Q2 2021 Vertex Pharmaceuticals Inc Earnings Call

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Good day, and thank you for standing by and welcome to the vertex.

Operator: Vertex Pharmaceuticals Q2-21 conference call. At this time, all participants are in a listen-only mode. After the speaker finishes,

And the Pharmaceuticals, Q2, 2021conference call at.

And at this time, all participants on the listen only mode. After the speaker presentation, there will be a question and answer session.

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At this time I'd like to turn the call over to your host of Mr. Michael Patrick just Sir you may begin.

Michael J. Yee: Michael Patrick. So you may begin. Good evening. This is Michael Partridge. Welcome to the Vertex Second Quarter 2021 Financial Results Conference Call. Making prepared remarks on the call tonight are Dr. Resh McEwal Romani, Vertex's CEO and president, Stuart Arbuckle, Chief Commercial and Operations Officer, and Charlie Wagner, Chief Financial Officer.

Good evening.

Vertex. This is Michael Partridge, welcome to the vertex second quarter 2021 financial results conference call, making prepared remarks on the call Tonight, we have Dr. Rich Mckay, while Rahmani for Texas, CEO, and President Stuart Arbuckle, Chief commercial and operations Officer, and Charlie Wagner Chief Financial Officer.

Michael J. Yee: We recommend that you access the webcast slides on our website as you listen to this call.

We recommend that you add.

Access the webcast slides on our website as you listen to this call. This call is being recorded a replay will be available on our website.

Michael J. Yee: is being recorded, and a replay will be available on our website. We will make forward-looking statements on this call that are subject to the risks and uncertainties discussed in detail in today's press release and in our filings with the Securities and Exchange Commission. These statements, including without limitation, those regarding Vertex's marketed CF medicines, our pipeline, and Vertex's future financial performance are based on management's current assumptions; actual outcomes and events could differ materially. I would also note that select financial results and guidance.

We will make forward looking statements on this call that are subject to the risks and uncertainties discussed in detail and today's press release and in our filings with the Securities and Exchange Commission these statements including without limitation.

<unk> those regarding vertex is marketed CF medicines, and our pipeline and vertex is 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 our non-GAAP.

Michael J. Yee: Results and guidance we will review on the call this evening are non-gap. I will now turn the call over to Dr. Reshma Kwalrama. Thank you, Michael.

I will now turn the call over to Dr. <unk>.

Fresh market, while the money.

Thank you Michael as we reached the halfway point in 2020, 1 and our business is performing exceptionally well and is very well positioned for the future. Our C of franchise is strong and growing joined the second quarter. We reached the number of new reimbursement agreements for the triple combination as well as other.

Reshma Kewalramani: As we reach the halfway point in 2021, our business is performing exceptionally well and is very well positioned for the future. Our CF franchise is strong and growing. During the second quarter, we reached a number of new reimbursement agreements for the triple combination, as well as other CFTR modulators in our portfolio, including in major markets like France and Italy, earlier than expected. These reimbursement agreements are occurring in a time frame that is far quicker than is typical for OUS markets, and importantly, we are achieving reimbursements at levels that are robust and reflect the value of our CF. We also secured regulatory approval for the triple combination As such, we are raising our 2021 guidance range by $500 million to a range of $7.2 to $7.4 billion, reflecting 18% year-on-year growth at the midpoint of the range.

<unk> of our modulators and our portfolio, including in major markets like France, and Italy earlier than expected. These reimbursement agreements that are occurring in the timeframe that as far quicker than is typical for O U S markets and importantly, we are achieving reimbursement set levels, which are robust and reflects the value of our C.

CF medicines.

We also secured regulatory approval for the Triple combination and the 6 to 11 age group for the U S. Taken together these additional reimbursement agreements and regulatory approvals provides thousands of new patients with access to our medicines as such we are raising our 2021 guidance range by $500 million.

2 of range of 7.2 to 7.4 billion, reflecting 18% year on year growth at the midpoint of the range, but our work and CF is not done there are still more than 30000 people with CF, who are yet to be treated and by reaching these patients. We see continued significant growth for the CF business.

Reshma Kewalramani: But our work in CF is not done. There are still more than 30,000 people with CF who are yet to be treated, and by reaching these patients, we see continued significant growth for the CF business. With regard to the pipeline, progress is accelerating across the portfolio. We now expect to achieve target enrollment in both CTX-0-1 studies in Q3. We have initiated the VX-548 Phase 2 program in acute pain, and we are on track to begin the Phase 3, Next-in-class, Triple Combination Program in CF shortly.

With regard to the pipeline progress is accelerating across the portfolio. We now expect to achieve target enrollment in both CTX fears of 1 studies in Q3, we have initiated the VX 5 for 8 phase II program in acute pain. We are on track to begin the phase III next in class.

Triple combination program and C F. Shortly.

Reshma Kewalramani: And in the next six to nine months, we expect important data readouts from multiple clinical stage programs, including VX-147 in APOL-1-mediated FSGS, VX-548 in acute pain, and VX-880 in type 1 diabetes. I'll now review the key clinical stage programs in more detail. Starting with CF, we are relentless in our efforts to maximize the benefit we can deliver for patients. Tricafta sets a very high bar, and we recognize that any new medicine that aims to treat the 90% of people with CF with at least 1 F508 del allele, including our own medicines, has to show clear potential to improve on tricaptis.

And in the next 6 to 9 months, we expect important data readouts for multiple clinical stage programs, including the X 147 in April well, 1 mediated F. S. G. S. VX 5 for 8 in acute pain and.

<unk> CX 880 in type 1 diabetes.

And now review the key clinical stage programs and more detail.

Starting with CF, we are relentless and our efforts to maximize the benefit we can deliver for patients try captor sets of very high bar and we recognize that any new medicine that aims to treat the 90.

And percentage of people with CF with at least 1 F..5 O 8 dellolio, including our own medicines has to show clear potential to improve on track. After we announced earlier this week that the once a day next in class Triple combination VX, 1 to 1 test of capture the X 5.6.

Reshma Kewalramani: We announced earlier this week that the once-a-day, next-in-class, triple combination VX-121-Tescafter, VX-561, is advancing to phase three. We believe it holds the potential for greater efficacy and convenience for patients. It also has the benefit of enhanced economics for our business, based on the fact that the royalty obligation would decrease from low double digits to low single-digit.

90% is advancing the phase III, we believe it holds the potential for greater efficacy and convenience for patients. It also has the benefit of and Ams economics for our business based on the fact that the royalty obligation would decrease from low double digits to low single digits.

Reshma Kewalramani: We are also committed to developing therapies for the approximately 10% of patients who cannot benefit from CFTR modulators. Our lead program, in partnership with Moderna, uses an MRI-based approach and continues to make progress in late preclinical development. Let me now turn to our non-CF clinical pipeline, which includes five mid-stage programs using three different therapeutic modalities, including small molecules, cell, and genetic therapy. The most advanced program in the pipeline is CTX-01, a gene editing therapy, which represents a potential, one-time, functional cure for patients with beta-thalcemia and sickle cell disease.

We are also committed to developing.

<unk> therapies for the approximately 10% of patients who cannot benefit from CF GR modulators, our lead program in partnership with Madonna uses and mrna based approach and continues to make progress in late preclinical development.

Let me now turn to our non CF clinical pipeline, which includes 5 mid to late stage programs.

1 using 3 different therapeutic modalities, including small molecules cell and genetic therapies.

The most advanced program and the pipeline of CTX, Here's your 1 our gene editing therapy, which represents a potential 1 time functional cure for patients with beta thalassemia and sickle cell disease. This.

Reshma Kewalramani: This program continues to have strong momentum and impressive results. We shared new data at EHA last month involving 22 patients who were treated with CTX001 and had at least three months of follow-up. In this data set, all beta-thalcemia patients, including beta-0-beta-0 patients who have the most severe form of the disease, were transfusion independent, and all sickle cell patients were free of pain crises.

<unk> per Gram continues to have strong momentum and impressive results. We've shared new data at IHA last month involving 22 patients who were treated with the C. T X series zero, 1 and had at least 3 months of follow up in this dataset, all beta thalassemia patients, including beta zero beta zero patients.

<unk>, who have the most severe form of the disease, where transfusion independent and all sickle cell patients were free of pain crises, following CTX Sears or of 1 therapy.

Reshma Kewalramani: following CTX-001 therapy. We now have dosed more than 45 patients across the program and are on track to achieve target enrollment in both CTX001 studies in the third quarter. We are working with regulators to finalize the filing package for CTX301 and anticipate filing for approval in the next 18 to 24 months. Moving to VX147

We now have dosed more than 45 patients across the program and are on track to achieve target enrollment in.

And both CTX yours or of 1 studies in the third quarter, we are working with regulators to finalize the filing package for CTX years here of 1 and anticipate filing for approval in the next 18 to 24 months move.

Moving to the X 1 for 7 VX 1 for 7 is our lead molecule for the treatment of April while 1 mediated kid.

Reshma Kewalramani: VX147 is our lead molecule for the treatment of APOL1-1-mediated kidney disease, and we anticipate clinical data from our Phase 2, Proof-of-C-of-Conse study in APOL-1-mediated FSGS in the second half of 2021. The VX-147 Phase 2 study evaluates the safety and the reduction of pertinuria over the course of 13 weeks. The achievement of double-digit decreases in pertinuria with this molecule would be a significant risk-taking milestone for the program, as this would establish APOL-1 inhibition as a promising new mechanism that can be applied to the approximately 100,000 patients in the U.S. and Europe who have APOL-1-mediated, non-diabetic pertinic kidney disease.

Kidney disease, and we anticipate clinical data from our phase II proof of concept study in April of 1 mediated F. S. G S and the second half of 2021the VX 1 for 7 phase II study evaluates the safety and the reduction of proteinuria over the course of 13 weeks.

The achievement of.

Double digit decreases in proteinuria with this molecule would be significant risk low ring milestone for the program.

As this would establish April 1 inhibition as a promising new mechanism that can be applied to the approximately 100000 patients and the U S and Europe, who have April.

Of deviated non diabetic partner of kidney disease.

Reshma Kewalramani: Consistent with the portfolio approach we take with every pipeline program, we have multiple molecules in development behind VX147 targeting the APOL-1 pathway. Now, turning to the NAV-8 program. As announced last week, the phase two trial in acute pain following bunionectomy surgery with our selective NAV-1.8 inhibitor VX-548 is underway, with data expected by early 2022. Nav 1.8 is both genetically and pharmacologically validated, with our previous molecule, VX-150, demonstrating positive proof of concept in acute, neuropathic, and musculoskeletal pain.

