Q1 2023 Vertex Pharmaceuticals Inc Earnings Call

Good day and welcome to the vertex Pharmaceuticals first quarter 2023 conference call all participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the Star T followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note. This event is being recorded I would now like to turn the conference over to Ms. Susie.

Lisa Please go ahead.

Good evening, all my name is Susie Lisa and as the senior Vice President of Investor Relations. It is my pleasure to welcome you to our first quarter 2023 financial results Conference call.

On tonight's call, making prepared remarks, we have Dr. Ray Smoky, while Romani vertex as CEO and President Stuart Arbuckle, Chief operating Officer, and Charlie Wagner, Chief Financial Officer, we recommend that you access the webcast slides as you listen to this call. 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 limitation. Those regarding vertex is marketed cystic fibrosis medicines, our pipeline and vertex is future financial performance are based on management's current assumptions.

Actual outcomes and events could differ materially.

I'd also note that select financial results and guidance that we will review on the call. This evening are presented on a non-GAAP basis. In addition, the impact of foreign exchange is presented inclusive of our foreign exchange risk management program I will now turn the call over to Rachel.

Thanks, Susie good evening, all and thank you for joining us on the call. Today. We're pleased to have opened with a strong start to 2023 as first quarter Global CF product revenues grew 13% versus the first quarter of 2022. In addition, we completed the extra sell U S. Rolling BLA.

Submissions for sickle cell disease, and beta thalassemia and secured U S approval for <unk> in patients two to five years of age now is an especially exciting time at vertex because within our five launches in five years or five and five goal, we see multiple programs with near term.

Launch potential, including extra salt in sickle cell disease, and transfusion dependent beta thalassemia, the vans, a captive triple in CF and VX five four rate for acute pain in total we now have programs in eight disease areas in mid and late stage development six of which are past the proof.

From concept stage as depicted on slide five with this breadth of compelling opportunities. We're investing accordingly to drive continued pipeline success clinical trial progress and the buildout of commercialization capabilities.

In addition, beyond the eight disease areas already in the clinic. The next wave of innovation is advancing through preclinical development, including programs in Duchenne muscular dystrophy, My Atonic dystrophy type one NAV, one seven for pain and gentler conditioning agents for use with extra south with a unique.

<unk> strong and durable CF franchise multiple near term commercial opportunities a broad and rapidly advancing pipeline, our strong balance sheet and an exceptionally talented and committed team vertex has never been as well positioned to deliver for patients and shareholders for years.

To come with that overview I'll turn to the details of recent R&D progress starting with C F.

Our next in class banter captor Triple combination has completed enrollment and it's two phase III clinical trials in patients ages, 12 years and above known as Skyline, 102, and 103 and its progressing well enrollment in patients ages six to 11 known as the Ridge line study is also advancing rapidly we can.

She knew to anticipate the completion of the Skyline studies by the end of this year and I'm pleased to share. We now project. The completion of the Ridge line study at approximately the same time as the Skyline studies.

Recognizing the very high bar set by try copter, we have high expectations for the vans. The captor Triple program based on the totality of the evidence generated to date and as was recently reported in lancet respiratory medicine pre clinically our H B E assays, which have consistently proven to have robust.

Ventilation from the bench into the clinic showed greater restoration of chloride transport with the vans. The captor Triple then with <unk> in the phase II clinical program. The vans the captor Triple drove greater C. F T our function and correspondingly lower levels of sweat chloride than it has.

It been seen with Pi Kafka as such we believe the Vance captor Triple has the potential for enhanced clinical benefit along with the convenience of once daily dosing. In addition, we expect the vans a triple to carry a substantially lower royalty burden.

Another important study in our CF portfolio pertains to VX five two to our C. F. T. R. M. RNA therapy that we're developing in partnership with Madonna for the more than 5000, CF patients who cannot benefit from CF GR modulators, we have initiated the single ascending dose or sad study of VX five two.

Two and are actively enrolling and dosing CF patients, we anticipate completing the sad portion of the study and initiating the multiple sending dose portion of the study this year.

Turning now to extra cell or gene editing program for severe sickle cell disease, and transfusion dependent beta thalassemia axis sell holds the potential to be the first CRISPR based gene editing treatment to be approved as well as the promise to be a one time functional cure for these dizzy.

Jesus. This is our most advanced program outside of CF, and we expect ex the cell to be our next commercial launch.

Our prior guidance, we completed our BLA submissions for both sickle cell disease and T. D. T. In the U S. At the end of last quarter, we now await acceptance of our filings and assignment of the Paducah date. Our filings include request for priority review, which if granted will result in an eight month review.

By F D. A from the time of submission.

Internationally as previously announced both the EMA and M. HRA have validated our extra salt MAA submissions and those filings are under review.

We see a significant opportunity for extra South Stewart will comment further on the market opportunity and our launch preparations in just a few minutes.

