Q2 2022 Vertex Pharmaceuticals Inc Earnings Call

Good day and welcome to the Vertex Pharmaceuticals second quarter 2022 earnings call.

Good day and welcome to the vertex Pharmaceuticals second quarter 2022 earnings call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May press.

All participants will be in a listen-only mode.

Excellent.

Should you need assistance, please signal conference specialists, by pressing the star key followed by zero.

After today's presentation, there will be an opportunity to ask questions.

To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two.

Star then one on your Touchtone phone and to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Charlie Wagner Chief Financial Officer. Please go ahead.

Please note this event is being recorded.

I would now like to turn the conference over to Charlie Wagner, Chief Financial Officer.

Thanks.

Please go ahead.

Good evening.

The next question will come from Jeff Neacham with Bank of America.

Good evening. This is Charlie Wagner vertex Chief Financial Officer, welcome to our second quarter 2022 financial results conference call on Tonight's call, making prepared remarks, we have doctor Reis, Mark Kaye wall, Romani vertex as CEO and President Stuart Arbuckle, Chief operating officer and myself.

This is Charlie Wagner, Vertex Chief Financial Officer.

Please go ahead.

Afternoon, guys.

Thanks so much for the question and also congrats on a good quarter.

I wanted to ask on 548, when you consider the market opportunity and what could be a pretty, broad program, I just wanted to get your perspective on what success looks like at a high level.

We recommend that you access the webcast slides as you listen to this call also the call is being recorded and a replay will be available on our website. We will make forward looking statements on this call that are subject to the risks and uncertainties discussed in detail in today's press release and in our filings with the Securities and Exchange Commission these statements including without.

<unk> those regarding vertex is marketed CF medicines, 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 I will now turn the call.

Welcome to our second quarter 2022 financial results conference call.

And then I wasn't sure if you've had pre-Phase III meetings with FDA, but how you're thinking about the size and scope of the pivotal that you'll start the second half of the year.

Over to Doctor array Spa K well Romani.

On tonight's call, making prepared remarks, we have Dr. Reshma Kewalramani,

Thank you.

Thanks, Charlie and good evening, all vertex continues to make strong progress towards our goal of reaching all CF patients eligible for our medicines based on the continued uptake of truck after the U S as well as in the International region. Our Q2 CF product revenues grew 22% year on year to 2.2 billion.

Vertex's CEO and President, Stuart Arbuckle, Chief Operating Officer, and myself.

Hey, Jeff.

We recommend that you access the webcast slides as you listen to this call. Also, the call is being recorded and a replay will be available on our website.

We will make forward-looking statements on this call that are subject to the risks, and uncertainties discussed in detail in today's press release and in our filings with the Securities and Exchange Commission.

Sure thing.

This is Rae Sherman.

Let me start and then I'll turn it over, to Stuart to talk about the market opportunity.

And based on this uptake as well as the new reimbursements recently secured we are updating revenue guidance from $8 four to $8 6 billion to $8 six to $8 8 billion.

We're also making rapid progress in advancing our R&D portfolio with programs in five disease areas now entering or progressing through late stage clinical development and the next wave of innovation getting ready to enter the clinic are expanding leadership in CF, coupled with the broad deep and advanced research and clinical.

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 review, on the call this evening are non-GAAP.

Nickel stage pipeline brings vertex to this new inflection point highlighted last quarter. This inflection point is rooted in our differentiated R&D strategy, which is designed to increase the odds of success in drug discovery and development. This strategy is working first in CF and more recently, we've seen it deliver potentially.

Transformative if not curative therapies in multiple disease areas, including sickle cell disease Beta thalassemia April one mediated kidney disease acute pain and type one diabetes programs that are all now past the proof of concept stage. Each of these programs individually represents a multi.

This is one of the programs that I have very high enthusiasm for, and we have high expectations for it. And the reason for that is I've heard talked about the genetic and pharmacologic validation, but the other reason for this is it really has potential across acute pain, neuropathic pain, and let's call it musculoskeletal pain, although the focus right now in terms of where the program is most advanced is in acute pain.

Billion dollar market opportunity and taken together they represent enormous potential for patients and for vertex. In addition, we continue to use our strong balance sheet to pursue external innovation that complements or accelerates our internal efforts. The VI side acquisition. For example has the potential to accelerate development.

All of our type one diabetes programs the early stage assets from catalyst and the Verve collaboration complement our internal efforts in sandbox diseases with our strong revenue growth and rapidly advancing pipeline, we are continuing to invest in internal and external innovation as you see us do today with the increase in Opex guidance.

Just three to $3 1 billion and the multiple business development deals we've announced this quarter. Let me now turn to the pipeline and review some of our recent R&D progress starting.

I will now turn the call over to Dr. Reshma Kewalramani.

The last reason I have such excitement for this program is the market opportunity is near term. Let me describe the pivotal program, and yes, we have completed our end of Phase II meeting with the FDA, and we have reached agreement on this program. So here's the program. It's about 2,000 or so patients in two randomized control trials that look exactly like the Phase II trial, one in abdominoplasty and one in bunionectomy, and a third single-arm study that takes all pain types procedure-related as well as, for example, a fracture or a sprain or soft tissue injury.

Thanks, Charlie, and good evening all.

Starting with CF.

For patients who can benefit from CFT, our modulators try CAFTA has set a very high bar, but if it is possible to develop more effective medicines, we are determined to be the ones who do so.

Vertex continues to make strong progress towards our goal, of reaching all CF patients eligible for our medicines. Based on the continued uptake of Trikafta in the U.S., as well as in the international region, our Q2 CF product revenues grew 22% year-on-year to $2.2 billion. And based on this uptake, as well as the new reimbursements recently secured, we are updating revenue guidance from $8.4 to $8.6 billion to $8.6 to $8.8 billion.

We're also making rapid progress in advancing our R&D portfolio with programs, in five disease areas now entering or progressing through late-stage clinical development and the next wave of innovation getting ready to enter the clinic.

Our next in class Triple combination of VX, one to one test the captor VX 561 is now in phase III development enrolling patients 12 years and older and we remain on track to complete enrollment by the end of this year or early next with the progress in the Skyline, one and skyline. Two trials. We've also recently initiated pivotal development.

Our expanding leadership in CF, coupled with the broad, deep, and advanced research, and clinical stage pipeline brings Vertex to this new inflection point highlighted last quarter.

This inflection point is rooted in our differentiated R&D strategy, which is designed to increase the odds of success in drug discovery and development. This strategy is working.

First in CF, and more recently, we have seen it deliver potentially transformative, if not curative, therapies in multiple disease areas, including sickle cell disease, beta thalassemia, APOL1-mediated kidney disease, acute pain, and type 1 diabetes, programs that are all now past the proof of concept stage. Each of these programs individually represents a multibillion-dollar market opportunity, and taken together, they represent enormous potential for patients and for Vertex.

In addition, we continue to use our strong balance sheet to pursue external innovation, that complements or accelerates our internal efforts.

Element of VX, one to one <unk> the X 561 in patients six to 11 years old lastly for patients who did not make any C. F T. Our protein and cannot benefit from a C. F. T. R. Modulator, we're developing an mrna therapy with our partners at Madonna we are on track to file the <unk> for the mrna program in the second.

Half of this year.

Moving to see T X years here, one our most advanced pipeline program outside of CF as our extra salt or CTX 001 gene editing program in severe sickle cell disease and beta thalassemia in June we presented data from more patients treated with ex the cell and with longer follow up at the annual meeting of the Europe .

In Hematology Association. These data, which included 75 patients with up to 37 months of follow up continue to demonstrate that extra cell holds the potential to be a durable one time functional cure for these patients and the safety data continue to be consistent with Milo ablative conditioning.

And I tall against bone marrow transplant.

In terms of next steps. We've recently concluded our discussions on the filing package with EMA and M. HRA and have reached agreement on the filing package. We remain on track to submit the MAA is in both sickle cell disease and beta thalassemia in the EU and the U K in Q4 of this year, we expect to wrap up.

Our conversations with the FDA regarding the filing package in particular, the number of patients and duration of follow up in the coming weeks and we look forward to updating you after that.

Turning now to Enoxaparin or VX 147 in April while one mediated kidney disease, our a M. P. D. Enoxaparin is a small molecule inhibitor of April one that targets the underlying cause of a M. K D based on the unprecedented phase two proof of concept results, which showed a 47.6% reduction in printing.

Lauria Enoxaparin received breakthrough therapy designation in the U S and priority medicines or prime designation in the EU. The pivotal trial is a single adaptive phase two three randomized placebo controlled trial and the primary endpoint is the reduction in the rate of decline of kidney function.

In patients who have been treated for approximately two years. Importantly. This study is designed to have a preplanned interim analysis at 48 weeks of treatment. If the interim analysis is positive it will serve as the basis for us to seek accelerated approval in the U S. We initiated the <unk> pivotal.

Trial in late March.

Site activation patient screening and enrollment are all ongoing.

And the program is so designed so that we have a broad, acute pain indication for the treatment of moderate to severe pain.

Moving to pain and VX 548, a novel first in class Nab 1.8 inhibitor, we have high expectations from this program because NAV 1.8 is both a genetically and pharmacologically validated target across acute neuropathic and muscular skeletal pain.

And VX 548 demonstrated a very desirable benefit risk ratio profile in phase two.

Additionally, the VX five for a program represents a near term commercial opportunity to recap earlier. This year, we shared positive proof of concept results from VX, 548, which demonstrated statistically significant and clinically meaningful relief of pain into phase two studies of acute pain one in there.

Postponed the anatomy setting and one in the post abdominoplasty setting.

Based on these results. The X 548 has received breakthrough therapy designation, highlighting the significant need for highly efficacious and well tolerated non opioid pain medicines. We are very pleased to have completed our end of phase II meeting with the FDA and reach agreement on the VX 548 pivotal.

In acute pain. The phase III program will include two randomized placebo controlled trials that will evaluate VX 548 postponed enacted me and abdominal plastic the exact same post surgical acute pain settings. We explored in phase. Two these trials are shortened duration approximately two days of treatment.

