Q4 2020 Vertex Pharmaceuticals Inc Earnings Call

Relations for vertex.

Unknown Executive: 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, and Dr. Bastian Osana, Chief of Cell and Genetic Therapies, 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. 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. 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.

Making prepared remarks on the call Tonight, we have Dr rushed Mckay wall Romani vertex as CEO and President Stuart Arbuckle, Chief Commercial Officer, and Charlie Wagner, Chief Financial Officer, Dr. David Altshuler, Chief Scientific Officer, and Dr. Bastian Ozona chief of cell and genetic therapies 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.

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 is marketed CF medicines, our pipeline and vertex us future financial performance are based on management's current assumptions actual outcomes and events could differ materially I would also note that select financial results and guidance. We will review on the call. This evening are non-GAAP.

I will now turn the call over to Dr. Rich Mckay while ramani.

I will begin this evenings call with comments on our 2020 performance and then turn to the pipeline, including an overview of a number of our R&D programs and upcoming milestones.

Reshma Kewalramani: I'll begin this evening's call with comments on our 2020 performance and then turn to the pipeline, including an overview of a number of our R&D programs and upcoming milestones. 2020 was an unprecedented year for governments, businesses, and people around the globe. It was also a remarkable year for Vertex.

'twenty 'twenty was an unprecedented year for governments businesses and people around the globe. He was also a remarkable year for vertex. Despite the challenges we all faced against the backdrop of the pandemic vertex delivered extraordinary commercial performance generating $6 2 billion in product revenues representing.

Reshma Kewalramani: Despite the challenges we all faced against the backdrop of the pandemic, Vertex delivered extraordinary commercial performance, generating $6.2 billion in product revenues, representing more than 50% growth compared to 2019. We also meaningfully advanced the pipeline and significantly strengthened our financial position. Vertex has discovered and developed medicines that have transformed the treatment of cystic fibrosis, and the latest of these, Trikafta, or Caftreo, as it's known in the EU, has the potential to treat up to 90% of patients with cystic fibrosis. In 2020, the first full year after TRIKAFTA's approval in the U.S., the number of patients with CF treated with our medicines increased In Q3, we received early approval for Cafetrio in the EU and also secured reimbursement in England. By the end of the year, with direct access to marketing authorization in Germany, portfolio agreements in Ireland and Denmark, and the reimbursement deal in the UK, thousands of patients across the EU gained access to Cafetrio.

More than 50% growth compared to 2019, we also meaningfully advanced our pipeline and significantly strengthened our financial position.

Vertex has discovered and developed medicines that have transformed the treatment of cystic fibrosis and the latest of these try CAFTA or cap trio as it's known in the EU has the potential to treat up to 90% of patients with cystic fibrosis in.

In 2020, the first full year after try capture approval in the U S. The number of patients with CF treated with our medicines increased substantially and by the end of the year. The vast majority of eligible patients 12 years and older in the U S. We're on track CAFTA.

In Q3, we received early approval for Caf trio in the EU and also secured reimbursement in England Bye.

By the end of the year with direct access at marketing authorization in Germany portfolio agreements in Ireland, and Denmark, and the reimbursement deal on the U K thousands of patients across the EU gained access to cap trio.

In terms of next steps in CF, we have line of sight to continued significant growth as we expand access to the triple combination to more patients in the EU secure approvals in new geographies as well as extend treatment to patients with rare mutations and younger populations, starting with the six to 11 year olds.

Reshma Kewalramani: In terms of next steps in CF, we have line of sight to continued significant growth as we expand access to the triple combination to more patients in the EU, secure approvals in new geographies, as well as extend treatment to patients with rare mutations and younger populations, starting with 6 to 11-year-olds in the U.S. We're also advancing additional small molecule combination regimens and other approaches that will further define our long-term leadership in Our goal remains to bring transformative treatments to all people with this disease. 2020 was also an important year for our pipeline.

In the U S.

We're also advancing additional small molecule combination regimens and other approaches that will further define our long term leadership in CF.

Our goal remains to bring transformative therapies to all people with this disease.

'twenty 'twenty was also an important year for our pipeline, we delivered proof of concept into disease areas and advanced several clinical programs spanning multiple modalities and we are now poised to move the VX 880 program into the clinic for type one diabetes.

Reshma Kewalramani: We delivered proof of concept in two disease areas and advanced several clinical programs spanning multiple modalities. And we are now poised to move the VX880 program into the clinic for type 1 diabetes, our seventh disease area in clinical development and our first cell-based therapy. Turning to our financial position, which continues to strengthen. As we treat more patients, our revenues and profitability are growing, and we finished the year with $6.7 billion in cash. We are steadfast in our belief that the best way to drive continued growth and create long-term value is to reinvest this capital in innovation, both internal and external. With respect to external innovation, our strategy remains the same.

Our seventh disease area in clinical development, and our first cell based therapy.

Turning to our financial position, which continues to strengthen as we treat more patients our revenues and profitability are growing and we finished the year with $6 7 billion in cash we are steadfast in our belief that the best way to drive continued growth and create long term value is to reinvest this capital in.

<unk>, both internal and external.

With respect to external innovation, our strategy remains the same invest in assets that complement our internal CF pipeline seek assets that fit our R&D strategy and identify tools to add to our toolkit.

Reshma Kewalramani: Invest in assets that complement our internal CF pipeline, seek assets that fit our R&D strategy, and identify tools to add to our toolkit. What hasn't changed is our position in CF and our growing financial firepower. Given where we are with TRIKAFTA and CAFTRIO, plus line of sight to novel regimens and treatment for the last 10%, and given our balance sheet, we are now in a position to focus on assets that fit our R&D strategy and consider assets in the mid and late stage. Moving on to an update on the pipeline. I'll focus on our R&D portfolio outside of CF and provide additional detail, including upcoming milestones on a number of programs. In total, we're active in clinical development in seven disease areas spanning multiple modalities, including small molecule, gene editing, and cell therapy, with each program holding the potential to transform the course of the targeted disease. I'll start with CTX-001, our most clinically de-risked program outside of CF, which we're developing with our partner CRISPR Therapeutics. In December, groundbreaking clinical data for sickle cell disease and transfusion-dependent beta thalassemia were published in the New England Journal of Medicine and presented in a plenary session at the American Society of Hematology annual meeting.

What has changed is our position in CF and our growing financial firepower gear.

Given where we are with Tri CAFTA and Caf trio plus line of sight to novel regimens and treatment for the last 10% and given our balance sheet. We are now in a position to focus on assets that fit our R&D strategy and consider assets in mid and late stage.

Moving on to an update on the pipeline on.

I'll focus on our R&D portfolio outside of CF and provide additional detail, including upcoming milestones on a number of programs. In total we were active in clinical development in seven disease areas spanning multiple modalities, including small molecules gene editing and cell therapy with each program holding the potential.

On to transform the course of the targeted disease.

I'll start with C. T X years year, one our most clinically derisked program outside of CF, which we're developing with our partner CRISPR Therapeutics in December groundbreaking clinical data in sickle cell disease, and transfusion dependent beta thalassemia will published in the New England Journal of Medicine and presented in a plenary session at the American Society.

D of Hematology annual meeting these data demonstrated proof of concept and showed that C. T X years year, one has the potential to be a one time functional cure for people living with these diseases. We're also pleased to share that the first patient treated in the South seamless study recently completed two years of follow up.

Reshma Kewalramani: These data demonstrated proof of concept and showed that CTX-001 has the potential to be a one-time functional cure for people living with these diseases. We're also pleased to share that the first patient treated in the thalassemia study recently completed two years of follow-up and is enrolled in the long-term follow-up study. We are advancing through clinical development with urgency, and our goal is to be able to bring this therapy to patients as soon as possible. Over the course of 2021, there are three key milestones that will mark our progress with CTx001.

And has enrolled in the long term follow up study.

We are advancing through clinical development with urgency and our goal is to be able to bring this therapy to patients as soon as possible over the course of 'twenty 'twenty. One there are three key milestones that will mark our progress with CTX fears ear. One first the presentation of additional clinical data for more patients and for longer duration.

Reshma Kewalramani: First, the presentation of additional clinical data for more patients and for a longer duration of follow-up that will further define the efficacy and durability of this therapy. Second, the completion of enrollment in our two ongoing studies of CTX-001, and third, the progression of our discussions with regulators about the data needed for a filing package for approval of CTX-001. In our Alpha-1 Antitrypsin Deficiency, or AATD, program, we're focused on the development of small molecule correctors to address the Z-AAT protein folding defect, the underlying cause of this disease, and thereby treat both lung and liver manifestations of the disease. Our most advanced molecule is VX864, which is progressing through a dose-ranging Phase II proof-of-concept study. The goal of the study is to assess safety, PK, and levels of the functional AAT protein.

On a follow up that will further define the efficacy and durability of this therapy the.

The completion of enrollment of our two ongoing studies of CTX years, you're one.

And third the progression of our discussions with regulators about the data needed for filing package for approval of CTX shares here one.

In our alpha one antitrypsin deficiency or a a T. D program. We're focused on the development of small molecule corrector to address the Z E. A T protein folding defect the underlying cause of this disease.

And thereby treat both lung and liver manifestations of the disease.

Our most advanced molecules VX eight six floor, which is progressing through a dose ranging phase two proof of concept study.

The goal of the studies to assess safety PK and levels of functional a a tea protein.

Reshma Kewalramani: The study continues to enroll dose patients, and we expect to have results in the first half of this year. Consistent with our portfolio approach, that is to say our strategy of advancing multiple molecules simultaneously through early clinical development for each target across our disease areas, we are also on track to advance an additional small molecule AAT corrector into the clinic in 2021. Our lead molecule in the APOL1-mediated FSGS program, VX147, is also currently being studied in a Phase II proof-of-concept study evaluating the safety, PK, and reduction of proteinuria over 13 weeks. We expect to have results from this study in 2021. We also have a second molecule for ApoL1-mediated kidney disease that is now completing phase one.

