Vertex Pharmaceuticals Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2023

There are 17 speakers on the call.

Operator

Note, this event is being recorded. I would now like to turn the conference over to Susie Lisa, Senior Vice President, Investor Relations. Please go ahead.

Speaker 1

Good evening, everyone. My name is Susie Lisa, and as the Senior Vice President of Investor Relations, it is my pleasure to welcome you to our Q2 2023 financial results conference call. On tonight's call making prepared remarks, we have Doctor. Reshma Kewalramani, Vertex's 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.

Speaker 1

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's marketed cystic fibrosis 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 that we will review on the call this evening are presented on a non GAAP basis.

Speaker 1

In addition, the impact of foreign exchange is presented inclusive of our foreign exchange risk management program. I'll now turn the call over to Reshma.

Speaker 2

Thanks, Susie. Good evening all and thank you for joining us on the call today. After a strong start to the year, we saw continued momentum Into the Q2 across all aspects of the company. Our CF business continues to grow and we are reaching more patients than ever. In the Q2, this expanded reach drove 14% global CF product revenue growth versus the prior year period.

Speaker 2

And with this first half performance, we are raising our full year 2023 CF product revenue guidance to a revised range Of $9,700,000,000 to $9,800,000,000 As we continue to deliver in CF, we're also investing for future commercial excellence Ahead of multiple potential near term launches. In exacel in both severe sickle cell disease and transfusion dependent beta thalassemia, Which we expect will be the first in our next wave of launches. In VX-five forty eight for acute pain, another multi $1,000,000,000 commercial opportunity And in our Vansacaftor triple combination therapy for cystic fibrosis, which provides the opportunity to further extend our leadership in CF. In addition to these four disease areas, our mid stage clinical pipeline continues to develop rapidly And marked progress towards our 5 launches in 5 years ago. Recent achievements include the VX-one hundred and forty seven or enaxyplyan pivotal trial remains on track to complete the Phase 2b portion of the study by the end of this year.

Speaker 2

In our Type 1 diabetes program, both VX-eight eighty, the naked cells and VX-two sixty four, the cells plus device programs are now in the clinic And dosing patients. Additionally, we announced a strategic long term manufacturing agreement with Lonza And finally, an accelerated timeline for the VX-five forty eight Phase 2 study in peripheral neuropathic pain, where we now expect the study to complete by the end of 2023. In total, we're advancing programs in 8 disease areas through mid and late stage development, 6 of which are now past the proof of concept stage As detailed on Slide 5, beyond our clinical pipeline, we're also advancing the next wave of research stage assets, Reflecting programs sourced from both internal and external innovation. This includes programs in Duchenne's muscular dystrophy, Myotonic dystrophy type 1, the NAV1.7 program for pain and gentler conditioning agents for use with exacel. In the CF franchise, in R and D and across the business, this quarter Vertex has continued to make meaningful advancements To bring our CFTR portfolio to more patients around the globe and bring additional 1st in class or best in class Potentially transformative medicines to multiple new disease areas.

Speaker 2

With that overview, I'll turn to the details of recent R and D progress, Starting with CF. While Trikafta delivers tremendous benefit for patients, if it's possible to do better, We're committed to being the ones who do so. And that is the goal for our next in class, Vansacaftor triple combination therapy. I'm pleased to share we expect to complete all 3 Phase 3 studies, SKYLINE 102103 In patients ages 12 years and above and the RIDGELINE study in patients ages 6 to 11 by the end of 2023 And release results from these three studies in early 'twenty four. We have high expectations from the vansacaftor triple program To lead to further improvements in CFTR function based on the totality of the evidence generated to date.

Speaker 2

The most direct readout of higher CFTR function is chloride transport in vitro and sweat chloride in patients. In vitro, our human bronchial epithelial cell assays with the Vansacaftor triple showed greater restoration of chloride transport Than with Trikafta. And in Phase 2 in patients, the Vansacafta triple clinical studies Should correspondingly lower levels of sweat chloride than in previous studies with Trikafta. We therefore believe the vansacaftor triple has the potential to provide patients with enhanced clinical benefit, The convenience of once daily dosing and additionally the VANZA triple carries a substantially lower royalty burden. Another important program in our CF portfolio is VX-five twenty two, our CFTR mRNA therapy in development with our partners at Moderna For the more than 5,000 CF patients who cannot benefit from CFTR modulators, we have enthusiasm for this approach for 3 key reasons Based on what we've achieved to date, first, the delivery of mRNA at high efficiency into HBE cells in vitro.

Speaker 2

2nd, expression of CFTR protein leading to high levels of chloride transport and third, Successful nebulized delivery of mRNA in both small and large animals resulting in expression of CFTR protein In the desired cells, we continue to enroll and dose CF patients in the single ascending dose or SAD study of VX-five twenty two. And we expect to complete the SAD portion and initiate the multiple ascending dose portion of the study this year. Turning now to ExaCell, our CRISPRCas9 based gene editing program for sickle cell disease and transfusion dependent beta thalassemia, Which targets the most severe patients and an estimated patient population of approximately 32,000. Exacel holds the promise To be a one time functional cure for these diseases. On the regulatory front, the FDA has accepted our filings and granted priority review in sickle cell disease with the December 8 PDUFA date, along with the standard review in beta thalassemia With the March 30, 2024 PDUFA date, the FDA has indicated an advisory committee will be held and we look forward to the opportunity to discuss the high unmet need, share results from the ExaCell studies And discuss the transformative potential ExaCell holds for patients.

