive combination of growth profitability and scale that is unique among large cap biotech.

Now to guidance.

Charles F. Wagner: Today we are pleased to once again revise upward our 2020 financial guidance for total product revenues to a range of $6.0 to $6.2 billion, which at the midpoint reflects 52% growth over 2019. This revised guidance primarily reflects the ongoing and impressive performance of Trikafta in the U.S. For non-GAAP OPEX, we are maintaining our guidance of $1.95 to $2 billion, with the vast majority of the year-over-year increase concentrated in R&D.

Today, we are pleased to once again revised upward our 2020 financial guidance for total product revenues to a range of 6.0 6.2 billion, which at the midpoint reflects 52% growth over 2019.

This revised guidance primarily reflects the ongoing an impressive performance of trade kept it in the U.S. our.

Our current view of persistence and compliance trends.

And the impact of the cap trio launch on fourth quarter revenue.

For non-GAAP Opex, we are maintaining our guidance of 1.95 to 2 billion with the vast majority of the year over year increase concentrated in R&D.

Charles F. Wagner: With the expansion and progression of our pipeline in 2020, we are poised to generate important clinical data and results across our programs in the coming quarters. The progress of these programs will be the primary driver of further investments in 2021, as well as investments in critical technologies and capabilities. For example, we expect our vertex cell and genetic therapies efforts to remain a priority as programs enter the clinic and advance further in clinical development. This includes investments in our ongoing CTX-001 Phase 1-2 program and our Type 1 diabetes program, which we expect to move into patients as we initiate a Phase 1-2 study next year. Lastly, due to changes in the utilization of certain tax assets, we are revising our 2020 full-year non-GAAP tax rate guidance to a range of 20-21%.

With the expansion of progression of our pipeline in 2020, we're poised to generate important clinical data and results across our programs in coming quarters.

The progress of these programs will be the primary driver of further investments in 2021 as well as investments in critical technologies and capabilities. For example, we expect evertec selling genetic therapies efforts to remain a priority as programs enter the clinic in advance further in clinical development. This include investments in our.

Ongoing CTX Oh, one phase one two program and our type one diabetes program, which we expect to move into patients as we initiate a phase one two study next year.

Lastly, due to changes in the utilization of certain tax assets. We're revising our 2020 full year non-GAAP tax rate guidance to a range of 20% to 21% I would note that the benefits that lower our 2020 tax rate are not expected to repeat so our non-GAAP tax rate is expected to remain at 21% to 22%.

Reshma Kewalramani: I would note that the benefits that lower our 2020 tax rate are not expected to repeat, so our non-GAAP tax rate is expected to remain at 21-22% in subsistence. Now back to Reshma for a few concluding remarks. As we head into 2021, I'm very pleased with both the achieved and potential growth of the CF franchise and the breadth of our pipeline. Our strategy of investing in internal and external innovation is working, with more CF patients becoming eligible and receiving treatment with CFTR modulators, and our portfolio of first-in-class and best-in-class therapies advancing, providing additional confidence for our long-term growth. I want to make a point of recognizing the progress of our R&D teams, especially in diseases outside of CF, with a broad pipeline of potentially transformative programs.

In subsequent years.

Now back to restaurant for a few concluding remarks.

As we head into 2021, I'm very pleased with both the existing and potential growth of the CF franchise and the breadth of our pipeline.

Our strategy of investing in internal and external innovation is working with more CF patients, becoming eligible and receiving treatment with the GR modulators and our portfolio of first in class and best in class therapies, advancing providing additional confidence for our long term growth.

I want to make a point of recognizing the progress of our R&D teams, especially in diseases outside of CF with a broad pipeline of potentially transformative programs.

Throughout our history, we have built this differentiated pipeline now extending to five diseases already in the clinic outside of CF by investing in game changing science research and development.

Reshma Kewalramani: Throughout our history, we have built this differentiated pipeline, now extending to five diseases already in the clinic outside of CF, by investing in game-changing science, research, and development. With continued internal innovation in our labs, as well as external innovation through business development, such as partnerships with CRISPR Therapeutics and our acquisitions of Sema and Exonix, we are on track to deliver multiple programs into the clinic and multiple proof-of-concept readouts in the coming year. This proven R&D and business development strategy of investing in transformative science and medicines, internally and externally, is core to our current success, and it will continue to be so as we move forward into 2021 and beyond. I look forward to updating you on progress across the business and the multiple R&D programs in the clinic in the coming months. Thank you, and we'll now open the call to questions. Certainly, ladies and gentlemen, if you have a question at this time, please press star, then 1 on your touchtone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key.

With continued internal innovation in our labs as well as external innovation through business development, such as partnerships with CRISPR therapeutics, and our acquisitions of summer and exotic.

We are on track to deliver multiple programs into the clinic and multiple proof of concept read outs in the coming year.

Proven R&D and business development strategy of investing in transformative science and medicine internally and externally is core to our current success.

And it will continue to be so as we move forward into 2021 and beyond I look forward to updating you on the progress across the business and the multiple R&D programs in the clinic in the coming months. Thank.

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

Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered and he'd like to remove yourself from the queue. Please press the pound key our first question comes from the line of film to do from Cowen and company. Your question. Please.

Sounds like a bit more conversations of last week. This was really trying to figure out whether the issues with 814 or mechanism based or molecule specific.

Reshma Kewalramani: Our first question comes from the line of Phil Nadeau from Calendon Company. Your question, please. It sounds like, based on our conversations over the last week, investors are really trying to figure out whether the issues with 8.1.4 were mechanism-based or molecule-specific and, therefore, how optimistic should we be about 8.6.4. So I'm curious, how do you think about that particular question and, in particular, were there any differences in bioavailability in the Healthy Volunteer studies between the two; 864 won't have the same issues with LFT elevations Thanks. Hey Phil, this is Reshma.

And therefore.

So optimistic should we about GBP 864, so I'm curious how do you think about that particular question and.

In particular were there any differences in bio availability in the healthy volunteer studies between the two molecules or any anything from the preclinical studies that you could point to that would suggest.

It's six four will have to see issues with <unk> appeal of issues that <unk>. Thanks.

[laughter] Oh. This is <unk>, let me start with that question and I'm going to ask David Altshuler, who is with us to comment further.

You are asking really important question about whether it was the findings with eight one for a should be considered molecule specific war should be considered on mechanism and there's another question in there about how different is it six four from eight one for <unk>. Let me just tell you where we are and then I'll ask David to give you some.

Reshma Kewalramani: Let me start with that question and I'm going to ask David Altshuler who's with us to comment further. You're asking a really important question about whether the findings with 814 should be considered molecule specific or should be considered by mechanism. And there's another question in there about how different 864 is from 814. So let me just tell you where we are and then I'll ask David to give you some color. From all of the data that we have and our understanding, I have no reason to believe that this is on a mechanism. I believe that this is molecule-specific idiosyncratic to VX814. And 864 and 814 are different chemical entities, and I'm going to ask David to give you a little bit more color on the mechanism versus 814 and then tell you specifically a few differences between these molecules, which are clearly different molecular structures. David?

Color.

From all of the data that we have and our understanding I have no reason to believe that this is on mechanism I believe that this is a molecule specific idiosyncratic to VX 814, and eight four and eight one for our dear friend chemical entities and I'm going to ask David did.

Give you a little bit more color on the odd mechanism versus 814, and then tell you specifically a few differences between these molecules, which are clearly different molecular structures David.

Thank you Richard Thanks for the question. So first with regard to the whether or not these are on mechanism for idiosyncratic findings and eight one for although we don't know and of course, we can't know for sure.