The study continues to enroll and dose patients and we expect to have the results in the first half of this year consistent with our portfolio approach that is to say our strategy of advancing multiple molecules simultaneously through early clinical development for each target across our disease areas. We are also on.

Track to advance an additional small molecule a a T correct or into the clinic in 'twenty and 'twenty one.

Our lead molecule in the April on one mediated F. S. G. S program. VX 147 is also currently being studied in a phase two proof of concept study evaluating the safety PK and reduction of proteinuria over 13 weeks, we expect to have results from this study in 'twenty and 'twenty. One we also have.

Second molecule for April one mediated kidney disease that is now completing phase one.

In our pain program, we have a molecule that continues to progress through phase one and we haven't at least one additional Nab 1.8 inhibitor that we expect to enter the clinic this year.

Reshma Kewalramani: In our pain program, we have a molecule that continues to progress through phase one, and we have at least one additional NAV1.8 inhibitor that we expect to enter the clinic this year. Lastly, we submitted the IND for VX880, our first cell therapy for type 1 diabetes, towards the end of last year, and we are very pleased that the FDA recently cleared the IND. This allogeneic cell transplant program has the potential to transform the treatment of type 1 diabetes. In type 1 diabetes, insulin-producing islet cells are destroyed. Our approach is to replace these cells with fully differentiated, stem cell-derived, pancreatic islet cells. This approach follows the well-established precedent of cadaveric islet cell transplants, which have proven clinical benefit. The advancement of VX880 is a significant achievement.

Lastly, we submitted the <unk> for VX 880, our first cell therapy for type one diabetes towards the end of last year and we are very pleased that the FDA recently cleared the IMD.

This allogeneic cell transplant program has the potential to transform the treatment of type one diabetes.

In type one diabetes insulin producing islet cells are destroyed.

Our approach is to replace these cells with fully differentiated stem cell derived pancreatic islet cells. This approach follows the well established precedent of katabatic islet cell transplants, which have proven clinical benefit.

Advancement of VX 880 is a significant achievement. It is vertex us first cell based therapy to enter the clinic and it is the only fully differentiated pancreatic islet cell program in development, we expect to initiate the phase one two clinical trial, which is a single arm study of peak.

Reshma Kewalramani: It is Vertex's first cell-based therapy to enter the clinic, and it is the only fully differentiated pancreatic islet cell program in development. We expect to initiate the Phase I-II clinical trial, which is a single-arm study of people with severe difficulty controlling type 1 diabetes in the coming months. The goal of this study is to assess safety and measures of glycemic control. We are focused on quickly getting the clinical trial up and running, and we look forward to updating you as we make more progress over the course of this year. With that overview, I'll now hand it off to Stuart.

With severe difficult to control type one diabetes in the coming months. The goal of this study is to assess safety and measures of glycemic control. We're focused on quickly getting the clinical trial up and running and we look forward to updating you as we make more progress over the course of this year.

With that overview I'll now hand, it off to Stuart.

Stuart A. Arbuckle: Thank you, Reshma. I am pleased to review with you our continued strong commercial performance. Our Q4 global revenues were $1.6 billion, with full year revenues of $6.2 billion. This reflects significant growth in 2019, as we launched Trikafta and Caftreo in the US and EU, respectively. As expected, in addition to continued U.S. demand for our medicines, we saw a significant increase in revenues from outside the U.S. in the fourth quarter, following the approval and launch of Caf-Trio. Starting in the US, it is now well over a year since the launch of Trikafta, and we have made tremendous progress in bringing Trikafta to nearly all eligible patients 12 and older, as reflected in our Q In 2021, our commercial focus now turns to maintaining the very high rates of persistence and compliance that we have seen to date, and we anticipate that these rates will normalize over the coming months. We expect the majority of near-term growth of Trikafta in the U.S. to come from approvals in rare mutations and younger age groups. Trikafta was recently approved for patients 12 and older with rare mutations, and the FDA recently accepted the SNDA for 6-11-year-olds and granted it priority review.

Thank you restaurant.

I am pleased to review with you our continued strong commercial performance.

Our Q4 global revenues were $1.6 billion with full year revenues of $6 $2 billion.

This reflects significant growth over 2019, as we launched try CAFTA and capture your in the U S and EU respectively.

As expected in addition to considerable continued U S demand for our medicines, we saw a significant increase in revenues from outside the U S. In the fourth quarter following the approval and launch of Caf trio.

Starting in the US it is now well over a year since the launch of Tri CAFTA and we have made tremendous progress in bringing tri CAFTA to nearly all eligible patients 12 and older as reflected in our Q4 revenues.

In 2021, our commercial focus now turns to maintaining the very high rates of persistence and compliance that we have seen to date.

And we anticipate that these rates will normalize over the coming months.

We expect the majority of near term growth of Tri catheter in the U S to come from approvals in rare mutations on younger age groups.

Truck after was recently approved for patients 12, and older with rare mutations on the FDA recently accepted the S. N D E for six to 11 year olds and granted priority review.

We expect an approval around midyear.

In Europe enthusiasm and interest in Caf trio amongst the CF community is high.

Stuart A. Arbuckle: We expect an approval around mid-year. In Europe, enthusiasm and interest in cafetrio amongst the CF community is high. Our fourth quarter revenues reflect substantial uptake of cafetrio across all countries where patients have access, particularly in the larger markets of Germany and England, where the majority of eligible patients have already been initiated.

Our fourth quarter revenues reflects substantial uptake of Caf trio across all countries where patients have access.

Notably in the larger markets of Germany, and England, where the majority of eligible patients have already been initiated.

We are seeing similar uptake in other countries, where we have secured reimbursement agreements, including Ireland, Scotland Wales and Denmark.

Stuart A. Arbuckle: We are seeing similar uptake in other countries where we have secured reimbursement agreements, including Ireland, Scotland, Wales, and Denmark. We remain focused on continuing the launch in these countries as well as completing new reimbursement agreements to provide all eligible patients across the EU with access to our medicines. We have high confidence that, as was the case in the US, ultimately, the vast majority of CF patients in the EU will be treated with cafetria. However, while the destination is the same, the journey to get there will be different.

We remain focused on continuing the launch in these countries as well as completing new reimbursement agreements to provide all eligible patients across the EU with access to our medicines.

We have high confidence that as was the case in the U S. Ultimately the vast majority of CF patients in the EU will be treated with Caf trio.

However, while the destination is the same the journey to get there will be different.

In addition to the time and work required to secure new reimbursement agreements. The COVID-19 pandemic also presents significant uncertainties around the rate of uptake for our medicines.

Stuart A. Arbuckle: In addition to the time and work required to secure new reimbursement agreements, the COVID-19 pandemic also presents significant uncertainties around the rate of uptake for our meds. We are conducting fully virtual launches in the EU amidst evolving country-level COVID lockdown. The ability of patients to attend in-person consultations with their physicians as the pandemic continues is a dynamic we are monitoring closely.

We are conducting fully virtual launches in the EU image evolving country level Covid lockdowns.

The ability of patients to attend in person consultations with their physicians as the pandemic continues is a dynamic we are monitoring closely.

I will now outline what's next for vertex is CF franchise, and how to think about future growth.

We recently shared with you on updated and expanded view of the CF market opportunity based on on accumulation of new data for registries and other sources around the world.

Stuart A. Arbuckle: I will now outline what's next for Vertex's CF franchise and how to think about future growth. We recently shared with you an updated and expanded view of the CF market opportunity based on an accumulation of new data from registries and other sources around the world. We now estimate that there are 83,000 patients living with CF in the US, Europe, Canada, and Australia. Today, we are treating around half of these patients. Notably, this leaves more than 30,000 additional patients in these regions who could benefit from our medicines but who are not being treated today.

We now estimate that there are 83000 patients living with CF in the U S Europe, Canada and Australia.

Today, we are treating around half of these patients.

Notably this leaves more than 30000 additional patients in these regions, who could benefit from our medicines and who are not treated today.

Approximately two thirds are 12 and older and we expect to reach these patients through the continued launch uptake in reimbursement at Caf trio in the EU.

And through approvals and reimbursement agreements in other countries, such as Australia and Canada.

The remaining one third of patients are in the lower age groups or have other mutations and we are making progress toward reaching these patients through label expansions.

Finally, I'd like to take a moment to recognize the CF teams at vertex both in the U S and internationally for their unwavering dedication despite the unprecedented global challenges of the past year.

Stuart A. Arbuckle: Approximately two-thirds of patients are 12 and older, and we expect to reach these patients through the continued launch, uptake, and reimbursement of CAF TRIO in the EU and through approvals and reimbursement agreements in other countries, such as Australia and Canada. The remaining one-third of patients are in lower age groups or have other mutations, and we are making progress towards reaching these patients through label expansion. Finally, I'd like to take a moment to recognize the CF teams at Vertex, both in the US and internationally, for their unwavering dedication despite the unprecedented global challenges of the past year, and I would also like to thank the CF community for their partnership as we work together to bring transformative medicines to patients around the world. Charlie will now review our fourth quarter and full year results and financial guidance. Thanks, Stuart.

And I would also like to thank the CF community for their partnership as we work together to bring transformative medicines to patients around the world.

Charlie will now review, our fourth quarter and full year results and financial guidance.

Thanks, Stuart in the fourth quarter of 'twenty 'twenty, we continued our exceptionally strong financial performance and of note Q4 was our first quarter with more than 1 billion of sales for the triple combination a significant accomplishment for the commercial team.

Fourth quarter total product revenues were 1.6 billion, a 29% increase compared to 2019, bringing our full year revenues to $6 2 billion, an increase of more than 50% compared to 2019 revenues of $4 billion.