Consistent with the portfolio approach, we take with every pipeline program, we have multiple molecules and development behind VX, 1 for 7 and targeting the April 1 pathway.

Turning to the NAV 1.8 program.

As announced last week.

1 of these 2 trial in acute pain following bunionectomy surgery with our selective NAV 1.8 inhibitor VX 5 for a is underway and data are expected by early 2020..2 NAV 1.8 is both genetically and pharmacologically validated with our previous molecule VX 100.

And the demonstrating positive proof of concept and acute neuropathic and musculoskeletal pain.

Reshma Kewalramani: VX-548 is more potent than our prior molecules, which allows us to use lower doses and also more fully explore the dose response curve. We expect to move faster with VX-548 by conducting multiple clinical studies in parallel. Indeed, we are starting a second phase-to-acute plane study following abdominalplasty in the coming week. The potential to serve patients suffering from acute pain is substantial, and Stewart will share additional perspective on the market opportunity in his remark.

The X 5 for rate is more potent than our prior molecules, which allows us to use lower doses and also more fully explore the dose response curve, we expect to move faster with VX.

And <unk> by 4.8 by conducting multiple clinical studies in parallel and indeed, we are starting a second phase II acute plain study following abdominoplasty in the coming weeks the potential to serve patients suffering from acute pain is substantial and Stuart will share additional perspective on the market opportunity in.

50 of marks.

Reshma Kewalramani: Moving on to type 1 diabetes, the phase 1-2 study with VX880, our islet cells alone approach, is underway, and the first patient has been dosed. Ours is the only approach to use stem-cell-derived, fully differentiated, insulin-producing islestles, distinguishing it from all other therapies in clinical development today. Similar to CTX-401, we anticipate that proof of concept for VX880 may be established with relatively small numbers of patients over a reasonably efficient time frame. We expect initial data from the study in 2022.

Moving onto type 1 diabetes the phase 1.2 study with VX 880 are islet cells alone approach is underway and the first patient has been dosed ours is the only approach to use stem cell derived fully differentiated insulin producing islet cells.

Distinguishing it from all other therapies and clinical development today.

Similar to the CTX fears are 1 we anticipate the proof of concept for VX 880, maybe established with relatively small numbers of patients over a reasonably efficient timeframe. We expect initial data from the study in 2020.2.

Reshma Kewalramani: Our optimism for this program and for the ability of VX880 to demonstrate clinical benefit comes from the catavoric IL cell transplantation experience, which has already provided a precedent for transformational outcomes. Beyond VX880, our Cells Plus Device program is continuing to progress in late preclinical development. Finally, in AATD, as we shared with you in June, the VX-864 Phase 2 clinical data showed clear evidence of biological activity, though the magnitude of the clinical effect did not support its progression to pivotal studies.

And our Optimus.

In his room for this program and for the ability of VX 880 to demonstrate clinical benefit comes from the cat of Eric islet cell transplantation experience, which has already provided a precedent for transformational outcomes.

Beyond VX 880 ourselves plus device program is continuing to progress in late <unk>.

Preclinical development for.

Finally in a a T D. As we shared with you and June the VX 8.6 for phase 2 clinical data showed clear evidence of biological activity, though the magnitude of clinical effect did not support its progression to pivotal studies.

Reshma Kewalramani: Based on these data, we remain confident in and committed to AATD and to our small molecule corrector approach. This is the only approach that targets the underlying cause of AATD and therefore holds the potential to treat both the lung and liver manifestations of the disease. We expect that our next wave of molecules will advance into the clinic in 2022 and that we will be able to move more rapidly through clinical development with the insights we have gained from the VX-864 trial. I'll now hand it off to Stewart. Thank you, Reshma.

Based on these data we remain confident.

Optimism and committed to a a T D and to our small molecule corrector approach. This is the only approach that targets the underlying cause of a a T D and therefore holds the potential to treat both the lung and liver manifestations of disease.

We expect that our next wave of molecules.

And in advance into the clinic in 2020, 2 and that we will be able to move more rapidly through clinical development with the insights we've gained from the VX 8.6 for trial.

I'll now hand, it off the Stewart.

Thank you restaurant.

Stuart A. Arbuckle: I'll begin by reviewing the Q2 revenue performance of our CFMET. Our Q2 global revenues reached nearly $1, driven by increasing revenues outside the US as a result of the launch of CAFTrio and continued strong performance in the US. In the US, the launch of Trikhafter in ages 12 plus has been highly successful, and just under two years since regulatory approval, the vast majority of eligible patients have initiated treatment. We have continued to see very high persistence and compliance levels, and we're now focused on the ongoing launch of Trikhafter in children ages 6 to 11 in the US, following regulatory approval in June.

I'll begin by reviewing the Q2 revenue performance of our CF medicines.

With our Q2 global revenues reached nearly $1.8 billion driven by increasing revenues outside the U S. As a result of the launch of <unk> trio and continued strong performance in the U S.

And the U S. The launch of Tri CAFTA and ages 12, plus has been highly successful and just under 2 years since regulatory approval.

The vast majority of eligible patients have initiated treatment.

We've continued to see very high persistence and compliance levels and will now focus on the ongoing launch of Tri CAFTA and children ages 6 to 11 and the U S. Following the approval in June.

Stuart A. Arbuckle: Outside the US, we have made significant progress with reimbursement for our med That's We now have reimbursed access to CAFTrio in more than 15 countries outside the US, less than one year following EMA approval. This compares favorably to the industry standard, both in terms of the timeline in individual countries and the total number of markets in which we have reimbursement agreements. Our rapid reimbursement progress can be attributed to multiple factors.

Outside the U S. We have made significant progress with reimbursement.

And for all medicines.

We now have reimbursed access for Caf trio and more than 15 countries outside the U S less than 1 year following EMA approval.

This compares favorably to the industry standards, both in terms of the timeline and individual countries and the total number of markets and which we have reimbursement agreements.

Our rapid reimbursement progress can be attributed to multiple factors.

Stuart A. Arbuckle: The transformative clinical benefits of the triple combination, the support and collaboration of governments and the CF community, and the expertise of our commercial team built over the course of a decade.

The transformative clinical benefits of the triple combination the.

And the support and collaboration of governments and the CF community and.

And the expertise of our commercial team built over the course of a decade.

Stuart A. Arbuckle: Importantly, as Reshma mentioned earlier, we are achieving reimbursement for our medicines at levels that recognize their considerable clinical benefits.

Importantly, as Rushmore mentioned earlier.

We are achieving reimbursement for our medicines at levels that recognize the considerable clinical value.

Stuart A. Arbuckle: The pivotal clinical trial data for Trikha were unprecedented.

The pivotal clinical trial data for Tri CAFTA were unprecedented and as with all of our Prime medicines. We are continuing to track the long term performance of the Triple combination and extension studies of our pivotal trials.

Stuart A. Arbuckle: As with all of our prior medicines, we are continuing to track the long-term performance of the triple combination.

Stuart A. Arbuckle: triple combination, in extension studies of our pivotal trials and in the real world, to be able to fully understand and communicate the long-term benefits of CFDR modulator therapy to all key stakeholders. We have previously shown powerful evidence that treatment with Collidico, Orkambi, and Simdico slows lung function decline, results in multi-system benefits, and transforms the course of the disease in CF patients.

And in the real world to be able to fully understand and communicate the long term benefits of C. F D. A modulator therapy to all key stakeholders.

We have previously shown powerful evidence that treatment with Kalydeco, ORKAMBI and Sim Decaux slows lung function decline results and multi system benefits.

And transforms the course of the disease in CF patients.

Stuart A. Arbuckle: Earlier this month, we obtained our first long-term follow-up data with the triple combination.

Earlier this month, we obtained our first long term follow up data with the triple combination in.

Stuart A. Arbuckle: In the FF and FMF patient populations, those treated for at least 96 weeks.

And the F F and F M F patient populations treated for at least 96 weeks with Tri CAFTA and the open label extension of the pivotal clinical trials.

Stuart A. Arbuckle: with Trikhae.

Stuart A. Arbuckle: In an open label extension of the pivotal clinical trials, we do not see any decline in mean lung function over time, which is a first for any of our CFTR modulators. We look forward to sharing these data at a forthcoming medical forum. Although we are pleased with what we've achieved so far, we still have a long way to go.

We do not see any decline in Maine lung function over time.

This is a first for any of us the F T or modulators.

We look forward to share and these data in the forthcoming medical for them.

Although we are pleased with what we've achieved so far we still have a long way to go to reach all CF patients.

Stuart A. Arbuckle: way to go to reach all CF patients.

Stuart A. Arbuckle: As we have previously communicated, we estimate there are 83,000 people living with HIV.

As we have previously communicated we estimate there are 83000 people living with CF in the U S, Canada, Europe, and Australia, and approximately 90% of these are likely to benefit from of C. F. T. A modulator.

Stuart A. Arbuckle: in the US, Canada, Europe, and Australia, and approximately 90% of these are likely to benefit from a CFTR modulator. We estimate that there are more than 30,000 patients who could benefit from our current CF medicines who are not

We estimate that there are more than 30000 patients who could benefit from our current C.

Persons, who are not yet being treated.

Stuart A. Arbuckle: Reaching these patients, which will drive significant additional revenue growth, will be achieved by successfully launching our medicines where we have reimbursement, securing additional new reimbursement agreements, and label expansions to younger age groups. We remain confident we will be able to reach the vast majority of these patients. I would now like to provide some perspective on the market opportunities for some of the other medicines in our mid and late stage pipeline, starting with CTX-01.

Reaching these patients which will drive significant additional revenue growth will be achieved by successfully launching our medicines, where we have reimbursement securing additional new reimbursement agreements and label expansions to younger age groups and we remain confident.

The EF met we will be able to reach the vast majority of these patients.

I would now like to provide some perspective on the market opportunities for some of the other medicines and all mid and late stage pipeline.

Starting with CTX 001.

Stuart A. Arbuckle: With the amendment of our collaboration agreement with CRISPR Therapeutics, Vertex now has global leadership for all aspects of the CTX-001 program. As a result, we are in a position to leverage

With the amendment of our collaboration agreement with CRISPR Therapeutics.

And the vertex now has taken global leadership for all aspects of the CTX, Arizona of 1 program.

As a result, we are and are positioned to leverage vertex is demonstrate the ability to develop.

Stuart A. Arbuckle: Vertex's demonstrated ability to develop and secure access to and reimbursement for transformative medicine. We see tremendous potential for CTX-01. We estimate that there are more than 150,000 patients in the US and Europe who have beta thalassemia or sickle disease.

And secure access and reimbursement for transformative medicines.

We see tremendous potential for CTX, Arizona.