David Altshuler: Thank you, Reshma. Thanks for the question, Phil. First, with regard to whether or not these are on mechanism or idiosyncratic findings in 814, although we don't know, and of course we can't know for sure, we see no reason to conclude that the LFT findings are on mechanism. There's really two lines of logic there that we think are most convincing.

I see no reason to conclude that the LMP bindings are on mechanism. There's really two lines of logic. There that we think the most convincing the first is that you are very common to have L.P. abnormalities as a cause program stopping in early development and these are typically chemical they are not.

David Altshuler: The first is that it is very common to have LFT abnormalities as a cause of program stopping in early development, and these are typically chemical based, not mechanism based. The second is that with regard to a specific interaction of our mechanism and hepatotoxicity, I'll just note that we have done multiple studies in mouse models that carry the human ZAAT gene where the polymers are seen, and liver histology and injury occur. And in those models, when we treat with our small molecules, not only do we see no evidence whatsoever of hepatotoxicity, but we actually see improvement in liver histology. And so, common things being common and the specific chemical nature of most LFT abnormalities combined with the mouse data makes us think that it's premature to conclude that it's mechanism-based, and we certainly look forward to the 864 data. Finally, just to close, you asked about 864 and 814. They're chemically different molecules; they have different structures.

The second is that with regard to a specific interaction of our mechanism and a patio toxicity I'll. Just note that we have done multiple studies and mouse model that carried the human D.A. <unk> gene, where the hot the polymers arsene and liver histology.

He and injury happen and then those models and we treat with our small molecule not only do we see no evidence whatsoever of how to toxicity, you actually see improvement in liver histology and so common thing being common and the specific chemist nature of most though with T. abnormalities combined with the mouse data makes a thing.

He said, it's premature to conclude that its mechanism based and a and we certainly look forward to <unk> six for data finally, just to close you asked about 864 and eight one for their chemically different molecule. The different structures 864 is multi fold more potent than 814 and does have different there.

David Altshuler: 864 is multifold more potent than 814 and does have different physical properties and metabolism, and these really represent two different opportunities to treat the disease. And just to close, in our CF experience, we put multiple next-gen correctors into the clinic. We saw that different molecules, even in the same class, have quite different properties, and so that actually underlies our portfolio strategy. That's very helpful.

Nickel properties and metabolism and are these really represent two different opportunities to treat the disease and just to close the NRC F. experience, who put multiple next gen correctors into the clinic.

We saw the different molecule even in the same klaskin quite different properties and so that is actually underlies our portfolio strategy.

[noise] that's very helpful. Thank you.

Thank you. Our next question comes from the line of helping Richter from Goldman Sachs. Your question. Please.

David Altshuler: Thank you. Thank you. Our next question comes from the line of Salveen Richter from Goldman Sachs. Your question, please. Good afternoon.

Turning on the ATM program can you speak to your third generation compounds and how you might be able to optimize some on the Ford and I have a second question. Thank you.

Reshma Kewalramani: On the AAT program, can you speak to your third-generation compounds and how you might be able to optimize them on the forward? And I have a second question. Salveen, I think you were asking about the generation of compounds coming behind VX864 for AATD. And I'm going to ask David to make some comments. The one thing I'd like to say is, as I said in my prepared remarks, you know, once we have a disease in our sandbox, we are absolutely relentless about pursuing a transformative therapy. And in the case of AATD, but honestly across our entire pipeline, our approach is defined by this idea of bringing multiple molecules in parallel forward through early development. And that's exactly what's happening in AATD.

Probably not I think you are asking about the generation of compounds coming behind VX 8644, Eightd and I'm going to ask David to make some comments I'm. The one thing I'd like to say that as I said in my prepared remarks, you know once we haven't disease in our sandbox, we are absolutely relentless.

Pursuing a transformative therapy and in the case of HPV, but honestly it across our entire pipeline. Our approach is defined by this idea of bringing multiple molecules in parallel Oh word up through early development and that's exactly what's happening in eightd.

David you have any points you want to make about the the next generation of molecules just that we've been working for some time as we always do to have multiple scaffold to get improvement in potent in properties and and all the features you look for and we're excited to move forward molecules that are in the preclinical.

Reshma Kewalramani: David, do you have any points that you want to make about the next generation of molecules? Just that we've been working for some time, as we always do, to have multiple scaffolds to get improvements in potency and properties and all of the features you would look for. So we're excited to move forward molecules that are in late-stage clinical development that would have differentiated and improved features. And then, secondly, can you just speak to your business development strategy for the future and if this initial setback has changed this outlook, as well as, you know, maybe commenting here on your mRNA and CRISPR-Cas9 programs and kind of where they stand in terms of moving into the clinic? Yeah, sure thing. Salveen, let me take that. This is Reshma.

Preclinical development, they would have a differentiated and improve injury.

And secondly can you just speak to your business development strategy on the Ford and if this initial set back has changed that outlook.

As well as you know maybe commenting here on your MSR NAND, CRISPR casnine programs and kind of where they stand in terms of moving into the clinic.

Yeah sure thing so I mean, let me take that this situation. My you know we have had a long interest in business development, we have the fundamental belief in investing in innovation be it internal or external last year. You know we did over a $1.5 billion.

Reshma Kewalramani: You know, we have had a long interest in business development. We have this fundamental belief in investing in innovation, be it internal or external. Last year, you know, we did over $1.5 billion worth of business development activities. And that interest remains. Our desire to have business development be one and the same in terms of strategic approach with internal R&D, that remains. And, very specifically, our three pillars of interest remain exactly the same.

Worth of business development activities and that interest remain our desire to have business development being one and the same in terms of strategic approach with internal R&D that remained very specifically our three pillars of interest that remains exactly the same that is to say we are.

Interested in Seattle, particularly in technology that could help us with the last 10%. We continue to be very interested in tools like we did deals with it any and Madonna and Arbor, and others and we're very interested equally in assets that could tackle diseases that are in our favor.

Reshma Kewalramani: That is to say, we are interested in CF, particularly in technologies that could help us with the last 10%. We continue to be very interested in tools like we did deals with Affinia and Moderna and Arbor and others. And we are equally interested in assets that could tackle diseases that are in our sandbox. Now, the one thing that has changed, I think pretty obviously, is our growing financial strength.

And Bob.

Now the one thing that has changed I think pretty obviously is our growing financial strength and we certainly have the capacity to do more deals are bigger deals and from that perspective. What we are really focused on is our strategy and we're prepared to use our balance sheet for a business.

Reshma Kewalramani: We certainly have the capacity to do more deals or bigger deals. And from that perspective, what we are really focused on is our strategy. And we're prepared to use our balance sheet for business development opportunities that fit within this very disciplined strategy that I've laid out. I'll quickly get through to our MRNA. I think you must be asking about the collaboration with Moderna.

Development opportunities that fit within this very disciplined strategy that I've laid out.

The I'll quickly get due to R.M. Arnie I think you must be asking about the collaboration with Madonna I'm pleased with the way our teams in San Diego immigrants are working together on the yeah last 10% program and with CRISPR Casnine.

Reshma Kewalramani: I'm pleased with the way our teams in San Diego and Moderna are working together on the CF Last 10% program. And with CRISPR-Cas9, that program is in partnership with CRISPR Therapeutics. As you heard in the prepared remarks, since the summer and since EHA, we've enrolled more patients. We've dosed more patients. Those early results were very impressive to us, two patients with beta thalassemia and one with sickle cell that we presented over the summer.

That program is in partnership with CRISPR Therapeutics as you heard in the prepared remarks since the summer and since each chain weve enrolled more patients we dose more patients. Those early results were very impressive to us to patients in beta thalassemia and one in sickle cell that we presented over the summer.