Our fourth quarter revenues included 1.21 billion in the U S and 421 million in revenues outside the U S.

Our ex U S revenues for the quarter grew 70% over the prior year driven by the uptake of Caf trio and our other medicines. Following the completion of several reimbursement agreements over the last year.

Unknown Executive: In the fourth quarter of 2020, we continued our exceptionally strong financial performance. And of note, Q4 was our first quarter with more than $1 billion of sales for the triple combination, a significant accomplishment for the commercial sector. Fourth quarter total product revenues were $1.6 billion, a 29% increase compared to 2019, bringing our full-year revenues to $6.2 billion, an increase of more than 50% compared to 2019 revenues of $4 billion. Our fourth quarter revenues included $1.21 billion in the U.S. and $421 million in revenues outside the U.S. Our ex-U.S. revenues for the quarter grew 70% over the prior year, driven by the uptake of cafetri Our fourth quarter 2020 combined R&D and SG&A expenses were $539 million, compared to $496 million for the fourth quarter of 2019, and our full year expenses were $1.98 billion, compared to $1.69 billion in 2019.

Our fourth quarter 2020, combined R&D and SG&A expenses were $539 million compared to 496 million for the fourth quarter of 2019.

And our full year expenses were 1.98 billion compared to 1.69 billion in 2019.

Our full year expenses reflected increased costs to support the rapid global expansion of our CF business.

As well as targeted investment and expanding our pipeline into new disease areas and progressing our high priority clinical programs.

A remarkable growth in revenues combined with disciplined spending resulted in a 2020 operating margin of 56% and operating income of 3.49 billion.

An increase of 95% compared to 2019.

Net income was 2.72 billion compared to 1.39 billion for 2019.

With continued substantial revenue growth and profitability. We finished the year with 6.7 billion in cash <unk>.

Consistent with our corporate strategy, our top priority for capital deployment is reinvestment and innovation.

Internally in our R&D programs and externally through business development aligned with our R&D strategy.

For example in 2020, we executed important collaboration agreements with Affinia Skyhawk Therapeutics and Madonna.

Additionally, we also used over 500 million of cash to acquire vertex shares through our ongoing share repurchase program.

Unknown Executive: Our full year expenses reflected increased costs to support the rapid global expansion of our CF business, as well as targeted investment in expanding our pipeline into new disease areas and progressing our high-priority clinical program. Our remarkable growth in revenues combined with disciplined spending resulted in a 2020 operating margin of 56% and operating income of $3.49 billion. An increase of 95% compared to 2019. Net income was $2.72 billion, compared to $1.39 billion for 2019.

The primary purpose of this program is to offset dilution and a proved very effective with nearly 2.5 million shares repurchased.

Now to guidance.

Our 2020 performance reflected considerable tried capped the uptake as we achieved nearly full penetration of eligible patients in the U S. As well as strong uptake of Caf trio in key EU countries, where patients have access.

For 'twenty and 'twenty, one we project that we will achieve total product revenues of 6.7 to 6.9 billion, reflecting 10% growth at the midpoint.

This guidance reflects our expectations for currently approved products in regions, where we are reimbursed plus an expectation of tri capped the approval for the six to 11 year old population in the U S. In mid 'twenty 'twenty one.

Unknown Executive: With continued substantial revenue growth and profitability, we finish the year with $6.7 billion in cash. Consistent with our corporate strategy, our top priority for capital deployment is reinvestment in innovation, both internally in our R&D programs and externally through business development aligned with our R&D strategy. For example, in 2020, we executed important collaboration agreements with Athenia, Skyhawk Therapeutics, and Moderna. Additionally, we also used over $500 million of cash to acquire Vertex shares through our ongoing share repurchase program. The primary purpose of this program is to offset dilution, and it has been very effective with nearly 2.5 million shares repurchased. Now to Guidance.

In our 'twenty 'twenty, one revenue guidance, there are fewer significant variables compared to 'twenty 'twenty.

However, an important continuing factor is rates of patient persistence and compliance we saw high rates of persistence and compliance with tread captor maintained in the U S. Throughout 'twenty 'twenty and we expect these levels to normalize throughout 'twenty 'twenty. One this dynamic is factored into our guidance as is uncertainty.

Related to the ongoing pandemic.

As Stuart mentioned moving forward, we expect to see further contribution to international revenues with subsequent waves of reimbursement agreements and launches in the EU as well as other ex U S geographies.

Unknown Executive: Our 2020 performance reflected considerable Trikafta uptake as we achieved nearly full penetration of eligible patients in the U.S., as well as strong uptake of Captrio in key EU countries where patients have access. For 2021, we project that we will achieve total product revenues of $6.7 to $6.9 billion, reflecting 10% growth at the midpoint. This guidance reflects our expectations for currently approved products in regions where we are reimbursed, plus an expectation of TRIKAFTA approval for the 6 to 11-year-old population in the U.S. in mid-2021. In our 2021 revenue guidance, there are fewer significant variables compared to 2020. However, an important continuing factor is rates of patient persistence and compliance. We saw high rates of persistence and compliance with Trikafta maintained in the U.S. throughout 2020, and we expect these levels to normalize throughout 2021.

However, the timing of these agreements is not predictable and they are therefore not included in our 'twenty 'twenty one guidance.

For non-GAAP Opex, we are guiding to a range of 2.25 billion to 2.3 billion.

We expect to continue allocating greater than 70% of Opex to R&D with year over year growth largely driven by investment in our pipeline programs in order to advance key programs further into the clinic and generate important proof of concept data in 'twenty 'twenty one.

Our non-GAAP tax rate for 2020 was 21% and we are guiding to a range of 21% to 22% this year.

In closing Twenty-twenty was a tremendously successful year for vertex and our business and we look forward to continuing our growth and significant profitability in 'twenty and 'twenty one.

Now back to Russia for a few closing remarks.

Thanks, Charlie 'twenty 'twenty was an unprecedented and grueling year for the entire world and while these challenges have not yet subsided I have confidence that science will lead the way out of the pandemic and we look forward with optimism.

Unknown Executive: This dynamic is factored into our guidance, as is uncertainty related to the ongoing pandemic. As Stuart mentioned, moving forward, we expect to see further contribution to international revenues with subsequent waves of reimbursement agreements and launches in the EU, as well as other ex-U.S. geographies. However, the timing of these agreements is not predictable, and they are therefore not included in our 2021 guidance. For non-GAAP OPEX, we are guiding to a range of $2.25 billion to $2.3 billion. We expect to continue allocating greater than 70% of OPEX to R&D, with year-over-year growth largely driven by investment in our pipeline programs, in order to advance key programs further into the clinic and generate important proof-of-concept data in 2021. Our non-GAAP tax rate for 2020 was 21%, and we are guiding to a range of 21 to 22% this year. In closing, 2020 was a tremendously successful year for Vertex and our business, and we look forward to continuing our growth and significant profitability in 2021. Now back to Reshma for a few closing remarks.

Throughout the past year vertex has demonstrated our resilience in the face of these challenges and this was reflected in our business performance and pipeline progress.

Vertex has a proven track record of creating breakthrough medicines and transforming lives.

We have an ambition to transform many more diseases and our pipeline of small molecules cell and genetic therapies are poised to do just that.

Thanks, and we'll now open the call to questions.

Thank you to ask a question you will need to press Star then one on your telephone to withdraw your question. Please press the pound key again that is star then one if he would like to ask a question.

Our first question comes from the line of Cory <unk> with J P. Morgan. Your line is now open Hey, good afternoon, guys and thank you for taking my questions two of them for you.

For on the a T program has the I D. M C been taking regular looks at the eight six for safety database and would you characterize this as a situation where no news is good news on the safety front or is that still premature where you are on enrollment and then also on this program, what's the relative in terms of relative.

Reshma Kewalramani: Thanks, Charlie. 2020 was an unprecedented and grueling year for the entire world, and while these challenges have not yet subsided, I have confidence that science will lead the way out of the pandemic, and we look forward with optimism. Throughout the past year, Vertex has demonstrated resilience in the face of these challenges, and this was reflected in our business performance and pipeline progress. Vertex has a proven track record of creating breakthrough medicines and transforming lives. We have an ambition to transform many more diseases, and our pipeline of small molecules, cell, and genetic therapies is poised to do just that. Thanks, and we'll now open the call to questions.

<unk> of functional serum a T V. What would give you conviction that you're onto something here and provide added confidence going into the next stage of development. Thank you.

Hey, Corey this is ratio let.

Let me take both of those questions for you.

The HCV program and is indeed, followed very carefully as we do all of our fab programs honestly from a safety perspective and that is just part of what we do so that is ongoing.

With regard to levels and maybe broadly speaking what are we really looking for from this VX eight six for phase II proof of concept study really three things. The first US safety. This is the first time that VX eight six for us going to a patient with a a T. D. The second is PK and exposure and the third.

Unknown Executive: Thank you. To ask a question, you will need to press star then 1 on your telephone. To withdraw your question, please press the pound key. Again, that is star then 1 if you would like to ask a question. Our first question comes from the line of Corey Kasumov with J.P. Morgan. Your line is now open.

These increases in functional AAC level I'm also going to be looking to see if there is a dose effect relationship. The key here remember is that this is our first time.

To close the loop on cracking the biology, that's to say if we see levels of functional <unk> increase in this study we see a dose effect what that tells US is that the mechanism that we projected to be the mechanism that could target both lung and liver.

Reshma Kewalramani: For the AAT program, has the IDMC been taking regular looks at it? 364 Safety Database, Would you characterize this as a situation where no news is good news on the safety front, or is that still premature where you are in enrollment? And then also in this program, what's the, in terms of relative levels of functional serum AAT? And then also in this program, what's the, in terms of relative levels of functional serum AAT? What would give you conviction that you're onto something here and provide added confidence going into it? Development. Thank you.