Speaker 2

Outside the U. S, In the EU and the U. K, reviews for our ExaCell filings are also well underway. Our oral presentation at the most recent EHA meeting in June provided new data that were the basis of the EMA and MHRA regulatory filings. Both trials met the primary and key secondary endpoints with follow-up in some patients of more than 36 months.

Speaker 2

The Exacel EHA results continue to demonstrate transformative, consistent and durable benefit for patients As measured by freedom from severe vaso occlusive crises for 94% of SCD patients And transfusion independence in 89% of TDT patients. The safety profile was generally consistent with busulfan conditioning And bone marrow transplantation. Another significant opportunity for exacel is in younger patients And the pediatric trials in both sickle cell disease and beta thalassemia are underway. We have enrolled more than half The target number of patients in both pediatric studies and have dosed multiple patients. This is an important area of focus given the opportunity to intervene Earlier and potentially prevent organ damage and other complications before they ever occur.

Speaker 2

As the PDUFA dates approach in the U. S. And reviews come to conclusion in the U. K. And EU, we look forward to bringing this one time Potentially curative therapy to thousands of patients with severe sickle cell disease and transfusion dependent beta thalassemia.

Speaker 2

Turning next to our pain program and VX-five forty eight, our novel, highly selective NaV1.8 inhibitor That holds the promise of effective pain relief without the side effects or addictive properties of opioids. In Acupane, I am pleased to share that all 3 Phase 3 studies, 2 Randomized controlled trials and a single arm safety and efficacy study will complete by the end of this year With results available in late 2023 or early 2024. The pace of this Phase 3 program has been rapid, Which we see as indicative of the high unmet need and strong interest in an efficacious non opioid acute pain therapy. We have high confidence in the outlook for these Phase 3 studies given, 1, the genetic and pharmacologic validation of the target 2, multiple proof of concept trials with the predecessor molecule and with VX-five forty eight itself. And 3, the similar methodology, design and endpoints of our Phase 3 studies compared to the Phase 2 program.

Speaker 2

Closing on Acupane, recall that the Phase 3 program has been designed to support a broad, moderate to severe Acupane label, Which would enable prescribing and usage across multiple care settings, including in hospital or the ambulatory surgical center, post discharge And in the home. We are also studying VX-five forty eight in diabetic peripheral neuropathy or DPN, A type of peripheral neuropathic pain that represents yet another significant area of unmet need And another multi $1,000,000,000 market opportunity. We've previously delivered positive proof of concept data in peripheral neuropathic pain with the predecessor molecule VX-one hundred and fifty. The current study in DPN with VX-five forty eight is a 12 week Phase 2 dose ranging proof of concept study. I am pleased to share the timeline for this DPN study has accelerated And we have recently completed enrollment.

Speaker 2

This study will complete by the end of this year, and we expect to share results In late 2023 or early 2024. Moving now to Type 1 diabetes, where we're evaluating stem cell derived, Fully differentiated insulin producing islet cells for people with Type 1 diabetes. Our goal is to develop a functional cure For the millions of people living with Type 1 diabetes, including the more than 2,500,000 patients in North America and Europe alone. The VX-eight eighty program is our foundational cell therapy program for T1D, in which we have already demonstrated proof of concept. In the VX-eight eighty trial or the naked cell program, patients take standard immunosuppressants to protect the islets from the immune system.

Speaker 2

We presented updated clinical data on Parts A and B of the study at the recent American Diabetes Association meeting. The presentation at the ADA showed that all 6 patients treated with VX-eight eighty engrafted islet cells, produced endogenous insulin And had improved glycemic control while reducing or eliminating exogenous insulin use. Importantly, the 2 patients with at least 1 year follow-up saw a complete elimination of severe hypoglycemic events, maintained hemoglobin A1Cs below 7% And were insulin independent. Further, patients who were earlier on their course of therapy were on a Similar trajectory as the 2 patients with long term follow-up. Based on these results, the VX-eight eighty trial has now advanced to Part C, Where patients are treated concurrently at the full target dose.

Speaker 2

And as part of our global study plan, we've now opened clinical trial sites in Europe In addition to those already open in the U. S. And Canada. Our second program VX264, the cells less device program Encapsulates these same cells, which have already demonstrated proof of concept in a proprietary immunoprotective device And hence, there is no requirement for immunosuppressants. I am pleased to share that enrollment in the VX-two sixty four study Has initiated and we have already dosed the first patient.

Speaker 2

The 3rd program is our hypo immune program in which we edit The same fully differentiated cells to cloak them from the immune system. This represents another path To obviating the need for immunosuppressants. In March, we expanded our collaboration with CRISPR Therapeutics into Type 1 diabetes To use CRISPR Cas9 to make these edits and we continue to make progress in this research stage program. Transitioning now to enaxaplin or VX-one hundred and forty seven, the first potential medicine to target the underlying cause of APOL1 mediated kidney disease Or AMKD, a genetically defined disease that affects approximately 100,000 patients in the U. S.