For sure those are small numbers of patients.

Reshma Kewalramani: And for sure, those are small numbers of patients, but it is really a functional cure for those patients, and we're very much looking forward to the results that we intend to share before the end of the year with more patients being treated and a longer duration of follow-up. Thank you.

But it is really a functional cure for those patients and we're very much looking forward to the results that we intend to share before the end of the year with more patients being treated and longer duration of follow up.

Thank you.

Reshma Kewalramani: Our next question comes from the line of Geoff Meacham from Bank of America. Your question, please. I just have a couple.

Thank you. Our next question comes more Jeff <unk> from Bank of America. Your question. Please.

[noise] question I, just have a couple of <unk>, one the Stewart with cobot accelerating in Europe in countries going into Fourq warranty.

Reshma Kewalramani: One, Stuart, with COVID accelerating in Europe and countries going into full quarantine, the question is, what, if any, are there tweaks to the launch plan? And the second question, Reshma, I thought the stock reaction after the AAPC setback was a bit overdone, but it is implying that there's not a lot of investor confidence in the portfolio behind CF. So to put an emphasis on Salveen's question, is there urgency to move the pipeline to mid or late stage through larger scale BD? The pipeline is broad. It just seems like it's early.

The question was what if any are there.

So the launch plan.

The second question Irish stock.

Stock reaction after the Eightys effect was a bit overdone, but.

It is implying that there's not a lot of investor confidence in the portfolio behind so.

So to put a and puts us on solving the question is there urgency to move the pipeline to mid or late stage due to larger scale BD.

The pipeline is broad it's just seems like it's early it won't catch up in time for when see EPS potentially starts to moderate growth wise.

Reshma Kewalramani: It won't catch up in time for when CF potentially starts to moderate growth-wise. Thanks for the question. Let me ask Stuart to go first, and then I'll come back for the second part of your question.

Yeah. Thanks for the question I want to go first and then I'll come back to the second part of your question.

Yeah, Jeff Thanks for the question so.

Stuart A. Arbuckle: Yeah, Geoff, thanks for the question. Obviously, the reaction from the community to CAF TRIO in Europe has been high, exactly as we saw here in the US, and we fully expect, over time, that we will treat the vast majority of eligible patients. The real question is, how quickly are we going to get to that destination?

Obviously the reaction from the community to capture you in Europe has been high exactly as we saw here in the U.S. and we fully expect over time that we will treat the vast majority of eligible patients. The real question is how quickly are we going to get to a that destination.

And obviously there are a number of factors that are important but clearly one is the ongoing and rapidly changing.

Stuart A. Arbuckle: And obviously, there are a number of factors that are important there, but clearly, one is the ongoing and rapidly changing pandemic. In terms of changing our launch planning, which I think was your question, it really hasn't changed our launch planning at all. We had been planning since March for a fully virtual launch. And that's what we are executing right now. Obviously, that causes some uncertainty; the pandemic leads to uncertainty about how easy it will be for patients and physicians to interact. So, that's why it's certainly uncertain as to how quickly we will get to that kind of peak uptake. But the early trends are, I have to say, very encouraging.

Changing a pandemic influenza changing launch planning, which I think was your question it really hasn't changed all launch planning a toll.

We had been planning since March for a fully virtual launch a and that's what we are executing right now.

Obviously that causes some uncertainty the pandemic leads to uncertainty about how easy it will be for patients and physicians to interact.

So that's why it's certainly uncertain as to how we will how quickly we will get to that kind of a peak uptake. The early trends are I have to say very encouraging obviously in this quarter. We were just a few short weeks into the launch but the early trends.

Reshma Kewalramani: Obviously, in this quarter, we were just a few short weeks into the launch, but the early trends are encouraging, and, as I say, we expect to get to the vast majority of them over time. The real question is just how quickly we get there. And about your question about the pipeline, including business development, and I think if I just stand back and reflect, I think you're really talking about how I see growth in the coming years, the next decade. Let me break that down into two parts.

Our encouraging and as I say, we expect to get to the vast majority of them over time. The real question is just how quickly we get there.

And about your question for the pipeline, including business development and I think if I just stand back and reflect I think you're really talking about how do I see growth in the coming years. The next decade, nothing parsed that out into two parts.

We have to be very careful about making sure that we don't forget about yeah.

Reshma Kewalramani: We have to be very careful about making sure that we don't forget about CF. So where we are in CF, as you heard Stuart talk about, we are at a place where we have tricaptor-captrio, which can serve up to 90% of patients, but that is not all today. It means that there are some patients in some geographies where there is regulatory approval and reimbursement, but we haven't yet gotten to those patients. And then, of course, there are the 20,000-plus patients that we are going to get to with future regulatory approvals and reimbursements, and then there are the last 10% of our CF patients. So that is multiple years of getting to more and more patients, and by treating more and more CF patients, more growth for the company. Now, let's go very specifically to the non-CF pipeline, and I want to make sure I take a minute to really go through this. The non-CF pipeline today; this is not in the future. This is not one year from now. It's not even a few months from now, today.

So where we are in CF and you heard Stuart talk about we are out of place where we have tried to factor cap trio, which can serve up to 90% of patients but that is not all today. It means that there are some patients in some geographies, where there is regulatory approval and reimbursement, but we haven't yet gotten to those patients and then of course.

The 20000, plus patients that we're going to get you to with future approvals and reimbursements and then there's the last 10% of our CF patients. So that is multiple years of getting to more and more patients and by treating more and more patients more growth for the company.

Then, let's go very specifically to the non CF pipeline and I want to make sure I take a minute to to really go through that.

The non CF pipeline today. This is not in the future. This is not one year from now it's not even a few months from now today.

Pipeline is already in phase two.

Reshma Kewalramani: The pipeline is already in Phase 2, so it's in the proof-of-concept stage in five disease areas. And let me just make sure I take another minute and just underline a few important points. In the CRISPR CTX-001 program for beta thalassemia, we shared clinical proof of concept results for beta thalassemia over the summer time frame. We anticipate proof of concept results for sickle cell disease by the end of this year when we share the data from the patients who are currently going through their treatment. That's two.

So it's in proof of concept stage in five disease areas.

And let me just make sure I take another minute and just underline a few important points.

And that could spur TTX years. Your one program beta thalassemia, we shared clinical proof of concept results in beta thalassemia over the summer time frame.

We anticipate proof of concept results for sickle cell disease by the end of this year when we share the data from the patients who are currently going through their treatment.

Shoot.

Reshma Kewalramani: AAPD, and this one's really important. You'll remember that 814 and 864 were, let's say, six months apart, something like that. It's certainly months apart, not years apart.

Hey, TV and this is really important you'll remember that eight one for an 864 were let's say six months apart something like that it's certainly month apart not years, apart and while disappointing our strategy fully contemplate that.

Reshma Kewalramani: While disappointing, our strategy fully contemplates that molecules and programs may not succeed. And that's why 864 was already in the clinic, already in phase two, and we do expect those results in the first half of 2021. Moving on then to FSGS, that's also in Phase 2. And then just to go a little bit more into the pipeline, the Type 1 Diabetes Program, IND is going to go in by the end of this year, which means that it will be in patients now. That means in patients, not in healthy volunteers, but in Phase 2 in patients in 2021. So I think when you really carefully look at the pipeline, and you stand back and say, "where are we really?", I think we're in a really good place.

Molecules and programs may not succeed and that's why 864 was already in the clinic already in phase two and we do expect those results in the first half of 2021.