Raise AAC level, we got them.

And as I always say.

Right.

Drug development at vertex into two part cracking the biology pouring on the chemistry pouring on the chemistry is the easier it is not easy, but it's the easier of the two parts and so that's what we're really looking for is.

Assessment of safety.

K and we're looking for elevations of functional AAC level.

Reshma Kewalramani: Hey, Corey. This is Reshma. Let me take both of those questions for you. The AATD program is indeed followed very carefully, as we do all of our programs, honestly, from a safety perspective. And that is just part of what we do. So that is ongoing.

Okay. Thank you restaurant.

Sure thing.

Thank you. Our next question comes on the line of solving Rick There with Goldman Sachs. Your line is now open.

Good afternoon. Thanks for taking my questions. So one question here on the Scf guidance could you just comment on how you're counting for uncertainty related to the pandemic and what reimbursement agreements or approvals could be expected that this year that are not accounted for and then secondly on.

Reshma Kewalramani: With regard to levels, and maybe broadly speaking, what are we really looking for from this VX864 Phase 2 Proof of Concept Study? Really three things. The first is safety. This is the first time that VX864 is going to patients with AATD. The second is PK and exposure. And the third is increases in functional AAT levels. I'm also going to be looking to see if there's a dose-effect relationship. The key here, remember, is that

You made a comment about your BD strategy and I recognize while it's aligned with R&D.

But at the same time is there any.

Clarity you can give us with regard to areas of focus size deal and how much of an interest you have been in technologies as we look to kind of fill your toolbox there.

Reshma Kewalramani: This is our first time closing the loop on cracking the biology. That is to say, if we see levels of functional AAT increase in this study, we see a dose effect. What that tells us is that the mechanism that we projected to be the mechanism that could target both the lung and liver, raise AAT levels, we have it. And as I always say, you know, we divide drug development at Vertex into two parts, cracking the biology and pouring on the chemistry. Pouring on the chemistry is easier; it is not easy, but it's the easier of the two parts.

Sure. This is ratio on why don't I start us off with the second part of your question and then I'm going to ask Stuart to just comment a little bit more on the launch dynamics.

In the EU and a little bit more about the U S. I think that'll cover your question on C F.

So with regard to BD.

What we're really talking about here is.

On interest that is exactly the same as the strategy we've laid out for many years, probably the last eight years now.

We're interested in.

Assets that complement our internal efforts and see us.

Reshma Kewalramani: And so, that's what we're really looking for. Assessment of Safety, PK, and we're looking for elevations of functional AAP.

We're interested in assets that fit our R&D strategy and you know our R&D strategy very very.

Reshma Kewalramani: Okay, thank you, Reshma.

Diligent we are very serious about the causal human biology, and Biomarkers and transformative potential specialty markets. It has to fit all of that.

Reshma Kewalramani: Sure thing.

Reshma Kewalramani: Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open. Good afternoon.

And we're looking for tools that fit our toolkit.

Reshma Kewalramani: Thanks for taking my questions. So one question here on the CF guidance. Could you just comment on how you're accounting for uncertainty related to the pandemic and what reimbursement agreements or approvals could be expected this year that are not accounted for? And then secondly, you made a comment about your BD strategy, and I recognize that it's aligned with R&D, you know, but at the same time, is there any clarity you can give us with regard to areas of focus, size of deals, and how much of an interest you have in technologies as you look to kind of fill your toolbox there?

We've transacted in these areas a lot of the recent transactions like Affinia and Skyhawk and driver metrics fit those tools and you should expect to see us continue doing that.

We've also transacted on I think semi is a great example is a good one to talk about today given the clearance of the IMD.

Acquisitions like semi that fit our R&D strategy like a glove.

And those that have transformative potential in.

And as you're thinking about okay, what kind of fall day in and what falls out.

Can take back to our slide we showed at J P. Morgan with our funnel. If you will that goes through our criteria certain diseases fall in clearly things like CF and a T V. In April on <unk> mediated kidney disease, but other examples of diseases that fall in would be huntington's disease.

Reshma Kewalramani: Sure. Salveen, this is Reshma.

Reshma Kewalramani: Why don't I start us off with the second part of your question and then I'm going to ask Stuart to just comment a little bit more on the launch dynamics in the EU and a little bit more about the US. I think that'll cover your question on CF. So Salveen, with regard to BD, what we're really talking about here is... Unknown Speaker

These would be polycystic kidney disease, and then there are diseases that fall out because they don't fit our criteria criteria like specialty markets or understanding of causal human biology are having on biomarkers that translate well.

Reshma Kewalramani: That is exactly the same as the strategy we've laid out for many years, probably the last eight years now. We are interested in assets that complement our internal efforts in CF. We're interested in assets that fit our R&D strategy. And you know our R&D strategy is very, very rigorous. We are very serious about causal human biology and biomarkers and transformative potential, specialty markets. It has to fit all of that.

Stuart I'm going to turn it over you to you to tell us a little bit about the CF market yes.

Yeah. Thanks, Richard So solving just I'm going to break down what's incorporated into our guidance into U S and ex U S in and talk about what the drivers of growth also in the U S. As you know the vast majority of the eligible patients across all patient groups have been initiated on try capture in the us during the course of.

Stuart A. Arbuckle: And we're looking for tools that fit our needs. We've transacted in these areas before. A lot of the recent transactions like Afinia and Skyhawk and Ribometrics fit those tools, and you should expect to see us continue doing that. We've also transacted on, I think SEMA is a great example, it's a good one to talk about today given the clearance of the IND, acquisitions like SEMA that fit our R&D strategy like a glove and those that have transformative potential. And if you're thinking about, okay, what kind of falls in and what falls out, you can think back to a slide we showed at J.P. Morgan with our funnel, if you will, that goes through our criteria. Certain diseases fall in, clearly things like CF and AATD and APOL1-mediated kidney disease, but other examples of diseases that fall in would be Huntington's disease, or polycystic kidney disease And then there are diseases that fall out because they don't fit our criteria, criteria like specialty markets or understanding of causal human biology or having biomarkers that translate. Stuart, I'm going to turn it over to you to tell us a little bit about the cystic fibrosis market.

2020, and so incorporating our guidance is the kind of the annualized effect of those patients having been initiated.

Offset to some degree by persistence and compliance, which we expect to normalize during the course of 2021 in terms of growth drivers for the U S. Probably the most notable.

Is the expected approval of Tricast at the six to 11 year olds, which we expect to happen in the midyear.

Moving to ex U S.

We have.

Obviously launched the Caf trio Triple combination in those markets, where we do have reimbursement agreements like the U K, and Ireland, and Denmark or markets, where you can get early access like Germany, and the majority of patients actually have already been initiated in those markets the launches.

Gone on very strongly we do anticipate obviously initiating more patients in those in those countries.

But we have only included in our guidance countries, where we already have pricing and reimbursement agreements. So to the last part of your question, which is and where else would we be seeking pricing and reimbursement the major countries in the EU where.

Where we will continuing to seek reimbursement, all like France, Spain and Italy.

Stuart A. Arbuckle: Yeah, thanks, Reshma. So, Salveen, I'm going to break down what's incorporated into our guidance into the U.S. and the ex-U.S. and talk about what the drivers of growth are. So, in the U.S., as you know, the vast majority of eligible patients across all patient groups have been initiated on Trikafta in the U.S. during the course of 2020. And so, incorporated in our guidance is the kind of annualized effect of those patients having been initiated and offset to some degree by persistence and compliance, which we expect to normalize during the course of 2021. In terms of growth drivers for the U.S., probably the most notable is the expected approval of Trikafta for 6- to 11-year-olds, which we expect to happen in the mid-year.

Obviously as Charlie said in his prepared remarks.

It's impossible for us to predict exactly the timing on when we will reach those.

Those agreements enough for that reason, we don't include them in our guidance outside of the EU. Obviously, the major countries are Australia and Canada in both of those we have filed for regulatory approval on or also in parallel seeking reimbursement approval as well again those are not included within our guidance.

And then if I can just kind of turn to the to the longer term because obviously 2021 is sort of one year in a long journey that we've been on we continue to believe.

We will be able to treat up to 90% of patients would see FTR modulators like the triple combination over time that has for a long time being all goal and continues to be all goal and we still feel very confident if not more confident than ever that we're going to get there over time.

Stuart A. Arbuckle: Moving to Ex-US, we have obviously launched the Cafetrio triple combination in those markets where we do have reimbursement agreements, like the UK and Ireland and Denmark, or markets where you can get early access, like Germany. And the majority of patients have actually already been initiated in those markets. The launch went very strongly.

Thank you.

Thank you. Our next question comes on the line of Phil Nadeau with Cowen. Your line is now open.

Good afternoon. Thanks for taking my question I'll sort of follow up on <unk>.

<unk> ex <unk> ex for I was curious whether the team has come to any further understanding of where it tripped up VX 814 was.

Stuart A. Arbuckle: We do obviously anticipate initiating more patients in those countries, but we have only included in our guidance countries where we already have pricing and reimbursement agreements. So to the last part of your question, which is then, you know, where else would we be seeking pricing and reimbursement, the major countries in the EU where we are continuing to seek reimbursement are like France, Spain, and Italy. Obviously, as Charlie said in his prepared remarks, it's impossible for us to predict exactly the timing of when we will reach those agreements, and for that reason, we don't include them in our guidance. Outside of the EU, obviously, the major countries are Australia and Canada; in both of those, we have filed for regulatory approval and are also, in parallel, seeking reimbursement approval as well.

Issues idiosyncratic to the molecule or cross effect.

And maybe an extension of that in the.

You had noted a difference and exposures between healthy volunteers and patients with <unk> T.

In any way could that be a sink effect because theres a lot of protein.

Aggregating the liver and if so how could that be overcome thank you.