Followed by 14 days of safety follow up both of these phase III studies will also include an opioid treatment arm a third single arm study will evaluate the safety and effectiveness of dosing with VX 548 for up to 14 days across multiple other types of moderate to severe acute.

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We remain on track to initiate the pivotal development program by the end of this year. In addition, we have completed a preclinical studies to support initiating a phase two dose ranging proof of concept study of VX five four rate in neuropathic pain towards the end of this year.

The Viacide acquisition, for example, has the potential, to accelerate development of our type 1 diabetes programs.

That's really the beauty of this program.

The early-stage assets from Catalyst and the VIRV collaboration complement our internal efforts, in sandbox diseases.

Turning now to type one diabetes in June our VX 880 clinical data were featured in an oral presentation at the 80, a scientific sessions. We've previously shared that we achieve proof of concept with the result from the first two patients who were treated in part a with half the targeted dose both achieved.

With our strong revenue growth and rapidly advancing pipeline, we are continuing to invest, in internal and external innovation, as you see us do today with the increase in OPEX guidance to 3 to 3.1 billion, and the multiple business development deals we've announced this quarter.

Let me now turn to the pipeline and review some of our recent R&D progress.

Stuart, I'm going to turn it over to you for market potential.

Starting with CF.

Yeah, Jeff.

For patients who can benefit from CFTR modulators, Trikafta has set a very high bar.

But if it is possible to develop more effective medicines, we are determined to be the ones who, do so.

Glucose responsive insulin secretion improvements in hemoglobin, a one C with concurrent reductions in or isn't the case of the first patient elimination of exaggerates insulin the new data that we presented at a D E, including glucose time and range measurements time in range is important because it gives.

Much more granular and comprehensive data than hemoglobin, a one C alone and it's correlated with the risk of developing micro and macro vascular complications patient wont achieve the glucose time and range of 99.9% of days to 70 versus 41%.

That baseline and remained insulin independent patient you showed a glucose time and range of 51.9% at day 150 versus 35, 9% at baseline with a 30% reduction in exogenous insulin the trial, which has remained opened in Canada and resumed enrollment in the United States lots.

Month continues to screen and enroll patients in part B.

Our next-in-class triple combination, the X121-tezacaptor, the X561, is now in phase 3 development, enrolling patients 12 years and older, and we remain on track to complete enrollment by the end of this year or early next. With the progress in the Skyline 1 and Skyline 2 trials, we've also recently initiated pivotal development of the X121-tez, the X561, in patients 6 to 11 years old.

To close a word on the next wave of innovative therapies. These are programs in late preclinical development that are rapidly approaching the clinic for the C. F T. Our mrna program ourselves and device program in type one diabetes and our next generation E. A T D molecules we expect.

Lastly, for patients who do not make any CFTR protein and cannot benefit from a CFTR modulator, we're developing an mRNA therapy with our partners at Moderna.

We are on track to file the IND for the mRNA program in the second half of this year.

Moving to CTX001, our most advanced pipeline program outside of CF is our ExoCell or CTX001 gene editing program in severe sickle cell disease and beta thalassemia. In June, we presented data for more patients treated with, ExoCell and with longer follow-up at the annual meeting of the European Hematology Association. These data, which included 75 patients with up to 37 months of follow-up, continue to demonstrate, that ExoCell holds the potential to be a durable, one-time functional cure for these patients, and the safety data continue to be consistent with myeloablative conditioning and autologous bone marrow transplant.

<unk> this year.

Lastly, our gene editing program in D. M. D is an IMD, enabling studies and we plan to file the IND for this asset in 2023.

In terms of next steps, we have recently concluded our discussions on the filing package with EMA and MHRA and have reached agreement on the filing package.

With that I'll hand, it over to Stuart for a commercial overview.

Thanks freshmen.

I'm pleased to review Tonight, our continued strong performance in CF, the path toward future growth and the commercial opportunity and plans for some of the most advanced disease areas in our pipeline.

We remain on track to submit the MAAs in both sickle cell disease and beta thalassemia in the EU and the UK in Q4 of this year.

I'll start with C F C.

CF business continued its rapid pace of growth this quarter with impressive performance in both the U S and internationally in the U S. We continue to add new Tri caf to patients with most of them being younger patients in the six to 11 age group and persistence and compliance remained very high across all patient groups outside the U S. We have.

Seen rapid uptake of Caf trio across multiple European countries, where we recently reached reimbursement agreements, notably, France, Spain, and Italy. We've now turned our focus in Europe to the launch of Caf trio in children Ages six to 11. Additionally, the launches of Tri CAFTA in Canada, and Australia are both off to a strong start.

We began the year with more than 25000 patients in North America, Europe , and Australia, who could benefit from a C. F. T. R modulator, but we're not yet on therapy. These patients felt primarily into one of three categories. One patients who had not yet initiated therapy largely in countries, where we are recently reimbursed and therefore early in the launch.

Curve to patients in geographies, where we are not yet reimbursed and three younger age groups, who will be addressed through ongoing label expansions, we have confidence in our ability to reach the vast majority of these patients over time, we've made good headway, securing new reimbursements and launching our medicines in the first half of 2022.

Additionally, we continued to make important progress in expanding access to younger patients for instance, we completed the study of Tri CAFTA in patients two to five years old with positive efficacy results on the endpoints of lung clearance index and sweat chloride and no new safety signals, we expect to present these data at a medical meeting later.

We expect to wrap up our conversations with the FDA regarding the filing package, in particular, the number of patients and duration of follow-up in the coming weeks, and we look forward to updating you after that.

This year and are on track to submit global regulatory filings by the end of the year. Additionally, we submitted regulatory filings in the U S and Europe for all Camby in patients 12 months to less than 24 months of age. The Paducah date for this filing is September four we were pleased to present compelling long term and real world data on track after the European.

Cystic fibrosis societies conference in June these data underscore the outcomes with Tri CAFTA, specifically improved lung function of 77% reduced risk of pulmonary exacerbations, and 87% lower risk of lung transplant and the 74% lower risk of death for patients with CF finally in CF as retro.

Mentioned, we are developing a C. F T. R M RNA therapy to treat patients who do not make any C. F D. A protein and thus cannot benefit from a C. F. T. R. Modulator. We estimate there are approximately 5000 of these patients in North America, Europe , and Australia outside of CF, We have made impressive strides with our clinical stage pipe.

Turning now to inoxiplin, or VX147, in APOL1- mediated kidney disease, or AMKD. Inoxiplin is a small molecule inhibitor of APOL1 that targets the underlying cause of AMKD. Based on the unprecedented Phase 2 proof-of-concept results, which showed a 47.6% reduction in proteinuria, inoxiplin received breakthrough therapy designation in the U.S. and priority medicines or prime designation in the EU.

One over the past 12 months today I'd like to highlight the market potential for three of our late stage clinical programs X L. Enoxaparin and VX 548, and some of our pre commercial activities. Each of these program sends a very high unmet need and is a first in class or best in class approach and each.

Represents a multibillion dollar opportunity beginning with our most advanced pipeline program X S L.

On our last few quarterly calls we provided details on our launch preparation activities. So I'll briefly recap how we are thinking about the market size and their approach. There are approximately 32000 patients who have severe sickle cell disease or transfusion dependent beta thalassemia in the U S and EU. Our initial launch will focus on these through.

2000 patients with severe disease of whom 25000 patients with severe sickle cell disease with the vast majority of them living in the U S. A small number of centers of excellence in the U S and Europe will treat the vast majority of these patients. Our research suggests that about 90% of U S patients reside in 24 states and.

More than 75% of patients in Europe reside in four countries, we have identified the potential treatment centers and their referral networks in all of these countries. We are confident that we'll be ready to launch Xsl. Following approval. We have hired the launch teams, including medical Science Liaisons Medical affairs and access and reimbursement.

<unk> teams and they are already active in the field and.

And finally, we are developing robust patient service programs to support patients throughout their treatment journey.

The pivotal trial is a single adaptive Phase 2-3 randomized placebo-controlled trial, and the primary endpoint is the reduction in the rate of decline of kidney function in patients who have been treated for approximately two years. Importantly, the study is designed to have a pre-planned interim analysis at 48 weeks of treatment.

If the interim analysis is positive, it will serve as the basis for us to seek accelerated approval in the U.S. We initiated the inoxiplin pivotal trial in late March. Site activation, patient screening, and enrollment are all ongoing.

Moving on to Enoxaparin or VX 147, which is in pivotal development for patients with a M. K D.

We've previously talked about a number of a M. K D patients, which we estimate to be approximately 100000 in the U S and Europe with over 80% of them living in the U S. Here I'll touch on the work we are undertaking to raise awareness of a M. Katy.

Awareness diagnosis and genotyping of patients with a M. K D O low within the medical and patient communities, which is not surprising given this is a newly defined disease without existing targeted therapies to.

To increase awareness of a M Katy and of genetic testing options. We are working with the kidney disease community and with minority health organizations to support sponsored education campaigns and scientific workshops and seminars.

Some examples of this work include sponsoring the American kidney fund a Po L. One education campaign, which will launch this year to provide educational materials and digital engagement tools for patients and providers and we are also educating people about a M. K D at Black health matters health fairs in summits and through Neff skills.

Health equity initiative.

In addition to these disease awareness and education efforts, we and others are also working on important policy initiatives to support a M. K D. Diagnosis, specifically, we are advocating for federal legislation introduced in the spring entitled the New era of preventing end stage kidney disease Act that would establish a rare kidney.

Disease Research center at NIH investigate the role of genetic screening in improving kidney disease outcomes and address kidney health disparities in communities of color and we're also advocating alongside the national kidney Foundation as well as other stakeholders to increase kidney disease screening you may have seen in the news recently.

<unk> that the U S. Preventive services task force has added chronic kidney disease screening to the list of services. They have under active consideration if recommended patients without access to screening at no cost, which would make a huge difference in improving availability and access to screening for a M. K D. Patients. Additionally, we are.