Moving on then to Fscs. That's also in phase two and then just to go a little bit more into the pipeline and the type one diabetes program that I, India is going to go in by the end of this year, which means that's going to be in patients now that means in patients not in healthy healthy volunteers, but enough.

Phase two indications in 2021 so.

I think when you really carefully look at the pipeline and you stand back and say where are we really.

I think we're in a really good place five disease areas already in the clinic.

Reshma Kewalramani: Five disease areas already in the clinic with more coming through in the pipeline and much to look forward to even in the last few months of this calendar year. And what I mean by that is the 6 to 11 in CF, that application going in, the CRISPR data coming out, and the IND for Type 1 Diabetes. I hope that helps. Yeah, very much. Thanks, Rich.

With more coming through up in the pipeline and much to look forward to even in the.

Last few months of this calendar year, and what I mean by that is the six to 11 in CF that application going in the CRISPR data coming out and the I.M.D. for type one diabetes I hope that helps.

Yes, very much thank freshman yeah.

Yeah Yeah.

Reshma Kewalramani: Yeah. Yeah. Thank you. Our next question comes from the line of Paul Matan from Stiefel. Your question, please. One AAP and one commercial, if you don't mind.

Thank you. Our next question comes from the line of Paul Matteis from Stifel. Your question. Please.

Thank you so much for taking my questions.

Reshma Kewalramani: On AAP, in the 814 press release, you mentioned that analysis of the PK data from the study indicated exposure levels were low. Were you implying that they were lower than seen in healthy volunteers? And if so, what would you kind of make about that?

Reshma Kewalramani: Could that have anything to do with the fact that these AAP patients may have livers that operate differently? And then, commercially, just one question on XUS price. I know you're not going to disclose granular details, but as you think about price in Trikafta or the SSS out of the U.S. in year one, with the country mix you're launching in initially, how might that compare to the kind of long-term price that you're anticipating? Thanks so much.

Reshma Kewalramani: Paul, let me take the first part of your question first, and then I'll ask Stuart to comment on XUS pricing. So, with regard to 814, that study is obviously an incomplete study. What that means is that we don't have all of the patients in all of the dose groups completing the full treatment period, and we're in the process of closing out that study and bringing all that data in. From the data that we did have access to, what we see is that the exposure across the dose range is lower than the target exposure that we were looking for. And the target exposure that we are looking for is the range at which we expect, let's call it therapeutic elevations of AAT levels, to have occurred. Now, when we think about, well, gosh, why is there a low PK?

When do you think about well gosh why is there no P. T. There's a there's a standard list of things one thinks about and yes, you're right that healthy volunteers are different than disease patients in the fact that one's healthy and one has the disease, but they are actually a number of other fairly obvious but nonetheless differences.

Reshma Kewalramani: There's a standard list of things one thinks about. And yes, you're right that healthy volunteers are different than disease patients in the fact that one's healthy and one has the disease. But there are actually a number of other fairly obvious but nonetheless important differences.

Reshma Kewalramani: Differences in age, differences in gender, diet, concomitant medicines, formulations, et cetera. So those are the kinds of things we think about. Absolutely, as we bring in all this data, we're certainly going to evaluate all of that. But I think the important point, though, is that H64 is the medicine that's in Phase II, and we're looking forward to the H64 study to give us a full view of this pathway and this mechanism. You asked a question in there before I turned it over to Stuart about livers. You know, there are about 100,000 people in the U.S. who have AATD, and we have no evidence that they react differently to oral medicine. So I don't have any evidence of that.

Differences in age differences in gender diet.

Concomitant medicines formulations et cetera. So those are the kinds of things, we think about an absolutely as as we bring it all the data was certainly going to evaluate all of that I think the important point, though is that 864 is the medicine. That's in phase two and we're looking forward to the 864 study to give us.

A full view of this pathway and this mechanism.

You ask the question in there before I turn it over to Stuart about Livers, you know, there's about 100000 people in the U S who have a T V and we have no evidence that they react differently to oral medicines. So I don't have any evidence of that.

Stewart over to you for the question of our pricing in New York.

Yes, cool I think it's important to think about the two types of countries that we are able to get the medicine to.

Stuart A. Arbuckle: Stuart, over to you for the question about pricing in Europe. Yes, so Paul, I think it's important to think about the two types of countries that we are able to get the medicine to immediately. So the first one is countries like Germany, which provide immediate access. And there, because of the structure of the German market, you get immediate access for patients at the list price whilst you negotiate a price over the next 12 months. Whereas, in contrast, countries like the U.K., Ireland, and Denmark, where we negotiated prior to approval the negotiated price per cafeteria over there, we are essentially selling at our final price, as it were.

Immediately so the first one is countries like Germany, which provide immediate access in the because of the structure of the German market you get immediate access for patients at the list price Wall Street negotiate a price over the over the next 12 months.

Whereas in contrast countries like the UK Island, Denmark, where we negotiated prior to the approval be negotiated price of the country are there we are essentially selling at all all final prices at work.

So.

Stuart A. Arbuckle: So moving forward, we're going to be entering more and more markets where we have negotiated prices. Your question was, you know, how will the negotiated price compare? You know, really hard to say because we haven't finalized those negotiations. But, in general, I'm expecting our negotiated prices to be as they are for our other medicines in a pretty narrow range across Europe because we know that the products provide the same value and benefit to patients no matter what country they're in.

<unk> forward, we're going to be entering normal markets, where we have negotiated prices. Your question was how will the negotiated price.

Compare.

Really hard to say, because we haven't finalize those negotiations but in general.

Expect it expecting on negotiated prices to be as they offer our other medicines in a pretty narrow range across Europe, because we know the products provide the same value and benefit to patients no matter what country they're in.

Thanks, So much that was very helpful.

Reshma Kewalramani: Thanks so much. That was very helpful. Thank you. Our next question comes from the line of Alethea Young from Canter. Your question, please. My question, and I just wanted to kind of ask another one around AAT.

Our next question comes from the line of Arabia Young from cancer. Your question. Please.

And my question and I, just wanted to kind of ask another one around 18, just can't talk about some of the scientific work that you've done the kinda address when you're formulating these molecules kind of the efficiency, that's going to be needed to kind of clear that a large amount of a T created I know you've been very thoughtful about that I just wanted to get some more detail on that thing.

David Altshuler: Can you talk about some of the scientific work that you've done to kind of address, when you were formulating these molecules, the efficiency that's going to be needed to kind of clear the large amount of AAT created? I know you've been very thoughtful about that. I just wanted to get some more detail on that thing. Yeah, sure, thanks. I'm going to ask David to give you some color on how we think about the molecule. I think what you're really getting at, Althea, is that the AAT as a protein is an abundant protein, and I'll ask David to give you some of our insights. Obviously, we're not going to give you the answer to this question because it's a non-obvious insight that our scientists have had, but David will give you some color.

Yeah sure. Thanks, I I'm Gonna ask David to give you some color of how we think about hockey I think what you're really getting to offer you is that the the a T. As a protein is is an abundant protein and.

I'll ask David to give you some of our insights obviously, what we're not going to give you. The answer to this question because it's a non obvious insight that our scientists had but David will give you a call.

Thank you for the question one of the reasons, we've been excited and remain very excited about this program is because it's the only approach that has the potential to address both the lung disease and the liver disease in this important.

David Altshuler: Sure. Thank you for the question. One of the reasons we've been excited and remain very excited about this program is because it's the only approach that has the potential to address both lung disease and liver disease in this important condition. And the key thing to the question you're asking and why the solution is so promising is that although there is a lot of AAT made, one molecule of the drug can refold or appropriately fold, I should say, more than one molecule of AAT. So it's really not a concern that we have based on all the experiments we've done with molecules and cells and animals about whether or not one molecule can do it.