Turning next to our pain program and VX five four rate our novel highly selective Nab 1.8 inhibitor that holds the promise of effective pain relief without the side effects or addictive properties of opioids, we have confidence in the outlook for this program given one NAV 1.8 is it.

Genetically and pharmacologically validated target too we have multiple positive proof of concept results with our predecessor, Nab 1.8 inhibitor VX 150 across acute neuropathic and musculoskeletal pain and with VX five four at itself in acute pain.

And three our phase III program with VX 548 in acute pain is substantially similar to the positive phase two trials. We have already concluded VX 548 has been granted fast track and breakthrough therapy designations for acute pain in the U S. We initiated pivotal development.

Last year and enrollment and dosing across the three phase III studies continued to progress nicely. These studies have been designed to support our goal of a broad moderate to severe acute pain label that would enable prescribing and usage across multiple care settings, including at the site of <unk>.

Care post discharge and in the home.

We continue to anticipate completing the acute pain phase III pivotal program toward the end of this year or beginning of next creating another potentially significant and near term commercial opportunity. In addition, we continue to enroll and dose patients in a 12 week phase two dose ranging proof of.

Study of VX 548 in diabetic peripheral neuropathy, a form of peripheral neuropathic pain I'm pleased to share. We also anticipate completing this phase two study towards the end of this year or beginning of next.

Transitioning now to enact a plan or VX 147, the first potential medicine to target the underlying cause of April one mediated kidney disease or a M. K D. In March we were very pleased with the publication of the phase two results for <unk> in the New England Journal of Medicine Importantly, the paper was accompanied by an.

<unk> and a feature on the science behind the study we see this coverage in the New England Journal of Medicine as underscoring the importance of the Enoxaparin data and the medicines potential the phase <unk> dose ranging portion of the global Phase II three pivotal study remains on track to complete this year.

Recall. This study is a preplanned interim analysis at 48 weeks of treatment, which if positive could serve as the basis to seek accelerated approval in the U S.

With the Max the plan, we see the potential to bring a first in class treatment to the approximately 100000 patients with a M. P. D. In the U S and Europe and unlock a multibillion dollar market opportunity movie.

Moving now to type one diabetes, there are more than two and a half million people with type one diabetes in North America, and Europe alone and we are committed to delivering a transformative if not cured of medicine for this disease. We have three programs in our type one diabetes portfolio all of which use the same fully differentiated.

Insulin producing islet cells, which have already demonstrated proof of concept.

Our first program or VX eight a D. The naked cell program uses standard immunosuppressive to protect the islet cells from the immune system.

I am pleased to share that both part a and part B of the study are now fully enrolled and dosed in both portions of the study dosing of patients with staggered with part a patients receiving half dose in part b patients receiving the full target dose the <unk>.

Next step in the program is part C in which patients will be treated concurrently with the full target dose.

This should facilitate faster timelines, we look forward to sharing VX 880 data for more patients and with longer duration of follow up at medical Congresses. This year, including the a D. A scientific sessions in June our second program, VX 264, or the south plus device.

Graham Encapsulates these same cells in a proprietary device that is designed to shield the cells from the body's immune system and hence there is no requirement for immunosuppressants, both the I N D. In the U S and the Cta in Canada have cleared site activation and study initiation activities.

Are underway in both the U S and Canada, and we look forward to enrolling and dosing patients in this phase one two study in the near term.

Third our hyper immune program in which we added the same cells to cloak them from the immune system. This would represent another path to obviating the need for immuno suppressive in March we expanded our collaboration with CRISPR therapeutics into type one diabetes and this new licensing agreement will enable.

Will us to use CRISPR Cas nine to edit the cells. This research stage program continues to make progress lastly, also in the tier one the portfolio. The via site V. C. T X 211, hypo immune program using Avaya site cell line remains on track. This program is.

Finished enrollment and dosing in group one of the phase one two study.

Let me conclude with our Alpha one antitrypsin deficiency or a a T D program, which continues to enroll both the phase two study for VX 864, and the phase one study for VX six three for the Phase two program for VX 864 is a 48 week study in patients with.

A a T D that will assess both liver clearance of Z polymer and serum functional a a T levels. This study's projected to complete enrollment later this year the phase one healthy volunteer study of VX six three for the next in class molecule with multi fold greater potency.

And better drug like properties is projected to complete this year with that I'll now turn over the call to Stewart.

Thanks Krishna.

From a commercial perspective, our focus continues to be to reach all patients eligible for our C. F D. Our modulators and maintain high levels of adherence among patients already on therapy, while also preparing for potential near term launches for extra so VX five four H in acute pain and the venza capped a triple combination in C F.

I'll first review, our CF first quarter commercial results and then the longer term outlook for our CF portfolio. I will then comment on the extra cell opportunity and our launch preparations given that we have now completed our regulatory filings in the U S Europe and the U K.