Speaker 2

And Europe alone. Recall, the enaxypeline pivotal program for patients with AMKD is a single adaptive Phase twothree study With a pathway to accelerate approval in the U. S, the Phase 2b dose ranging portion of the study continues to enroll and dose And remains on track to complete this year. We also continue to work to enhance ANKD disease awareness And genetic testing availability to support diagnosis, including through partnerships with Natera, a leader in genetic testing And Arkana, a leader in renal pathology services. To close, an update on our Alpha-one antitrypsin deficiency or AATD program.

Speaker 2

Our small molecule approach targets both the lung and liver manifestations of this disease that affects an estimated 100,000 people in North America Our program is exploring 2 hypotheses. 1st, longer treatment duration with VX-eight sixty four and second, A more potent molecule with VX-six thirty four. The Phase 2 program for VX-eight sixty four, a 48 week study in patients with AATD That assesses both liver clearance of Z Polymer and functional plasma AAT levels is ongoing And is anticipated to complete enrollment later this year. VX-six thirty four, the next in class molecule with multifold greater potency And Better Drug like Properties is projected to complete its Phase 1 trial by the end of this year. Overall, the AATD program remains on track and we look forward to sharing results in 2024.

Speaker 2

With that, I'll turn it over to Stuart to provide a commercial update, including details on our launch preparations for Exacel. Thanks, Reshma.

Speaker 3

From a commercial perspective, we had strong second quarter results as we continue our focus on reaching all patients eligible for our CFTR modulators And maintaining high levels of adherence for patients treated with our medicines. In addition, we continue to prepare for multiple potential near term launches, Including Exacel in severe sickle cell disease and transfusion dependent beta thalassemia, VX-five forty eight in moderate to severe acute pain And the Vansacaftor triple combination in CF. At the same time, we are developing new capabilities to support the commercialization of other pipeline assets, Such as disease awareness for AMKD and investing in our manufacturing capabilities for Type 1 diabetes. Given our nearest term opportunity is exacel in hemoglobinopathies, where we have completed our regulatory filings in Europe and the U. S.

Speaker 3

And also been granted PDUFA dates in the U. S, this quarter I will focus my comments about our pipeline on pre launch activities for Exacel. But briefly first on CF. At the beginning of this year, there were more than 20,000 people with CF in North America, Europe and Australia Who could benefit, but were not yet being treated with a CFTR modulator. We continue to bring our medicines to these patients through new approvals and uptake following additional reimbursements with a focus on reaching younger patients and this will continue to be a driver of near term growth for our business.

Speaker 3

2nd quarter 2023 CF revenue growth of 14% was consistent with this outlook and was driven primarily by Following U. S. Trikafta approval in children ages 2 to 5 in late April, We've seen strong interest from the CF community with the first prescription written just hours after the approval and uptake across all eligible patients. Outside the U. S, CAF Trio growth has continued to be strong in patient ages 16 and older, following approval, reimbursement and Launches in multiple geographies.

Speaker 3

In addition, we received EU approval for ORKAMBI in children ages 1 to 2 in early July, And we continue to expect approval for CAF Trio in the EU in children ages 2 to 5 by the end of this year. We are also actively enrolling our CAF TRIO study in children ages 1 to 2. Overall, we see continued growth for our portfolio of CFTR modulators, Driven by approvals, reimbursement and uptake of our medicines in younger patients. In addition, approvals of future CF medicines will also drive growth. Notably, our next generation Vansacaftor triple seeks to provide improved efficacy for patients and a new treatment option for those who have discontinued Prior CFTR modulator therapy.

Speaker 3

And longer term, VX-five twenty two, our mRNA approach, Could offer a therapy for the more than 5,000 patients who cannot benefit from CFTR modulators. Shifting now to ExaCell, Which holds curative potential for patients with severe sickle cell disease and transfusion dependent beta thalassemia, both chronic diseases that can be disabling and life Shortening and have an extremely high burden of care. On previous quarterly earnings calls, I provided details for Exacel on the estimated eligible patient population, the geographic concentration of those patients and our proposed ATC network of 50 centers in the U. S. And 25 in Europe, The hiring and training of our field and medical education teams and insights from physician and patient market research.

Speaker 3

This quarter, I'd like to provide our perspective on access and reimbursement and our discussions globally with payers and policymakers. Our teams continue to make excellent progress in preapproval discussions with both government and commercial payers in the U. S. And Europe. With more than a dozen cell and gene therapies on the market, payers across different channels are increasingly experienced with these transformative types of therapies.

Speaker 3

In the U. S, approximately 65% of patients with sickle cell disease or beta thalassemia have coverage through government programs, With the majority via Medicaid and the remaining 35% of patients are covered by private insurance, our teams have already engaged Medicaid administrators in all 50 states With a particular focus on the 24 states with the highest prevalence of sickle cell disease, accounting for an estimated 90% of Medicaid patients with SCD. We're encouraged by the enthusiasm from state Medicaid administrators for Exacel, as well as the proactive steps they are taking To prepare for the availability of therapies like Exacel, including the enablement of separate payment policies for coverage of the cost of the therapy The Medicaid focused CMS cell and gene therapy access model Also continues to make progress towards its anticipated launch in 2026. The model is clear evidence of the federal government's recognition of the potential For state Medicaid programs. Shifting to commercial payers, we have had high levels of engagement with commercial payers, Including the top 4 payers that account for approximately 80% of commercial lives.