Condition.

And the key thing to the question you're asking why the solution is so so promising is because although there is a lot of a T made.

One molecule of the drug and refilled her appropriately fold I should say more than one molecule. They T. So it's really not a concern that we have based on all the experiments, we've done and molecules and cells and animals about whether or not one molecule can do it and it just underscores our commitment.

Two beyond 814, and obviously being very excited about 864 also other molecules does this mechanism have so much problems.

David Altshuler: And it just underscores our commitment to beyond 814 and, obviously, being very excited about 864 and other molecules because this mechanism has so much promise. Thank you. Our next question comes from Michael Yee from Jeffery, questioning that maybe there is a hypothesis that some of it might be mechanism-based either because it's specifically a liver-targeted drug and you're actually trying to bind aggregates in the liver. So I guess my question is, one, how confident are you that it's not something mechanism-related there other than the preclinical model since it's a liver-targeted And two is, I guess, how fast did it come on in 8.1.4, and do you have some degree of confidence you're at least past the early parts of the study for 8.6.4 to make us feel just a little bit better?

Our next question comes from the line of Michael from Jeffrey Just your question. Please.

Oh, great. Thanks, two part question.

A T. A I guess you can see from some of the questioning that maybe there is a hypothesis that some of it might be mechanician based either because it's specifically a liver targeted drug and you're actually kind of buying aggregates in the liver show I guess my question is one how confident are you that it's not something nakedness.

Mm related there other than the preclinical model she'll ever targeted dragon and that's actually might be related and two is I guess, how fast it to come on in 814, and do you have some degree of confidence or at least passed the early parts of the study for any chicks, Florida can make us go to smell better. Thanks.

Yeah like.

David Altshuler: Thanks. Mike, I think that the bottom line to your question is, " Help us understand why we think this liver finding is not going to be a recurrent finding in 864." And I'm going to ask David Altshuler to comment on this important question about why we don't think that this is on mechanism. But I'll just say that, Mike, the absolute bottom line, there is no way that I can promise you, David A. can promise you that with VX864 or any molecule in our pipeline will not have a safety finding. There is no way to promise that,

Like I I think that the the bottom line to your question is.

Help us understand why we think this is this liver finding is not gonna be a recurring finding an 864 and I'm Gonna ask David also to comment on on this.

Important question about why we don't think that this is an mechanism.

I'll, just say that like the absolute bottom line.

There is no way that I can promise you or.

Or the David I can promise you that with me at 864 or any molecule in our pipeline is not going to have a safety finding there there was no way to promise that obviously that is the reason we do the phase two studies.

Reshma Kewalramani: Obviously, that is the reason we do the Phase II studies, specifically to assess safety, PK exposure, and then, of course, a sense for the primary endpoint. But I don't believe that this is an on-mechanism finding, and I'll ask David to walk you through the multiple lines of reasoning. And I think David's done that, but I'll just ask him to go through one more time what we've seen in our animal models, because we have studied this in great detail in our mouse models because we're actually evaluating the liver. David?

Typically to assess safety PK exposure and then of course Ah sense for the primary endpoint, but I don't believe that this is an on mechanism finding and I'll ask David to walk you through the multiple lines of reasoning and and I think David done that but I'll, just I'm asking to go through one more time.

What we've seen in our animal models, because we have studied this in great detail in our mouse models, because we're actually evaluating the liver.

No. Thank you and thanks, a lot for the question I mean, I think one thing I'll say before I go through that is we have no evidence that this is a liver targeted drugs I just want to be clear. This is a drug that acts on a protein is expressed in the liver and actually one of the things. We're excited about me approach is actually a T is not only made him deliver it's actually made it.

David Altshuler: Thank you, and thanks a lot for the question. I think one thing I'll say before I go through that is we have no evidence that this is a liver-targeted drug. I just want to be clear. This is a drug that acts on a protein that's expressed in the liver, and actually, one of the things we're excited about in the approach is that AAT is not only made in the liver. It's actually made in other cells of the body, and actually, this drug is systemic.

Other sales of the body and actually this drug it's a stomach and so would be I think it's incorrect to say this is a drug targeted to deliver even though it does act on the liver and then I think you come back to the question and I'll just go through again, the three lines of logic that make us think it's premature certainly to conclude that this is odd.

David Altshuler: And so it would be, I think, incorrect to say this is a drug targeted to the liver, even though it does act on the liver. And then I think you come back to the question, and I'll just go through again the three lines of logic that make us think it's premature certainly to conclude that this is on-mechanism or because of the disease, even though, as Rachel said, we can't know for sure. And the three arguments are that most LFT abnormalities are chemical in nature, not on-mechanism. The second is we've specifically studied in mouse models the human ZAAT protein and its being corrected by this mechanism with multiple different compounds, multiple different chronic studies, and we see not liver toxicity but improvement. And then the third possibility in people's minds is that the liver of a patient with AAT just somehow can't tolerate medicine. And I think, as we know, 100,000 people have this disease, and there's no evidence we're aware of for any sort of liver toxicity associated with having AATD. So I just don't think it's the right conclusion.

[noise] mechanism, where because of the disease, even though arrangements that and you can't know for sure and the three arguments are most L. S T abnormalities or chemical in nature not a mechanism.

Second is we've specifically study.

Mouse model human Z, a G protein and being corrected by this mechanism with multiple different compounds multiple different products studies, and we see not liver toxicity, but improvement and then the third is perhaps in People's minds is that the liver of a patient with a G. Just somehow can't tolerate medicine and I.

Think that we know of 100000 people have this disease and there's no evidence we are aware of for any sort of liver toxicity associated with having a G. D. So I just don't think it's the right conclusion.

David Altshuler: But nonetheless, we certainly are excited for 864 and the next molecule, and we'll look forward to telling you more data as we collect it. And just to follow up on the comment about 864 and how far you've gone and how it makes you feel better versus 814. Yeah, yeah. Sorry about that, Mike.

And then the list.

We certainly are excited for 864 in the next molecule and we'll look forward to telling you more data as we collected.

And just to follow up to comment on an 864 and how far you've gone in enough to feel better versus 814.

Yeah, sorry about that like.

Very early days, we were just in the early parts of that study. So I I don't have more details for you. It's obviously a study that is.

Reshma Kewalramani: It's very early days. We are just in the early parts of that study, so I don't have more details for you. It's obviously a study that is going to take some time to complete, given that we expect our results in the first half of 2021. Thank you. Thank you. The next question comes from the line of Corey Kessner from J.P. Morgan. Your question, please. Thank you so much for taking my question. This is Turner on for Corey.

Going to take some time to complete given that we expect our results in the first half of 21.

Thank you.

Thank you. Our next question comes from the line of Cory customer from J P. Morgan into your question. Please.

So much for taking my question. This is turn on for Corey So and just trying to understand the ultimate opportunity for Trek cast where do you see pockets of patients that are more difficult to get on label or bring them in for treatment beyond just the 10% that aren't amenable to C. F. T. R modulators and how do you just quantify that in the context of the estimate.

Reshma Kewalramani: So in just trying to understand the ultimate opportunity for Trikafta, where do you see pockets of patients that are more difficult to get on label or bring in for treatment beyond just the 10% that are amenable to CFTR modulators? And how do you just quantify that in the context of the estimated 68,000 CF patients eligible for Trikafta? And then I have one quick follow-up. Yeah, this is Rachel.

68000, and see if patients eligible for sure I got that and then I have one quick follow up.