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We estimate that there are more than 150000 patients in the U S and Europe, who have beta thalassemia or sickle cell disease, approximately 32000 of whom have severe disease.

Stuart A. Arbuckle: Approximately 32, of whom have severe disease.

Stuart A. Arbuckle: 25, are severe sickle cell disease patients, and the vast majority of these are in

25000 are severe sickle cell disease patients and the vast majority of these are in the U S.

Stuart A. Arbuckle: are in the US.

Stuart A. Arbuckle: We believe that a gene editing approach, which holds the potential for a one-time curative treatment, will be highly valued by patients, physicians, and the medical community.

6 we believe that of gene editing approach, which holds the potential for of onetime curative treatment will be highly valued by patients physicians and payors.

Stuart A. Arbuckle: Consistent with our own internal market research, published physician surveys in the US consistently indicate that they expect a quarter to a third of their sickle cell disease

Consistent with our own internal market research published physician surveys and the U S consistently indicate that they expect of quarter to a third of the sickle.

Stuart A. Arbuckle: Patients would be good candidates for a one-time curative approach using the current conditioning regimen, which is in line with the estimate

The cell disease patients would be good candidates for a onetime curative approach using the current conditioning regimen, which is in line with the estimates of the numbers of severe patients.

Stuart A. Arbuckle: of the numbers of severe patients and with gentler conditioning regimens in the future.

And with gentle of conditioning regimens and the future, we expect CTX zero-zero want to be an attractive option for a much larger proportion of the 100.

Stuart A. Arbuckle: In the future, we expect CTX-001 to be an attractive option for a much larger proportion of the 150,000 beta thalassemia and sickle disease patients. Our pre-commercial efforts are well underway. There are a number of notable features that are guiding our approach to this market, including one, patients with severe beta thalcemia and sickle cell disease are symptomatic and have a lifelong history of hospitalizations and other significant cost burden

<unk> thousand and beta thalassemia, and sickle cell disease patients.

Our pre commercial efforts are well underway.

There are a number of notable features that are guiding our approach to this market, including 1 patients with severe beta thalassemia and sickle cell disease are symptomatic and have a lifelong history of Haas.

Fertilization and other significant cost burdens.

Stuart A. Arbuckle: We are developing health economic models to demonstrate the cost effectiveness of a functional cure for these patients. Two, a New and Flexible Payment Model

We are developing health economic models to demonstrate the cost effectiveness of a functional cure for these patients.

2 new and flexible payment models will be needed for a functional cure for these diseases.

Stuart A. Arbuckle: Payment models will be needed for a functional cure for these diseases.

Stuart A. Arbuckle: We are engaged with payers to understand what models work best for them and for patients. Three, patients are geographically concentrated. For instance, 75% of eligible sickle cell patients in the US live in 15 states.

We are engaged with payers to understand what models.

The work best for them and for patients and.

And 3 patients are geographically concentrated for instance, 75% of eligible sickle cell patients in the U S live in 15 states.

Stuart A. Arbuckle: We will use these and other insights to establish a commercial operation that is both lean and highly effective, as we have in CF today. Let me now turn to Payne and share our perspective on the market opportunity for a novel medicine in this area. Acute pain therapies represent 1.8 billion treatment days a year in the US. Despite more than 90% of prescriptions being generic, acute pain still represents a $4 billion market, underscoring the opportunity for a novel transformative agent.

We will use these and other insights to establish a commercial operation that is both lean.

And highly effective as we have and CF today.

Let me now turn to pain and share our perspective on the market opportunity for a novel medicine in this area.

Acute pain therapies represent 1.8 billion treatment days a year in the U S.

Despite more than 9.

Sense of prescriptions being generic acute pain still represents a 4 billion dollar market.

Underscoring the opportunity for a novel transformative agent.

Stuart A. Arbuckle: A new medicine that even takes a portion of the current treatment days has multi-billion dollar potential. In acute pain, a significant component of the market is opioids. A medicine with high efficacy and without the limitations of opioids, particularly their addictive potential, would be transformative for patients and the healthcare system.

A new medicine that even takes a portion of the current treatment days has multibillion dollar potential.

In acute pain, a significant component.

90 pocket is opioids.

A medicine with high efficacy and without the limitations of opioids, particularly their addictive potential would be transformative for patients and the health care system.

Stuart A. Arbuckle: With regard to commercialization, treatment is highly concentrated within hospital and post-operative settings. 25% of US hospitals account for 80% of all opioid prescriptions.

With regards to commercialization treatment is highly concentrated within hospital and post operative settings.

And of the 25% of U S hospitals account for 80% of all opioid prescriptions.

Stuart A. Arbuckle: Given this concentration, successful

Given this concentration successful commercialization will be possible with a small specialist focused commercial model again, consistent with our lean SG&A approach.

Stuart A. Arbuckle: successful commercialization will be possible with a small, specialist-focused commercial model, again, consistent with our lean SG&A approach. Finally, type 1 diabetes. VX80 has advanced to patient studies, and relatively soon, we will begin to have a view of its clinical profile. We estimate that 60,000 patients in the US and Europe with severe type 1 diabetes or type 1 diabetes with prior kidney transplant would be potential candidates for VX880.

Finally type 1 diabetes.

Ts VX.

The next aches 80 has advanced of patient studies and relatively soon we will begin to have a view of its clinical profile.

We estimate that 60000 patients in the U S and Europe with severe type 1 diabetes or type 1 diabetes with prior kidney transplant would be potential candidates for VX 880.

Stuart A. Arbuckle: In and of itself, the Islet Cells Alone program is

And in and of itself the islet cells of loan program is a significant market opportunity and existing transplant approaches establish a basis for the high value of a transformative therapy.

Stuart A. Arbuckle: significant market opportunity, and existing transplant approaches establish a basis for the high value of a transformative therapy. Beyond VX880, the Cells and Device Program could address the broader type 1 diabetes population of 2.6 million patients in the US and Europe. In conclusion, it's an exciting time to be at Vertex as we continue to bring our CF medicine to patients.

Beyond VX 880, the sales and device program could address the broader type 1 diabetes population.

And 2.6 million.

Patients in the U S and Europe.

In conclusion, it's an exciting time to be at vertex as we continue to bring our CF medicines to more patients and we still have significant growth ahead and C F with new reimbursement agreements and label expansions to younger age groups.

Stuart A. Arbuckle: to more patients, and we still have significant growth ahead in CF with new reimbursement agreements and label expansions to younger age groups.

Stuart A. Arbuckle: and beyond CF, our mid and late stage pipeline is rapidly advancing, with each program having both the potential to transform lives and presenting a significant commercial opportunity.

And beyond C F Amit.

Mid and late stage pipeline is rapidly advancing with each program, having both the potential to transform lives and presenting a significant commercial opportunity.

Charles F. Wagner: And with that, I'll hand it over to Charlie. Thanks, Stuart. In the second quarter of 2021, Vertex again continued its record of outstanding financial performance. In fact, we're in the midst of our eighth consecutive year of at least double-digit revenue growth. Second quarter total product revenues were 1.79 billion, an 18% increase compared to the second quarter of 2020. This growth was primarily driven by strong international uptake of CapTrio and continued performance of TriCAPTA in the U.S. Our second quarter revenues included 1.26 billion in the U.S.

And with that I'll hand, it over to Charlie.

Thanks, Stuart and.

And the second quarter of 2020, 1 vertex again continued its record of outstanding financial performance.

<unk> in fact, we're in the midst of our eighth consecutive year of at least double digit revenue growth.

Second quarter total product revenues were 1.79 billion and 18% increase compared to the second quarter of 2020.

This growth was primarily driven by strong international uptake of Caf trio and continued performance of.

And in the U S.

Our second quarter revenues included 1.26 billion and the U S and $536 million outside the U S. Ex U S revenues for the quarter grew 71% over the prior year, reflecting the full quarter of effect of prior initiations and Europe as well as any new patient initiations.

Charles F. Wagner: And 536 million outside the U. X-S revenues for the quarter grew 71% over the prior year, reflecting the full quarter effect of prior initiations in Europe, as well as any new patient initiations in countries where patients have access to Keptrio. Our second quarter combined R&D and SGNA expenses were $537 million, compared to $467 million for the second quarter of 2020, driven largely by investment in our clinical trial programs and our research pipeline.

And countries, where patients have access to kept trio.

Our second quarter, combined R&D and SG&A expenses were $537 million compared to 467 million for the second quarter of 2020.

Driven largely by investment and our clinical stage programs and our research pipeline.

As our pipeline continues to expand and mature.

<unk> kept our R&D investments will continue to be substantial while we drive toward proof of concept data and further clinical and regulatory progress across the pipeline.

Charles F. Wagner: As our pipeline continues to expand and mature, we expect our R&D investments will continue to be substantial while we drive toward proof of concept data and further clinical and regulatory progress across the pipeline. Our continued growth in revenues, combined with carefully managed growth in spending, translates to a second quarter operating margin of 57%. With our strong revenue and profitability, we ended the quarter with $6.7 billion in cash, following the one-time $900 million payment to CRISPR therapeutics for the amended collaboration.

Our continued growth and revenues combined with carefully manage growth and spending translates to a second quarter operating margin of 57% with our strong revenue and profitability we ended the quarter.

Warner with $6.7 billion and cash following the onetime $900 million payment to CRISPR therapeutics for the amended collaboration.

Our strong financial performance to date, the future growth profile and C F and the tremendous potential of our broad and deep pipeline.

I made this the right time for the 1.

Point $5 billion stock repurchase authorization that we announced in June.

This authorization gives us the opportunity to repurchase stock at very attractive prices as we seek to offset future dilution from equity programs.

Charles F. Wagner: Our strong financial performance to date, the future growth profile in CF, and the tremendous potential of our broad and deep pipeline made this the right time for the $1.5 billion stock repurchase authorization that we announced in June. This authorization gives us the opportunity to repurchase stock at very attractive prices as we seek to offset future dilution from equity programs. Now to guidance.

Now to guidance.

We are making a significant upward revision to our previously issued.

Issued 2021 guidance for total product revenues to a range of 7.2 to 7.4 billion the.

It's $500 million increase and our revenue guidance range reflects year to date business outperformance as well as the rapid progress, we've made and reaching new reimbursement agreements.

Year over year this guidance represents nearly 18.

Per cent growth at the midpoint.

And as is our practice the guidance only includes revenue for countries that are currently reimbursed future new reimbursements are not included.

Charles F. Wagner: We are making a significant upward revision to our previously issued 2021 guidance for total product revenues to a range of 7.2 to $7.4 billion. This $500 million increase in our revenue guidance range reflects year-to-date business outperformance, as well as the rapid progress we have made in reaching new reimbursement agreements. Year of a year, this guidance represents nearly 18% growth at the mid-term. As is our practice, this guidance only includes revenue for countries that are currently reimbursed. Future new reimbursements are not included.