Sure.

Let me answer those questions for you.

You know I think the best way to think about the ATV program is the following we are very enthusiastic about the mechanism.

That's the only one that holds the potential to treat both liver and lung.

814 was simply not the right molecule and unsurprisingly because the study was terminated early we.

Stuart A. Arbuckle: Again, those are not included within our guidance. And then, if I can just kind of turn to the longer term, because obviously, 2021 is sort of one year in a long journey that we've been on. We continue to believe that we will be able to treat up to 90 percent of patients with CFTR modulators like the triple combination over time. That has for a long time been our goal and continues to be our goal. And we still feel very confident, if not more confident than ever, that we're going to get there.

Didn't get fully enrolling in patients who were enrolled all complete the trial does not much more we can learn there.

We are looking forward to VX 864 on those results.

On the study is enrolling we are dosing patients and we need to be a little bit more patient, but it's not that much longer now we will have the result this half.

This first half of 2021.

Great. Thank you.

Thank you.

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

Hey, guys, Thanks, and congrats on a great a great quarter on Greg here to close out.

Stuart A. Arbuckle: Thank you. Thank you. Our next question comes from the line of Phil Nadeau with Cowen. Your line is now open.

Two questions one was on.

On BD, maybe rationale or the team.

Reshma Kewalramani: Good afternoon, thanks for taking my question. I also had a follow-up question on AAT and VX864. I was curious whether the team has come to any further understanding of what tripped up VX814 was, whether the issues were idiosyncratic to that molecule or a class effect, and maybe an extension of that. In the past, you had noted a difference in exposures between healthy volunteers and patients with AAT. In any way, could that be a sink effect because there's a lot of protein aggregated in the liver? And if so, how could that be?

Mid to late stage can span a whole gamut of us.

Size and market cap and certainly financial resource capacity.

Vertex is a much bigger company now much more cash, but mid and late stage and different sizes can mean different things to different people can you maybe just comment about where vertex is balance sheet or where are you strategically feel comfortable along the range of EBITDA.

He had upside is on what that can be whether that's 5 billion $10 billion 15 billion, maybe just think about that which is the other side of a deal and then the second question you made a nice comment on CF and how you are advancing.

The cycle there I know there was a super corrector that at really high levels of chloride transport and Joshua.

Reshma Kewalramani: Thank you.

Reshma Kewalramani: Sure. This is Reshma. Let me answer those questions for you.

Reshma Kewalramani: You know, I think the best way to think about the AATD program is the following. We are very enthusiastic about the mechanism because it's the only one that holds the potential to treat both the liver and the lung. 814 was simply not the right molecule, and, unsurprisingly, because the study was terminated early, we didn't fully enroll it, and patients who were enrolled didn't all complete the trial. There's not much more we can learn there. We are looking forward to VX864 and those results. The study is enrolling patients, and we need to be a little bit more patient, but it's not that much longer now. We will have the results in the first half of 2021.

A once daily.

And Peter can you just remind us where those are and if those are still moving forward.

Thank you.

Hey, Michael its ratio I'll, let me take that second question first and then I'll come back around and talk a little bit more about BD.

So the once a day potentiate or is VX 561.

And you're right we have been busy at work David I'll Shuler on the team in San Diego had been busy at work.

With.

The development of more collectors, we have.

The combination of VX, one to one let's call. It a next next Gen corrector.

Ex 561, that's the once a day potentiate or and Tessa that's made its way through phase two development and Youll remember the agency asked US to also do a monotherapy study with VX 561, all of that's been completed and what we're really doing now is looking.

Reshma Kewalramani: Thank you. Our next question comes from the line of Michael Yee with Jeffries. Your line is now open.

Reshma Kewalramani: Hey guys, thanks and congrats on a great quarter and a great year to close out. I have two questions. One was on BD, maybe Reshma or the team, you know, mid to late stage can span a whole gamut of size and market cap and certainly financial resource capacity. You know, Vertex is a much bigger company now, much more cash, but mid and late stage and different sizes can mean different things to different people. Can you maybe just comment about where Vertex is on the balance sheet or where you strategically feel comfortable along the range of, you know, sizes of what that can be, whether that's 5 billion, 10 billion, 15 billion? Maybe just think about that, which is the other side of doing a deal. And then, on the second question, you made a nice comment about CF and how you're advancing the cycle there. I know there was a super corrector that had really high levels of chloride transport, and there's also a once daily potentiator. Can you just remind us where those are and if they are still moving forward and doing well? Thank you.

Looking at all of the data planning forward to our regulatory interactions and as soon as we get through all of those will certainly give you an update on that program just remember at a high level drug development in CF going forward is going to be completely different than anything that's come before it because there is no placebo anymore and so.

Don't be surprised if you don't hear from you on this program until we are through all of the conversations and we're ready to give you concrete next steps, but I'm very pleased with how that's progressed.

Okay, let's tackle BD you know.

Let me take a couple of minutes and just really walk you through this in a little bit of detail.

When I think about where we are in terms of the business today and where we're going.

And then try to give you a little bit more color and texture behind capital allocation and BD, Here's a way to put it altogether.

The if you look at the company three years ago, So back to January 2018.

We were active in the clinic with programs and patient so I'm not counting healthy volunteers just patient based studies in CF and pain.

That's where we were fast forward three years and we are now if I count that type one diabetes program, which is going to be going into patients very quickly. We're looking at molecules in.

Reshma Kewalramani: Hi Michael. It's Reshma.

Reshma Kewalramani: Let me take the second question first, and then I'll come back around and talk a little bit more about So the once-a-day potentiator is VX561, and you're right, we have been busy at work. David Altshuler and the team in San Diego have been busy at work with the development of more correctors. We have the combination of VX121, let's call it a next-gen corrector, VX561, that's the once-a-day potentiator, and TESA that's made its way through phase two development, and you'll remember the agency asked us to also do a monotherapy study with VX561. All of that's been completed, and what we're really doing now is looking at all of the data, planning forward to our regulatory interactions, and as soon as we get through all of those, we'll certainly give you an update on that program.

Six disease areas right now in patients right and if I count the pain molecule in healthy volunteers at seven so it's.

Very different.

If I think about revenues 2018 January I think we are pretty close at the previous year, it's something a little bit on north of $2 billion and if I think about cash again, a little bit north of 2 billion, where we are today, we closed out 2020 with revenues of more than 6 billion in cash close to 7 billion. We are indeed in a.

Different place and its really that different place that allows us to think about mid and late stage assets.

That's a way of indicating the balance sheet and the strength of the balance sheet.

I want to be very clear that the strategy is exactly the same on what I outlined previously and if I just focus in on the assets that fit our R&D strategy.

We are now able to look at for example, phase two assets assets that might be in phase III.

Reshma Kewalramani: Just remember, at a high level, drug development and CF going forward are going to be completely different from anything that's come before it, because there is no placebo anymore, and so don't be surprised if you don't hear from me on this program until we're through all of the conversations and we're ready to give you concrete next steps, but I'm very pleased with how that's progressed. Okay, let's tackle You know, let me take a couple of minutes and really walk you through this in a little bit of detail.

And those are assets that we're going to look at we're also going to continue to look at tools for our toolkit.

I'm not looking at I have no preconceived notions about.

The timing of a transaction and I have no preconceived notions about the dollar amount of the transaction. It has to fit our R&D strategy. It has to be transformative we have to be able to add value and when we find that asset and we have the patients and the judgment to be very.

Thoughtful about that we're going to be ready to evaluate.

Thank you very much appreciate that yeah.

Reshma Kewalramani: When I think about where we are in terms of the business today and where we're going and then try to give you a little bit more color and texture behind capital allocation and BD, here's a way to put it all together. Then, if you look at the company three years ago, so back to January 2018. We were active in the clinic with programs and patients, so I'm not counting healthy volunteers, just patient-based studies in CF and pain. That's it. That's where we were. Fast forward three years, and we are now, if I count the type 1 diabetes program, which is going to be going into patients very quickly, we're looking at molecules in six disease areas right now in patients, right?

Yes.

Thank you on.

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

Afternoon, guys. Thanks for the question.

Two two main ones.

Charlie or Stewart you guys recently updated your assumptions on the CF epidemiology.

Can you address what data helps us help lead you down that path on.

And whether this updated view of the CF market by patients as reflected in your 2021 outlook.

And then.

Second question ratio when you look at the pipeline and strategy you guys have been obviously busy on the BD front.

Essentially you have maintained somewhat of a rare disease or a specialized focus I know you have been reluctant to label yourself on orphan drug company, but is it fair to say that future BD could.

Reshma Kewalramani: And if I count the pain molecule in healthy volunteers, that's seven. So it's very different. If I think about revenues, 2018, January, I think we closed out the previous year at something a little bit north of $2 billion. And if I think about cash, again, something a little bit north of $2 billion. Where we are today, we closed out 2020 with revenues of more than $6 billion and cash close to $7 billion. We are indeed in a different place, and it's really that different place that allows us to think about mid- and late-stage assets. And that's a way of indicating the balance sheet and the strength of the balance sheet. I want to be very clear that the strategy is exactly the same as I outlined previously.

Could be similar or as a bigger company could you go after larger indications that share the same spirit of having a transformational efficacy. Thank you.

I would ask Stuart to comment on CF Epidemiology first and then I'll come back.

For your second question.

Hey, Jeff. Thanks for the question. So as you noted and just to ground everybody. We recently updated our view on the epidemiology of CF in the U S, Canada, Europe, and Australia from 75000 patients living with CF in those countries.

All regions to 83000.

And the reason that drove that that change was really improvements in data quality and capture in the various registries and indeed, some establishment of new registries.