Yeah. This is ray Shulman I'm Gonna ask you were to come in but I I just want to make sure that we set the frame correctly. The number that we use is 75000 total patients I just Wanna make sure that we get that one clear the 68000 represents 90% for whom a medicine.

Stuart A. Arbuckle: I'm going to ask Stuart to comment, but I just want to make sure that we set the frame correctly. The number that we use is 75,000 total patients. I just want to make sure that we get that one clear. The 68,000 represents 90% of those for whom a medicine like Trikafta could offer potential, the last 10% being those who need a nucleic acid approach. And the opportunity, I'm going to turn over to Stuart. Yeah, Turner, thanks for the question. Based on our experience here in the U.S., which is now just over a year, and we have the vast, vast majority of patients across all eligible types, those who were naive to therapy, not even eligible for a CFTR modulator, those who were already being treated with Orkambi and Simkevi, those who had discontinued, across all of those groups, we have seen very, very strong uptake. And so I really can't identify for you a group of patients that we have, to date, found that it is more difficult to initiate on Trikafta.

And like try captive could.

Offer potential the last 10% being those who need a nucleic acid approaching and the the opportunity I'm going to turn it over to Stuart.

You know tuna. Thanks for the question based on our experience here in the U S, which is now just over a year and we have the vast vast majority of patients across all eligible times, those who are naive to therapy not even eligible for a cft's modulators of those who were already being treated with all can.

Be in some kevvy, those who discontinued across all of those groups. We've seen very very strong uptake and so I really can't identify you for you a group of patients that we have to date found that it is more difficult to be initiated on try casting.

In terms of future.

Stuart A. Arbuckle: In terms of future growth, we addressed some of that in my prepared remarks. Obviously, with the approval of Caftrio, we're now hoping to replicate what we did with Trikafta here in the U.S. with Caftrio in the EU. We are encouraged by the early trends in Germany and the U.K. and Ireland, where we already have access for patients, and that is clearly important. We need to secure similar reimbursement agreements across the rest of Europe to be able to access those patients, so that is obviously a first step to getting access for those patients we don't have reimbursement for today. And then, as we said, in total, if you count those patients and additional patients that we can get to through expanding the Caftrio label to other countries, like Australia, to going to younger age groups with Trikafta and Caftrio, such as 6- to 11-year-olds, and then further expanding our entire CF portfolio to younger patients and also to other mutations, like the rare mutation.

Future growth, we address some of that in my prepared remarks, obviously with the approval of cafeteria. We're now hoping to replicate what we've done we've tried to have that here in the U S with calf trio.

In the U. We are encouraged by the early trends in Germany, and the UK an island, where we already have access school for patients.

That is clearly.

Important we need to secure similar reimbursement agreements across the rest of Europe to be able to access those patients. So that is obviously.

A a first step to getting access to those patients who don't have reimbursement for today and then as we said in total if you count those patients and additional patient. So we can get you through expanding the cafeteria label to other countries like Australia.

<unk> going to younger age groups with try Catherine calf trio, such as the six 211 year old and then further expanding our entire portfolio two younger patients to do so.

The mutations like rare mutations in aggregate in addition to what we've already being able to deliver we think there's over 20000 more patient that we will be able to benefit. So we continue to feel good about where we are but we know the job's not done and we have a long way to go to make sure the 90% of patients that are gonna be eligible for CFT almost.

Stuart A. Arbuckle: In aggregate, in addition to what we've already been able to deliver, we think there are over 20,000 more patients that we'll be able to benefit. So we continue to feel good about where we are, but we know the job's not done, and we have a long way to go to make sure the 90% of patients that are going to be eligible for CFTR modulators have the ability to try one. And then, as Reshma said, in addition to that, we're continuing to work hard to develop new medicines and new interventions for the 10% who won't benefit from CFTR modulators. Thank you, that's helpful. And then, just understanding that you're bringing in the remaining 814 data, is there a potential chance that we get a glimpse of the data prior to seeing 864 results, as we're just trying to benchmark 864 for ourselves? If so, to what extent of the data could we potentially see, or alternatively, do you plan on publishing preclinical 814 data? Thanks so much.

<unk> have the ability to try one and then his regiment said in addition to that we're continuing to work hard to develop.

You mentioned, a new interventions for the 10% who would benefit from the C. F C O modulation.

Thank you that's helpful. And then just understanding that you bring in the remaining Avon for data is there a potential chance that we get a glimpse at the data prior to seeing 864 results.

Trying to benchmark it took for for ourselves if so what expenses the data could we potentially see or Alternatively do you plan on publishing preclinical 814 data. Thanks, so much.

Okay, Yeah, I'll really great questions. Obviously, we're gonna bring all the data in from the V X 814 program as we close that out again the key finding there is that we have low exposure and we didn't achieve that target range. So I don't have high expectations at the date is gonna.

Reshma Kewalramani: All really great questions. Obviously, we're going to bring all the data in from the VX814 program as we close that out. Again, the key finding there is that we had low exposure and we didn't achieve the target range, so I don't have high expectations that the data is going to be informative. I think the key thing to look forward to is VX864 and those results, and we certainly are working expeditiously to get that trial enrolled and to be able to see those results. As I said before, it should be available in the first half of 2021.

That'd be informative I think the key thing to look forward to is the X 864.

And those results and we certainly are are working expeditiously to get that trial enrolled in and to be able to see those results and as I said before that that should be available in the first half of 21.

Reshma Kewalramani: Thank you. Our next question comes from Mohit Bansal from Citigroup. Your question, please. So, given that it is a small trial and relatively short, is it possible that we could see that data even before the AP data? I mean, this trial did not stop because of COVID.

Thank you. Our next question comes from the line Mohit, that's all from Citigroup. Your question. Please.

Great. Thanks for taking my question then.

Maybe switching to F. A G S.

So give them that it is a small.

And Ah relatively short.

Possible that you could check that date.

Before the data this trial did not stop because.

And the the follow up question is eight four is a mutation.

Reshma Kewalramani: And the follow-up question is, the APO11 mutation is implicated in many kidney diseases. So, if this first compound were to be successful, do you have any plans to go into those, you know, broader indications like liposuntropy and other indications? Thank you. Yeah. Hi Mohit.

Many do you need this evening.

This complaint to be successful do you have any plans to.

<unk> goes no daughters indications like.

12 P M.

Thank you.

Yeah, I don't know if it. Thanks, so much for the question about Uhm F. S. T. S. So with regard to the trial you're right. It's a it's a reasonably efficient trial, you know a dozen or so patients. It is a longer duration trials M. B a a T V program. It's a 12 week trial. So there is a difference there.

Reshma Kewalramani: Thanks so much for the question about FSGS. So, with regard to the trial, you're right. It's a reasonably efficient trial, you know, a dozen or so patients. But it is a longer-term trial than the AATD program. It's a 12-week trial, so there's a difference there.

And.

Reshma Kewalramani: And it's a little bit early to call for both the 864 program and the VX147 program when exactly the results will be available. They're both studies that are active, enrolling patients, and we're dosing patients, but it's just a little bit too early to call. I'll just point out on that one, the FSGS program, the endpoint there is Pertinuria, and as you know, there have been multiple discussions between the community and regulatory agencies, and that does seem to be a very acceptable endpoint to the agency. So, I'm particularly eager to look at those results. I'm going to ask David Altshuler to tell you a little bit more about ApoL1-mediated kidney disease, although I am the nephrologist here.

Little bit early to cough up for both the 864 program and the V X 147 program when exactly the results will be available. They're both studies that are active enrolling and we're dosing patients, but just a little bit too early to call at this point that I'm on that one.