We are maintaining our non-GAAP opex guidance for the full year 2021 at 2.25 to 2.3 billion.

Driven by R&D investment.

18th we anticipate that our opex and the second half of 2020, 1 will be sequentially greater than in the first half of the year.

Specific drivers include the new economic split under the amended CTX 001 collaboration advancement of VX 5 for 8 to multiple studies in pain and investment to support type 1 diabetes clinical development.

Charles F. Wagner: We are maintaining our non-gap OPEX guidance for the full year 2021 at 2.25 to 2.3 billion. Driven by R&D investment, we anticipate that our OPEX in the second half of 2021 will be sequentially greater than in the first half of the year. Specific drivers include the new economic split under the amended CTX-O-1 collaboration, advancement of VX-548 to multiple studies in pain, and investment to support type 1 diabetes clinical development. For a non-gap tax rate, we continue to guide to a range of 21 to 22% this year.

<unk> for our non-GAAP tax rate, we continue to guide to a range of 21% to 22% this year.

Looking to the future the financial profile of our business is exceptional in many ways first we expect to see continued significant top and bottom line growth from our CF franchise into the middle of the decade as we continue.

Continue to reach more and more patients.

Second our CF revenues are well protected by the triple combinations strong IP, which extends to the late 'twenty thirties, and which could be further extended with the new next in class Triple now entering pivotal trials.

Third our differentiated business model and lean SG&A lead the high margins.

Charles F. Wagner: Looking to the future, the financial profile of our business is exceptional in many ways. First, we expect to see continued, significant, top and bottom line growth from our CF franchise into the middle of the decade as we continue to reach more and more customers. Second, our CF revenues are well protected by the triple combination's strong IP, which extends to the late 2030s and which could be further extended with the new next-in-class triple now entering pivotal trials.

And strong cash flow, which allows for sustained levels of investment into internal and external R&D and continued strong earnings growth.

And finally.

We have a number of multibillion dollar opportunities advancing and the pipeline many with near term milestones, including those in beta thal and sickle cell disease April.

O L..1 mediated kidney disease pain type, 1 diabetes and a a T.

Each of which have the potential to drive significant growth beyond CF into the 'twenty thirties.

Charles F. Wagner: Third, our differentiated business model and lean SGNA lead to high margins and strong cash flow, which allows for sustained levels of investment in internal and external R&D and continued strong earnings growth. And finally, we have a number of multi-billion-dollar opportunities advancing in the pipeline, many with near-term milestones, including those in beta-thal, sickle cell disease, APOL-1-mediated kidney disease, pain, type 1 diabetes, and AAT, each of which has the potential to drive significant growth beyond CF into 2030. With that, I'll turn it back to Rescholose.

With that I'll turn it back to Richmond of close.

Why don't we go directly to questions and open the phone lines now.

Thank you.

As a reminder to ask a question you would need to for our 1 on your telephone.

Which of your question press the pound key.

Please stand by while we compile the Q&A roster.

I show our first question comes from the line of Michael Yee from Jefferies. Please go ahead.

Hey, guys. Good evening. Thanks for the question Rushmore and I know that there is a important.

Phase 2 readout for Iraq F. S. Cash later this year and you've talked about that and I know you've talked about what you're looking for in terms of reduction of proteinuria I guess my question much twofold, 1 are there scenarios where.

Reshma Kewalramani: Why don't we go directly to questions and open the phone lines now?

Operator: As a reminder, to ask a question, you need to press R1 on your telephone. To withdraw your question, press the pound key.

The reductions of more modest and you have to think about what that would mean for going forward and.

And second if it was really good reductions.

Operator: Please stand by while we compile the Q&A roster. I will show our first question comes from the line of

Production and put in areas of surrogates for when you still need to run a much longer study appreciate and it's a genetic mutation patient population and so maybe you could talk to those scenarios and how you think about.

Operator: comes from the line of Michael Ye from Jeffries. Please go ahead.

Michael J. Yee: Hi guys, good evening, thanks for the question. Reshma, I know that there's a...

The robustness of data thank you.

Michael J. Yee: Important phase two readout for

Yeah.

And Mike.

Michael J. Yee: FS later this year, and you've talked about that, and I know you've talked about it.

The the question you asked was about the VX 1 for 7 program for the the others on the phone. This is the April L..1 mediated F. S. C. S program that is currently in phase 2 and we are on track to read out.

Michael J. Yee: What you're looking for in terms of a reduction in perpurnuria.

Michael J. Yee: I guess my question was twofold. One, are there scenarios where reductions are more modest, and you have to think about what that would mean going forward. And second, if there were really good reductions, you know, production of curtailors is a surrogate, so when you still need to run a much longer study, appreciating it's a genetic mutation patient population.

Q2 results.

In the second half of this year the.

And I see this program, Mike and what we're really looking for is safety for sure. It's a phase II program and on the efficacy side Youre right. It is about per cent reduction in proteinuria, and we're looking for double digit reduction.

And and partner because of those levels, it's meaningful and it is correlated with improvements in GFR and the heart and point of time to ESR D.

Michael J. Yee: genetic mutation patient population. So maybe you could talk about those scenarios and how you think about the robustness of data. Thank you.

As with all of our programs, Mike we have a portfolio approach here and I am excited to see these results and the community.

Reshma Kewalramani: Yeah. Hi Mike.

Reshma Kewalramani: You know, the question you asked is about the VX-147 program for the others on the phone. This is the April L1 mediated FSGS program that is currently in Phase 2, and we are on track to read out the phase 2 results in the second half of this year. The way I see this program, Mike, and what we're really looking for is safety, for short. It's a Phase 2 program. And on the efficacy side, you're right.

Munity physicians as well as patient groups and the regulators, particularly in the U S of had multiple workshops and conferences over the last several years.

And the regulators have expressed openness for proteinuria to be the regulatory enabling endpoints.

And point now whether that's an accelerated approval whether that's the full approval all of that obviously will need to be discussed as we progress of the program and have those discussions with the regulators, but I've been really pleased with how the regulators of thought about it and the fact that this is indeed a genetically defined.

Reshma Kewalramani: It is about percent reduction in protanuria, and we are looking for double-digit reduction in protenaria because at those levels, it's meaningful, and it is correlated with improvements in GFR and the hard endpoints of time to ESRD. As with all of our programs, Mike, we have a portfolio approach here.

Find a renal disease and and what the regulators of often talked about is a homogeneous proteinuria kidney disease and that that is what this is so I feel optimism for proteinuria to be the regulatory enabling endpoint and obviously that makes for a more efficient trial.

Reshma Kewalramani: I am excited to see these results. The community, physicians, as well as patient groups, and the regulators, particularly in the U.S., have had multiple workshops and conferences over the last several years, and the regulators have expressed openness to having protenuria be the regulatory enabling endpoint. Now, whether that's an accelerator approval, whether that's a full approval, all of that obviously will need to be discussed as we progress the program and have those discussions with the regulators.

Thank.

Thank you.

Your next question comes from the line of Phil Nadeau from Cowen and company. Please go ahead.

Good afternoon, and thanks for taking my question kind of a 2 part regulatory question from US and you recently announced the design of the Phase III trial and it is notable because of non inferiority.

The primary endpoint were curious to know whether simple non inferiority of sufficient to support of FDA approval or if the FDA asked for superiority or something else from the secondary endpoints and.

Reshma Kewalramani: But I've been really pleased with how the regulators have thought about it and the fact that this is indeed a genetically defined renal disease. And what the regulators have often talked about is a homogeneous protinoric kidney disease, and that is what this is. So I feel optimism about protereturia being the regulatory enabling endpoint. And obviously, that makes for a more efficient trial.

And then second part of the question is when will we get similar details on what's necessary to file of CTX.

001, I think you've been guiding for F D E and F. The update.

Sometimes this year, we're kind of curious is that gonna come sooner rather than later and.

Operator: I show our next question, which comes from the line of Phil Nodoo from Calman & Company. Please go ahead.

If you of any preliminary idea of what will be necessary for filing and that candidate. Thank you.

Sure.

Phil Nadeau: Good afternoon, thanks for taking our question, kind of a two-part regulatory question from us. You recently announced the design of the CF Phase 3 trial, and it's notable because as a non-inferiority priority primary endpoint, we're curious to know whether simple non-inferiority is sufficient to support FDA approval, or if the FDA asks for superiority or something else from the secondary endpoint. And then the second part of the question is when will we get similar details on what's necessary to file CTX001?

Let me take the CTX years here of 1.

1 question.

The first.

And as I mentioned in my prepared remarks, we are now looking to achieve completion of target enrollment in Q3. So that's really a very near term completion of of the targeting enrollment. So what we're really looking at now and I've described before because we've had these conversations.

<unk> with regulators and we do have the benefit of really virtually every regulatory designation 1 can imagine so we've had the opportunity to have productive discussions with the agency about the size of the filing package. It's about the duration of follow up and the CMC manufacturing controls and I'd like to see.

Phil Nadeau: I think you've been guiding for an FDA update. Sometime this year, we're kind of curious, is that going to come sooner rather than later? If you have any preliminary idea of what will be necessary for filing that candidate, thank you.

Achievement enrollment is really short term so it's about.

The duration of follow up and CMC manufacturing I do expect that we're going to bring those conclude the those discussions to a conclusion.

Reshma Kewalramani: Sure. Let me take the CTX-001 question first. As I mentioned in my prepared remarks, we are now looking to achieve completion of target enrollment in Q3. So that's really a very near-term completion of target enrollment. So what we're really looking at now, and I've described before, as we've had these conversations with regulators, and we do have the benefit of virtually every regulatory design one can imagine. So we have had the opportunity to have productive discussions with the agency. It's about the size of the filing package.

In the next coming months and I do anticipate filing to be possible and the next Oh, let's call. It 18 to 24 months. So that's.

That's really what it looks like on the CTX Sears here of 1.

On the phase III next in class CF program.

We've gone through our discussions with the regulators we've had our end of phase II meetings and this trial design that you see reflects those considerations and those discussions.

I will point out that as I look at the VX 1 to 1 data that there are 3 really important elements that stand out to me.

Reshma Kewalramani: It's about the duration of follow-up and the CMC manufacturing controls that I'd like to say. Achievement enrollment is really short-term, so it's about the duration of follow-up and CMC manufacturing. I do expect that we're going to bring those discussions to a conclusion in the coming months, and I do anticipate filing to be possible in the next, oh, let's call it 18 to 24 months.