Speaker 3

And our goal is to facilitate Timely coverage decisions upon a potential ExSL approval. Our preapproval discussions have been encouraging and have focused on disease burden, Epidemiology estimates, our clinical data and potential payment models. In Europe, the MAA reviews are well under And thus, we are also working on paving the way to secure reimbursed access for patients in our targeted European markets. We have been engaging with health systems to educate them on the significant disease burden on patients, healthcare systems and society. In addition, we have been meeting with European Health Authorities to understand their interest in different payment models and to communicate the holistic value Given the urgent unmet need for new treatments for sickle cell disease and beta thalassemia, There is significant interest from patients and physicians, particularly in geographies with high concentrations of the eligible patient population.

Speaker 3

To conclude, it's a remarkable time to be at Vertex. We continue to make progress treating more CF patients, while our excitement for the transformative promise of Exacel for patients and the resulting multi $1,000,000,000 market opportunity continues to grow as we approach potential approval. We are also preparing for multiple additional near term launches, including the Vansacafta triple in CF and VX-five forty eight in acute pain, Both of which have the potential to dramatically improve patients' lives. I'll now turn the call over to Charlie

Speaker 4

to review the financials. Thanks, Stuart. Vertex's excellent results in the Q2 of 2023 demonstrate once again our Consistent strong performance and attractive growth profile. 2nd quarter 2023 revenue increased 14% year over year to 2,490,000,000 Growth was led by a 26% year over year increase outside the U. S.

Speaker 4

On continued strong uptake of Trikafta Captrio In markets with recently achieved reimbursement as well as label extensions in younger age groups. Similarly, expansion in younger age groups helped Drive 7% U. S. Revenue growth following the recent FDA approval of Trikafta in patients ages 2 to 5. 2nd quarter and first half revenues also benefited from increases in channel inventory in certain international markets, which are expected to draw down in the second half.

Speaker 4

2nd quarter 2023 combined non GAAP R and D acquired IP R and D and SG and A expenses were $1,040,000,000 Compared to $750,000,000 in the Q2 of 2022. Q2 2023 results include $110,000,000 of acquired PR and D charges compared to $62,000,000 of such charges in the Q2 of 2022. 2nd quarter 2023 iPR and D expense reflects $70,000,000 milestone to CRISPR Therapeutics for progress made in our hypoimmune program for Type 1 diabetes. Aside from our investments in external innovation and the resulting higher acquired IPR and D charges, operating expense growth was driven as by continued investment in research and our advancing pipeline, which includes mid and late stage clinical assets across 8 different disease areas. The most significant areas of increased investment versus prior year included the clinical studies for the Vansacafta triple in CF For VX-five forty eight in acute pain and for Type 1 diabetes.

Speaker 4

In addition, we continued our pre commercial activities for Exacel And other anticipated near term launches. Given the potentially transformative benefits to patients and multi $1,000,000,000 market opportunities for our mid and late stage programs, We will continue to invest appropriately. 2nd quarter 2023 non GAAP operating income was $1,150,000,000 Compared to $1,190,000,000 in the Q2 of 2022. 2nd quarter non GAAP earnings per share were $3.89 Representing 8% growth compared to $3.60 in the Q2 of 2022. We ended the quarter with $12,600,000,000 in cash and investments.

Speaker 4

Now switching to guidance. Given our strong first half results and our consistent execution, including the successful launch of Trikafta in patients ages 2 5 in the U. S, we are increasing our 2023 revenue guidance as detailed on Slide 16. For the full year 2023, We now expect CF net product revenue of $9,700,000,000 to $9,800,000,000 an increase of $100,000,000 to $150,000,000 Compared to our prior range of $9,550,000,000 to $9,700,000,000 Note that this revenue guidance includes an expected approximate 100 50 percentage point headwind to our revenue growth rate consistent with our prior expectations. In addition, given our December 8 U.

Speaker 4

S. PDUFA date for exocell in sickle cell disease, 2023 product revenue guidance continues to reflect revenue from cystic fibrosis products only. We are also raising our 2023 guidance for combined non GAAP R and D, acquired IP R and D and SG and A expenses to a range of $4,100,000,000 to $4,200,000,000 an increase of $200,000,000 from prior guidance. This increase reflects higher IPR and D expenses from new business development, including collaborations with Entrada in DM1 and with CRISPR in Type 1 diabetes. Our 2023 non GAAP operating expense guidance now includes approximately $500,000,000 of upfronts and milestones compared to the $300,000,000 projected at the start of the year.

Speaker 4

We continue to invest a majority of our operating expenses into R and D given the momentum in our multiple mid and late stage clinical development programs. We are also funding the expansion of our commercial capabilities in anticipation of the multibillion dollar opportunities represented by our programs With near term launch potential, while continuing to leverage an attractive business model afforded by our focus in specialty markets. Our guidance for projected full year 2023 non GAAP effective tax rate of 21% to 22% is unchanged. In closing, Vertex delivered excellent results for the Q2 of 2023. We delivered strong revenue growth, completed important regulatory milestones, Updated on significant clinical trial programs and invested internally and externally.