F. A chef program the end point, there's partner area and as you know there have been multiple discussions between the community and regulatory agencies and that does seem to be a very acceptable and point to the agency. So I'm I'm, particularly eager to look at those results I'm Gonna give you also wanted to tell.

You're a little bit more about April on one immediate had kidney disease, although I am the nephrologist here. Some people tease that this is one of David most favorite program. So I'll I'll, let him tell you about a couple of more April while one mediated kidney disease that we are looking at David do you want to just quickly talk about that absolutely.

David Altshuler: Some people tease that this is one of David's favorite programs, so I'll let him tell you about a couple more ApoL1-mediated kidney diseases that we are looking at. David, do you want to just quickly talk about that? Absolutely not. You know, ApoL1 strikes us as a really compelling target for the strategy of using human genetics and genetically validated targets to go after major unmet needs. And you've got the strategy right, because the idea is to first go into FSGS, which is a severe disease, very strongly driven in certain populations by the ApoL1 genotype, but in addition, there are many, many patients with non-diabetic kidney disease, with other forms of protein or kidney disease for which ApoL1 is a driver. And so, certainly, we first need to get proof of concept of the mechanism and figure it out, but it would be our expectation, if that succeeds, that we would be able to go into a variety of other indications. And it's really one of the most unusual and compelling common genetic risk factors with a major effect on a disease, protein or kidney disease, for which there is great unmet need. Very helpful. Thank you. Thank you, David and Reshma.

Oh ones strikes us as a really compelling target for the strategy of using human genetics and genetically valid targets go over after major unmet needs and you've got the strategy right. Because the idea is to first go into F. S. G S, which is a severe disease very strong.

We are driven in certain population by April L. One genotype, but in addition, there are many many patients with non diabetic kidney disease with other forms of protein or kidney disease for which April one is a driver and so certainly we first need to get proof of concept mechanism and figure it out but it would be.

Our expectation if that succeeds that we would be able to go into a variety of other indications and it's really one of the most unusual and compelling common genetic risk factors with a major effect on a disease burtner kidney disease.

They're afraid I might need.

Oh, you're very helpful. Thank you. Thank you David Fisher.

Thank you. Our next question comes with the line of gene away from Barclays. So your question. Please.

Reshma Kewalramani: Thank you. Our next question comes from the line of Gina Wang from Barclays. Your question, please? Thank you for taking my questions, and I'm sorry I also have to ask one more question about AAPD. So David, you did mention there are three possible reasons. One, you know, being a small molecule, but H6 was also a small molecule.

Thank you for taking my questions and I'm, sorry, I also have to ask a question about a T V.

So maybe you did mention that to be possible reasons one.

Molecule eight six will also small molecule could you help us understand a little bit you know regarding what do you see between healthy fallen creation of any congestion.

Reshma Kewalramani: Could you help us understand a little bit, you know, regarding what you see between healthy volunteers, you know, anything different in terms of exposure and the drug dose that will make you feel more confident that H6-4 will show a better clinical profile? And my second question is regarding the beta flaccinia sickle cell program, and should we expect a late-break abstract at the ASH? And also, will we see the beta beyond the seven patients that were announced? And also, what will be the plan for the registration path from here? Wow, Gina, I think you managed to get three questions in there. I know we're coming up on the hour. Let me quickly tackle the CTX-001 question, and I'll ask David to, I think you're really asking about differences between 814 and 864, and I'll ask David to give you a quick comment on that.

Exposure and did you want to host.

Will make you feel more comfortable.

Sure, we'll shoot that'll clinical profile and my second question wasn't going to do that lucky.

No problem and what should we expect the labor.

Oh Gosh and I also believe me the data B, one seven patients that announced and also what would be the plan for the registration so cute.

Watching I think you you managed to get three questions and that I know, we're coming up on the hour. Let me quickly tackled the CTX Here's your one question and I'll ask David too I think you're really asking about differences between 814864 and I'll I'll ask David to give you a quick comment on that.

You should expect to see more data from the C. T appears your one program you should expect to see data in more patients and longer duration of follow up in both beta thalassemia and sickle cell disease.

Reshma Kewalramani: So you should expect to see more data from the CTX-001 program. You should also expect to see data from more patients and a longer duration of follow-up in both beta thalassemia and sickle cell disease. And we'll just have to be a little bit more patient with regard to the exact venue of these data. David, do you have a quick question on 814, 864 that you haven't already commented on? All I would say is what we were saying about the idea of LFT abnormalities being chemical specific. We meant specific to the particular molecule, and 864 being structurally different than 814, which we would not necessarily expect.

And we'll just have to be a little bit more patient with.

With regard to the exact venue of those those data David you have a quick question on 814864 that you haven't already commented on it all I would say is what we were saying about the idea of L. S T abnormalities being chemical specific.

Specific to the particular molecule and 864 being structurally different than 814, we would not necessarily expect to see the same kind of problems with them.

David Altshuler: The same kind of problem again. Okay, thank you. Thank you. Our next question comes from Robyn Karnauskas from TIGRI. Hey guys, this is Kripa and for Robyn. Thank you so much for taking my question. I had a question about your diabetes program, and we talked about two different types of opportunities. Can you tell us where you are in terms of timelines for the device? How much work is left before you can think of moving into patients? And does the IMD that you expect to file have both of those opportunities?

Okay. Thank you.

But our next question comes from the line of Robyn connect us from.

Your question please.

Okay, there's a coupon for robbing. Thank you so much for taking my question I have a question about your diabetes program talked about two different types of opportunity.

Can you tell us when you walk in terms of timeline for the divine how much working.

Or you can think of moving into patients.

And that's D I N D.

Five have both of those opportunities are you looking at them at independent programs are do you do you believe that they have to be done in two thank.

Reshma Kewalramani: Are you looking at them as independent programs, or do you believe that they have to be done in sequence? Thank you. Yeah. Yeah.

Thank you yeah, Yeah, sure Hey, I I really appreciate the question and the opportunity to talk a little bit more about the type one diabetes program I think you've characterized it correctly I see this opportunity as two shots on goal the first and the one we're starting with is let's call. It naked cells. That's C. I N D. That's going in.

Reshma Kewalramani: Sure. I really appreciate the question and the opportunity to talk a little bit more about the type 1 diabetes program. I think you've characterized it correctly. I see this opportunity as two shots on goal.

Reshma Kewalramani: The first and the one we're starting with is, let's call it, naked cells. That's the IMD that's going in by the end of this year, and that's the program I anticipate will be in the clinic in 2021. The kinds of patients that the naked cells could serve as an example, there are a few thousand people who have what are called SHEs, or severe hypoglycemic episodes. Now, while diabetes certainly has the morbidity of when you have hyperglycemia, such as nephropathy, neuropathy, and retinopathy, that takes years to develop.

By the end of this year and that's the program I anticipate will be in the clinic Uhm in 2021.

The kinds of patients that the naked cells could serve as an example, there are a few thousand people who have what are called S. A cheese or severe hypoglycemic episodes now while diabetes Ah certainly has the morbidity when you have high.

Per glycemia that are neff prophecy neuropathy in retinopathy that takes years to develop these S. A cheese can kill you because you become severely hypoglycemic with with lack of awareness. So that's one group of patients. This could serve and the second group of patients obviously, our our people for exam.

Reshma Kewalramani: These SHEs can kill you because you become severely hypoglycemic with a lack of awareness. So that's one group of patients this could serve. And the second group of patients, obviously, are people, for example, who are type 1 diabetics, who are post kidney transplant, who are already on immunosuppressive medicine. So that is the naked cell alone program. But clearly, the highest fruit and the biggest population we could serve is the population that could have the cells encapsulated in the device. And that's the second program that we're going to bring forward. And I'll look forward to telling you more about it as the months go by. But the one to look out for now is the IND for the naked cell program. Hi Operator, we're coming right up on the hour, so we'll take two more quick questions.