The first is that in our HB assays, and you know that our HPE assays translate very well into the clinic not only qualitatively, but quantitatively seen.

Italy or in combination and so 1 to 1 alone or in combination with type of capture of 561 and the results are in our HB. He's the 1 to 1 is more efficacious more efficacious and even try CAFTA, that's really saying something and and the phase II results. You can look at the sweat chloride, which is the real director.

Reshma Kewalramani: So that's really what it looks like on CTX-001. On the Phase 3 Next in Class CF program, we've gone through our discussions with the regulators. We've had our end of phase two meetings, and this trial design that you see reflects those considerations and those discussions. I will point out that as I look at the VX-121 data, there are three really important elements that stand out to me. The first is that in our HBE assays, and you know that our HBE assays translate very well into the clinic, not only qualitatively but quantitatively, singularly or in combination, so 1-2-1 alone or in combination with tethercafter of 5-6-1, the results in our HBEs show that 1-2-1 is more efficacious, more efficacious than even triccation. That's really saying something.

You alert the nation of chloride transport in vitro and you can see that we're looking at numbers that are more like 45% to 45 million Moeller with the 1 to 1 regimen versus 33 to 39, and that's what we saw and phase 2 with the.

Tried CAFTA regimen, and then of course P. P F E V 1 which.

It is more variable, but even that.

Has indications for being better than try captor. So while the primary endpoint is non inferiority.

And I see a lot of optimism and these data to even have the potential to be better than try CAFTA.

Thank you.

I show. Our next question comes from the line of Jeffrey Campbell from Bank of America. Please go ahead.

And then.

Great guys. Thanks for the question.

Reshma Kewalramani: And in the phase two results, you can look at the sweat chloride, which is the real direct translation of chloride transport in vitro, and you can see that we're looking at numbers that are more like 45 to 45 millimolar with the 1-21 regimen versus 33 to 39. That's what we saw in phase two with the trichfter regimen. And then, of course, PPFEV1, which is more variable, but even that has indications. for being better than TriCAPTA. So while the primary endpoint is non-inferiority, I see a lot of optimism in these data that these agents even have the potential to be better than TricafTA.

Just a couple for you guys. So on the pipeline and I know, there's been a lot of emphasis.

On the D, but for.

I have today and the pipeline are there investments that you can accelerate to get into registration trials faster for example, like and pain.

And then when you look and CF.

Non rolling out across the EU, and and maybe adding younger patients across the board.

For what you are and where do you think I know you're not going to give long term guidance, but you know what is the normalization of the market look like in terms of the maybe the incidence rate. What are you guys, assuming I'm just trying to get a sense for.

Operator: I show our next question comes from the line of Jeff Meekam from Bank of America. Please go ahead.

And when CF is more moderate growth is.

Is that the the timeframe, where you think that the.

Geoff Meacham: Great afternoon, guys. Thanks for the question.

And you're going to have more of a P&L impact from.

Geoff Meacham: Just a couple for you guys. So on the pipeline, I know there's been a lot of emphasis.

You know from sickle cell and beta thal from O of 1 or other elements of the pipeline I'm just trying to get a sense of put all the pieces together for kind of the long term growth picture. Thank you.

Geoff Meacham: on BD, but for what you have today in the pipeline,

Geoff Meacham: day in the pipeline, you know; are there investments that you can accelerate?

Geoff Meacham: to get into registration trials faster, like in pain.

Yeah, It's a great question, Jeff and and let me.

Geoff Meacham: When you look at CF, beyond rolling it out across the EU and maybe adding younger patients across the board, what do you think? I know you're not going to give long-term guidance, but, you know, what will the normalization of the market look like in terms of the, maybe the incidence rate? You know, what are you guys assuming? I'm just trying to get a sense for when CF is more moderate growth.

And set it up for you and then I'm going to ask Stuart to comment on market dynamics, and then I'll come back and and address your question about the pipeline and and how we see that going.

You'll see the start with is I really see continued significant growth for many years to come in our CF franchise and I'm.

Stuart to outline those dynamics for for why I say that.

Yes, Jeff So as you know we updated our estimates of the epidemiology for people living with CF in the U S, Canada, Europe, and Australia earlier this year to approximately 83000 patients and.

Geoff Meacham: That the timeframe where we think that you're, that you're

Geoff Meacham: You're going to have more of a P&L impact from, you know, sickle cell and beta thal from O.

And I, probably treating about half of those patients today and as you know we updated our guidance today to a range of 7.2 to $7.4 billion.

Geoff Meacham: or other elements of the pipeline, just trying to get a sense to put all the pieces together for kind of the

Geoff Meacham: kind of the long-term growth picture. Thank you.

Reshma Kewalramani: Yeah, it's a great question, Jeff. And let me set it up for you, and then I'm going to ask Stewart to comment on market dynamics, and then I'll come back and address your question about the pipeline and how we see that going. What I'll say to start with is I really see continued significant growth for many years to come in our CF franchise, and I'm going to ask Stewart to outline those dynamics for why I say that. Thank you.

What that means is and I don't want to gloss over this is the there is more than 30000 patients remaining who are eligible.

For us of the FTR modulators, they are likely to benefit from our existing <unk> modulators and those 30000 patients really fall into 3 categories. The first 1 is people who live in countries, where we have regulatory approval and we've secured reimbursement and we are beginning the launches and those markets and as you know the launches of <unk>.

CF medicines tend to be very rapid.

Stuart A. Arbuckle: Yeah, Jeff, we updated our estimates of the epidemiology for people living with CF in the US, Canada, Europe, and Australia earlier this year to approximately 83,000 patients. And we're probably treating about half of those patients today. And as you know, we updated our guidance today to a range of $7.2 to $7.4 billion.

The second group of patients for those who live in countries, where we have regulatory approval, but don't yet have reimbursed. Obviously, we've had a great year securing reimbursement for Caf true just a year of just under a year from the EMA approval and I have full confidence that we're going to continue that run and secure additional reimbursement.

And the agreements and countries, where we don't have it today.

And then we have to get down into younger patients.

Stuart A. Arbuckle: What that means is, and I don't want to gloss over this, is that there are more than 30,000 patients remaining who are eligible for our CFTR modulators, and they are likely to benefit from our existing CFTR modulators. And those 30,000 patients really fall into three categories. The first one is people who live in countries where we have regulatory approval and we've secured reimbursement, and we are beginning launches in those markets. And as you know, launches of our CF medicines tend to be very rapid.

And as you know, we've done that with Kalydeco and ORKAMBI and we can be and given the benefit risk profile of Tri CAFTA, we fully expect we'll be able to get down to younger age groups. So over the next several years, we see multibillion.

Dollar of revenue growth potential through getting to those more than 30000 patients.

Additionally.

We are also working on the 7% and 10% of patients who aren't going to be eligible for our CFT, our modulators using genetic approaches through our collaborations with amongst others.

Stuart A. Arbuckle: The second group of patients are those who live in countries where we have regulatory approval but don't yet have reimbursement. Obviously, we've had a great year securing reimbursement for CAFTrio, just a year, just under a year from the EMA approval, and I have full confidence that we're going to continue that run and secure additional reimbursement agreements in countries where we don't have it today. And then we have to get down into younger patients.

Madonna So we do see continued growth of our CF.

The franchise for several years to come based on continuing to execute in the way that we have done over the last few years and then tell of how you can tell you how the pipeline is going to layer on top of that and I'll hand, it back to restaurant.

Stuart A. Arbuckle: And as you know, we've done that with Collidico and Cambi, and given the benefit-risk profile of TriCaftor, we fully expect we'll be able to get down to younger age groups. So over the next several years, we see multi-billion dollar revenue growth potential through getting to those more than 30,000 patients. Additionally, we are also working on the 7 to 10% of patients who aren't going to be eligible for our CFTR modulators using genetic approaches through our collaborations with, amongst others, Moderna.

And you know the.

The pipeline is.

Is progressing.

Progressing nicely and and I actually I would say, it's accelerating and and let me tell you why I say that the the pain program is now in phase 2 for the Bunionectomy study and in parallel and very shortly we're going to start up the Abdominoplasty study the CTX Here's your 1 program.

Said in my prepared remarks that 1 is going to achieve target enrollment in Q3, now and when I think about 147 and that is absolutely on track to have results in the second half of this year and.

Stuart A. Arbuckle: So we do see continued growth of our CF franchise for several years to come based on continuing to execute in the way that we have done over the last 10, and then to tell you how the pipeline's going to layer on top of that, I'll hand it back to Rush.

And when I put all of that together.

It looks like of really.

Important.

Site next 6 to 9 months in terms of not only data readouts, but the opportunity to advance the milestones in each of these programs and that's not even talking about the programs that are and late preclinical development or in phase 1.

Reshma Kewalramani: You know, the pipeline is progressing nicely, and I actually would say it's accelerating, and let me tell you why. The pain program is now in phase two for the bunionectomy study, and in parallel, very shortly, we're going to start up the abdominoplasty study. The CTX-001 program, as I said in my prepared remarks, that one is going to achieve target enrollment in Q3 now. And when I think about 147, that is absolutely on track to have results in the second half of this year.

And so we are investing heavily.

Certain pipeline.

It is because the pipeline is accelerating and there are many opportunities for us to get to the next important milestones in clinical development.

I would be remiss, if I didn't say of worried about VX 880. This is the naked cells only approach. This 1 is a phase <unk>.

Reshma Kewalramani: And when I put all of that together, it looks like a really important next six to nine months in terms of not only data readouts but the opportunity to advance to milestones in each of these programs. And that's not even talking about the programs that are in late pre-clinical development or in phase one. So we are investing heavily in our pipeline. It is because the pipeline is accelerating, and there are many opportunities for us to get to the next important milestones in clinical development.

And our trial and I would think about this 1 as similar to CTX shares here of 1 in that reasonably and small number of patients and a reasonably efficient time frame will really tell us what we have and so that was another 1 that I think is going to be important to keep our eyes on and to invest behind.

And to thank you.

I show. Our next question comes from the line of solving and Victor from Goldman Sachs. Please go ahead.

Thanks for taking my questions for CTX series, there of 1 on manufacturing do you have and understanding of the assays required or how differences could play out regulatory wise versus gene therapy given.

Reshma Kewalramani: I would be remiss if I didn't say a word about VX880. This is the naked cells only approach. This one is a phase one trial, and I would think about this one as similar to CTX-001 in that a reasonably small number of patients in a reasonably efficient time frame will really tell us what we have. And so that one's another one that I think is going to be important to keep our eyes on and to invest in.

Given this is the new technology and then with your work with Madonna on mrna and gene editing, maybe you could just help us understand how that's progressing and when those might enter the clinic.

Sure.