Reshma Kewalramani: And if I just focus in on the assets that fit our R&D strategy, we are now able to look at, for example, phase two assets, and assets that might be in phase three. And those are assets that we're going to look at. We're also gonna continue to look at tools for our tool. I'm not looking at I have no preconceived notions about the timing of a transaction, and I have no preconceived notions about the dollar amount of a transaction. It has to fit our R&D strategy, it has to be transformative, we have to be able to add value, and when we find that asset, and we have the patience and the judgment to be very thoughtful about that, we're going to be ready to evaluate it.

In this in these regions.

We periodically review all that data and on our latest review it was obvious to us that over the last few years. The epidemiology had increased just to answer a question you didn't ask but one that we have been asked.

<unk> as you know it wasn't that increased.

Concentrated in any one country any one region. It really wasn't it was really on.

Across the board phenomenon and something.

That's not uncommon as well in in rare and orphan diseases is when you have really great transformative medicines.

Often you see increases in the number of eligible patients and we believe that was also a factor here.

In terms of whether that new epidemiology is included in our long.

Reshma Kewalramani: Thank you very much. I appreciate that. Our next question comes from the line of Geoff Meacham with Bank of America. Your line is now open.

Long term on <unk>.

'twenty 'twenty one guidance absolutely. It is that's the denominator that we are using now and indeed.

Stuart A. Arbuckle: Afternoon, guys. Thanks for the question. There are just two main ones.

Reshma Kewalramani: Charlie or Stuart, you guys recently updated your assumptions on the CF epidemiology. Can you address what data helped lead you down that path and whether this updated view of the CF market by patients is reflected in your 2021 outlook? And then second question, Reshma, when you look at the pipeline and strategy, you guys have been obviously busy on the BD front, but essentially, you have maintained somewhat of a rare disease or specialized focus. I know you've been reluctant to label yourself an orphan drug company, but is it fair to say that future BD could be similar, or as a bigger company, could you go after larger indications that share the same spirit of having Thank you.

Those patients are already being treated with us the FTR modulators in the U S, Canada or Australia.

And the E U.

Hey, Jeff it's ex.

Ratio that I'm really glad you asked the question about rare disease and orphan drugs. So.

You know the reason I don't like calling us a rare disease companies because we are a rare disease company. What we are is a company that is about specialty markets and the Best example, I can give you of that is type one diabetes and our semi acquisition. So when you think about type.

One diabetes, it's well over 2 million people right, so far away from being a rare disease that suffer from type one diabetes and.

Stuart A. Arbuckle: I'm going to ask Stuart to comment on CF epidemiology first, and then I'll come back for your second question.

The key there is that the semi acquisition and the cell based therapy holds the potential to be transformative. So you're very correct that is a key that we are looking for and the type one diabetics are treated by endocrinologists, a specialty group so really the key for us is <unk>.

Stuart A. Arbuckle: Hey Geoff, thanks for the question. So, as you noted, just to ground everybody, we recently updated our view on the epidemiology of CF in the U.S., Canada, Europe, and Australia from 75,000 patients living with CF in those countries or regions to 83,000. And the reason that drove that change was really improvements in data quality and capture in the various registries and indeed some establishment of new registries in these regions. We periodically review all that data, and on our latest review, it was obvious to us that, over the last few years, the epidemiology had increased. Just to answer a question you didn't ask, but one that we have been asked consistently, was that increase concentrated in any one country, any one region? And it really wasn't.

Not rare disease, but specialty markets and type one diabetes is the best example.

Okay. Thank you.

Sure.

Thank you. Our next question comes on the line of Mohit Bansal with Citigroup. Your line is now open.

Great. Thank you very much for taking my question.

Couple of question one for Stuart if you could help me understand that you you did talk a little bit about <unk>.

New nuclear a prevalence numbers for CF in these developed markets, but when you look beyond these blockades to likes of Latin America, or even going as far as China I understand the prevalence is lower interest.

Stuart A. Arbuckle: It was really an across-the-board phenomenon, and something that's not uncommon as well in rare and orphan diseases is that when you have really great transformative medicines, you often see increases in the number of eligible patients, and we believe that was also a factor. In terms of whether that new epidemiology is included in our long-term, in our 2021 guidance, absolutely it is. That's the denominator that we are using now, and indeed, a number of those patients are already being treated with our CFTR modulators in the US, Canada, Australia, and the EU.

But on that population bases by ex towards diesel do you still think about expansion opportunities outside of these core markets at this point.

The second part is more on the R&D side.

As you mentioned so can you can you help us understand for VX 147 trial, how are you thinking about meaningful reduction in proteinuria debt because these patient if I understand correctly, they started using protein to create and issue of nine on tenants sometimes.

Sure sure sure do you want to start and then I'll take 147, yeah, Mohit, so absolutely you're right. The <unk> thousand patients living with CF is specific to the U S, Canada, EU and Australia.

Reshma Kewalramani: Hey, Geoff, it's Reshma. I'm really glad you asked the question about rare diseases and orphan drugs. So you know, the reason I don't like calling us a rare disease company is because we aren't a rare disease company. What we are is a company that is about specialty markets.

Reshma Kewalramani: And the best example I can give you of that is type 1 diabetes and our Sema acquisition. So when you think about type 1 diabetes, it's well over 2 million people, right? So far away from being a rare disease that suffers from type 1 diabetes. And the key there is that the semi-acquisition and cell-based therapy hold the potential to be transformative. So you're very correct. That is the key that we are looking for. And type 1 diabetics are treated by endocrinologists, a specialty group. So really, the key for us is not rare diseases but specialty markets. And type 1 diabetes is the best example.

But in terms of other markets.

We continue to believe that there are patients in other countries that we could serve indeed, we have established an affiliate in Brazil.

And we are in the process of procuring.

Reimbursement for our medicines down there.

The issue really with the epidemiology in some of these other countries is that it's much less robust much less.

Mature and we have much less confidence in it than we do.

Reshma Kewalramani: Thank you. Our next question comes from the line of Mohit Bansal with Citigroup. Your line is now open. Good.

In some countries like the us in the EU the prevalence of the disease is much higher and there are much more established and longstanding registries. So we continue to see opportunity to serve patients outside of those core markets, but those are the ones, where we have a really really good handle on the epidemiology.

Stuart A. Arbuckle: Thank you very much for taking my question. There are a couple of questions. One for Stuart, if you could help me understand that you talked a little bit about new or new prevalence numbers for CF in these developed markets. But when you look beyond these markets, like Latin America or even go as far as China, I understand the prevalence is lower there, incidence is lower on a population basis, but it's not zero. Do you still think about expansion opportunities outside of these core markets at this point? And the second part is more on the R&D side. As you mentioned, can you help us understand for the VX147 trials, how are you thinking about meaningful reductions in proteinuria there? Because these patients, if I understand correctly, they start at a protein to creatinine ratio of 9 or 10 at some times.

And about your question.

With regard to VX 147 to remind everyone that the small molecule that we are studying in phase two.

Proof of concept for SGS focal segmental glomerular sclerosis, Youre right. Its a disease that is unfortunately unrelenting heavy proteinuria, usually in that nephrotic range of more than three grams and what happens to these patients as they either progressed onto dialysis or to transplant.

Patients were looking here as we are for all of the programs through our transformative effect and to me that would be you know double digit protein reduction.

Stuart A. Arbuckle: Sure, sure. Stuart, do you want to start, and then I'll take one for seven.

As I said for the ATV question with regard to what are we looking for from this phase II study safety first time going into patients BK and in this regard proteinuria and a double digit decrease in proteinuria would be great to see and something that aren't going to be looking for I'll remind everyone that we do expect the <unk>.

Reshma Kewalramani: Yeah, Mohit, absolutely, you're right, the HHT-1000 patients living with CF are specific to the US, Canada, the EU, and Australia. But in terms of other markets, we continue to believe that there are patients in other countries that we could serve. Indeed, we have established an affiliate in Brazil, and we are in the process of securing reimbursement for our medicines down there. The issue really with the epidemiology in some of these other countries is that it's much less robust, much less mature, and we have much less confidence in it than we do in some countries like the US and the EU, where the prevalence of the disease is much higher, and there are much more established and long-standing registries. So we continue to see opportunities to serve patients outside of those core markets, but those are the ones where we have a really, really good handle on the epidemiology.

Sales from that study this year.

Excellent. Thank you very much sure.

Thank you. Our next question comes from the line of Paul Matisse with Stifel. Your line is now open.

Great. Thanks, so much for taking my questions. A couple of quick follow ups on the BD side, you know I know there's been a lot of discussion around potential indications are disease areas, you're interested in but if you take a step back you guys have your hands in gene therapy.

Editing mrna a bunch of different tools are there any platform modality that you don't have your hand in that are especially interesting to you and then on April one one quick follow up Rashmi, we did a few Doc calls.

Reshma Kewalramani: And Mohit, about your question with regard to VX147, to remind everyone that's the small molecule that we are studying in phase two, proof of concept for FSGS, focal segmental glomerulosclerosis. You're right, it's a disease that is unfortunately unrelenting, heavy proteinuria, usually in the nephrotic range, so more than three grams. And what happens to these patients is they either progress on to dialysis or to transplantation. We're looking here, as we are for all of the programs, for a transformative effect, and to me, that would be, you know, double-digit protein reduction. As I said for the AATD question with regard to what we are looking for from this phase two study, safety, the first time it's going into patients, PK, and in this regard, proteinuria, and a double-digit decrease in proteinuria would be great to see and something that I'm going to be looking for. I'll remind everyone that we do expect the results from that study this year.

The feedback was how you interpret the proteinuria data in part depends on the severity of the population and how heavily pretreated they've been by the standard of care is there anything you can tell us about the patients you're enrolling in the study. Thanks so much.

Yeah.

With regard to the patients that we're enrolling these are patients with heavy proteinuria.

There is.

Some as you say theres some background treatment.