We had a strong first quarter with growth predominantly driven by bringing our medicines to younger patients, including Tri CAFTA in children Ages six to 11 in the U S plus Europe , and Canada, and we remain confident in the growth outlook for 2023.

Last week as expected we received FDA approval for Tri catheter in the U S for children ages, two to five years, which adds approximately 900, new patients who for the first time, we will have a treatment to address the underlying cause of their disease.

Turning to the longer term outlook, we see continued growth in C. F. Beyond 2023 is retro mentioned at the beginning of this year there were more than 20000 people in North America, Europe , Australia, and New Zealand with CF, who could benefit, but we're not yet being treated with our approved medicines.

Beyond the key growth driver of reaching younger patients through new approvals. We also continue to make progress in securing additional reimbursements. This includes multiple agreements spanning all CF portfolio for younger patients in Europe , and most recently also Australia and New Zealand are.

A second driver of CF product growth is the compelling portfolio of real world outcomes studies, including model data, which validate the positive outlook for long term growth in the overall CF population due to improved survival model data related to projected survival and long term health outcomes were recently.

Published in the journal of cystic fibrosis and include a 33 and a half year increase in median projected survival with trike after therapy versus the standard of care.

The third growth driver for our CF portfolio will be on next generation vans, a catheter triple which provides an opportunity to bring a new and potentially improved treatment option to patients, including those who have discontinued therapy with our other medicines.

We estimate that there are approximately 6000 patients who have discontinued one of our existing C. F T. Our modulators and longer term a fourth factor to help drive extended growth in our CF portfolio is VX 522, which is designed to provide mrna therapy for more than 5000 patients who cannot benefit from <unk>.

F T or modulators.

Shifting now to X S L, which holds curative potential for patients with sickle cell disease, and transfusion dependent beta thalassemia with.

With the recent completion of our extra sell regulatory submissions in the U S Europe and U K. Our commercial teams are preparing for the potential approval and launch of this multibillion dollar opportunity.

Sickle cell disease, and transfusion dependent beta thalassemia are neither silent no undiagnosed diseases.

Our initial launch will focus on the approximately 32000, most severe patients in the U S and Europe .

These patients had been sick their entire lives with a chronic often disabling disease that carries a high burden of care.

They could soon have the opportunity for a potential lifetime cure.

Our launch preparations are informed by extensive market research and insight generation, including through direct engagement with patients providers and payers to understand their perceptions of gene therapy, and the potential uptake of a product like X S. L.

We are encouraged by the strong interest and enthusiasm shown by all stakeholders for a genetic therapy that could provide transformative benefit for patients.

Darting with patients the journey for someone to receive extra cell can be summarized in three key phases.

One the pretreatment period, where patients decide a genetic therapy is right for them and I referred to an authorized treatment center by the Hematologists and begin the cell collection process.

Two the manufacturing period, where a patient cells edited and become the X L drug product and three the treatment period, where a patient receives Milo ablative conditioning, then they're edited cells and is followed for successful and graph meant.

With providers, we've learned there was a clear recognition of the differences between various genetic therapy approaches and a strong preference for gene edited therapies like extra sell over gene insertion approaches using lentivirus.

Our market research suggests that approximately 70% of providers prefer a gene editing approach over other gene therapy mechanisms.

Our teams are focused on providing access to key support and systems for both patients and providers to ensure the best possible treatment experience.

Accordingly, we have made strong progress toward ensuring authorized treatment centers are administratively and logistically prepared to initiate the extra cell treatment journey for patients upon approval.

Approximately 50 U S centers are actively engaged in the process to become an a T. C. Located in those areas with the highest prevalence of patients. Similarly in all four key European markets, all twenty-five targeted a T. C sites are in process payers.

Payers are another important area of focus we are actively engaging with key commercial and government payers and policymakers in the U S and Europe .

First with regard to commercial payers in the U S. Our conversations are focused on the patient need and clinical profile of extra cell, including dramatic reductions in B O sees and hospitalizations for sickle cell disease patients.

And in transfusions for beta thalassemia patients.

We are confident that payers will recognize ex yourselves value in patient populations, where current lifetime cost of care can exceed $4 million.

We are working with insurers to ensure broad access for the approximately 35% of sickle cell disease, and transfusion dependent thalassemia patients who are commercially insured.

Now to government Payors.

Approximately 45% of severe sickle cell disease patients in the U S uninsured by Medicaid and thus we've also been working with state agencies to ensure Medicaid patients have broad access to extra cell.

We recognize that a critical element for adoption is ensuring a separate payment for the extra cell therapy. In addition to the reimbursement already in place for the transplant procedure costs.

Encouragingly, many states are already providing access to cell and gene therapies with separate payment policies for the procedure and the therapy and we continue to engage with state agencies around payment models ahead of the launch.

In addition in February of this year, the Barton administration demonstrated their commitment to ensuring access to cell and gene therapies like X or sell through the announcement of the CMS demonstration project called the cell and gene therapy or C. G T access model.