We're exploring pathways with diagnostic testing companies to make genetic testing more accessible to patients finally, VX 548 in pain.

Moving to pain, and VX548, a novel, first-in-class NAV1.8 inhibitor.

And so why we're so excited about our agreement with the FDA and the broad indication it could lead to if the studies are positive, which we have a high level of confidence they will be, is because the moderate to severe acute pain market is incredibly large.

Given the recently announced agreement with FDA on the pivotal development program for acute pain I'd like to give you a summary of the market opportunity.

There is a real need for effective safe and well tolerated pain medicines as there have been no novel pain medicines introduced in the past 20 years, we see utility for our NAV 1.8 inhibitors in different types of pain, including acute neuropathy and musculoskeletal.

We have high expectations from this program because NAV1.8 is both a genetically and pharmacologically validated target across acute, neuropathic, and musculoskeletal pain. And VX548 demonstrated a very desirable benefit-risk ratio profile in Phase 2.

Additionally, the VX548 program represents a near-term commercial opportunity. To recap, earlier this year we shared positive proof-of-concept results from VX548, which demonstrated statistically significant and clinically meaningful relief of pain in two Phase 2 studies of acute pain, one in the post-bunionectomy setting and one in the post-abdominoplasty setting.

So, as I said in my prepared remarks, it's over 1.5 billion with a B treatment days a year in the U.S. alone. And two-thirds of those, so about a, billion treatment days a year, are either initiated in hospital or influenced by hospital as a result of patients being discharged after either their inpatient or outpatient visit where they were given treatment for pain.

Today, I'm going to focus on acute pain in the U S. There are approximately 1.5 billion treatment days for acute pain, each year and approximately two thirds or 1 billion of those are driven by hospital prescribing. This includes treatment for inpatient and outpatient visits and the patient's related pain management following discharge.

Based on these results, VX548 has received breakthrough therapy designation, highlighting the significant need for highly efficacious and well-tolerated non-opioid pain medicines. We are very pleased to have completed our end-of-Phase 2 meeting with the FDA, and reached agreement on the VX548 pivotal program in acute pain. The Phase 3 program will include two randomized placebo-controlled trials that will evaluate VX548 post-bunionectomy and abdominoplasty, the exact same post-surgical acute pain settings we explored in Phase 2.

So 1.5 billion treatment days, as you know, the vast majority of that market is currently genericized.

Consistent with our business strategy, a small specialty commercial organization will allow us to reach a large proportion of this market given the concentration of pain treatment driven by hospital prescribing <unk>.

But even so, it's a $4 billion market in the U.S. alone today. And so we know that if we bring to market a highly effective pain med that also has a great safety and tolerability profile, we should expect to be able to get a decent share of that market and at a branded oral pain medicine price of around $10 a day, that is a very significant multi-billion dollar opportunity.

And so that's why both Reshma and I have a high level of enthusiasm for this program.

Today oral treatment of acute pain is roughly a 4 billion dollar market, even though over 90% of prescriptions are generic considering the price of a typical branded pain medicine is roughly $10 per day.

Thanks, guys.

Safe and effective new pain medication without addictive potential that captures even a partial share of that market represents a multibillion dollar opportunity importantly, given the magnitude and severity of the ongoing opioid crisis in the U S. The initiation of the phase III studies for VX five four rate later this year.

These trials are shortened duration, approximately two days of treatment, followed by 14 days of safety follow-up. Both of these Phase 3 studies will also include an opioid treatment arm.

A third single-arm study will evaluate the safety and effectiveness of dosing with VX548 for up to 14 days, across multiple other types of moderate to severe acute pain.

In the relatively short duration of the trials, we will be working with urgency to build out our teams and go to market plans to bring this novel non opioid pain medicine to patients.

In closing I'm excited about bringing truck after to even more patients around the globe and also commercializing multiple potentially transformative therapies outside of CF in the future.

Now I'll turn it over to Charlie.

We remain on track to initiate the pivotal development program by the end of this year. In addition, we have completed our preclinical studies to support initiating a Phase 2 dose-ranging proof-of-concept study, of VX548 in neuropathic pain towards the end of this year.

The next question will come from Evan Seigerman with BMO Capital Markets.

Thanks, Stuart in the second quarter of 2022 vertex continued to deliver strong financial performance second quarter product revenues were $2 2 billion, an increase of 22% compared to the second quarter of 'twenty 'twenty. One our growth was again driven by an increased number of patients on therapy compared to the prior year reserve.

Please go ahead.

Opting from several approvals and reimbursements for Tri Captor Caf trio over the last year as well as continued strong execution with market launches movements in foreign exchange had only a small impact on reported growth primarily because of our active hedging program, which helps offset impact from currency movements.

Our second quarter combined non-GAAP, SG&A, R&D and acquired IP R&D expenses were $750 million compared to 1.5 billion in the second quarter of 2021 the year over year decline was primarily related to the 900 million dollar payment in the second quarter of 2021 for the amended collaborations.

<unk> agreement with CRISPR Therapeutics. This effect was partially offset by higher expenses, resulting from our advancing pipeline, especially in C. F pain and type one diabetes as well as expenses for CF launches and pre commercial activities for eggs or sell our continued strong revenue growth combined with our efficient operating model resulted in a Q2.

non-GAAP operating margin of 54% and non-GAAP operating income of 1.19 billion compared to 71 million in the second quarter of 'twenty 'twenty. One. This increase was primarily driven by strong product revenue growth in the year over year comparison to the second quarter of 2020, one which included the $900 million payment to CRISPR.

Our non-GAAP effective tax rate for the second quarter of 2022 was 22%. We ended the quarter with 9.3 billion in cash and investments and our balance sheet profile remains very strong as restaurant highlighted on the external innovation front, we've recently announced multiple business development deals, including the acquisition of via site for 300.

Hi all.

Thank you so much for taking the question and congrats on the quarter.

Kind of following up, to Jeff's question on pain, I'd love to take a step back and really get some color on how you envision 548 fitting within the acute pain management paradigm.

And I assume the goal would be to use 548 ahead of opioid therapy, but still kind of have the option for opioid therapy if there's breakthrough pain.

$20 million in cash with closing subject to certain conditions, including the expiration of the Hart Scott Rodino waiting period. This transaction will bring us tools technologies and assets that will accelerate our goal of bringing a curative therapy to millions of people with type one diabetes.

And with that, would you need to show a safety kind of perspective using both together to provide us color as to how you think about this fitting in?

Turning now to Type 1 diabetes.

Thank you.

In June, our VX880 clinical data were featured in an oral presentation at the ADA Scientific Sessions. We've previously shared that we achieved proof-of-concept with the results from the first two patients, who were treated in Part A with half the targeted dose. Both achieved glucose-responsive insulin secretion improvements in hemoglobin A1c with concurrent reductions in, or as in the case of the first patient, elimination of, exogenous insulin. The new data that we presented at ADA included glucose time and range measurements.

Time and range is important because it gives much more granular and comprehensive data than hemoglobin A1c alone, and is correlated with the risk of developing micro- and macrovascular complications.

Yeah, Evan, it's Stuart here.

Now to guidance, we are raising our 2022 product revenue guidance to a range of 8.6 to 8.8 billion based on current exchange rates. The increase reflects the rapid uptake we have seen with new launches in geographies, where we recently secured reimbursement portray captor kept trio as well as continued performance in the U.

I'll take that one.

So the way acute pain is currently managed, obviously, if it were very, very mild, people might be taking kind of over-the-counter pain meds.

Then people would go to transition to kind of sort of non-steroidals, then go through to opioids, and then maybe something else.

So what we're imagining here with VX548 is essentially sort of a step therapy approach where we would be sort of inserting ourselves between those initial prescription NSAIDs and opioids. And we believe that's a realistic proposition based on the clinical profile that we've seen to date and our discussions with physicians that that's where they would see this kind of medicine fitting in. So that's how we would see it fitting into the treatment paradigm based on the sort of efficacy profile and safety and tolerability profile that we've seen.

The us.

Year over year, our updated guidance represents product revenue growth of approximately 15% at the midpoint.

Now to Opex, our R&D strategy was designed to deliver disproportionate success and we're seeing that strategy play out with multiple programs now in mid and late stage development, each of which could drive significant future growth.

With our strong financial profile, we expect to continue investing in both internal innovation with our rapidly advancing pipeline as well as external innovation that fits with our R&D strategy and complements our existing portfolio as a result, non-GAAP operating expenses for the year are now projected to be in a range of three to three point.

1 billion, an increase from our previous guidance of 2.82 to 2.92 billion.

The increase is primarily due to incremental expenses, resulting from the advancement of our pipeline programs into late stage clinical trials, particularly in pain and a M. K D as well as additional upfront and milestone payments.

Finally, we continued to project a non-GAAP effective tax rate in the range of 21% to 22%.

As we consider the second half of 2022 and into early 'twenty twenty-three. We look forward to a number of important milestones to Mark our continued progress several of which are outlined on this slide.

Patient 1 achieved a glucose time and range of 99.9% at days 270 versus 40.1% at baseline and remained insulin independent.

Evan, this is Reshma.

As regimen discussed earlier in the call vertex is at a new inflection point, wherein our eighth consecutive year of double digit revenue growth and we've built a remarkably durable business with long term leadership in CF delivering strong cash flow for years to come.

To add to what Stuart said, there is a raging opioid epidemic in this country, and it is a public health crisis.

We're also well on our way to diversifying the business and adding to our long term growth potential with five disease areas now in late stage development and multiple new medicines set to enter the clinic.

We are developing these programs with the intent of creating transformative high value medicines, each of which represents a multibillion dollar opportunity.

Fueled by our success in CF, we can continue to invest in our advancing pipeline, while also delivering exceptional profitability and cash flow.

As always we look forward to updating you on our further progress throughout the balance of the year, let's now open the call to questions.

Patient 2 showed a glucose time and range of 51.9% at day 150 versus 35.9% at baseline with a 30% reduction in exogenous insulin.