Speaker 4

As we continue to advance our programs in 2023, We anticipate further important milestones as highlighted on Slide 17 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 and A period.

Speaker 5

Thanks, Charlie. Gary, can you please queue the first question?

Operator

We will now begin the question and answer session. Our first question is from Phil Nadeau with Cowen and Company. Please go ahead.

Speaker 6

Good afternoon. Thanks for taking our questions. Just a couple on XSL. In the prepared remarks you mentioned or at least in the press release you mentioned that advisory committee is likely does Vertex have any sense of what is likely to be discussed or debated at the advisory committee? And then second for Stuart, thanks for all your comments on the commercial prep.

Speaker 6

We have seen gene and cell therapy launches get off to relatively slow starts of late With some not actually having patients dosed for 7 or so months after approval, what does Vertex learn from that? What could you do to Increase the speed at which patients are adopting XSL post approval. Thank you.

Speaker 5

Hey, good afternoon, Phil. This is Reshma. Let me take the first part of your And then I'll ask Stuart to comment on the commercial launch readiness. With regard to exacel, the FDA has Informed us that there will be an advisory committee. This is not unexpected as we've discussed in the past given the new Mechanism of action.

Speaker 5

We don't have further details. Those will be forthcoming. And I expect we'll know more as we approach the date of the AdCom, which we don't have today either. However, conventionally, the advisory committees usually take place about 1 to 2 months before the PDUFA date. So that's the general framework that we're looking at.

Speaker 5

We are very excited to have the opportunity to share our data, To talk about the benefit risk and to talk about the transformative potential and to have the patients' voices heard at the advisory committee. Let me Turn it over to Stuart to comment on launch readiness.

Speaker 7

Yes, Phil. So thanks for the question. Obviously, the first most important step To provide the conditions for a successful launch are going to be to secure access and reimbursement because as you know, without access and reimbursement, there really is no for patients to get treated, and that's why I focus my comments on that. And we are doing everything we can With payers, both in the U. S.

Speaker 7

And internationally, to try and get access and reimbursement as close to regulatory approval as we possibly can. Obviously, that's Entirely within our control, but that's what we're working on. In terms of the kind of uptake curve in the future, Obviously, that's going to depend on the interest from physicians and patients. We know that, that is very high. But I would remind you that as I've said on previous calls, we do expect the uptake with Exacel to be Slower obviously than we see with our CF medicines where the launches are almost vertical.

Speaker 7

And that's largely because, as you know, this is a multi month that a patient has to go through to get treated with Exacel. Obviously, they have to decide with their physician that they want to go through a gene therapy. They have to have their cells collected. The cells then have to be edited, returned to the site and then the patient has to schedule coming in for essentially the equivalent of a bone marrow transplant before they're actually dosed with the Exacel drug product. So it is a multi month process from And so that's why we've always said this launch, we do expect to be slightly slower in uptake rate than in cystic fibrosis.

Speaker 7

We continue to believe there's a lot of interest. It's a big market opportunity, and we see XSL as a multibillion dollar opportunity in the future.

Speaker 6

Great. One follow-up, if I may. On the reimbursement, we've seen warranty agreements put in place by 1 recent gene therapy launch. Is that something you're considering or you think would be helpful?

Speaker 7

Sorry, Phil, I didn't quite catch the question. Can you say it again?

Speaker 6

Yes. In terms of reimbursement in the structure Of reimbursement agreements, one recent gene therapy launch included a warranty as part of the reimbursement agreement. Is that something Vertex is considering or would think would be helpful for a launch like XSL?

Speaker 7

Yes. We are considering a range of different options, Phil, the reason for that is, if you ask one payer what they're looking for, you get one answer. If you ask another payer, you get another So I think much as we've done with cystic fibrosis, we're going to look to be flexible. There are some who are going to be interested in just a straight price And just paying upfront for the benefits for one time functional cures. Others are looking at more things like outcomes based So right now, we're in kind of listening mode and defining and designing what the nature of our payment models will be.

Speaker 7

But I think the key word is probably

Operator

The next question is from Lisa Bayko with Evercore

Speaker 8

Congratulations on the good quarter. I'm just wondering if you could give us a view on sort of the Data readouts for your Type 1 diabetes program, both the Cells and the Cells Plus pouch? Thanks.

Speaker 5

Sure thing. Lisa, with regard to the T1D program, on the VX-eight eighty side, that's So let's call it the naked cells program. You should expect to have a data readout at the fall diabetes conference, Where there will be an oral presentation. On the 2/64 program, that's the sales plus Device program, we've just initiated enrollment. We've just dosed, as you heard in my prepared remarks, the first patient.

Speaker 5

And you should expect to hear from us with regard to results from that Cells Plus device program, which does not require immunosuppressants Either when we've reached a milestone in terms of data readout or we have a decision to communicate. We won't be Sharing results patient by patient.

Speaker 8

Okay, fair enough. And then As you think about your kind of commercial path for pain, are you going to be focusing on certain types of centers? I mean, this could be obviously Very broad market and opportunity. How are you thinking about the rollout and where I'm curious on that kind of thing. The market estimates could be have a very wide range depending on how you think about it.