The C. G T access model will be administered through CMS is innovation center, which has a total budget of approximately $10 billion for the exploration and testing of novel delivery methods and approaches intended to accelerate and enhance broad Medicaid access for sickle cell disease patients the CGT access.

<unk> will over time facilitate this in two important ways by creating a pathway for state Medicaid agencies to delegated authority to CMS to coordinate and facilitate innovative payment models, including outcomes based agreements or Ob as with cell and gene therapy manufacturers like vertex and in it.

Dishing CMS has confirmed any outcomes based arrangement for inpatient therapies requires payment separate from the hospital inpatient bundle.

We view this C. G T access model as an important indicator of the understanding of the severity of these diseases and the need to provide broad access to potentially transformative therapies for these historically underserved patient populations. We are extremely excited about the potential for X L. Our first commercial launch outside of C.

Jeff in many years and look forward to updating you further on our launch preparation activities on future calls.

I'm also looking forward to updating you on our continued progress to discover develop and secure access to transformative medicines for all people living with CF I.

I will now turn the call over to Charlie to review the financials.

Thanks, Stuart vertex is results in the first quarter of 'twenty twenty-three demonstrate our consistent strong performance and attractive growth profile, regardless of macroeconomic conditions first quarter 2023 revenue increased 13% year over year to 2.37 billion.

Growth was led by a 33% year over year increase outside the U S. On continued strong uptake of Tri Captor Caf trio in markets with recently achieved reimbursement as well as label extensions in the younger age groups.

U S. CF revenue grew 3% year over year with ongoing consistent performance.

First quarter 2023 combined non-GAAP R&D acquired IP, R&D and SG&A expenses were 1.2 billion.

Compared to 687 million in the first quarter of 2022.

Q1, 2023 results include $347 million of acquired IP R&D charges compared to just 2 million of such charges in the first quarter of 2022.

First quarter 2023 IP R&D expenses resulted from several new collaborations, which augment our internal innovation efforts as detailed on slide 15, including collaborations with and try to therapeutics and D. M. One immunogen for gentler conditioning agents and the expansion of our relationship with CRISPR therapeutics into type one diabetes.

Aside from our investments in external innovation, and the resulting higher acquired IP R&D charges operating expense growth was driven as expected by continued investment in research and our advancing pipeline, which includes mid and late stage clinical assets across eight different disease areas. For example, these investments are directed towards clinical studies.

For the vans, a catheter triple in CF VX 548 in acute pain and type one diabetes as well as pre commercial build out activities for exit cell and other potential near term launches.

Given the potentially transformative benefit to patients and multibillion dollar market opportunities for our programs, we will continue to invest appropriately.

First quarter 2023, non-GAAP operating income was 902 million in the quarter compared to 1.17 billion in the first quarter of 2022.

First quarter adjusted earnings per share were $3.05. We ended the quarter with 11.5 billion in cash and investments as our cash flow generation and balance sheet remained very strong.

Now switching to guidance given our first quarter results and our consistent execution. There are no changes to our 2023 financial guidance as detailed on slide 16, we continue to expect product revenue guidance of 9.55 to 9.7 billion, representing 7% to 9% growth year over year note that this guidance.

To include unexpected approximate one and a half percentage point headwind to our revenue growth inclusive of our foreign exchange risk management program. As we mentioned in early February given our years of experience in CF, we have strong visibility to our 2023 revenue guidance range, which is inclusive of expected new approvals like the Tri catheter you.

S approval in patients ages, two to five and new reimbursement outside the U S. Note to that 2023 product revenue guidance continues to reflect revenue from cystic fibrosis products only exit sale is not included in guidance as potential approval and launch dates in the EU UK and U S are still to be determined.

We are also reiterating our 2023 guidance for combined non-GAAP R&D acquired IP R&D and SG&A expenses in the range of 3.9 to 4 billion or 2023 non-GAAP operating expense guidance now includes approximately $400 million of Upfronts and milestones from previously existing or <unk>.

Recently completed BD transactions versus the 300 million that was anticipated at the beginning of the year. Our operating expenses continued to be more than 70% allocated to R&D and are funding. The significant continued progress of our multiple mid and late stage clinical development programs. Additionally, we are funding the expansion of our commercialization.

Capabilities in anticipation of the multibillion dollar market opportunities represented by our programs with near term launch potential our guidance for projected full year 2023, non-GAAP effective tax rate of 21% to 22% is also unchanged in closing vertex performed exceptionally well in the first quarter.

2023 we delivered strong revenue growth invested internally and externally and accelerated programs across our diverse pipeline. We're also proud of our industry, leading culture of innovation that we believe will continue to drive long term success. A few highlights from our recently published corporate responsibility report are found on slide seven.