With regard to CTX series here of 1 we.

And we really have had the opportunity to.

To have multiple discussions with the regulators not just on what the potential filing package could look like in terms of the clinical data sample size et cetera, but also on CMC and manufacturing and we are of very good understanding of what the agency both here and outside the U S. We'd like.

Operator: I show you the next question comes from the line of Salveen Richter from Goldman Sachs. Please go ahead.

Salveen Richter: Thanks for taking my questions. For CTX-001 on manufacturing, do you have an understanding of the assays required or, you know, how differences could play out regulatory-wise versus gene therapy, given this is a new technology? And then, with your work with Moderna on MRNA and gene editing, maybe you could just help us understand how that's progressing and when those might enter the clinic. Sure.

And to see in terms of potency assays and release assays and that work is going very well.

In terms of the mrna program.

You know that we have multiple programs for the last 10% of our CF patients. The most advanced of which is the mrna program in partnership with Madonna Theres really 2.

Reshma Kewalramani: Sure, Selvie, with regard to CTX-01, we really have had the opportunity to have multiple discussions with the regulators, not just on what the potential filing package could look like in terms of the clinical data, sample size, etc., but also on CMC and manufacturing. And we have a very good understanding of what the agency, both here and outside the U.S., would like to see in terms of potency assays and release essays. And that the work is going very well.

Components here, it's the mrna construct itself and it's also delivery.

We've made solid progress on both of those and I would say the important 1 is on delivery of <unk>.

Too early for me to give you timing for when that would enter the clinic, but I will say that the progress has been very.

Very good.

And I'm, feeling very optimistic about our ability to get to that last 10% of patients.

Reshma Kewalramani: In terms of the MRNA program, you know that we have multiple programs for the last 10% of our CF patients, the most advanced of which is the MRNA program in partnership with Moderna. There are really two components here. It's the MRNA construct itself, and it's also delivery.

And maybe even compared to 6 months ago.

Thank you.

And I share. Our next question comes from the line of Robyn.

And from choice of Securities. Please go ahead.

Hi, Thanks for the question, starting first of all of a little bit on and.

And I have to ask this question and I did not want to be the person who asked the question on the call of restaurant that I have for you your thoughts on the Galapagos and.

Reshma Kewalramani: We have made solid progress on both of those, and I would say the important one is delivery. It's a little too early for me to give you timing for when that will go into the clinic, but I will say that the progress has been very good. And I'm feeling very optimistic about our ability to get to that last 10% of patients, maybe even compared to, you know, six months ago.

And the headwind and as people are and focusing on their data coming up.

And I know Theyre behind you, but can you just give any more additional color and on the biology, perhaps even the and how you view of their drugs and second on <unk>, you mentioned like timelines, we could get some clarity on your pipeline over the next 6 to 8.6 and 9 months when could we actually see data from those trials enrolled really quickly.

Operator: I show our next question. It comes from the line of Robin Canowska from Truist Securities. Please go ahead. Hi, thanks for the question.

And.

Just some sense of of of what your expectations are for.

Robyn Karnauskas: Hi, thanks for the question. Starting first, a little bit on, I have to ask this question. I did not want to be the person who asked this question on the caller's rationale, but I have to.

For your your next day to set and what what the bar might be thank you.

Yeah sure thing Robin, let me start with pain.

I'm really excited about our pain program and you know that we have a program and NAV of 1.8.

Robyn Karnauskas: Here's thoughts on the Galapagos headwind as people are focusing on their data coming up. I know they're behind you, but can I just give any more additional color on the biology, perhaps, even, on how you view their drugs. And second, on Paine, you mentioned, like, timelines. You could get some clarity on your pipeline over the next six to eight, six to nine months when could we actually see data from pain? Those trials enroll really quickly. Maybe give us some sense of what your expectations are for your next data set and what the bar might be. Thank you. Yeah, sure thing, Robin. Let me start with pain.

Maybe the 1 that's furthest ahead and in our.

Discovery and preclinical research. We also have programs in NAV, 1.7 and the reason I'm, particularly excited about NAV 1.8 as its of genetically validated target for sure, but it's also pharmacologically validated by our very own VX 150.

The molecule.

In the clinic now the X 5 for 8 really is all of the attributes we were looking for in terms of potency.

Reshma Kewalramani: I'm really excited about our pain program. You know that we have a program in NAV 1.8. That's the one that's furthest ahead. And in our discovery and preclinical research, we also have programs in NAV 1.7. The reason I'm particularly excited about NAV 1.8 is that it's a genetically validated target for sure, but it's also pharmacologically validated by our very own BX-150. The molecule that's in the clinic now, VX-548, really has all the attributes we were looking for in terms of potency, as well as in drug-like properties, DDIs, manufacturingability, etc. So this one really looks very exciting to us.

As well as in drug like properties Beady eyes manufacturer ability et cetera. So this 1 really looks.

Very exciting to us it's already.

Acute and the Bunionectomy study that is up and running as of phase II proof of concept study. The abdominoplasty is right behind it and that should start up very shortly we are also interested in pursuing.

Peripheral neuropathic pain in the NAV 1.8.

Area.

And the reason for that is because again, our VX 150 molecule had proof of positive proof of concept of data not only in acute pain, but also of neuropathic pain and so that 1 is another study that's coming.

Reshma Kewalramani: It's already in the bunyanectomy study that is up and running as a phase two proof-of-concept study. The abdominoplasty study is right behind it, and that shows will start up very shortly.

With regard to acute pain. The studies are very short in duration, because it's the procedure like a bunny and activity.

Reshma Kewalramani: We're also interested in pursuing peripheral neuropathic pain in the NAV-1.8 area. And the reason for that is that, again, our VX-150 molecule had proof of positive proof of concept data, not only in acute pain but also in neuropathic pain. So that one is another study that's come out. With regard to acute pain, the studies are very short in duration because it's a procedure like a bunionectomy. You have treatment that lasts for a couple of days, and so the results can be obtained in a reasonably efficient time frame. I expect that the bunionectomy results will be ready by, let's say, the tail end of this year, beginning part of next year, and the abdominoplasti results thereafter. So that's really how I would have encapsulated the pain program.

To me you of treatment that is over a couple of days and so the results can be obtained and a reasonably efficient timeframe I expect that the bunyan and <unk> results will be ready by let's say the tail end of this year beginning part of next year Abdominoplasty results of thereafter.

So that's really.

With the encapsulate the pain program.

With regard to the Galapagos data, maybe Galapagos Abbvie data, you know Robyn and I I'd, rather focus on our portfolio and and tell you about how I see our portfolio and and maybe the the best way to summarize it is vicki.

Reshma Kewalramani: With regard to the Galapagos data, maybe the Galapagos Abbe data, you know, Robin, I'd rather focus on our portfolio and tell you about how I see our portfolio. And maybe the best way to summarize it is VX1215-61-Tesa, CAFTA holds the potential to bring greater patient benefit than even TriCFTA, once daily dosing, which I think adds a level of convenience for our patients And in all honesty, the greatest threat to Tricafta, the greatest competitor to Tricafter in terms of the most advanced, is our very own VX-121-561-Tescafter.

How I went to 1.5 of 6.1 Tessa captor holds the potential to bring greater patient benefit the even try CAFTA is once daily dosing, which I think adds a level of convenience for our patients.

And in all honesty the the greatest.

Threat.

Next we tried character of the.

The greatest competitor to try and capture in terms of the most advanced is our very own VX, 1 to 1561.10th of the CAFTA.

Thank you.

Our next question comes from the line of Cory <unk> from JP Morgan. Please go ahead.

And.

Great. Thanks, Good afternoon I appreciate for taking the question and I actually want to follow up restaurant and what you were just talking about the time of Joe's earlier question on the Q DCF study, but for.

Reshma Kewalramani: Our next question comes from the line of Corey Kosimo from J.

Operator: J. J.P. Morgan, please go ahead.

Corey Kosimo: Great, thanks. Good afternoon. I appreciate you taking the question. I actually want to follow

The slightly different point of view so recognize it's designed to demonstrate statistical non inferiority from a regulatory standpoint, but what do you think you need.

Corey Kosimo: on what you were just talking about, Kamen Phil's earlier question on the

Corey Kosimo: to the QDCF study, but from a slightly different point of view. So you should recognize it's designed to demonstrate

Need to show for this to actually displace a product as good as tried capstone and the market I'm, assuming dosing once versus twice a day isn't enough on its own and did you say in the prepared remarks I want to make sure. We have this right that the royalty on the QD goes to low single digit from low double digit do we get that right.

Corey Kosimo: demonstrate statistical non-inferiority from a regulatory standpoint, but what do you think you need to show for this to actually displace a product as good as TriCafta in the market? I'm assuming dosing once versus twice a day isn't enough on

Corey Kosimo: its own and did you say in the prepared remarks? I just want to make sure we have this right that the royalty on the QD goes to

Yeah Yeah.

Corey with regard to the the study.

Youre right for the regulatory enabling endpoint. It is a non inferiority study and that non inferiority is on P. P. F E V..1.

Corey Kosimo: goes to a low single digit from a low double digit. Do we get that right?

Reshma Kewalramani: Yeah, Corey, with regard to the study, you're right, for the regulatory enabling endpoint, it is a non-inferiority study, and that non-inferiority is on PPFEV1. You're also correct that the royalties go from low double digits with Trikata-Captrio to low single-digits.

You're also correct that the royalties go from low double.

Digits with Tri cap the cap of trio to low single digits.

Let me just take a step back though and.

Help maybe everyone on the phone.

Reshma Kewalramani: Let me just take a step back, though, and help maybe everyone on the phone line understand our perspective on the one-to-one program and why we're really doing this. Our long-standing goals in CF have been threefold: bring forward a medicine that can treat up to 90% of patients with cystic fibrosis. Check that out. That's Trikata, Kftrio.

Line understand our perspective on the.

The 1 to 1 program and and why we're really doing this.

So.

Our long standing goals and CF habits, we fold for.

First bring forward of medicine that can treat up to 90 percentage of patients with cystic fibrosis give that of check that strike cap the cap true.

Reshma Kewalramani: Second, get patients who can benefit from CFTR modulators to the highest levels of efficacy. And the way we've discussed that is to bring patients to carrier levels of sweat chloride. And that's really important because at those levels, when you look at carriers of cystic fibrosis, they really have no manifestation of disease.

And second get patients, who can benefit from CF GR modulators.

For the highest levels of efficacy and the way we've discussed that is to bring patients to carrier levels of sweat chloride and that's really important because at those levels. When you look at carriers of cystic fibrosis. They really have no manifestation of disease and when you look at our own data other.