I think the most recent CDC report indicated 75,000 deaths in this last year, which is a 35 percent increase over the past year.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two please.

The trial, which has remained open in Canada and resumed enrollment in the United States last month, continues to screen and enroll patients in Part B.

So this is not a historic issue.

To close, a word on the next wave of innovative therapies. These are programs in late preclinical, development that are rapidly approaching the clinic. For the CFTR mRNA program, our cells and device program in type 1 diabetes, and our next generation AATD molecules, we expect to file INDs this year.

Please limit yourself to one question and if you have further questions you may reenter the question queue.

Lastly, our gene editing program in DMD is in IND-enabling studies, and we plan to file the IND for this asset in 2023.

And at this time, we'll pause momentarily to assemble our roster.

It's a current day crisis, and I think that this approach that Stuart described where there is a step from over-the-counter pain medicines and then to a drug like VX548, which because it only works in the periphery, there are no central receptors, there is no addictive potential here, I think has enormous potential.

And from physicians and community groups and healthcare officials that we've spoken with, there is a huge enthusiasm for this kind of mechanism.

And the first question will come from Salvia richer with Goldman Sachs. Please go ahead.

With that, I'll hand it over to Stuart

Good afternoon. Thanks for taking my question nice quarter here.

The pipeline question with regard to your program for beta Thal, and sickle cell and what does the FDA want with regard to number of patients and then what duration.

Here are they looking at a proportion out to two years similar to what we saw with Blue Bird just curious where you stand there. Thank you.

for a commercial overview.

Great, thank you.

Yeah, Hey, good afternoon, Salvia and this is very small.

Thanks, Reshma.

The next question will come from Colin Bristow with UBS.

I'm pleased to review tonight our continued strong performance in CF, the path toward future growth, and the commercial opportunity and plans for some of the most advanced disease areas in our pipeline.

I'll start with CF. Our CF business continued its rapid pace of growth this quarter, with impressive performance in both the U.S. and internationally. In the U.S., we continue to add new Trikafta patients, with most of them being younger patients in the 6 to 11 age group, and persistence and compliance remain very high across all patient groups.

With regard to the extra Salt program and what the FDA is looking for it is down to these two areas for us to reach conclusion on the number of patients and the file and the duration of follow up we are we have been having conversations very productive.

Outside the U.S., we have seen rapid uptake of Caftreo across multiple European countries, where we recently reached reimbursement agreements, notably France, Spain, and Italy.

We've now turned our focus in Europe to the launch of Caftreo in children ages 6 to 11.

Additionally, the launches of

Trikafta in Canada and Australia are both off to a strong start. We began the year with more than 25,000 patients in North America, Europe, and Australia who, could benefit from a CFTR modulator but were not yet on therapy.

These patients fell primarily into one of three categories. One, patients who had not yet initiated therapy, largely in countries where we are recently reimbursed and therefore early in the launch curve.

Please go ahead.

Two, patients in geographies where we are not yet reimbursed, and three, younger age groups who will be addressed through ongoing label expansions. We are confident in our ability to reach the vast majority of these patients over time.

We have made good headway securing new reimbursements and launching our medicines in the first half of 2022.

Additionally, we continue to make important progress in expanding access to younger patients. For instance, we completed the study of Trikafta in patients 2 to 5 years old with positive efficacy results on the endpoints of lung clearance index and sweat chloride and no new safety signals.

With them over the last many months and we are done in our in terms of the conversations for the preclinical package CMC and manufacturing and all of the other modules. It is about these two areas and.

We expect to present these data at a medical meeting later this year and are on track to, submit global regulatory filings by the end of the year.

Additionally, we submitted regulatory filings in the U.S. and Europe for Orkambi in patients 12 months to less than 24 months of age.

The PDUFA date for this filing is September 4th. We were pleased to present compelling long-term and real-world data on Trikafta at the European Cystic Fibrosis Society's conference in June. These data underscore the outcomes with Trikafta, specifically improved lung function, a 77% reduced risk of pulmonary exacerbations, an 87% lower risk of lung transplant, and a 74% lower risk of death for patients with CF.

Finally, in CF, as Reshma mentioned, we are developing a CFTR mRNA therapy to treat patients, who do not make any CFTR protein and thus cannot benefit from a CFTR modulator. We estimate there are approximately 5,000 of these patients in North America, Europe, and Australia.

Outside of CF, we have made impressive strides with our clinical stage pipeline over the, past 12 months.

Today, I'd like to highlight the market potential for three of our late-stage clinical programs, XSL, Inaxiplin, and VX548, and some of our pre-commercial activities.

Each of these programs serves a very high unmet need and is a first-in-class or best-in-class, approach, and each represents a multibillion-dollar opportunity.

Beginning with our most advanced pipeline program, XSL.

On our last few quarterly calls, we provided details on our launch preparation activities. So I'll briefly recap how we are thinking about the market size and our approach. There are approximately 32,000 patients who have severe sickle cell disease, or transfusion-dependent beta thalassemia in the US and EU. Our initial launch will focus on these 32,000 patients with severe disease, of whom 25,000 are patients with severe sickle cell disease, with the vast majority of them living in the US. A small number of centers of excellence in the US and Europe will treat the vast majority of these patients.

Our research suggests that about 90% of US patients reside in 24 states, and more than 75% of patients in Europe reside in four countries.

We have identified the potential treatment centers and their referral networks in all, of these countries. We are confident that we'll be ready to launch ExoCell following approval. We have hired the launch teams, including medical science liaisons, medical affairs, and access and reimbursement teams, and they are already active in the field.

We are expecting to wrap up these conversations in the coming weeks. So we don't have to speculate we will be able to update you after that but it is really down to just those two points number of patients they'd like to see in the file and the duration of follow up I will just reiterate that we've these are similar topics that we've been talking to the EMA.

And finally, we are developing robust patient service programs to support patients throughout the treatment journey.

A an NHRA on and we have come to conclusion on that.

The next question will come from Michael Yee with Jefferies. Please go ahead.

Hey, good afternoon and congrats on the quarter.

Oh, Hey, Thank you good afternoon.

From the Viacom acquisition, the V880 program, could you just walk us through just obviously there's areas of program overlap.

Moving on to Inaxiplin, or VX147, which is in pivotal development for patients with AMKD. We've previously talked about the number of AMKD patients, which we estimate to be approximately, 100,000 in the US and Europe, with over 80% of them living in the US.

Just how should we think about prioritization here and maybe just flesh out a little bit more about just some of the, of how it augments the program for you overall.

A question on I guess enoxaparin.

And then on VX548, so it sounds like trial initiation before year end and acknowledging that it's, you know, large population size, but it is a short primary endpoint.

You are enrolling the phase II portion and then it rolls into our phase three could you comment on how the phase II portion is going in terms of patient enrollment and whether youre off data to talk about at the end of the year you know I think that.

When do you think you'd be in a position to walk us out top line for those trials?

Thanks.

Give a good.

Good insight into how you would think about the phase III because I know it is a.

Challenging population to necessarily enroll so maybe talk a little about that and then I guess a follow up to <unk> question on extra sell if it is a two year requirement how long does that push things out does that push pushed the timing out by a year or just help us out with the with that thank you.

Yeah.

Yeah, Michael there were two questions in there one about a M K D and one about extra Sal let me just close out on extra South first as we were just discussing a we're going to have our meetings with the FDA to wrap up these discussions in the coming weeks and said, we're not going to need to speculate we will be able to update you on the on the specifics.

Colin, let me just tackle the 548 question first and then I'll get to Viacite and the type 1 diabetes programs.

The 548 programs are the pivotal program.

It's really quite an efficient development program.

These studies are quite short in duration.

We know exactly how to do them.

We've done them with VX150.

We did it again with VX548.

Give you a timeline in the near future.

Here, I'll touch on the work we are undertaking to raise awareness of AMKD. Awareness, diagnosis, and genotyping of patients with AMKD are all low within the medical and patient communities, which is not surprising given this is a newly defined disease without existing targeted therapies.

With regard to a M. K D. You know the the point that you make about the difficulty enrollment based on the patient population is it is a really good point and while the a M. Katie population shares many similarities with Fiat genetically driven disease about 100000 patients.

And our approach to treating CF is by targeting the C. F T. Our protein the underlying cause of disease. It's the same thing with an K D. We're targeting the April one protein.

The Big difference comes in is in diagnosis disease awareness and Genotyping, but recognizing this we've.

To increase awareness of AMKD and of genetic testing options, we are working with the kidney disease community and with minority health organizations to support sponsored education campaigns and scientific workshops and seminars.

We've inserted three initiatives into this phase II three program. The first is we're opening over 150 sites globally. So that we have sites to close to where the patients are and simply many of them second we have an observational study ongoing that's E G.

Some examples of this work include sponsoring the American Kidney Fund's APOL1 education campaign, which we'll launch this year to provide educational materials, and digital engagement tools for patients and providers.

And we are also educating people about AMKD at Black Health Matters health fairs and summits and through NefQure's health equity initiative.

In addition to these disease awareness and education efforts, we and others are also working on important policy initiatives to support AMKD diagnosis. Specifically, we are advocating for federal legislation introduced in the spring entitled the New Era of Preventing End-Stage Kidney Disease Act that would establish a rare kidney disease research center at NIH, investigate, the role of genetic screening in improving kidney disease outcomes, and address kidney health disparities in communities of color.

And we're also advocating alongside the National Kidney Foundation as well as other stakeholders to increase kidney disease screening.

You may have seen in the news recently that the U.S. Preventive Services Task Force has added chronic kidney disease screening to the list of services they have under active consideration. If recommended, patients would have access to screening at no cost, which would make a huge difference in improving availability and access to screening for AMKD patients.

Additionally, we are exploring pathways with diagnostic testing companies to make genetic testing more accessible to patients.

Typing study people, who genotype in with two April all want Illegals are then eligible and could be.

Enrolled in the randomized control trial and.

And lastly, as you heard Stuart discussed, we're working with patient groups and physician groups and the community as a whole to raise awareness.