And as we continue to advance our programs in 'twenty twenty-three, we anticipate further important milestones as highlighted on slide 18 to Mark our continued progress in multiple disease areas. We look forward to updating you on our progress on future calls and I'll ask Susie to begin the Q&A period.

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.

And to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.

And the first question will come from Salve enriched <unk> with Goldman Sachs. Please go ahead.

Good afternoon. Thanks for taking my question with regard to the XFL launch you discussed that the three steps that need to occur for a patient to get treatment here could you just speak to the overall time that will be required in your mind after approval for a patient to actually be administered drug.

And then secondly on the the gene insertion competitor clearly has been doing work here and it's taken some time.

But they've done foundational payer work just wondering what the read through is from from all the work they've done to your launch progress as well.

And in the context of this on the R&D and SG&A front as we look to next year, how do we think about how that SG&A line might inflect in the context of not just this launch but also that the pain launch as well. Thank you.

Thanks, very much for the question I'm going to ask.

To talk about the XFL timeline and a little bit about the.

A launch start.

Yes, so sell in as I outlined in my prepared remarks. This is a relatively extended process that it takes multiple months.

I'm beginning to end as I said from the patient deciding with their physician.

Genetic approach is the one that they would like to undertake through low utilization in the 90 factoring then very very importantly is the the law, which is obviously the most important because that's when they are.

Used with their editing cell because of the nature of that lost at where the patient if they wanted to go model ablative conditioning, and therefore has a multi week stay in the hospital, while followed to see whether the.

Paul has engrafted before they all really hospital they have to schedule that into their lives and so that is a obviously a very significant undertaking or individual.

Of course, the payoff there is there a law.

Looking to get a a potential lifetime cure.

All of that multimodal.

So it is a multi maam.

Processes that last step, obviously being one that they need to schedule into there.

We then receive a lifetime of benefit.

So it does move.

What are we learning from the.

The marketplace more interaction with payers, we're incredibly encouraged by the reaction we've had from payers.

Their understanding of the severity of sickle cell disease, and transfusion dependent thalassemia and the very significant burden that it has on patients their families and of course, the broader health care system and the cost associated with that although we're very encouraged by the reaction to the product profile that extra sale has.

And how positive they appear to be working with us to try and ensure that there is as near as possible.

<unk> two.

The sale of close to possible post approval. So we're really very encouraged by the response from payers across the continuum commercial Payors and very importantly for this population both Medicaid and Medicare.

I think you had a question on the SG&A evolution I think that's probably our best handled by Charlie So Julian I'll take that one.

Yes.

Given that we've just reiterated our 2023 Opex guidance you can expect I'm not going to have much to comment on about 2024, I will say that.

The growth in Opex in 2023 of course is driven by the advancements in the pipeline, we've got multiple programs mid and late stage, including.

You that are very close to commercialization.

Even with that the majority over 70% of our Opex is invested in R&D.

Looking ahead as we have more programs moving towards commercialization you could see a little bit of a mix shift towards towards commercial spend but importantly, with our model of focusing on transformative medicines specialty populations, we'd always expected SG&A burden on the business would be quite low it gives us the ability to drive significant profit.

Ability overtime.

Thank you.

The next question will come from David.

Yes, thanks, very much and thank you for the updates.

So I was hoping you could talk about your vision for VX 548 in chronic pain. So obviously, you're studying it in D. P M, but specifically what I'm interested in is.

Assuming that you succeed in your phase two neuropathic pain trial, how might vertex pursue phase III development, how do you see the target product profile for the product and would you consider development and muscular skeletal pain as well. Thank you.

Sure.

Is that ratio.

If you take that one for you.

We see three distinct.

Areas for a drug like VX five four rate one is acute pain I'll put that aside for now and I'll come back to it and instead of seeing the chronic market as one market, we actually see this too.

The first being neuropathic pain, and the second being let's call it musculoskeletal pain.

In that chronic market, which we subdivide into to the our immediate area of interest and where we are already in phase two and the update on today's call is that we are now projecting the completion of that phase II proof of concept study by the end of this year early next we see that as a very substantial market.

And we're pursuing that first because one there is high unmet need to because it fits our commercialization model that is to say a specialty market I fully expect that VX 548, and NAV one eight inhibition in general will also be effective for.

Musculoskeletal pain, and I say that not based on conjecture, but rather because the predecessor molecule VX 150, we've already taken that into a form of musculoskeletal pain and it was positive there as well so the way I see our pain portfolio progressing is acute pain first.

We're already in phase III that program will be completed towards the end of this year beginning of Mac and I see that as the first pain opportunity in terms of the nearest to market.

The neuropathic pain program and I do expect that 548 will work in musculoskeletal pain, I don't see that as a vertex in disease because it requires a primary care outreach, but certainly if the medicine can help and I believe it will we'll find a way to get it to patients, but that won't be through a vertex commercialization enterprise.

Thank you.

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

Great. Thank you for taking my question, maybe a question on an extra sell one more question on that so.

I know that.