Speaker 8

Thanks.

Speaker 5

Sure. Lisa, you're right. We see this as an enormous opportunity. Let me ask Stuart to tell you how we plan To approach that opportunity. Stuart?

Speaker 7

Yes. So acute pain, obviously, which is going to be our first launch indication, Subject to the studies being positive, is 2 things can be true at the same time, Lisa, I'd say. One is acute pain therapies are concentrated in institutions, ambulatory surgical centers, settings like that, where patients are either Prescribed and dispense their acute pain medicine whilst they're in the institution or the facility. And then they're also prescribed and given on discharge for their ongoing pain management when they leave the facility. That accounts for a large percentage of the prescriptions in acute pain.

Speaker 7

Those prescriptions are concentrated in somewhere around just shy of 2,000 sites covered by about 220 or So IDNs, and that is going to be the primary focus of our commercialization activities. We think we can cover that universe Centers with a sales force approximately in the 150 range, which fits very nicely with our focus on specialty markets.

Speaker 8

Thanks.

Operator

Pardon me. At the request of management, could we please limit yourself to one question and if you have a follow-up, The next question is from Salveen Richter with Goldman Sachs. Please go ahead.

Speaker 9

Good afternoon. Thanks for taking my question. Just a follow-up on the acute pain program. Just Can you help us understand apart from upon a positive data outcome here and given the target Prescribers, you mentioned what needs to be done logistically to ensure a successful launch with regard to just The marketing aspect, whether there's kind of any understanding that needs to be played out with regard to Contracts and how the no pain law kind of falls into this, just any idea of how you can ensure this plays out well? Thank you.

Speaker 5

Sure. Salveen, I'll ask Stuart to comment.

Speaker 7

Yes, Salveen, thanks for the question. I think there's a couple of other things that are likely to be supportive VX-five forty eight in acute pain. One is, I think we are likely to see a number of the existing pain treatment guidelines Consider updates to their guidelines once there is the availability of a safe and effective non opioid medicine. In addition, and you mentioned one of them, I think we are increasingly going to see policies change their focus. The policies that have been put in place in states and hospitals over the last few years for understandable reasons have largely all have been about restricting Prescriptions restricting who can prescribe for which patient types for what length of time.

Speaker 7

I think we are beginning to see the focus of those policy initiatives Change to being supportive of non opioid pain medicines like VX-five forty eight. And I think That's a very welcome systemic change, which will potentially support the uptake of VX548 subsequent to it getting approved. So in addition to our own commercialization efforts, I think there's a number of other things which would be supportive of the launch.

Operator

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

Speaker 10

Hey, guys. Thanks for the question. Just had a follow-up on Exacel. I know you guys are focused today on regulatory and commercial as well. But when you think about the improved conditioning regimen, Wanted to know kind of what we should expect from that optimization of that.

Speaker 10

What are kind of the what does success Looked like I guess for that and what are the timelines I think that we'll see some data for?

Speaker 5

Sure. Jeff, as we think about the busulfan based conditioning regimen, which is what Exacel will launch with, We see that as having a positive benefit risk profile for the approximately 32 Gentleer conditioning, we see the opportunity to serve the full 150,000 people with sickle cell disease And beta thalassemia in Europe and the U. S. What this program looks like and we have an active set of programs internally. Our Partners at CRISPR are working on this problem.

Speaker 5

Other academia and biotechs are working on this problem. And so I do see this as a problem that will be solved. It's not a tomorrow solution, but I see this happening in the coming months years. What we see is the opportunity to have a conditioning regimen that very specifically targets the compartment and the cells That are limited to those hematopoietic stem cells sparing all of the other cells and in so doing not have the side effects of busulfan including the very significant cytopenias that you see with busulfan. So I do think that this is an area that we will see a solution for because we and others are working on it and because of the Broad application and I do think you'll see progress in the coming months and inner years.

Speaker 5

I don't mean decades.

Speaker 10

Thank you.

Operator

Our next question is from Robin Karnauskas with Truist Securities. Please go ahead.

Speaker 5

Hi, sorry for the noise. I'm on board a plane and we're departing. So the question is, what is the bar for neuropathic pain? I know your previous study with your previous drug kind of looks similar to Lyrica. Maybe you could set that for us.

Speaker 5

And second, We've done some due diligence in the chemo related peripheral neuropathy is a huge unmet need. I wanted to know whether you thought it might work in this population as well. Thanks. Yes. So Robin, the ball for neuropathic pain is to have a better Overall profile benefit risk taken together than existing therapies.

Speaker 5

As you know, the existing therapy has limitations in terms of efficacy, But there are also limitations on the safetyAE side. And the reason for that is what we use for neuropathic pain is Frankly, a recycled medicine that comes from fundamentally central nervous system depression That we are reusing for neuropathic pain because that's the best we have. So what we're going to be looking for is improvement in So has a Lyrica arm for context. So we'll be able to see the magnitude of the treatment effect as well as Lyrica on for context.

Operator

The next question is from David Risinger with Leerink Partners. Please go ahead.