We'll point out Michael that the the beauty of the phase two three study is we do everything upfront that is to say that the face the trial sites that will be the phase III trial sites, they're all being opened up right now as part of the phase two three study.

Thanks are you committed to giving data on the phase two what are you seeing anything or just move forward.

Yes, sorry about you had a question on the data.

We are at the point of having selected our dose on the phase two part you should expect to hear from us.

Okay. Thank you.

The next question will come from Phil to do with Cowen. Please go ahead.

Hi, This is Mike.

Thanks, so much.

And congrats on the progress.

147.

Thank you Kevin.

Speaking about.

One characteristic of the patients involved in it.

Now that it's targeting a battery.

Population.

Thinking about the potential differences in pulmonary and Egfr looking across the clinical spectrum at all on that.

Okay.

Yeah I think the question is how are we thinking about the patients who would enroll and what do we think their baseline characteristics would mean this a M. Katie population.

Two we ground the unifying entry criteria for the phase two three study are really three fold in terms of the key criteria. The first is to April one ODM.

The second is a reduced renal function.

And the third is proteinuria, that's greater than 7.7 grams. So all patients in this study will have those key criteria now of course as you point out there's going to be a spectrum of disease and we fully expect.

<unk> to have.

Our diversity in terms of the range of proteinuria as well as the renal function, but the really important point is that this is a rather homogeneous population up to April one allele protocol.

ARIA and reduced kidney function.

Great. That's very helpful. For me is there any chance that you don't really need it and the opportunity.

So do you think you mentioned that you're enrolling just like it.

Geno typing.

Sure.

Oh, Yeah, it's a it's a great question I'm sure the teams or are planning to share that data that study because it is a very simple observational study that is genotyping people is already well into the hundreds of patients that we have screened and enrolled.

I'm sure the IR team can give you specifics offline.

Oh, great. Thank you so much appreciate the color.

Okay.

The next question will come from Lisa <unk> with Evercore ISI. Please go ahead.

Hi, there I was wondering if you could give us any sense of what you're looking for in the skyline, One O two and one O three study specifically.

To be able to file on that what are what are the benchmarks and clinical meaningfulness are looking for thank you.

Yeah sure thing am Lisa.

So skyline the two skyline studies and now the Ridgeline study, which is the study was one to 1561 Tezak chapter in the six to 11 year olds, which is also ongoing here's what we're looking for based on every piece of data that we have.

Including our HB assays, which you know is not only qualitatively, but quantitatively predictive of what we see in the clinic, we expect to see greater sweat chloride that even tried CAFTA.

Based on the Phase II studies, where we looked at sweat chloride and we looked at P. P. F. E V. One we expect one to 1561 test has the potential to be even greater than try CAFTA and at the end of the day, what we're really looking for here is.

P. P F E V. One.

Sweat chloride levels and of course, the safety profile from what we see pre clinically.

And clinically in those phase two studies that I described.

Expect that one to 1561 Kaz M has the real potential to be superior to try CAFTA.

And remember when we when we talk about that the best read out of the function of seats C. F. T. Our modulators is on sweat chloride. That's the most direct read out the PD readout. If you will and that has been consistently superior and H b, He's phase one and our phase II studies.

Excellent. Thanks.

The next question will come from Geoff Meacham with Bank of America. Please go ahead.

Afternoon, guys. Thanks, so much for the question and also congrats on a good quarter.

Finally, VX548 in pain.

One last one on 540 <unk> when you consider the market opportunities and what could be a pretty broad program. Just wanted to get your perspective on what success looks like kind of at a high level and then I wasn't sure. If you've had pre phase III meetings with FDA, but you know how you are thinking about the size and scope of the pivotal that youll start second half of the year.

Given we recently announced agreement with FDA on the Pivotal, Development Program for acute pain, I'd like to give you a summary of the market opportunity.

Yeah.

Hey, Jack sure thing. This is rational let me start and then I'll turn it over to Stuart to talk about the market opportunity.

This is one of the programs that I have very high enthusiasm for it and we are we have high expectations for it and the reason for that is I've already talked about the genetic and pharmacologic validation.

The other reason for this is it really has potential across acute pain, neuropathic pain, and let's call. It musculoskeletal pain, although the focus right now.

There is a real need for effective, safe and well-tolerated pain medicines, as there have, been no novel pain medicines introduced in the past 20 years. We see utility for our, NAV1.8 inhibitors in different types of pain, including acute, neuropathic and musculoskeletal.

Today I'm going to focus on acute pain.

In terms of where the program is most advanced is in acute pain. The last reason I have such excitement for this program is the market opportunity is near term, let me describe the pivotal program and yes. We have completed our end of phase II meeting with the FDA and we have reached agreement on this program.

So here's the program, it's about 2000 or so patients in two randomized controlled trials that look exactly like the phase II trials, one in Abdominoplasty and one in Bunionectomy and a third single arm study that takes all are paying types procedure related.

And the RCTs, the two randomized clinical trials, are very well understood surgical procedures, bunionectomy and abdominoplasty.

As well as for example, a fracture or a sprain or soft tissue injury and the program is so designed so that we have a broad.

Acute pain indication for the treatment of moderate to severe pain, that's really the beauty of this program Stuart I'm going to turn it over to you for market potential yeah, Jeff and so why we're so excited about our agreement with the FDA and the broad indication it could lead to if the studies are positive we have a.

High level of confidence they will be is because the moderate severe acute pain market incredibly large so as I said in my prepared remarks, it's over 1.5 billion with a b treatment days a year in the U S alone.

In the US, there are approximately 1.5 billion, treatment days for acute pain each year, and approximately two-thirds, or one billion of those, are driven by hospital prescribing. This includes treatment for inpatient and outpatient visits, and the patient's related pain management following discharge.

And two thirds of those are about 1 billion treatment days a year are either initiated in in hospital or influenced by hospital as a result of patients being discharged after either their inpatient or outpatient visit where they were given treatment for pain.

So one 5 billion treatment days as you know the vast majority of that market is currently genericize, but even so it's a 4 billion dollar market in the U S alone today and so.

Consistent with our business strategy, a small, specialty commercial organisation will, allow us to reach a large proportion of this market, given the concentration of pain treatment driven by hospital prescribing. Today, oral treatment of acute pain is roughly a $4 billion market, even though over 90% of prescriptions are generic. Considering the price of a typical branded pain medicine is roughly $10 per day, a safe and effective new pain medication, without addictive potential, that captures even a partial share of that market, represents a multi-billion dollar opportunity.

Importantly, given the magnitude and severity of the ongoing opioid crisis in the US, the initiation of the Phase 3 studies for VX548 later this year, and the relatively short duration of the trials, we will be working with urgency to build out our teams and go-to-market plans to bring this novel, non-opioid pain medicine to patients.

In closing, I'm excited about bringing Trikafta to even more patients around the globe, and, also commercialising multiple, potentially transformative therapies outside of CF in

We know that if we bring to market a highly effective.

the future.

Pain Med that also has a great safety and Tolerability profile, we should expect to be able to get a decent share of that market and at a branded oral pain medicine price of around $10. A day that is a very significant multibillion dollar opportunity and so that's why both retro and I have a high level of enthusiasm for this program.

Now, I'll turn it over to Charlie.

Okay. Thanks, guys.

Thanks, Stuart.

The next question will come from Evan Cybermen with BMO capital markets. Please go ahead.

In the second quarter of 2022, Virtex continued to deliver strong financial, performance. Second quarter product revenues were $2.2 billion, an increase of 22% compared to the second quarter of 2021. Our growth was again driven by an increased number of patients on therapy compared to the prior year, resulting from several approvals and reimbursements for Trikafta Cafetrio over the last year, as well as continued strong execution with market launches.

Movements in foreign exchange had only a small impact on reported growth, primarily because of our active hedging program, which helps upset impact from currency movements.

Hi, all thank you so much for taking the question and congrats on the quarter kind of following up to jeffs question on pain loved.

Our second quarter combined non-GAAP SG&A R&D and acquired IP R&D expenses were $750 million, compared to $1.5 billion in the second quarter of 2021. The year-over-year decline was primarily related to the $900 million payment in the second, quarter of 2021 for the amended collaboration agreement with CRISPR Therapeutics. This effect was partially offset by higher expenses resulting from our advancing pipeline, especially in CF, pain, and type 1 diabetes, as well as expenses for CF launches and pre-commercial, activities for Exacel.

Our continued strong revenue growth combined with our efficient operating model resulted in a Q2 non-GAAP operating margin of 54% and non-GAAP operating income of $1.19 billion, compared to $71 million in the second quarter of 2021. This increase was primarily driven by strong product revenue growth and the year-over-year comparison to the second quarter of 2021, which included the $900 million payment to CRISPR.

Our non-GAAP effective tax rate for the second quarter of 2022 was 22%.

We ended the quarter, with $9.3 billion in cash and investments, and our balance sheet profile remains very strong.

Love to take a step back and really get some color on how you envision five floor a fitting within the acute pain management paradigm I assume the goal would be to use five board ahead of opioid therapy, but still kind of have the option for opioid therapy, if it breakthrough pain and with that would you need to show safety kind of perspective, using both together they provide us.

Colors to how you think about this is sitting in thank you.

Yeah, Evan it's Stuart here I'll take that one so.

The way acute pain is currently managed obviously if it were you know very very mild people might be taking kind of over the counter pain meds than people would go to trend transitioned to kind of sort of non steroidal <unk>.

Dengue through to opioids, and then maybe something else. So what we are imagining here with VX 548 is essentially sort of a step therapy approach, where we would be sort of inserting ourselves between those initial prescription nsaids and opioids and we believe that's a realistic proposition based on the.

The clinical profile that we've seen to date and our discussions with with physicians that that's where they would see this kind of medicine are fishing in so that's how we would see it fitting into the to the treatment Paramount paradigm based on you know the sort of efficacy profile and safety and Tolerability profile that we've seen.