But when you talk to doctors they talk about you know maybe she'll opportunity would be five to 10000 patients.

A little bit worried about safety at this point early on.

The investment community is also little bit looking at it as a show me story. So could you help us understand what we are missing in terms of when you talk to payers and prescribers.

Sure. This is Greg I think your question's about extra selling what do we really see as the real potential.

<unk>.

This is a disease that has really no.

Therapy that can offer pure to potential full stop there.

No debate on that.

With regard to the potential of our medicine.

All of the data that we've shown to date show that this medicine has transformative if not curative potential and I'm going to ask.

I'm Stuart to comment and what we've heard from patients.

From payers and from stakeholders in general about their level of understanding and enthusiasm for this product and I'll also ask Stuart to remind what we see is the market size. What I'll say is that in the U S and Europe . There are 150000 people with sickle.

Fallon beta thalassemia.

As Duston said the.

With 30000 job those patients who are sort of the severe end of the spectrum essentially patients very similar to those that.

<unk> enrolled in our clinical trials. These are patients who are having multiple.

Ziv crises.

For sickle cell disease population and multiple transfusions, a year for those in the transfusion dependent thalassemia patient population. So these are patients whose lives are very very significantly impacted by the disease and it really impacts all aspects of their life impacts there are their loved ones.

That impacts their ability.

That's a work.

And they have a very very significant burden of disease and also a very significant burden of the health care system.

And the discussions that we've had with.

The patients payers and physician groups. The unmet need is very very clearly well understood. The potential for curative onetime therapies is very very much something that people are all looking forward I think with any new technology and with any new.

Thank you.

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

Afternoon, everyone. Thanks for the question.

I just have a couple Stuart on the vans the captor triple.

On your updated view as to differentiation, obviously beyond dosing just assuming that a patient is doing well on track with the argument would be the switch.

I think you've mentioned in the prepared remarks of patients have been have discontinued tried cap, though what's.

What's the logic and then may be responding to the new.

Triple.

Secondly, Charlie a ratio you guys have almost 12 billion in cash pretty good pipeline and no real urgent need for BD. So do we think about capital investments in areas that are probably need even more of a build out like gene or cell therapy, just curious about that.

Uses of cash going forward. Thanks.

Sure, Jeff Let me ask Stuart to tackle vans. The captor first and then I'll ask Charlie to comment on capital allocation Stuart Yeah, Hey, Jeff So badly Kathleen just.

A mind everybody on the call our goal in cystic fibrosis is to get as many people as possible the carrier levels of chloride transport as we can carry levels of sweat chloride pardon me as we can because we believe if we can do that we will essentially be able to prevent developing people as we know it today.

As you know tomorrow in vitro assays, but also for la clinical data with the advent of the camp. The Triple combination. We believe we can get to even higher levels than we've even been able to establish with dry gas, which as you know that's a very very high bar.

The study that we have ongoing both in 12 hospitals now six to 11.

And to do just that to compare Troy catheter with vans. The gap, obviously, we won't looking forward to seeing the data.

When those studies read out.

As you identified I think there's really going to be the two treatment opportunities for the vans the catheter triple combination the efficacy is superior.

Two what we see would like after I think it's going to be a really exciting new treatment option either of those people who are currently being treated with one of our existing CSD, our modulators or the patients who discontinued one of Aussie FTR modulators and I said in my prepared remarks.

Globally. There are about 6000 of those patients now now your question is when or why might they respond the advanced cancer. They haven't responded to our other medicines actually the major reason for discontinuation is not lack of efficacy.

Products are amazingly efficacious in just about every patient it tends to be.

So I do think it's going to be an attractive treatment option for people to consider who may have discontinued one of our previous C. F.

Dr. Modulators, so obviously the data will be.

Very influential to all of this we're looking forward to seeing that the studies are fully enrolled and ongoing.

Looking forward to seeing that data, but I do think then that has the potential to be an even better treatment option for many patients even for like afterwards.

And then just on capital allocation no change at all in our strategy or priorities tougher.

Our priority continues to be investment in innovation, both internally and externally.

You saw that we were active with BD in the first quarter, while it while it may be true that if you look back over the last 18 months or so we've done a number of.

Lastly, I guess I'm gonna be remiss to point out we.

We do have an ongoing share buyback program as well we've been at that for about five years or so and that program continues to be a part of our capital allocation strategy.

Great. Thank you guys.

The next question will come from Phil Nadeau with Cowen and company. Please go ahead.

Hi, good afternoon, thanks for taking our questions a few on VX five four <unk> coupon.

Can you talk a bit more about your target product profile what level.

<unk> do you want do you want to achieve with with how many side effects.

Maybe.

As a follow on to that could you discuss the target patient population, who would be the ideal.

Patients, who are non opioid option and how many procedures per year approximately does that patient group had thank you.

Sure let me comment.