That Ah patients can be placed on including steroids, but unfortunately these treatments are not particularly effective and even when you sometimes can see effect. The durability is often not there.

So we're studying heavy partner ex end.

That's what we're looking at with regard to your question about.

Tools for our tool kit and what do we have.

Reshma Kewalramani: Helpful. Thank you very much. Sure. Thank you. Our next question comes from the line between Paul Matisse and Stiebel.

We are really about transforming diseases.

And when you are committed to transforming diseases.

Unknown Executive: Your line is now open. Great. Thanks so much for taking my questions. A couple of quick follow-ups. On the BD side, you know, I know there's been a lot of discussion around potential indications or disease areas you're interested in, but if you take a step back, you guys have your hands on gene therapy, editing, mRNA, a bunch of different tools. Are there any platform modalities that you don't have your hands on that are especially interesting to you? And then on April 01, one quick follow-up, Reshma. We did a few doctor calls, and the feedback was, How you interpret the pertinent area data in part depends on the severity of the population and how heavily pre-treated they've been by the standard of care. Is there anything you can tell us about the patients you're enrolling in this study? Thanks so much.

The key is to not let the tool be limiting.

You know that.

A small minority of the proteome can be.

Impacted by small molecule for example, and so if we're going to targeted disease and we can't get there by small molecules, we're certainly going to get there with one of the other modalities and I'm going to ask David also Youll interest and give you a couple of words on us.

Mrna therapies that we're working on some of the collaborations we've done and give you a sense of where we are with our gene editing tools. David do you want to make a couple of comments sure. Thanks Richemont.

As you said our strategy starts with the disease and we suspect a target which is validated is playing a causal role on the underlying biology of the disease and then we either invent or through partnership will find the tools and technologies needed in the case of CF.

David Altshuler: Yeah. With regard to the patients that we're enrolling, these are patients with heavy proteinuria. There is some, as you say, some background treatment that patients can be placed on, including steroids. But unfortunately, these treatments are not particularly effective, and even when you sometimes can see an effect, the durability is often not there.

For therapies to get at the last 10% of people, who don't make a protein and won't benefit from our CF GR modulators, we've collaborated with multiple companies, including Madonna as you mentioned our mrna therapy in other cases, we've identified a small molecule approach, but we think that adding for example protein degradation technology such as through our <unk>.

David Altshuler: So we're studying heavy proteinurics, and that's what we're looking at. With regard to your question about tools for our toolkit and what we have, we are really about transforming diseases, and when you are committed to transforming diseases. The key is not to let the tool be limited. You know that a small minority of the proteome can be impacted by small molecules, for example. And so if we're going to target a disease and we can't get there with small molecules, we're certainly going to get there with one of the other modalities. And I'm going to ask David Altshuler just to give you a couple of words on the mRNA therapies that we're working on, some of the collaborations we've done, and give you a sense of where we are with our gene editing tools. David, do you want to make a couple of comments? Sure.

Collaboration with Chimera, or drugging Emaar drugging RNA I should say as with our collaborations with driver metrics or Skyhawk are the right way to approach those diseases and you'll continue to see us do deals and partnerships, where there is a particular technology that opens up a target that we think has transformational potential.

And we will continue to do those as time goes on.

Thanks very much.

Thank you. Our next question comes from the line of Alicia Young with Cantor. Your line is now open.

Hey, guys. Thanks for taking my question and congrats on all the progress and I guess I just want to talk a little bit about this of exa ATI. Indeed can you talk a little bit more about kind of your clinical trial plans and designs on how you're going to plan on navigating in light of Covid in and that transplant population. Thanks.

David Altshuler: Sure, thanks Reshma. As you said, our strategy starts with the disease, and we select a target which is validated as playing a causal role in the underlying biology, and then we either invent or, through partnership, we'll find the tools and technologies needed. In the case of CF, aiming for therapies to reach the last 10% of people who don't make a protein and won't benefit from our CFTR modulators, we've collaborated with multiple companies, including Moderna, as you mentioned, for mRNA therapy. In other cases, we've identified a small molecule approach, but we think that adding, for example, protein degradation technology, such as through our collaboration with Chimera or drugging mRNA, I should say, as with our collaborations with Ribometrics or Skyhawk, is the right way to approach those diseases.

Hey, alethia. Thanks, so much for the question I'm really.

Very enthusiastic about the VX.

880 program. This is the cell based therapy program for type one diabetes.

It's actually pretty remarkable that we are at a point, where we can now.

Seriously think about this therapy going to patients and being.

On the brink of being able to see results. This is us.

A disease and an approach and a clinical trial that I would think about like CTX 001, and our CRISPR.

Approach to beta thal and sickle cell disease.

A single arm trial, the cell therapy product goes directly into patients Theres no healthy volunteer step.

And I would say that in a reasonable number of patients we're going to be able to tell them. What the performance of our therapy is the out the measures that we are looking at the outcome I'm very straightforward glucose.

David Altshuler: And you will continue to see us do deals and partnerships where there's a particular technology that opens up a target that we think has transformational potential, and we'll continue to do those as time goes on. Thank you. Our next question comes from the line of Alethea Young with Cantor.

Hemoglobin, a one C C peptide level.

And so I think this is you know the brink of something very special.

Unknown Executive: Your line is now open. Hey guys, thanks for taking my question and congrats on all the progress. And I guess I just want to talk a little bit about this VXA.

And I'm very eager to see this program progress.

And the impacts from Covid, you think or is it going to be pretty straightforward yeah navigate that.

Reshma Kewalramani: Talk a little bit more about your clinical trial plans and designs and how you kind of plan on navigating in light of COVID and that.

You know Covid is something that is top of mind for all of us clinical trials for sure but.

Reshma Kewalramani: Transplant Population Thanks

That being said this is a.

Reshma Kewalramani: Hey, LTS. Thanks so much for the question. I'm really very enthusiastic about the VX880 program. This is a cell-based therapy program for type 1 diabetes. It's actually pretty remarkable that we are at a point where we can now very seriously think about this therapy going to patients and being on the brink of being able to see results. This is a disease and an approach, and a clinical trial that I would think about, like CTX001 and our CRISPR approach to beta phallus sickle cell disease. It's a single-arm trial, meaning the cell therapy product goes directly into patients. There's no healthy volunteer step, and I would say that in a reasonable number of patients, we'll be able to tell what the performance of our therapy is. Out of the measures that we are looking at, the outcomes are very straightforward: glucose. Hemoglobin A1c C-peptide level, and so I think this is, you know, the brink of something very special, and I'm very eager to see this program progress.

A an approach that is done in specialized centers.

On <unk>.

And I don't see us having.

A lot of challenge with it if the COVID-19.

Pandemic continues in this way, which is to say vaccines are coming people have learned how to manage and hospitals are able to continue to do clinical trial work and so that part looks pretty good to me.

Yes.

Great. Thank you.

Thank you. Our next question comes on the line of Gena Wang with Barclays. Your line is now open.

Thank you for taking my question and I will also follow at least yet.

A question regarding Inc zero.

Just wanted to wish Matt Olney particular, Oh.

Go you know benefit you want to achieve.

Well see glucose or.

Reshma Kewalramani: Any impact from COVID, do you think? Or is it going to be pretty straightforward to navigate that?

Anything you can share with us.

Will lead to the next steps for this program and my second question is regarding debt.

Reshma Kewalramani: You know, COVID is something that is top of mind for all of our clinical trials, for sure. But that being said, this is an approach that is done in specialized centers. And I don't see us having a lot of challenges with it if the COVID pandemic continues in this way, which is to say vaccines are coming, people have learned how to manage, and hospitals are able to continue to do clinical trial work. And so that part looks pretty good to me.

CTX.

One on for the complete the trial.

Current debt.

Enrollment completion anticipated 2021 to 45 patient each copied us electing a sickle cell could Debbie registration trial for the next day.

Okay.

Reshma Kewalramani: Great, thank you. Thank you. Our next question comes from the line of Gina Wang with Barclays. Your line is now open.

There are two questions one about CTX, here's your one and one about type one diabetes.

Let me take the CTX Here's your one question first and then we'll come back around to type one diabetes.

Reshma Kewalramani: Thank you for taking my question. I will also follow Alicia's question regarding 880. I'm just wondering, Reshma, any particular benefit or goal you want to achieve with, say, glucose or, you know, anything you can share with us that will lead to the next step for this program? And my second question is regarding CTX001 for the complete trial. Current, you know, the trial enrollment completion anticipates in 2021, that's 45 patients each for beta thalassemia sickle cell. Could that be the registration trial for the next step?

So let's see textures are one.

Really.

Remarkable but you are correct. We are looking to complete enrollment in both trials beta thalassemia and sickle cell disease, and we're looking to do that in 2021.

And yes, I do anticipate that the patients that we're studying in these trials that are ongoing will be their patients that.

Constitute the regulatory package.

You've heard us talk about before we've initiated those conversations but we have not yet completed them. So we're looking forward to doing so this year, but yes, I do expect patients to be.

Reshma Kewalramani: Okay. There are two questions, one about CTX-301 and one about type 1 diabetes. Let me take the CTX-001 question first and then we'll come back around to type 1 diabetes. So with C-TECH-001, really remarkable, but you are correct.

The composition of our filing package.

On.

On the <unk> program and what are we looking for.

Reshma Kewalramani: We're looking to complete enrollment in both trials, beta thalassemia and sickle cell disease, and we're looking to do that in 2021. And yes, I do anticipate that the patients that we're studying in these trials that are ongoing will be the patients that constitute the regulatory package. As you've heard us talk about before, we've initiated those conversations, but we have not yet completed them, so we're looking forward to doing so this year. But yes, I do expect these patients to be the composition of our filing process. On the VX880 program, and what are we looking for?

So.

First things first this is the first time that the these fully differentiated stem cell derived insulin producing islet cells are going to patients. So what we're really looking for is to get to our clinical trial sites with urgency we're looking to get.