Evan this is <unk> to add to what Stuart said, there is a raging opioid epidemic in this country and it is a public health crisis I think the most recent CDC report indicated 75000 deaths in this last year, which is a 35% increase over the past.

Here. So this is not a historic ish.

Issue, it's a current day crisis.

And I think that this approach that Stuart described where there is a step from over the counter pain medicines, and then to a drug like VX 548, which because it only works in the periphery. There are no central receptors. There is no.

Addictive potential here I think has enormous potential and from physicians and community groups.

And health care officials that we've spoken with there is a huge enthusiasm for this kind of mechanism.

Alright, thank you.

The next question will come from Colin Bristow with UBS. Please go ahead.

Hey, good afternoon, and congrats on the quarter.

The acquisition of the VA, a there'll be a ATM program could you just walk us through just obviously there's areas of the program overlap just how should we think about prioritization here and maybe just flesh out a little bit more about <unk>.

Just some of the <unk>.

And how it augments the program to a rule and then.

For a trial initiation before year end and acknowledging that it large population size, but it is a short primary endpoint. When do you think you'd be in a position to report top line for those trials. Thanks.

Yeah, Colin let me just tackle the five four a question first and then I'll get to Avaya sites and the type one diabetes programs. The 548 programs on the pivotal program, it's really quite an efficient development program. These studies are quite shorten duration, we know exactly.

Exactly how to do them, we've done them with VX 150, we did it again with VX 548, and the Rct's. The two randomized clinical trials are very well understood.

Surgical procedures, Bunionectomy and Abdominoplasty I expect that these programs will progress quickly.

I expect that these programs will progress quickly.

As Reshma highlighted, on the external innovation front, we've recently announced multiple business, development deals, including the acquisition of Viacite for $320 million in cash, with closings subject to certain conditions, including the expiration of the Hart-Scott-Rodino waiting period. This transaction will bring us tools, technologies, and assets that will accelerate our goal of bringing a curative therapy to millions of people with type 1 diabetes.

With regard to the Viacite acquisition, the real goal here for us in the type 1 diabetes program is to transform, if not cure, this disease. That is certainly what we are aiming for. And we have three programs internally aimed at exactly that goal.

With regard to the bis site acquisition.

The real goal here for us in the type one diabetes program is to transform if not cure. This disease that is certainly what we are aiming for and we have three programs internally aimed at exactly that goal VX 880, let's call. It the naked cell program the neck.

Now to guidance.

We are raising our 2022 product revenue guidance to a range of $8.6 to $8.8, billion based on current exchange rates. The increase reflects the rapid uptake we have seen with new launches in geographies where we recently secured reimbursement for Trikafta Cap Trio, as well as continued performance in the U.S. Year over year, our updated guidance, represents product revenue growth of approximately 15% at the midpoint.

Now to OPEX.

VX880, let's call it the naked cell program.

The next program, which is the same cells as VX880 in a device to evade the immune system.

<unk> program, which is the same cells is VX 880 in a device.

To evade the immune system in the third program is those same cells that we edit and we call them hyper immune cells.

And the third program is those same cells that we edit and we call them hypoimmune cells.

Our R&D strategy was designed to deliver disproportionate success, and we, are seeing that strategy play out with multiple programs now in mid- and late-stage development, each of which could drive significant future growth.

We are well on our way to achieving this goal of transforming type 1 diabetes, which you can see from the first two patients dosed at half dose with VX880.

We are well on our way to achieving this goal of transforming type one diabetes, which you can see from the first two patients dosed at half dose with VX one AAV.

With our strong financial profile, we expect to continue investing in both internal innovation with our rapidly advancing pipeline, as well as external innovation that fits with our R&D strategy and complements our existing portfolio. As a result, non-GAAP operating expenses for the year are now projected to be in a range, of $3 to $3.1 billion, an increase from our previous guidance of $2.82 to $2.92 billion. The increase is primarily due to incremental expenses resulting from the advancement of, our pipeline programs into late-stage clinical trials, particularly in pain and AMKD, as well as additional upfront and milestone payments.

Finally, we continue to project a non-GAAP effective tax rate in the range of 21 to 22%.

What we're doing and the value of the Viacite acquisition is accelerating our ability to get there. Specifically, Viacite brings us tools and technologies, IP, capabilities in manufacturing in particular, and talent. That's going to accelerate our ability to get to this cure.

What we're doing and the value of the Avaya site acquisition is accelerating our ability to get there.

As we consider the second half of 2022 and into early 2023, we look forward to a number, of important milestones to mark our continued progress, several of which are outlined on this slide.

Specifically vice site brings us tools and technologies IP.

Capabilities in manufacturing in particular and talent.

As Richmond discussed earlier in the call, Vertex is at a new inflection point. We're in our eighth consecutive year of double-digit revenue growth, and we've built a remarkably, durable business, with long-term leadership in CF delivering strong cash flow for years to come.

We're also well on our way to diversifying the business and adding to our long-term growth, potential with five disease areas now in late-stage development and multiple new medicines set to enter the clinic. We are developing these programs with the intent of creating transformative, high-value, medicines, each of which represents a multibillion-dollar opportunity.

It's going to accelerate our ability to get to this cure.

Fueled by our success in CF, we can continue to invest in our advancing pipeline while, also delivering exceptional profitability and cash flow.

As always, we look forward to updating you on our further progress throughout the balance, of the year.

If I double-click on that, what I'm really talking about are GMP cell lines, GMP manufacturing, access to a clinical stage program with hypoimmune cells via the ViSci-CRISPR collaboration, and as we did with CF, our goal here and what we expect to do is move multiple programs in parallel, and then choose the best one or ones to take to late-stage development and commercialization.

If I double click on that what I'm really talking about our G. M P cell lines.

GMP manufacturing.

Access to a clinical stage program with hyper immune cells via the buy side CRISPR collaboration and as we did with CF.

Our goal here and what we expect to do is move multiple programs in parallel.

And then choose the best one or one to take the late stage development and commercialization.

Great, thanks.

Great. Thanks.

Let's now open the call to questions.

The next question will come from David Risinger with SVB Securities.

The next question will come from David with finger with S. V. B Securities. Please go ahead.

Thank you.

Please go ahead.

Thanks very much.

So I have a couple of questions about the a M. K D. Interim that you have spoken too could you discuss your expectations for the control arms Egfr rate of decline at 48 weeks.

A short period of time in the control arm patients I think will be well taken care of care of on the standard of care, which is not always the case in the real world. So it would be helpful to understand what you're expecting for the control arms decline.

And then.

Assuming that you do succeed in heading on the interim has the FDA suggested that it would be supportive of an early filing on just the positive interim data. Thank you.

Thanks very much.

Yeah sure thing.

<unk>.

With regard to the question around the interim analysis and is the agency supported of a.

<unk> approval based on the interim analysis.

Ambiguously, yes.

So I have a couple questions about the AMKD interim that you have spoken to.

This is one of the points of agreement that we reached at our end of Phase two meeting, which is one of the very important points that we.

We were driving to ensure we had conclusion on the.

The reason for that is the following April well, one mediated F. S. G S or April one mediated kidney disease as a whole.

Is a different ball of wax than non April one mediated kidney disease in other words, those who have to April one allele have very aggressive disease, we're talking about rate of declines annually north of five Ccs per year that is a very significant.

And a reduction in kidney function. Unfortunately, there are no specific treatments for a M. K D and they certainly are no targeted treatments. So even though patients are often on standard of care medicines. This decline that I talked about.

Could you discuss your expectations for the control arms EGFR rate of decline at 48 weeks?

Is continuing so with regard to our program. We have designed it to have this interim analysis. After 48 weeks of treatment, where we will be able to assess the proteinuria difference between those treated with VX 147 versus.

That's a short period of time, and the control arm patients I think will be well taken care of on the standard of care, which is not always the case in the real world.

The standard of care as well as the decline in renal function and because these patients are so sick and they progression is so fast it offers the opportunity to make this assessment at one year, which is not always the case in non April one mediated kidney disease. That's why it usually takes longer because they are.

The decline is just plain slower very very different in a M. Katy.

We will now begin the question-and-answer session.

So it would be helpful to understand what you're expecting for the control arms decline, and then assuming that you do succeed in hitting on the interim, has the FDA suggested that it would be supportive of an early filing on just the positive interim data?

Yeah.

Thank you.

The next question will come from Mohit pencil with Wells Fargo. Please go ahead.

To ask a question, you may press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys.

Thank you.

Great. Thanks for taking my question and congrats on the quarter I have I have I have a question or clarification for Charlie.

And to withdraw your question, please press star, then 2.

Please limit yourself to one question, and if you have further questions, you may reenter, the question queue.

The clarification is oddly, including a $300 million of our buy side equation in IP R&D at this point for your guidance number one and the question is for R&D and SG&A combined.

It looks like I mean, you are in a good situation of having so many programs which are entering into pivotal phase.

Keeping that in mind.

How sustainable is this a mid 50% operating margin profile.

Going forward for next couple of years, given that you're investing heavily in R&D. Thank you.

Yeah, sure thing.

With regard to the question around the interim analysis and is the agency supported of an accelerated approval based on the interim analysis, unambiguously yes.

Sure Good question.

This is one of the points of agreement that we reached at our end of Phase 2 meeting, which is one of the very important points that we were driving to ensure we had conclusion on. We're talking about rate of declines annually north of 5 cc's per year. That is a very significant reduction in kidney function.

So even though patients are often on standard of care medicines, this decline that I talked about is continuing.

Unfortunately, there are no specific treatments for AMKD, and they certainly are no targeted treatments.

So with regard to our program, we have designed it to have this interim analysis after 48 weeks of treatment where we will be able to assess the proteinuria difference between those treated with VX147 versus the standard of care, as well as the decline in renal function.

And because these patients are so sick and the progression is so fast, it offers the opportunity to make this assessment at one year, which is not always the case in non-APOL1-mediated kidney disease.