The target product profile, a bit and then I'll ask Stuart to comment on the market size, both in terms of patient numbers and dollar potential.

So Phil you know if we could picture Lake. The result that we saw in phase two which you will recall.

It's substantially similar to what we're doing in phase three that is to say its study in abdominoplasty as a form of a soft tissue model and bunionectomy as a.

Form of a hard tissue pay model that would be a home run for us.

What I mean by that is efficacy.

Pain relief that is quick and durable.

A benefit risk profile that is quite attractive and by mechanism of action that is to say the way <unk> works is on the peripheral nerves nervous system not centrally no addictive potential that is.

Absolute homerun I'm going to ask Stuart.

Stewart to comment on market size in terms of dollars and patients Stuart yes. Thanks Krishna.

The study program that we've got this we've designed it presents his commentary only designed to secure for US a label for moderate to severe acute pain.

In contrast to a number of other relatively reasons.

Approvals in acute pain, which have been related to post surgical pain and linked to certain procedure. That's not the label with thinking that we are seeking a label of moderate to severe acute pain writ large could be post surgical and that's indeed, the nature of our studies, but that is not the label with <unk>. So we are not sizing the market based on.

The number of procedures or numbers of surgery as it is for the broad treatment.

Acute pain cannot be controlled with kind of standard N saves and things like that when you look at that market opportunity in the U S alone. It's roughly $1 5 billion treatment days of medicine are utilized.

And despite 90 plus percent of those prescriptions being generic therefore, very very cheap it is a $4 billion market in the U S alone today. So we see a very very significant commercial opportunity for VX four alright, if it has the profile of the rest of the squad.

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

Andrew Tye on for Michael Thanks for all the updates so I wanted to follow up on the acute and chronic pain studies. So the first question. We had is do you think acute pain should have read through to chronic pain and vice versa. And then second question for US is for your phase one.

Jeff program with Madonna, we understand this is a sad dataset coming up later this year.

But just curious when we can expect to see longer term mad data is it possible that could come out later this year or should we be ruling out that scenario. Thank you.

Sure. Let me take the mrna question first and I'll come back around to pain with regard to the program we have ongoing with Madonna that's the VX 522 program.

Is that program for the approximately last 5000 patients or so who simply can't benefit from see FTR modulators. It.

It is a sad mad program with the sad portion of it going on right now.

You know when we did Kalydeco and tractor for example, our patients used to tell us that they knew from the first day that they were on placebo or active therapy.

So I I can't rule out when we will know whether we have efficacy, but in terms of timelines and what you can plan for we expect to be done with the Fad. This year and we expect to be well into the mad. This here. So those are the timelines we're looking forward to.

With regard to the pain studies and what you could expect there.

I don't really see it.

Read through from acute to chronic neuropathic pain or vice versa. What I do see read through is from the phase two studies to phase three and I also see read through from the NAV. One eight class that is to say VX 150, which already showed efficacy in acute.

Neuropathic and musculoskeletal so as I look forward to the VX five four a pain study results and the X 548 dose ranging phase two neuropathic waned Neuropathic study result, that's where I'm looking to for precedence the phase III program in <unk>.

<unk> itself in acute pain, and the VX 150 program across the three pain types.

Very clear very helpful. Thank you.

Sure.

The next question will come from will Pickering with Bernstein. Please go ahead.

Hi, Thank you for taking my question another one on pain for the neuropathic pain study could you talk about reasons to be optimistic that this drug will compare favorably to existing treatment options based on your experience with VX 150.

And then very quickly on sickle cell in the CGT access model, how does the timeline for that program compared to the expected launch timeline for extra so thank you.

Sure.

The first question on how do we think about VX five four rate in neuropathic pain and what our expectation.

Shared with you earlier, when we were waiting on the acute pain phase II results I have high expectations for the X five for a program in general and that extends to neuropathic pain and the reasons for that are multi fold, but here are three reasons, one NAV 1.8 <unk>.

As a target has often been called the Holy Grail in the pain setting because pain signal go through the NAV one point a channel and that's how these signals are propagated. So they are central to their perception of pain that is for acute and that is the same.

For neuropathic to VX 150, the predecessor molecule already delivered positive proof of concept in neuropathic pain that study had patients that 150 study had patients with something called small fiber neuropathy and it also had patients with diabetic neuropathy that's.

The study we're doing now diabetic neuropathy and three the VX 548 molecule is multi fold more potent and has better drug like properties, which is why we went on to seek another molecule. Despite the success with $1 50, you put that altogether and that sort of gives you a sense for.

Why do we have a high expectations for this I think he had a second question on TVT, Let me ask Stuart to comment on that yes, we will sell them the CGT access model.

I would consider theres kind of complementary to our ongoing efforts with both government and commercial payers.

Secure access for <unk> close to approval as we as we possibly can.

The model has only just been announced.