The cells dosed.

We're evaluating safety.

And the outcome measures are really fairly straightforward.

C peptide glucose hemoglobin a one C.

And what we're looking for here is obviously to see an impact in terms of bringing down blood sugar.

Reshma Kewalramani: So, first things first, this is the first time that these fully differentiated stem cell-derived insulin-producing islet cells are going to patients. So what we're really looking for is to get these to our clinical trial sites with urgency. We're looking to get the cells dosed. We're evaluating safety. And the outcome measures are really fairly straightforward: C-peptide, glucose, and hemoglobin A1C. And what we're looking for here is obviously an impact in terms of bringing down blood sugar and being able to see peptide levels rise, an indication that there is insulin. It's a little too early to call exactly what the results will be and such, but I am very excited that we're on the brink of enrolling patients and getting these trials up and running.

And being able to see C peptide levels rise an indication that there is insulin.

So too early to call exactly what the results will be and such but I am very excited that we're on the brink of enrolling patients in getting these trials up and running.

Thank you.

Thank you. Our next question comes on the line of Brian Suwannee with Baird. Your line is now open.

Hey, good afternoon, everyone. Thank you for taking my question also sticking on the type one diabetes program I was wondering if you can kind of help us understand how your program.

Deferred for some sort of a historical islet cell transportation transplantation athletes I understand that it comes from stem cells, and maybe kind of walk us through.

Any engineering or process that goes into the.

The derivation of the salt it'll ultimately gets transplant and how are you sort of plant.

Reshma Kewalramani: Thank you. Our next question comes from the line of Brian Schorny with Baird. Your line is now open. Hey, good afternoon, everyone.

I'll.

Try to mitigate immuno suppressive effects. Thanks.

Yeah, what a great question and again, thanks, so much for asking it.

Reshma Kewalramani: Thank you for taking my question. I'm also sticking with the type one diabetes program. I was wondering if you can kind of help us understand how your program differs from sort of historical islet cell transplantation. I understand it comes from stem cells, but maybe kind of walk us through any engineering or process that goes into the derivation of the cell that ultimately gets transplanted and how you sort of plan to try to mitigate immunosuppressive effects. Thanks.

I guess you must be hearing my enthusiasm just brimming over so the way I would think about the type one diabetes program is really to program and I would think of them as two separate program. The first one the one for which the IMD just cleared let's call that one of the naked cell program.

I would expect that there are maybe 60000 people who could benefit from that naked cell program that program does require immunosuppression and the way I get to 60000 US maybe there are 10 15000 people who have type one diabetes have end stage renal disease because of their type one diabetes and for that.

Reshma Kewalramani: Yeah, what a great question. And again, thanks so much for asking it.

Reshma Kewalramani: I guess you must be hearing my enthusiasm just brimming over. So the way I would think about the Type 1 Diabetes program is really two programs, and I would think of them as two separate programs. The first one, the one for which the IND just cleared, let's call that one the Naked Cell Program. I would expect that there are, you know, maybe 60,000 people who could benefit from that program. That program does require immunosuppression, and the way I get to 60,000 is maybe there are 10,000, 15,000 people who have type 1 diabetes, have end-stage renal disease because of their type 1 diabetes, and for that reason have had a renal transplant and are on immunosuppressive medications anyway. And then maybe another 40,000 or so people with very brittle diabetes who would be comfortable with immunosuppression for the benefits that the cell therapy would bring them.

And have had a renal transplant and are on immunosuppressive anyway, and then maybe another 40000 or so people with very brittle diabetes, who wouldn't be comfortable with immunosuppression for the benefits that the cell therapy would bring them now.

Now of course, the the high fruit here is.

The cells plus device program.

For that second program, we are in late preclinical development.

The really important thing to know there is that.

The semi team prior to acquisition and one of the reasons. We were so excited about the <unk> team.

Coming into vertex is that they designed using the right material the right geometry.

On a clear understanding of how to avoid the pitfalls of fibrosis.

Reshma Kewalramani: Now, of course, the high fruit here is the cells plus device program. For that second program, we are in late preclinical development. The really important thing to know about the SEMA team prior to acquisition, and one of the reasons we were so excited about the CEMR team coming into Vertex is that they designed using the right materials, the right geometry, and a clear understanding of how to avoid the pitfalls of fibrosis. Allowing oxygen to flow, allowing insulin and glucose to flow, but not allowing the immune cells to attack the cell-based therapy. So that program is particularly exciting because it does not require immunosuppressants. As we make progress on that program, we'll certainly keep you updated, but this is making its way through preclinical development, late preclinical development, all right.

Allowing oxygen to flow, allowing insulin and glucose to flow, but not allowing the you mean the.

The immune cells to attack the the cell based therapy. So that program is.

Particularly exciting because that does not require immunosuppressive as.

As we make progress on that program, we'll certainly keep you updated.

But that is making its way through preclinical development late preclinical development right now.

Alright, thank you.

Thank you. Our last question comes on the line of Lisa <unk> with Evercore ISI. Your line is now open.

Hi, there I'm just going to jump on the bandwagon and ask a couple more questions on on this now.

Let me speak to.

Sort of help terrible a pancreatic islet cell transplantation of today.

It might be different.

With.

Reshma Kewalramani: Thank you. Our last question comes from the line of Liisa Bayko with Evercore ISI. Your line is now open. Hi there, I'm just gonna jump on the bandwagon and ask a couple more questions on this note. Can you maybe speak to

Bx Ido, and then a little bit about your ability I think I understand it's quite durable.

Then.

And then just a final question on inventory were there any inventory build in Europe, let's say given recent loss Eric on capped or anything like that to note. Thank you very much.

Liisa Bayko: [inaudible]

Unknown Executive: Transcript by Rev.com. Page of

Reshma Kewalramani: Hey there, this is Reshma. You know, um, well, I'll start with type 1 diabetes.

Yes.

This is Rachel.

I'll start with type one diabetes and keep on that theme and then I'll ask Charlie to comment on inventory okay. So.

Reshma Kewalramani: Inventory. Okay, so the question that you ask is an excellent one. And so, how should we think about our cell-based therapy vis-a-vis what's been done with pancreas transplant or islet cell transplant? Alright, so maybe three or four key things to know. The most important thing to know is this: we know exactly what causes type 1 diabetes. It's an autoimmune destruction of the pancreatic islet cells. And we know that when you can replace those cells, be it by a whole pancreas transplant or islet cell transplants.

But you ask us an excellent one and it is how should we think about.

Our cell based therapy.

The what's been done with pancreas transplant are islet cell transplant, alright, so maybe three or four key things to note.

Most important by far and away. The most important thing to know US. This we know exactly what caused us type one diabetes autoimmune destruction of the pancreatic islet cells.

And we know that when you can replace those cells by whole pancreas transplants or islet cell transplants, you get benefit.

Reshma Kewalramani: You get benefits. So we know those two. What's the problem? Well, the problem is the quantity and quality of islet cells. That is actually the essence of the problem. Not that we do not know that this will work. We know it will work.

So we know those two things.

What's the problem.

Problem is the quantity and quality of Ireland. So that is actually the essence of the problem not that we don't know that this will work, we know it'll work and the real real seminal discovery here that the 17 made and that was so exciting to us.

Reshma Kewalramani: And the real, real seminal discovery here that the SEMA team made, and that was so exciting to us, is that they developed a way to take stem cells, differentiate them, fully differentiate them into insulin-producing islet cells, and make that in an industrialized quantity. And so now we have the quantity and quality of cells to give to, to transfuse, to transplant into patients with type 1 diabetes. So that's really what the real discovery here has been and why this program is so exciting. Charlie, from that excitement to an inventory question that I'm going to ask you to address.

Is they developed a way to take stem cell differentiated fully differentiated into insulin producing islet cells.

And make that Industrialised quantities and so now what we have is the quantity and quality of cells.

To give to us to transfuse to transplant into patients with type one diabetes. So that's really what the real discovery here has been and why this program. It is so exciting to us.

Charlie from that excitement to an inventory question that I'm going to ask you to address.

Reshma Kewalramani: Yes, thanks. And I'm actually going to take this opportunity to give a plug to our colleagues in the Supply Chain and Manufacturing Organization. The noteworthy comment I can make about inventory is that those teams have worked flawlessly throughout the pandemic to ensure that we have inventory available for our patients, to ensure that we were ready for the Caf trio launch in Europe, and to ensure that we will be ready for future launches in 2021. I think your question, of course, is specifically about the impact on revenue.

Thanks, and I'm going to take this opportunity to actually to give a plug to our colleagues in the supply chain and manufacturing organization I think the most noteworthy comment I can make about inventory is that those teams have worked.

Flawlessly throughout the pandemic to ensure that we have inventory available for our patients to ensure that we were ready for the Caf trio launch in Europe and to ensure that we will be ready for future launches in 2021.

Your question of course is specifically about the impact on revenue I can tell you that there was nothing noteworthy in the fourth quarter or in our 'twenty 'twenty 'twenty, one guidance related to inventory levels.

Charles F. Wagner: I could tell you that there was nothing noteworthy in the fourth quarter or in our 2021 guidance related to inventory. Thank you. This concludes today's question and answer session. I will now turn the call back to Michael Partridge for closing remarks. Thanks, operator.

Yeah.

Yes.

Thank you.

This concludes today's question and answer session I will now turn the call back to Michael Partridge for closing remarks.

Thanks, operator, so we're at the one hour Mark we will conclude the call here I know there are other folks in the queue that didn't get a question, but the Investor Relations team is in the office Tonight and happy to take your questions.

Geoffrey Christopher Meacham: The Investor Relations Team is in the office tonight and happy to take your questions, and thank you very much for connecting tonight. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Thank you very much for connecting Tonight.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

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Yes.

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