You know as we mentioned the success that we've had in the pipeline recently really is unprecedented and so not surprisingly with with the great data and several multibillion dollar opportunities. We are investing behind the success of these programs and that really is what drives the opex increased in <unk>.

That's why it usually takes longer because the rate of decline is just plain slower.

Recent quarters and in our guidance specifically in the guidance I would highlight the success in pain and a M. K D. As the biggest drivers of the change in the Opex guidance.

Very, very different in AMKD.

And importantly, all of the increased 90 plus percent of the increase is in R&D.

So it's certainly are certainly very very good news from our perspective, and we will continue to invest in terms of the.

The ability to sustain margins, we have a fantastic model you know when you develop transformative medicines for serious diseases, there's tremendous value unlocked there, which is allows us to consistently reinvest in innovation.

And so we believe that with this model, we can sustain very very attractive operating margins for the foreseeable future. Your specific question around via site that is not in the guidance yet as we are in the Hart Scott Rodino waiting period and can't accurately forecast close date for the transaction that is not included.

And the guidance and when we know the transaction close date, we'll update accordingly.

The next question will come from Mohit Bansal with

Thank you.

Okay.

And at this time, we'll pause momentarily to assemble our roster.

Wells Fargo.

The next question will come from Olivia Brayer with Cantor Fitzgerald. Please go ahead.

Please go ahead.

Salveen Richter, Goldman Sachs, Good afternoon.

Great.

Thanks for taking my question.

Thanks for taking my question and congrats on the quarter.

Hey, good afternoon, and thank you for the question and congrats on a great quarter I wanted to follow up on CTX L. One I know you're still in conversations with FDA, but are there any metrics beyond number of patients and duration of follow up.

Nice quarter here.

I have a question and a clarification for Charlie.

Just a pipeline question.

With regard to your program for VFL and sickle cell, what does the FDA want with regard to number of patients, and what duration here?

That could be different between the agreed upon EMA and NHI and HR a submission packages versus what you might have to follow on file in the U S.

Are they looking at a proportion out to two years, similar to what we saw with Bluebird?

Just curious where you stand there.

So the clarification is, are we including $300 million of wire site acquisition in IP, R&D at this point for the guidance, number one?

And then just a quick clarification question on the filings it looks like in the press release, you guys mentioned, you're on track for filing in Europe , and the U K by year end, but it doesn't specifically call out the U S. So I just wanted to clarify to see if there's any change to your assumptions there.

And the question is, for R&D and as G&A combined, it looks like, I mean, you're in a good situation, of having so many programs which are entering into pivotal phase.

Thank you.

Keeping that in mind, how sustainable is this mid-50% operating margin profile going, forward for next couple of years, given that you're investing heavily in R&D?

Yeah.

Yeah sure thing.

Hey, good afternoon, Salveen.

This is Reshma.

Thank you.

We have been having conversations and we're really fortunate because we have every.

Sure, Mohit.

Bezeq nation offered by regulators on this side of the pond and the other that allow us to have frequent conversations with them and so we've been having these conversations with MH or a E. M D E and F D. A for many months.

Good question.

As we mentioned, the success that we've had in the pipeline recently really is unprecedented. And so not surprisingly, with the great data and several multi-billion dollar opportunities, we are investing behind the success of these programs. And that really is what drives the OPEX increase in recent quarters and in our guidance.

Specifically in the guidance, I would highlight the success in PAIN and AMKD as the biggest, drivers of the change in the OPEX guidance.

The topic of conversations have evolved because over time, we've settled out on the preclinical package, we've settled out on CMC and manufacturing and all of the other modules.

And importantly, all of the increase, 90 plus percent of the increase is in R&D.

The conversation with EMEA and M HRA towards the end as we were concluding those discussions were on the same point as with F. D. A and that was around number of patients in the filing and duration of follow up we have come to conclusion, we have reached agreement and therefore I can say that we are on track and we.

So it's certainly very, very good news from our perspective and we'll continue to invest.

In terms of the ability to sustain margins, we have a fantastic model.

When you develop transformative medicines for serious diseases, there's tremendous value, unlocked there, which allows us to consistently reinvest in innovation.

And so we believe that with this model, we can sustain very, very attractive operating, margins for the foreseeable future.

Your specific question around biocyte, that is not in the guidance yet.

As we are in the Hart-Scott-Rodino waiting period and can't accurately forecast a closed, date for the transaction, that is not included in the guidance.

Fully expect to get our filing in towards the end of this year with regard to the FDA, we simply haven't hit that milestone yet that we have with M. HR in EMEA, we simply haven't concluded our discussions.

With regard to the ExaCell program and what the FDA is looking for, it is down to these two areas for us to reach, conclusion on, the number of patients in the file and the duration of follow-up. We have been having conversations, very productive conversations, with them over the last many months, and we are done in terms of the conversations for the preclinical package, CMC and manufacturing, and all of the other modules. It is about these two areas.

On the number of patients and the duration of follow up I do expect we will do so in the coming few weeks and I'll look forward to updating you after that.

And we are expecting to wrap up these conversations in the coming weeks, so we don't have to speculate.

We'll be able to update you after that.

But it is really down to just those two points, number of patients they'd like to see in the file, and the duration of follow-up.

And when we know the transaction closed date, we'll update accordingly.

Great. Thanks very much.

I will just reiterate that these are similar topics that we've been talking to the EMEA and MHRA on, and we have come to conclusion on that.

Thank you.

The next question will come from Heart Taj Singh with Oppenheimer. Please go ahead.

The next question will come from Michael Yee with Jeffries.

The next question will come from Olivia Brayer with Cancer Fitzgerald.

Great. Thank you for the question and also really nice quarter.

They're not too much more to talk about a little bit of cobalt memory from a year or two years ago, but HED looks like youre going to be bringing in a couple of more molecules into the clinic this year.

And previously you had mentioned that you're trying to increase the potency of these molecules and get them at a higher concentrations into the tissue of interest.

So you know how how.

How are you thinking about that would be approach.

For these molecules in the clinic this year and then Youre, assuming you get them in the clinic this year when could we see a readout.

And thanks for the question.

Please go ahead.

Please go ahead.

Yeah, Hey, good afternoon her badge.

Hey, thank you.

Hey, good afternoon.

With regard to the a T D program.

Good afternoon.

Thank you for the question and congrats on the great quarter.

ITD remains a disease of high interest and one that fits the vertex strategy like a glove.

Question on, I guess, NAXA plan.

I wanted to follow up on CTX-01.

I know you're still in conversations with FDA, but are there any metrics beyond number, of patients and durational follow-up that could be different between the agreed-upon, EMA and MHRA submission packages versus what you might have to file in the U.S.?

You are enrolling in the Phase 2 portion, and then it rolls into a Phase 3.

I'm excited that the next wave of molecules are about to enter the clinic and I do expect the IMD for at least one to go in this year, but there are many molecules more than one in this next wave we have been able to dial up the potency. The doses are low I expect that we're going to fully.

Explore the dose range.

And I expect that we'll have results that we can talk about by next year.

Could you comment on how the Phase 2 portion is going in terms of pace of enrollment, and whether you have data to talk about at the end of the year?

So the programs are progressing and the opportunity here her thoughts just to remind others.

You know, I think that would give a good insight into how you would think about the Phase 3, because I know it is a challenging population to necessarily enroll.

So maybe talk a little about that.

And then I guess a follow-up to Salveen's question on Excel.

Is to tackle both the lung and liver manifestations of this disease. That's why the small molecule approach is so inviting to us and why we're so I'm eager to pursue at all the other approaches out there simply don't tackle both manifestation.

Of disease and in my mind, therefore are not transformative. So that's really what we're looking for it and next year. We should have results that we can all look at and.

Evaluate.

Thank you Rachel thanks for all of them.

We have time for one more question and that will come from Brian Abrahams with RBC capital markets. Please go ahead.

And then just a quick clarification question on the filings, it looks like in the press, release you guys mentioned you're on track to file in Europe and the U.K. by year-end, but it doesn't specifically call out the U.S.

Hey, guys. Thanks for squeezing me in.

As you approach the filings I'm curious, where you stand with respect to CTX L O on manufacturing and supply.

I know you recently posted a bridging study I'm curious how that might help you ultimately expand manufacturing and scale up and then Relatedly, where do you see the field with respect to next generation conditioning regimens and how much would that be potentially helpful for expanding in that long term opportunity. Thanks.

Yeah.

I'm going to ask Stuart to comment on the opportunity in near term opportunity with B cell phone on the long term and I'll come back and tell you a little bit about manufacturing yeah. So Brian thanks for the question so.

Across the U S and the EU across sickle cell and <unk>. We think there's approximately 150000 patients who have sickle cell disease or beta thalassemia.

Our initial launch is going to focus on those that have more severe disease are similar to the patients that are being included in the in the clinical trial those that are likely to consider going through this treatment given the current both b cell phone conditioning regimen. We think that population is probably around 32000 patients about 25.

Thousands of those of sickle cell disease patients and the majority of those are in the United States. So that's the initial launch population in terms of what the opportunity could look like if we can get to a truly gentler conditioning.

Regimen, which may turn this kind of much more towards an outpatient procedure retro comment on it technically but in terms of opportunity, we think that would significantly expand it beyond the 32000 well into the 150000 population maybe not all the way there, but certainly expanded significantly.

Become a procedures at a significantly higher number of people would consider having.

And with regard to the manufacturing you know in the Grand scheme of things. This is an easier manufacturing challenge than other.

Other diseases that are being tackled with a CRISPR Cas nine for example, and I say that because this is ex vivo gene editing and in essence, what we're talking about is a guide RNA and cast nine.

The second point to make here is that and credit to our partners at CRISPR, We've thought about the commercial manufacturing of this therapy from the get go I mean that in terms of the process development I also mean that in terms of the actual.

Manufacturing sites, it's fundamentally the same process that we are using in the clinical trial space that is what we will be using in the commercial space and it's actually the exact same manufacturing sites as well. So we feel really good about where we are with the commercial manufacturing.

Of CTX.