And so that was going to take a while for that to be fleshed out and then and then implemented we're certainly not relying on that to be in place for a successful launch of <unk> as I said in my prepared remarks, we've been having extensive discussions with both government and commercial payers for.

The wall he months and will continue to see when post the approval of eggs to sell and so.

We are working with and we're not relying on the CGT access model for a successful one where I do think it is a signal of though is just how important.

Payers consider.

Yes.

Innovative therapies like excess ltvs traditionally underserved patient populations they dwarf the real.

Indicator of a groundswell of opinion that people want to get these transformative medicine agency.

And poorly treated in the past.

Thank you.

The next question will come from Jessica Fye with J P. Morgan. Please go ahead.

Hey, there good evening, thanks for taking my question.

Question on the ex factory.

It leaves a randomized phase III trials.

Have a primary analysis against placebo, but there's also an opioid comparator arm how do you think about the commercial implications.

You see it looks better or worse than the opioid arm.

Yeah.

Yes. This is very strong.

Youre right about the study design. It is a study that has a primary endpoint of VX 548 versus placebo just like the phase II study and there is a secondary endpoint.

With regard to the opioid comparator arm and you'll remember in the phase two study. We also had an opioid arm, but in the phase II program given the.

Reasonably.

Efficient study design it was not for comparison, but for context, but I will point you to the press release that we put out to give you. If you wanted to get a sense for what the magnitude of the treatment effect was and how it compares and I'll just say that it compares favorably of course it was not there for comparison, let me try.

And over to Stewart to comment on the commercial implications yes.

So Jessica if you offered people today, a medicine, which had opioid like efficacy, but without all of the associated baggage, including addictive potential.

I'd tell you that that is a very very attractive.

Treatment option for them to be considering.

If we were superior to opioid then clearly that would be additionally, beneficial and nothing that we would obviously be very pleased about however, I don't want to take away.

Anything other than opioid like efficacy without the baggage that is a very very attractive treatment option and I think that would be a very commercially successful.

Thanks, and if I could just sneak in a follow up are there any side effects that we should be keeping an eye out for with this mechanism as we approached the phase III readout.

Justice is very small.

If you look at the phase two data both in.

Dominant plasty and Bunionectomy.

The benefit risk profile looks very good and when you look specifically at safety and Tolerability. It compares.

Very very well to placebo, so a really good looking side effect profile.

Okay.

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

Hey, good afternoon, and congrats on the quarter and all the progress.

Maybe first on the pipeline and CRISPR based DMD therapy could you give us any more color on the progress of the R&D filing and.

Is it reasonable for us to expect any clinical data in 2024.

And then secondly, say 18, what should we expect to see in terms of patient numbers and cohort.

And then just a follow on from that with regards to two six for now the R&D is cleared could you give us any more color in terms of the materials or the design of the device. Thank you.

Sure.

Couple of questions in there, let me talk about the type one diabetes questions first and I'll come back around to DMD.

With regard to the type one diabetes portfolio at vertex, we really have sweep programs. The first is VX 880, that's the naked cell program that uses off the shelf immunosuppressive.

That's the program that has completed and I am very pleased to share completed part a and part B and that's the program, where we're going to share the results at multiple congresses through the year, starting with a D. A what you should expect there is.

The full cohort of part a and part B patients and you should expect that that is to say more patients worth of data than we previously shared and longer term data, including some patients that are out more than a year.

Those same cells. The VX 880 cells are the foundation for program, two which is the south plus device program and those same cells are the foundation for our program suite, which is the hyper immune program and that's really important because as you know there are two parts to this the first is having cells that are fully differentiated.

<unk> and insulin producing we've got back and the second is how to evade the immune system and acoustic floor program. We've made the immune system with a device.

I'm not going to share any more details than we have in the past, but I will say that it's a proprietary device.

That has a particular material geometry and structure that allow for oxygenation and nutrient transport as well as fencing of glucose and release of insulin without.

Worry of the immune system.

Into the cell and from what we've seen to date in large animal models and small.

No fibrosis.

And of course, the third is the cells.

With the edits so that the editor itself evade the immune system.

With regard to when we can see data from the X 264, we havent guided to that but we are very pleased with the clearance of the Cta and I N D and we expect the trial to start dosing patients in the near future with regard to the DMD program.

You'll recall that our approach is different than the approach being taken by many in the field that is to say our approach is grounded in human genetics.

And what we see is that if you have near full length or full length dystrophin, which is the goal of our program you have very mild version of the disease. There is no such human genetic validation for an approach using micro dystrophin, we're excited about.

The program it is and it's our IND, enabling studies and we are on track to complete those studies and get the IND filed towards the second half of this year.

Thanks Colin.

Declines, but when you wrap it up please.

Yes man that will conclude our question and answer session as well as our conference call for today.

A replay of today's event will be available shortly after the call concludes by dialing 1877344 75 to nine or 141 to 3170088 and you can use the replay access code 8384718.

Everyone have a great day.

Okay.

[music].