Speaker 11

Yes. Thanks very much. I wanted to change gears please to your 2 AAT candidates. Could you frame the efficacy results to watch in 2020 For and potential timeline for those readouts next year? Thank you.

Speaker 5

Sure. David, I think you're asking about the AATD program and just to ground everyone on that one. This is our Program where we have 2 molecules VX-eight sixty four, which is in a Phase 2 study and VX-six 34, which is making its way through a Phase 1 study. Our excitement for this particular program and disease comes from the fact that it fits the Vertex Strategy like a glove. We are seeking to target both the liver and lung manifestations of this disease and our small molecule Approach is the only one that holds the potential to treat both liver and lung manifestations.

Speaker 5

And I do believe you need to treat both in order to have a transformative medicine. Our VX-eight sixty four study, which is in Phase 2, is a long term study. It's a 48 week study. And there we are looking at the impact of long term dosing on both functional AAT levels in the blood And clearance of liver polymer. You might recall that on a post hoc analysis of our VX-eight 864 Phase 2 data from a few years ago, we saw a 90 plus percent reduction in Serum Z polymer levels, which is why we're so interested in the liver polymer.

Speaker 5

And in the 634 study, we are going through our 1st in human studies. So I expect that we'll have all the results from both of these trials By sometime next year, so 2024, and I expect that we'll be able to share the results at that time. Exact timing, we're going to need to get A few more months under our belt to look at the enrollment dynamics, but I do expect we'll be sharing results by Sometime next year. So it's a 24 milestone.

Speaker 7

Thank you.

Operator

The next question is from Terence Flynn with Morgan Stanley. Please go ahead.

Speaker 12

Hi, thanks for taking the question. Stuart, you mentioned there were about 20,000 patients not on drug at the start of the year that could potentially be eligible. Just wondering where that Figure will end, assuming you achieve your new 2023 guidance. Thank you.

Speaker 7

Yes, Terrence. So we've kind of gone away over the last few years of kind of giving detailed sort of forensic accounting of All the different patient numbers. And so I'm not going to kind of give you an updated estimate at this time. But as Charlie said in his remarks and I said in mine, we've continued to make good progress in treating more patients, including in younger age groups Including in other countries where we've secured reimbursements and launches. But other than that, we're not going into more detail at this time.

Speaker 7

We may if there's a substantial change, we may update those numbers as we've done in the last couple of years or so At the beginning of next year when we talk about our guidance for the following year.

Operator

The next question is from Mohit Bansal with Wells Fargo. Please go ahead.

Speaker 13

Great. Thank you. Sorry for this. Just wanted to get some color on how do you so Zwesha, you talked about sweat chloride improvement with the VENSA CAFTER trial. Is there a correlation between the amount of Specteride, you reduced versus the SUV improvement.

Speaker 13

If I'm not mistaken, the improve the Specteride improvement was about 30% more than the Right. Casta combo, with this combo. So, just trying to understand how should we think about The bar for FEV that this new combo will set? Thank you.

Speaker 5

Yes. Mohit, I think you're talking about the Vansacaftor triple. That's our next in class regimen for CF. This is the program that's in Phase 3 and we expect to complete both studies in the 12 plus year old age group and the 6 Plus your age group this year with results from that pivotal program early next year. With regard to your question on sweat chlor and PPF EVO-one, yes, There is a very strong association between improvements in sweat chloride and improvements in lung function.

Speaker 5

And you can see that Across all of our previous CFTR modulators all the way from KALYDECO through ORKAMBI, SIM and Trikafta. So That relationship is strong. In terms of what you should expect from the Vansacaftor triple or let me put it another way, the reason we have Such high enthusiasm for the Vansacaptor triple. In the preclinical experiments, including the very important HBE assays, which have been not only Qualitatively predictive, but quantitatively so, the Vansacaftor triple, I know this is going to this is hard to believe in a tall order, But the Vansacaftor triple pre clinically is even better than Trikaftor in our HBE cells. And when we look across The Phase 2 studies that have been done, the Vansacafta triple has better sweat chloride than even Trikafta.

Speaker 5

It's hard to call make a call on PPFEV1 because in the Phase 2 studies, the sample sizes are obviously smaller and PPFEV1 is a more variable endpoint. So I think the right measure to look at is indeed sweat chloride and from all of the data we've collected, VANSA It's even better than Trikafta on that measurement of sweat chloride.

Speaker 14

Helpful. Thank you.

Operator

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

Speaker 15

Hey guys, thanks for the question. You announced that the chronic pain, neuropathic pain study Phase 2 was complete enrollment, so that's super exciting and the data gets this end of 'twenty three or early 'twenty four. Can you talk a little bit about, I guess, on one side, you feel confident because of the biology and the acute data was also quite strong and There's also some early chronic data as well as the last gen, but also I guess historically chronic pain studies can be challenging with placebos. Even with Vicodin and opioids, You can get mixed results. So I just wanted to maybe ask about your confidence around this probability success versus the acute study and how we should take this Study into consideration from an expectation standpoint, give us just a Page 2?

Speaker 15

Thanks, Reshma.