See textures are one and as I said in the Grand scheme of things, it's an easier challenge because it's ex vivo gene editing and it is cash nine and guide RNA and and that's it.

Got it thanks.

So I just wanted to clarify to see if there's any change to your assumptions there.

Yeah.

Alright, thank Louis our question.

Sure thing.

We have been having conversations, and we're really fortunate because we have every designation, offered by regulators on this side of the pond and the other that allow us to have frequent conversations with them. And so we've been having these conversations with MHRA, EMEA, and FDA for many months.

The topic of conversations have evolved, because over time we've settled out on the preclinical package, we've settled out on CMC and manufacturing and all of the other modules. The conversation with EMEA and MHRA towards the end, as we were concluding those discussions were on the same point as with FDA. And that was around number of patients in the filing, and duration of follow-up.

Yep go ahead, Mr. Wagner.

We have come to conclusion, we have reached agreement, and therefore I can say that we are on track and we fully expect to get our filing in towards the end of this year.

With regard to the FDA, we simply haven't hit that milestone yet that we have with MHRA and EMEA.

If it is a two-year requirement, how long does that push things out?

Yeah, I was just gonna say thank you to, everyone for tuning into the Q2 call tonight.

We simply haven't concluded our discussions, on the number of patients and the duration of follow-up.

I was just going to say, thank you to everyone for tuning into the Q2 call Tonight. If you have additional questions. Please reach out to the Investor Relations team who are available in the office. This evening Goodnight.

Does that push the timing out by a year or just help us out with that dynamic?

I do expect we will do so in the coming few weeks, and I'll look forward to updating you after that.

Thank you.

Great, thanks very much.

Yeah.

The next question will come from Harta Singh with Oppenheimer.

Michael, there were two questions in there, one about AMKD and one about Excel.

Please go ahead.

Let me just close out on Excel first.

If you have additional questions please reach out to the Investor Relations team who are available in the office this evening.

Great, thank you for the question, and also a really nice quarter.

As we were just discussing, we are going to have our meetings with the FDA to wrap up these discussions in the coming weeks, and so we're not going to need to speculate.

You know, not to, Reshma, to talk about, a little bit of a bad memory from a year, two years ago, but AATD looks like they're gonna be bringing a couple more molecules into the clinic this year.

We'll be able to update you on the specifics and give you a timeline in the near future.

And, you know, previously you had mentioned, that you're trying to increase the potency of these molecules and get them at higher concentrations into the tissue of interest.

With regard to AMKD, you know, the point that you make about the difficulty enrollment based on the patient population is a really good point.

So, you know, how are you thinking about that, you know, with the approach for these molecules in the clinic this year?

Good night.

While the AMKD population shares many similarities with CF, genetically driven disease, about 100,000 patients, and our approach to treating CF is by targeting the CFTR protein, the underlying cause of disease.

And then, you know, assuming you get them, into the clinic this year, when could we see a readout, you know, going forward?

The conference is now concluded.

It's the same thing with AMKD.

Here's what we're looking for.

And thanks for the question.

Thank you for attending today's presentation.

We're targeting the APOL1 protein.

Based on every piece of data that we have, including our HPE assays, which you know is not only qualitatively but quantitatively predictive of what we see in the clinic, we expect to see greater sweat chloride than even Trikafta.

Yeah, hey, good afternoon, Hartaaj.

You may now disconnect.

Where the big difference comes in is in diagnosis, disease awareness, and genotyping.

Based on the Phase II studies where we looked at sweat chloride and we looked at PPFEV1, we expect 121561 tez has the potential to be even greater than Trikafta.

With regard to the AATD program, AATD remains a disease of high interest and one that fits the Vertex strategy like a glove.

But recognizing this, we've inserted three initiatives into this Phase II-III program.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

And at the end of the day, what we are really looking for here is PPFEV1, sweat chloride levels, and of course, the safety profile.

I'm excited that the next wave of molecules, are about to enter the clinic and I do expect the IND for at least one to go in this year, but there are many molecules, more than one in this next wave.

The first is we're opening over 150 sites globally so that we have sites close to where the patients are, and simply many of them.

From what we see preclinically and clinically in those Phase II studies that I described, I expect that 121561 tez has the real potential to be superior, to Trikafta.

We have been able to dial up the potency.

Second, we have an observational study ongoing that's a genotyping study.

And remember, when we talk about that, the best readout of the function of CFTR modulators is on sweat chloride. That's the most direct readout, the PD readout, if you will.

The doses are low.

People who genotype in with two ApoL1 alleles are then eligible and could be enrolled in the randomized control trial.

And that has been consistently superior in HPE's Phase I and our Phase II studies.

I expect that we're going to fully explore the dose range, and I expect that we'll have results that we can talk about by next year.

And lastly, as you heard Stuart discuss, we're working with patient groups and physician groups and the community as a whole to raise awareness.

So the programs are progressing, and the opportunity here, Hartaaj, just to remind others, is to tackle both the lung and liver manifestations of this disease. That's why the small molecule approach, is so inviting to us and why we're so eager to pursue it.

I will point out, Michael, that the beauty of the Phase II-III study is we do everything up front. That is to say that the trial sites that will be the Phase III trial sites, they're all being opened up right now as part of the Phase II-III study.

All the other approaches out there, simply don't tackle both manifestations of disease and in my mind, therefore, are not transformative.

Thanks.

So that's really what we're looking for, and next year we should have results that we can all look at and evaluate.

Are you committed to giving data on the Phase II?

Thank you, Reshma.

Will you say anything or just move forward?

Thanks for the call.

Yes, sorry.

We have time for one more question and that will come from Brian Abrahams with RBC Capital Markets.

You had a question on the data.

Please go ahead.

When we are at the point of having selected our dose on the Phase II part, you should expect to hear from us.

Hey guys, thanks for squeezing me in.

Okay, thank you.

[music].

As you approach the filings, I'm curious where, you stand with respect to CTX-001 manufacturing and supply.

The next question will come from Phil Nadeau with Cowan.

I know you recently posted a bridging study.

Please go ahead.

I'm curious how that might help you ultimately expand manufacturing and scale up.

Hi, this is Liza on for Phil.

And then relatedly, where do you see the field with respect to next generation of conditioning regimens and how much would that be potentially helpful for expanding in that long-term opportunity?

Thanks so much for taking the question, and congrats on the progress.

Thanks.

I'm going to read just on 147.

Yeah, I'm going to ask Stuart to comment on the opportunity, the near-term opportunity with busulfan on the long term and I'll come back and tell you a little bit about manufacturing.

Potentially, could you give us an update on how you're thinking about potential baseline characteristics of the patients enrolled in the Phase II-III study, now that it's targeting the broader AMTKD population? Just curious how you're thinking about the potential differences in proteinuria and EGFR looking across the clinical spectrum of APOL1 nephrosis.

Yeah, so Brian, thanks for the question.

Yeah, I think the question is, how are we thinking about the patients who would enroll, and what do we think their baseline characteristics would be in this AMTKD population?

So across the U.S. and the EU, across sickle cell and TTT, we think there's approximately 150,000 patients who have sickle cell disease or beta thalassemia.

To reground, the unifying entry criteria for the Phase II-III study are really threefold in terms of the key criteria. The first is two APOL1 alleles, the second is a reduced renal function, and the third is proteinuria that's greater than 0.7 grams. So all patients in this study will have those key criteria.

Our initial launch is going to focus on those that have more severe disease, similar to the patients that are being included in the clinical trial, those that are likely to consider going through this treatment given the current busulfan conditioning regimen. We think that population is probably around 32,000 patients, about 25,000 of those are sickle cell disease patients and the majority of those are in the United States.

Now, of course, as you point out, there's going to be a spectrum of disease, and we fully expect patients to have diversity in terms of the range of proteinuria as well as the renal function.

So that's the initial launch population.

But the really important point is that this is a rather homogeneous population of two APOL1 alleles, proteinuria, and reduced kidney function.

In terms of what the opportunity could look like if we can get to a truly gentler conditioning regimen, which may turn this much more towards an outpatient procedure, Reshmer will comment on it technically, but in terms of opportunity we think that would significantly expand it beyond the 32,000, well into the 150,000 population, maybe not all the way there, but certainly expand it significantly.

Great, that's very helpful.

It would become a procedure that a significantly higher number of people would consider having.

Is there any chance that you'll release data from the observational study that you mentioned that you're enrolling just to get the genotyping data, et cetera?

And with regard to the manufacturing, you know, in the grand scheme of things this is an easier manufacturing challenge than other diseases that are being tackled with CRISPR-Cas9, for example, and I say that because this is ex vivo gene editing and in essence what we're talking about is a guide RNA and Cas9.

It's a great question.

The second point to make here is that, and credit to our partners at CRISPR, we've thought about the commercial manufacturing of this therapy from the get-go. I mean that in terms of the process development, I also mean that in terms of the actual manufacturing sites, it's fundamentally the same process that we are using in the clinical trial space, that is what we will be using in the commercial space, and it's actually the exact same manufacturing sites as well.

I'm sure the teams are planning to share that data.

So we feel really good about where we are with the commercial manufacturing of, CTX-001, and as I said in the grand scheme of things it's an easier challenge because it's ex vivo gene editing and it is Cas9 and guide RNA and that's it.

That study, because it is a very simple observational study that is genotyping people, is already well into the hundreds of patients that we have screened and enrolled.

Got it, thanks.

I'm sure the IR team can give you specifics offline.

All right, thank you.

Great.

Go ahead, Mr. Wagner.

Thank you so much.

I appreciate the cover.

The next question will come from Liisa Bayko with Evercore ISI.

Please go ahead.

Hi there.

I was wondering if you could give us any sense of what you're looking for in the, Skyline 102 and 103 studies specifically to be able to file on that.

What are the benchmarks and clinical meaningfulness that you're looking for?

Thank you.

Yeah, sure thing, Liisa.

So, the two Skyline studies and now the Ridgeline study, which is the, study of 121561 tezacaptor in the 6 to 11-year-olds, which is also ongoing.

Okay.

[music].