Reshma Kewalramani: And when you look at our own data, and other published data, it is absolutely true that the better the sweat chloride results, which is a reflection of CFTR function, the better the outcomes for our patients. And the third big goal has been to get to the last 10% of patients. The 121-561-Tescafter program is all about that big goal number to get patients to carrier levels of sweat chloride. And certainly, it is the case that some patients on TriCFTA can get there.

Other published data it is absolutely true that the better the sweat chloride results, which is a reflection of see FTR function the better the outcomes for our patients and the third big goal has been to get to the last 10 per cent of patients. The 1 to 1561 test of captive program is all about that big gold number.

Or to get patients to carrier levels of sweat chloride and certainly it is the case that some patients on <unk> can get there.

Reshma Kewalramani: But we are looking to get many, many more patients to those levels, if not all patients. And that is 1-21-561-Tesa. And as I reviewed, from what we see in the HBE cells, in terms of chloride transport, sweat chloride from phase two studies, and even PPFEV-1, all these measures point us in the direction that this is possible with 1-2-1-5-6-1. And, of course, we're busy in the labs working on even more efficacious molecules.

But we are looking to get many many more patients to those levels, if not all patients and that is 121 and 561, Tessa and as I reviewed.

And from what we see in the H b cells in terms of chloride transport sweat chloride from the phase III studies and even P. P. F. E V..1 all of these measures point us and the direction that this is possible with 1 to 1561 and of course, we're busy and the labs working on even more efficacious.

Efficacious moloch.

Reshma Kewalramani: I show a next question comes from the line of Lisa Beiko from Evercore, ISI. Please go ahead.

Thank you.

And I show and next question comes from the line of lease of Baker from Evercore ISI. Please go ahead.

Operator: Hi, thanks for taking the question. I want to ask a little bit more about the FSGS study design. Can you talk about sort of the background therapies that patients will be on, and will they be on study background meds headed into the study, or will there be any changes ahead of the study? Will you allow for these types of steroids? Just curious about some of the other factors.

Hi, Thanks for taking the question I wanted to ask a little bit more about the a F. F. F. S. Yes study design can you talk about sort of the background therapies the patients will be on and.

Will they be on steady background meds headed into the study or will there be any changes ahead of the study and Renault will you allow for these of steroids just curious about some of the other factors. Thank you.

Liisa Bayko: Thank you. Yeah, sure thing. Lisa, in our phase two study, we are looking at patients who have APOL-1 mediated FSGS with two APOL-1 alleles, and we are looking for patients with heavy amounts of pertinuria. We are allowing patients to be on background therapy, and we are looking for the double-digit percent reduction of pertinuria that I was talking about earlier, on top of whatever background therapy our patients may be coming into our trial with Okay.

Yeah sure thing.

Leases and our phase 2 study we are looking at patients who have.

Acute L..1 mediated <unk> with 2 April L..1 of wheels, and we are looking for patients with.

Heavy amounts of proteinuria.

We are allowing patients to be on background therapy.

And.

We are looking for the double digit percent reduction of per.

Ordinary of that I was talking about earlier on top of whatever background therapy of patients may be coming into our trial with.

Reshma Kewalramani: Okay, great, and helpful.

Okay, great and helpful.

Operator: Sorry, our next question comes from the line of Brian.

And then what.

Okay.

Alright. Thank you. Our next question comes from the line of Brian Abrahams from RBC.

Brian Abrahams: of Brian Abrams from Arbuth. Please go ahead. Hey guys, good evening, thanks for taking another question. So my question is on one-two-one. Can you talk about where you're planning to conduct the phase three triple combo study? And, you know, is that going to be in the U.S. or outside the U.S., would you expect any medium-term impact on tri-cafair or cap-trio revenues?

The capital market. Please go ahead.

Hey, guys. Good evening, thanks for taking the question.

And 1 to 1.

Can you talk about where you are planning to conduct the phase III Triple combo study and it's that kind of and the U S or outside the U S would you expect any medium term impact.

To try catheter, our cafeteria revenues and then you know it looks like the sweat chloride that you observed at least the net headwind was dose dependent.

Brian Abrahams: And then, you know, it looks like the sweat chloride that you observed, at least in Hetman.

Brian Abrahams: dose I'm wondering, do you feel you fully explored

And I'm wondering do you feel you're fully explored the dosing curve here any safety or PD reason not to further dose escalate just given the high bar set by our captive and thanks.

Brian Abrahams: the dosing curve here, any safety or PD reason not to further escalate the dose to

Brian Abrahams: further dose escalates, just given the high bars set by Tarkathus.

<unk>.

Sure thing.

And we're gonna be conducting the study and the usual countries U S.

Reshma Kewalramani: Sure thing. Brian, we are going to be conducting the study in the usual countries, the U.S., European countries, the usual. Remember, this study, both the studies in the one-to-one program are compared to the tricactor, cactrio. So this is not a placebo control, so patients are going to be receiving active therapy in either arm. That obviously makes it a lot easier for patients to enroll in this study. With regard to impact on revenues for TriCAPTA, no, we don't see any impact on revenues for TriCAPTA.

European countries. The standard remember this study both the studies in the 1 to 1 program.

Our competitor.

Prior to the to try and capture of capturing out. So this is not placebo controls of patients are going to be an active therapy in either arm that obviously makes it a lot easier for patients to enroll into this study.

With regard to impact on revenues for truck after no.

Compared to the any impact on revenues to track actor.

Reshma Kewalramani: And with regard to how we selected the dose, and how we thought about this program. We shared with you the results from the phase two study, and as is the case with all of our programs, we take all of that data, and we do quite a bit of modeling and simulation to settle on the best dose that maximizes efficacy and has the greatest benefit risk profile. I think that's exactly what we did with the regimen that we selected.

And with regard to how did we select the dose how did we think about this program.

We shared with you the results from the Phase II study and as is the case with all of our programs. We take all of that data, we do quite a bit of modeling and simulation.

We don't.

To settle on the best dose that maximizes efficacy.

And has the greatest benefit risk profile I think that's exactly what we've done with the regimen that we've selected and it's as I mentioned on my response to 1 of the other questions what I see and these data with the regimen that where select.

Reshma Kewalramani: And as I mentioned in my response to one of the other questions, what I see in these data with the regimen that we're selecting is in vitro chloride transport that is even better than trichacta, sweat chloride levels, which is the most accurate translation of chloride transport, so the sweat chloride levels in our phase two trial that are higher than what we saw with Tricafta, and PPPV-1, which you know has greater variability, You know, I have to say what is obvious.

<unk> is in vitro chloride transport that is even better than try character.

What chloride levels, which is the most approximate translation of chloride transport for the sweat chloride levels in our phase II trial.

And that are higher than what we saw with.

Select actor and P. P. F E V..1, which you know has greater variability that is also showing its potential to be better than <unk>.

I have to say what is obvious try capture is a great medicine, what we saw and the clinical trials has been recapitulated in the real World you heard Stuart talk about the longer term.

Reshma Kewalramani: Tri-Captor is a great medicine. What we saw in the clinical trials has been recapitulated in the real world. You heard Stewart talk about the longer-term data with Tricafta that just continues to look excellent. But we think we have something that might be even better than that with 1-21-561-Tes-Ecter, and I'm really looking forward to the phase three results.

Treichel with Tri CAFTA debt is just continues to look.

Excellent, but we think we have something that might be even better than that with 1 to 1561 test of character and I'm really looking forward to the phase III results.

Operator: Thank you. I show our next question comes from the line of Paul Matthias from Steeffle. Please go ahead. Great. Thanks so much and congrats on the quarter. I just had a couple other April L1 questions.

Thank you.

Your next question.

<unk> day, and the line of Paul Matteis from Stifel. Please go ahead.

Great. Thanks, so much and congrats on the quarter.

A couple of other April all 1 questions. If you don't mind 1 was just on finding these patients I know the study or at least per clinical trials and that's been going on for a little over a year and the the implied sample.

Paul Matthias: if you don't mind. One was just

Paul Matthias: on finding these patients. I know the study, or at least according to clinical trials, has been going on for a little over a year, and the implied sample

Paul Matthias: Size is estimated to end up at around 10, but has it been difficult to find patients as genetic testing is a headwind and

And that comes from is estimated to end up at around 10 and has it been difficult to find patients as genetic testing of headwind and then second you know restaurant I know you talked about this is obviously the first study double digit partner is the goal can you just kind of contextualize that in terms of what thresholds of change.

Paul Matthias: And then second, you know, Reshma, I know you talked about this being obviously a first study, double digit protinuria as a goal.

Paul Matthias: Can you just kind of contextualize that in terms of what thresholds of

Paul Matthias: Changes in proteinuria have predicted clinical outcomes.

And part and area have predicted clinical benefit and the path is there some sort of minimum change that has been relevant.

Paul Matthias: Benefit in the past; is there some sort of minimum change that has been

Paul Matthias: That has been relevant to get FDA comfortable with accelerated approval. Thanks so much. Yeah, all great questions.

To get FDA comfortable with accelerated approval. Thanks, so much.

Yeah, Yeah, I'll all great questions about the April 1.

Reshma Kewalramani: Yeah, all great questions about the April 1 mediated FSGS program. Let me start with the clinical trials and the enrollment and such. First and foremost, we are on track to have results this calendar year and this second half of the year.

Mediated <unk> program.

So let me start with the clinical trials and the enrollment and such are first and foremost we are on track to have results.

In this calendar year and the second half of the year.

Reshma Kewalramani: It has been a study that has taken some time to enroll, and I'm not surprised about that. The factors that we need to think about are, remember, this study started right in the midst of the pandemic, actually right when the pandemic was hitting a real high point in terms of case numbers here in the U.S. The second is that this is a disease for which we don't routinely employ genetic testing in renal medicine.

It has been.

The study that has taken some time to enroll and and I'm not surprise.

Of that.

The the factors that we need to think about our remember the study started right in the midst of the pandemic actually right. When the pandemic was hitting a real high point in terms of case numbers here and the U S. The second is that.

The balance is a disease that for which we don't routinely employee genetic testing and we know medicine.

Reshma Kewalramani: So it takes a little bit of time to find the patients, genetically test them, and have them enroll in our studies. And the third thing is that APOL1-mediated FSGS is the smaller of the spectrum of APOL-1-mediated kidney disease, and the APO-1-Mediated FSGS patients, because it's a smaller component, they are spread across the U.S., and they don't necessarily live close to And so that was particularly difficult in the pandemic. With regard to what we are looking for, we are looking for percent decreases in pertinuria, and I think double-digit decreases in pertinuria in this phase two study, which is a first-in-class molecule for this genetically validated target, would be just excellent. And the question around, you know, what is the agency looking for and such?