And for what type one diabetics, who are post kidney transplant, who are already immunosuppressive medicine. So that is the naked sell a loan program, but clearly the the high fruit and the the biggest population. We could serve is the population that could have the sales encapsulated in.

The device and that's the second program that we're gonna bring forward and I look forward to telling you more about it as the months go by but the one to look out for now is the indecent to make US all program.

Alright, thank you so much.

Oh.

Yeah.

But.

Certainly than our next question comes from the line of Jesse Forces Leerink. Your question. Please.

Reshma Kewalramani: Certainly. Then, on the line from Geoffrey Borges, Lee Rink, your question please. Thank you very much.

Thank you very much.

Smoke so you'll have 6.2 billion in cash on the balance sheet is generating about.

Reshma Kewalramani: Reshma, you have $6.2 billion in cash on the balance sheet. You're generating about, well, close to a billion and a quarter in free cash flow, it seems. Or you will be by the end of the year.

Close to a billion are cool.

Princess Lollipop.

Oh, you will be by the end of the year. So hypothetically, let's say that you could help.

Reshma Kewalramani: So, hypothetically, let's say that you could have $12 billion in cash on the balance sheet by the middle of next year. Could you give us an idea of how you plan to deploy that capital? You've had questions on this call about... Business Development Activity. But that's a huge amount of cash, and you have no debt.

She was a little a little too.

Could you give us some idea.

To deploy.

Capital without questions on this call about.

What's available activity, but but that's a huge amount of cash and you have no desk.

So what are you thinking of doing.

Reshma Kewalramani: So, what are you thinking of doing? Jeff, thanks for the question and, as you point out, you are asking a question that is broader than business development and about capital allocation. Let me make a high-level statement and then I'm going to ask Charlie to also chime in. We are very pleased with the way the business is progressing. We are very pleased with the strength of our balance sheet.

Yeah, just thanks for the question and as you point out. This is you're asking a question that's broader than business development and about capital allocation, Let me make a high level statement and then I'm going to ask Charlie to to also chime in.

We are very pleased with the way the business is progressing.

Are very pleased with the strength of our balance sheet and we recognize that this is a really.

Reshma Kewalramani: And we recognize that this is a really favorable position to be in. We believe at our core that the best deployment of our capital is in innovation. And I'm going to turn it over to Charlie to give you a sense of how we specifically think about that. Yeah, thanks, Reshma. Geoff, I appreciate the question. Really, the strength of the business, of course, with growth and profitability, we do generate a lot of cash flow, as you point out. And so naturally, we are very focused on capital allocation. As Reshma highlights, we clearly believe that the best use of capital is to invest in innovation.

Favorable position to be in.

We believe at our core that's the best deployment of our capital is an innovation and I'm Gonna turn it over to Charlie to give you a sense of of how we specifically think about that Charlotte.

Yeah, Thanks, very smart Jeff appreciate the question.

Really the strength of the business of course with the growth and the profitability, we do generate a lot of cash flow as you as you point out and so naturally we're very focused on capital allocation.

As rational highlights.

Clearly believes that the best use of capital is to invest in innovation and you've seen us be very active over the last two years and D. D gaining access to important platform technologies and capabilities as well as assets that are really helped us broaden and deepen the pipeline importantly, with summer and exotic so.

Charles F. Wagner: And you've seen us be very active over the last two years in BD, gaining access to important platform technologies and capabilities, as well as assets that have really helped us broaden and deepen the pipeline. I feel that, for BD specifically, that is the best opportunity for us to add value and drive ROI over the long term. Thank you. Thank you. And our final question for today comes from the line, Evan Seigerman from Credit Suisse. Your question, please. Thank you, guys. I appreciate you putting me at the end. I'll be quick.

Looking ahead, you can expect that will continue to be active to be the team is very active.

And we have as you point out the balance sheet capacity and flexibility to do more.

And potentially do bigger deals, but importantly, we do intend to stay very close to our corporate in our research strategy because.

Feel that the port for BB, specifically that is the best opportunity for us to add value.

And drive Roy over the long term.

Reshma Kewalramani: So, on KWAL calls, I've gotten very positive feedback on curative approaches to sickle cell disease and beta thalassemia. Do you have any ideas on what you might need to show at a pivotal or registration-directed trial in terms of efficacy or follow-up? This is a Flynn that could potentially be part of the Vertex commercial story.

Okay.

Thank you and our final question for today comes from the line Sacrament from Credit Suisse. Your question. Please.

Thank you guys. Appreciate you letting me at the end all be quick so okay, well calls I've gotten very positive feedback on cured of approaches to sickle cell disease, a beta thalassemia do you have any colors to what you might need to show it a pivotal or registration director trial in terms of efficacy or follow up just give us a sense of so.

Reshma Kewalramani: I didn't catch the tail end of the question, but I think you're really asking about CTX001 in beta thalassemia in sickle cell disease, okay, and how we see the registrational approach. It's a little bit too early to call exactly the number of patients, the duration of follow-up, and what exactly the regulators will require. That being said, clearly, the results that we've shared from the summer are exceptional, and while very small in number, two people in beta thal, and one in sickle cell, they do represent, in essence, a functional cure for those patients. We also have secured multiple regulatory designations like PRIME and RMAP, FastTrack, etc., that give us the opportunity to have conversations with regulators, and that is, of course, very helpful.

Potentially be part of the unprotected.

Commercial story.

I didn't catch the tail end of the question, but I think you're really asking about she takes care of everyone in beta calcium and sickle cell disease, Okay, and and how we see the registrational approach, it's a little bit too early to call exactly the number of patients the duration of follow.

<unk>.

And the.

What exactly the regularly will require that being said clearly the results that we've shared from the summer are exceptional and while very small and number two people and being a thousand one in sickle cell. They do represent in essence, a functional cure for those patients.

We also have secured a multiple regulatory designations like crime in our map fast track et cetera, They give us the opportunity to have conversations with regulators and that is of course very helpful.

So I think that the study that we're doing are exactly the white one in the white patients. So for example in beta thalassemia, what I mean, specifically is patients who are both dated zero zero and non native here.

Reshma Kewalramani: I think that the studies that we're doing are exactly the right ones in the right patients. For example, in beta thalassemia, what I mean specifically is patients who are both beta 0, beta 0, and non-beta 0 on the beta thalassemia side, and on the sickle cell side, patients who are severe sickle cell patients with multiple VOCs over a one- to two-year period.

For the beta thalassemia side and for the signal Southside patients who are severe sickle cell patients with multiple vlc's over.

One to two year period.

And I'm really very much looking forward to those regulatory interactions and and a little bit more time labor being able to come back to you and make you know specifically what those packages look like after we have the opportunity to work through that with regulators.

Reshma Kewalramani: I'm really very much looking forward to those regulatory interactions. In a little bit more time, we'll be able to come back to you and let you know specifically what those packages look like after we have the opportunity to work through that with regulators. Excellent, thank you so much. Okay, thank you everybody for joining us on the call tonight and on the webcast. We appreciate it. The Investor Relations Team, if you have additional questions, is available tonight. Please reach out to us. We'd be happy to help.

Excellent. Thank you so much.

Okay. Thank you everybody for joining us on the call Tonight and on the webcast. We appreciate it the Investor Relations team. If you have additional questions is available Tonight. Please reach us we'd be happy to help thank you.

That you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Unknown Executive: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Oh.

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