Speaker 5

Sure. My confidence level in the VX-five forty eight program Is equal for the acute pain studies in that Phase 3 program as it is For the diabetic peripheral neuropathy Phase 2 program. And you're right, that confidence comes from the Pharmacologic validation of the target, which we ourselves conducted with our predecessor molecule, BX-one hundred and fifty And also the genetic validation of the 1.8 target. With regard to a double click on what you could expect from both The acute pain program is 2 randomized clinical trials in the same bunionectomy abdominoplasty, those are 2 of the RCTs and the third is a single arm safety and efficacy study to allow a broad moderate severe acute pain label in the various settings that Stuart described in terms of use. And I expect that those results will be available late this And the goal there is, gosh, if we see what we saw in Phase 2 for VX-five forty eight Acute Pain, that would be a home run.

Speaker 5

So the diabetic peripheral neuropathy program, this is a multiple dose, dose ranging proof of concept study, Where we also have a gabapentin arm for context. So what you should be looking for there is Improvements in the pain score from baseline to the 12 week time point when we have the pain Endpoint and you'll be able to make assessments versus the gabapentin arm that's in there for context. That study is fully enrolled and should also be available in terms of results late this year, early next.

Speaker 15

Thank you.

Operator

The next question is from Evan Seagraman with BMO Capital Markets. Please go ahead.

Speaker 6

Hi, guys. Thank you so

Speaker 16

much for taking my question. Kind of a follow-up to Mohit's question on the Vanda triple. Can you talk about what the added benefit of the Vanda triple needs to be versus Kathy, to get patients to switch. You also mentioned getting patients to levels of carrier levels of sweat chloride. Could you ever get to a wild type Level of sweat chloride?

Speaker 16

Thank you.

Speaker 5

Yes. Let me take the second half of your question, Evan, and then I'll turn it over to Stuart To talk through how we're seeing the commercial opportunity for the Vans at Triple. So when you look at Parents, so carriers of the CF mutation, but those who don't have disease. When you are at those carrier levels of sweat chloride, you have virtually no manifestation of disease. That's why we're targeting Carrier levels of sweat chloride, you're fundamentally just like you and me.

Speaker 5

I don't I'm not a carrier and I'm not a patient with CF. But If you are a carrier of CF, you are fundamentally unaffected. That's That's why that's the highest bar to achieve and that's why that's the bar we continue to chase. The Tri ACTA triple get some patients there, the Vansacaftor triple will get more patients there, but our research continues and we've already identified Additional potentiators and correctors that will get us to that ultimate goal of carrier levels of sweat chloride. Stuart?

Speaker 7

Yes. So in terms of the sort

Speaker 13

of uptake

Speaker 7

and what's attractive at the profile, we know from speaking with CF clinicians that if Vanzakastar has the sort of profile that Reshma described earlier where it's delivering increased levels of benefit In terms of CFTR function as measured through sweat chloride, that in and of itself will be an attractive proposition because as Reshma said, The link between increases in CFTR function and improvements in outcomes has been demonstrated through our own work. In addition, you were talking about patients potentially transitioning. I do think there's an important group we should also consider, which is There have been a number of patients who over the years have discontinued their CFTR modulators. It's probably somewhere north of 6 1,000 patients who we know want to be on a CFTR modulator, but have had to discontinue over the years. And I do think that's another population who will welcome treatment option being available.

Operator

The next question is from Collin Bristow with UBS.

Speaker 14

Congrats on the quarter. Maybe one of the CRISPR based DMD program, are you still on track to Well, the IND is in the second half. And then assuming all goes to plan, would it be reasonable to expect Some clinical data in 2024. And then maybe if I could just have a quick follow on to the vantacastatriptystin. Just What do you think you need

Speaker 13

to see for this to be

Speaker 14

a launch that is as a major component of Switchers versus just a new patient

Speaker 5

Colin, I think there are 2 separate questions in there. One about the Vansa Triple And what do we need to see and then one on DMD. Let me tackle the DMD, DM1 question, I'll come back to Vansa. On the DMD question, I'm going to broaden it out to muscular dystrophies as a whole and I'll talk about DMD And DM1, we have programs in DMD that are going through IND enabling studies now as well As in DM1, we actually have multiple programs in DM1. The lead program is the one that we in license from ENTRATA And that program also is already in IND enabling studies and both of them should have those results in the second half of twenty twenty three And our timing remains to file the IND for both DMD and for DM1 for the Lead program in DM1 in the second half of this year.

Speaker 5

With regard to the Vanta program, I think Stuart just What we're looking to see and the way the study is designed is vanzacaftor in the Phase 3 program head to head versus Trikaftor And the primary endpoint is sweat chloride. And the reason for that is, again, with patients who with Carriers, those with who have 1 CF gene, they have Virtually no manifestations of disease and that is measured assessed by sweat chloride Carrier level is a description of sweat chloride levels. So that's what we're measuring. We are of course going to have PPFEV1 in there. And as Stuart If the profile is, as I described it to be, improvement on sweat chloride levels, We expect it to have real value to patients.

Speaker 5

I'll also add that the Vansacaftor Triple has a lower royalty burden than the Trikafta combination. Thanks, Rachma. Thanks, Colin. Gary, that

Operator

This concludes the question and answer session and the conference is also now concluded. Thank you for attending today's presentation. You may now disconnect.

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Earnings Conference Call
Vertex Pharmaceuticals Q2 2023
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