So it takes a little bit of time to find the patients genetically test them and have them enroll and are paid in our studies and the third thing is.

April of 1 mediated <unk> is the the smaller.

Of the spectrum of April of <unk> mediated kidney disease, and the April 1 media the FSC as patients because it's the smaller component.

And they are spread across the U S and they don't necessarily live close to a testing center and so that was particularly difficult in the pandemic.

And.

<unk> regard to what we are looking for we're looking for a percentage decreases in proteinuria and I think double digit decreases in proteinuria and.

And this phase II study, which is a first in class.

Molecule for this genetically validated target would be.

And with that it would be just excellent.

And the question around you know what what does the agency looking for am and such it really depends on the kidney disease of interest we are looking at a homogeneous kidney disease. It is all genetically defined and I think that that falls into a category in.

Reshma Kewalramani: It really depends on the kidney disease of interest. We are looking at a homogeneous kidney disease. It is all genetically defined, and I think that that falls into a category in and of itself. And as I said, there is no precedent for this. We are the first to bring a targeted therapy for APOL1 mediated kidney disease. But I do think a percent reduction in the double digits would be very meaningful.

In and of itself and as I said there is no precedent for this we are the first to bring a targeted therapy for April 1 mediated kidney disease.

But I do think a percent reduction and the double digit would be very very meaningful.

Operator: I show on the next question comes from the line of Brian Scornie from

Yeah.

Thanks, a lot.

Thank you.

As shown on the next question comes from the line of Brian <unk> from Baird. Please go ahead.

Operator: Ryan Scornie from Barron. Please go ahead.

Geoffrey Christopher Meacham: Hey, good afternoon, everyone. Thanks for taking my question.

Hey, good afternoon, everyone. Thanks for taking my question is really on the diabetes program.

Geoffrey Christopher Meacham: My name is really on the diabetes program.

Geoffrey Christopher Meacham: Just strictly thinking about the opportunity in patients who are going to require lifetime immunosuppression, how do you kind of think about differentiation from your cell line to sort of the cell trans donor cells, which, you know, I think should probably get a

And just strictly thinking about the opportunity and in patients who are going to require.

It required a lifetime of immuno suppression and how do you think about differentiation from yourself and 1 from from sort of of salt trends don't ourselves.

It should probably get approved and the next months.

Is there is there a supply constraint there due to sourcing that you think overdo overcome with the sort of the stem cell line.

Geoffrey Christopher Meacham: Is there a supply constraint there due to sourcing that you think you can overcome?

Geoffrey Christopher Meacham: with the stem cell line.

Geoffrey Christopher Meacham: or are there other characteristics of differentiation that you think can make your technology work better? And then, in terms of, I know you're

Are there other.

Other characteristics of the differentiation that you think can make a make your technology and work better and then in terms of I know you're working on are the sort of encapsulation for protecting.

Geoffrey Christopher Meacham: sort of encapsulation from protecting the differentiated isleet cells to reduce immunoreactivity, but are you exploring other ways, such as the induction of immunity?

The differentiated island sales to reduce immunoreactivity of but are you exploring other ways such as of the induction of immune tolerance for cell editing and to get around the need for.

Geoffrey Christopher Meacham: Immune tolerance or cell editing to get around the need for immunosuppression as well.

Immuno suppression as well and any thoughts on on sort of those pathways.

Geoffrey Christopher Meacham: as well as any thoughts on sort of those pathways?

Reshma Kewalramani: Yeah, really, really great questions. Brian, and thank you for those.

Yeah, really really great questions and Brian and thank you for for those of I'm I'm really happy to talk about the type 1 diabetes programs and I'm sure you can hear from the enthusiasm and my voice. It's it's 1 of the ones that is.

Reshma Kewalramani: I'm really happy to talk about type 1 diabetes programs. I'm sure you can hear the enthusiasm in my voice. It's one of the ones that really holds enormous potential for patients. So let's just start at the very top of the funnel.

Really.

Enormous potential of for patients. So, let's just start at the very top of the funnel there of more than 2 million patients 2 million patients with type 1 diabetes in the U S and Europe. So the potential to help patients is enormous.

Reshma Kewalramani: There are more than 2 million patients, 2 million patients with type 1 diabetes in the U.S. and Europe. So the potential to help patients is enormous when you look at it from that perspective.

When you look at it from that perspective.

Reshma Kewalramani: I'll take your second question first, about encapsulation. I do think that it will be important to have the cells be encapsulated in a device or in some way be immune evasive so that you don't require immunosuppressives to be able to get to all of those patients. I think that the device approach is elegant because it has the benefit of simplicity.

I'll take your second question.

Holds its about encapsulation and I do think that it will be important to have the cells being capsulate it and of device or in some way be immune evasive. So that you don't require immunosuppressive to be able to get to all of those patients.

I think that the device approach is.

And first and because it has the benefit of simplicity, that's not to say that it's a simple device, but it is to say that the cells encapsulated with the device then don't require any further manipulation, which is elegant.

Reshma Kewalramani: That's not to say that it's a simple device, but it is to say that the cells encapsulated with this device then don't require any further manipulation, which is elegant. That all being said, we are very interested in all other approaches, and we are pursuing other approaches to immunovasion. The lead approach is with the cells encapsulated in the device. With regard to the cadaveric cells and the cells that are available currently, the big differentiator, and this is really important to understand because it's fundamental,

And that all being said, we're very interested and all other.

The approaches and we are pursuing other approaches to immuno invasion of the lead approach is with the cells encapsulated in the device.

With regard to the cat of varick cells and the cells that.

Our available.

As elegantly the the.

A big differentiator and and this is really important to understand because it's fundamental.

Reshma Kewalramani: Those cells are cadaveric cells, and those cadaveric cells have all of the limitations that have made the procedure difficult for patients to undergo. That is to say, quality and quantity of cells are limited. Our approach is derived from stem cell derived, fully differentiated insulin-producing isleet cells, and that makes quantity not an issue and quality not an issue. And so that's really the foundational difference between our approach and the other.

Those cells, the art CAD of varick cells, and those kind of vertex cells have all of the limitations that have made the procedure and difficult for patients to.

To undergo that is to say quality and quantity of cells are limited. Our approach are as of stem cell derived fully differentiated insulin producing islet cells and that makes quantity and not an issue and quality not an issue.

Issue and so that's really the foundational difference between our approach.

Reshma Kewalramani: Great, thank you, Rushmond. That's very helpful. Yeah, sure thing.

And the other.

Great. Thank you your restaurant that's very helpful.

Operator: Operator, we have time for one more question.

Yeah sure thing.

Operating real time for 1 more question.

Thank you Sir.

Operator: Our last question comes from the line of Aletia Young from Cantor Fitzgerald. Please go ahead.

The last question comes from the line of Alicia.

The young from Cantor Fitzgerald. Please go ahead.

Aletia Young: Hey guys, thanks for squeezing me in. Just a quick question on

Hey, guys. Thanks for squeezing me in just a quick question on how you kind of thinking about maybe kind of external deals. Maybe you know are there and interest and kind of proof of concept or are you still kind of focus on kind of earlier stage deals. Thanks.

Aletia Young: How you're kind of thinking about maybe kind of external deals, maybe, you know, are there an interesting kind of concept,

Aletia Young: of concept, or you still kind of focus on kind of the earlier safe steel thing. I'm sorry, Alicia, we couldn't hear your question in the room. Could you repeat it? on external bills kind of in the early stage or in the late stage, but then I guess just been thinking about timelines with the Outlaw Antetraption Program being a little bit more delayed than we thought.

I'm, sorry, the Alicia I didn't.

And we couldn't hear your question and the room could you repeat your question.

And.

And <unk>.

The only thing during the late stage. Besides the I guess, just and thinking about.

And the timelines with the Trups and.

The program being a little bit more delayed than we thought Inc.

Aletia Young: The question is about deals, external deals, looking at what saves. Wait. All here we were.

I think the question is about.

Shields and just the whole deals of looking envelope phase and like we'd be looking for ways.

Operator: Hello? We were interpreting a question in the room about Can you hear me now? We can hear you.

Okay.

Well that'd be of we were interpreting your question and do you hear me now.

Yeah.

And you hear me now.

Operator: Yeah, basically, I'm just asking about kind of external timelines, external development, you know, kind of aspirations, like whether you're looking at more proof of concept still, or are you looking at kind of earlier stage development programs, which you kind of have gone with in light of what's been going on without one at the trips. Sure thing. I think you're asking about business development and how we're doing, yeah, okay, and external innovation.

And here you.

Yeah, basically I'm, just asking about kind of external timelines.

That'd be kernel development, you know kind of aspirations like whether you're looking at more of a proof of concept still or are you looking at kind of earlier stage development programs with the kind of gone with in light of what's been going on with Alpha 1 antitrypsin.

Sure thing I think you were asking about business development and and have the right wing, yeah, Okay and external innovation.

Operator: You know, Althea, we have been, and we remain today very focused on innovation, both internal and external. And we've talked in the past about our areas of interest and how we view this, namely in CF, in tools to augment our toolbox and assets that our sandbox diseases, all of those stay exactly the same. Our R&D strategy encompasses both internal and external innovation. You have never seen us invest more in our internal innovation.

Innovation, you know I'll see it we are we have been and we remain today very focused on innovation, both internal and external and we've talked in the past about or areas of interest and how we view this namely in CF and tools.

And <unk> to augment our toolbox and assets that fit our sandbox diseases all of those stay exactly the same our R&D strategy encompasses both internal and external innovation are you of never as soon as invest more and our internal innovation our pipeline.

Operator: Our pipeline has both sources of assets, both from our own pipeline and what we brought in from acquisitions like Semma and Exxonics and partnerships like CRISPR and Moderna, and you should expect us to continue in the same way.

<unk> has both.

Sources of assets, both from our own pipeline and what we brought in from acquisitions like semi and Exxon aches and partnerships like CRISPR and Madonna and you should expect us to continue and the same way.

Reshma Kewalramani: This concludes our Q&A session. At this time, I'd like to turn the call back over to Mr. Patrick for a cool remark.

Yes.

Great. Thank you.

Thank you.

This concludes our Q&A session at this time I'd like to turn the call back over to Mr. Patrick for closing remarks.

Michael J. Yee: Thanks, operator. Thanks, everybody, for tuning in to tonight's call. The investor relations team is in the office, and we look forward to any additional questions that you have. Have a good night.

Thanks, operator, and thanks, everybody for tuning into the tonight's call of the Investor Relations team is and the office and we look forward to any additional questions that you have have a good day.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Good day.

This concludes today.

Today's conference call. Thank you for participating you may now disconnect good day.

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