Vertex Pharmaceuticals Inc (VRTX) — Q3 2021 Earnings Call Transcript

Thanks, Michael. I'm very pleased to be here with you tonight to discuss Vertex's progress through the first three quarters of 2021. During this year, we've meaningfully increased our leadership in cystic fibrosis, both with our approved CFTR modulators and with the CF programs advancing in our pipeline. We have expanded and accelerated our R&D pipeline beyond CF. And these programs are now delivering clinical results. We have continued to demonstrate exceptional financial performance with significant growth in revenue, high operating margins, and increases in cash flow. Let me elaborate more on each of these 3 points. Starting with CF, from a commercial perspective, third quarter product revenues were $1.98 billion, representing almost 30% growth year-over-year. This growth was driven by the performance of TRIKAFTA in the U.S., including the launch in children ages 6 to 11 and strong uptake outside U.S., where KAFTRIO has been reimbursed, including most recently in France and Italy. Based on the strong performance, we are again increasing our revenue guidance and now expect total product revenues for 2021 to be between $7.4 billion and $7.5 billion. As we look forward, we expect that our CF business will continue to show robust growth in the years ahead, as there are approximately 30 thousand CF patients yet to be treated with our CFTR modulators. We've made important progress with our CF R&D pipeline programs this year as well. Based on strong preclinical and clinical results from our next in-class, triple combination regimen of VX-121, tezacaftor, and VX-561, we are demonstrating the potential for superior benefit to existing CFTR modulators. We've accelerated this program into pivotal studies. Both of the Phase 3 studies are head-to-head trials versus TRIKAFTA. Both studies are up and running and enrolling patients. and we're not stopping there. We have identified even more promising regimens in our labs building on 20 years of success, translating our proprietary insights in CF biology into groundbreaking medicines. We are confident that these regimens will allow us to reach our long-standing goal of bringing all CF patients to carrier levels of sweat chloride. For the approximately 10% of people with CF who cannot benefit from a CFTR modulator, we're working on genetic therapies, including an mRNA approach. We and our partner Moderna have for some time now been able to synthesize mRNA constructs that restore CFTR protein function in vitro. The biggest challenge for us and for everyone in the field has been delivery of the mRNA to the target cells. I am very pleased to report that we and Moderna have made a significant breakthrough in delivery this past year. We've now demonstrated that we can efficiently deliver full-length CFTR mRNA to human bronchial epithelial cells in vitro, to provide high levels of CFTR function and in vivo through the delivery of nebulized lipid nanoparticles to the bronchial epithelial cells in non-human primates. Based on these results, IND enabling studies for our CFTR mRNA therapy are already underway. And we plan to file an IND and start clinical development in 2022. To close out on CF, I will note that just a few months from now, we will mark the 10th anniversary of the first approval of KALYDECO, our first CFTR modulator. And last month marked 2 years since the U.S. approval for TRIKAFTA. From the Phase 3 clinical trials, our CF medicines have always been appreciated for their outstanding short-term benefits, not just significant increases in ppFEV1, but also decreases in pulmonary exacerbation, increases in weight, and improvements in quality of life. We now have tens of thousands of patient years of safety data and we could appreciate more fully the breadth of clinical benefit with analysis of longer-term, real-world data. What we find truly remarkable is that with KALYDECO, we now have data on an average of 6 years of follow-up in patients 6 years and older. This includes a 78% reduction in the mortality rate and an 89% reduction in the rate of lung transplantation compared to patients who were not eligible for treatment. With TRIKAFTA, we now have data showing no decline in lung function after 2 years of follow-up from the pivotal trials, which is a first for any CF medicine. I'd like to emphasize that from our perspective, it is these kinds of long-term data that ultimately determine physician and patient choice of regimens, particularly in CF, where patients use CFTR modulators chronically over a lifetime. Let me turn to our pipeline outside of CF. First to our type 1 diabetes programs and the unprecedented clinical data we recently shared. The pathophysiology of type 1 diabetes is well known. It results from the autoimmune destruction of pancreatic islet cells. Daily injections of insulin have saved the lives of these patients, but patients still suffer from severe long-term vascular complications of the disease, resulting in premature mortality and unfortunately, the treatment itself can lead to severe hyperglycemic episodes associated with unresponsive seizures and even death. Therefore, the Holy Grail for type 1 diabetes for decades has been to replace the damaged pancreatic islet cells and restore insulin production. Early clinical studies using cadaveric islets have demonstrated the curative potential of this approach. The problem has been producing sufficient quality and quantity of islet cells to treat the millions of people with this disease. Vertex has developed a proprietary process to make industrial quantities of allogeneic stem cell-derived, fully differentiated islet cells that could serve the more than 2.5 million patients with type 1 diabetes. The clinical data from this first patient treated in our VX-880 program with these cells are truly remarkable; with a single infusion at half the target dose combined with standard immunosuppression routinely used in transplantation, we observed substantial improvements across multiple measures of islet cell function that were rapid, robust, and durable through day 90. Our stem cell-derived islets produced basal levels of insulin and increased insulin secretion appropriately in response to glucose stimulation. In the 90 days following infusion, there was a significant reduction in blood glucose as measured by hemoglobin A1c, despite a 91% reduction in exogenous insulin requirements. On the safety side, VX-880 was generally well-tolerated. These cells are the product; the other common denominator across our type 1 diabetes programs. These results de-risk each of our 3 programs. In the first program, we are using standard pharmacologic immunosuppressants. In the next program, we're using our proprietary device for immunoprotecting these cells. The IND enabling studies for this program are already underway and we plan to file an IND in 2022. These same cells are the starting product for our gene editing program designed to produce hypo-immune islet cells that can evade the immune system. In selling gene therapies, it is clear that the curative potential of these approaches is very high. And therefore, these therapeutics have potentially rapid paths to registration involving a reasonable number of patients and a reasonable amount of follow-up. It is with this in mind that we're working with urgency on the VX-880 program. Moving onto CTX001. CTX001 is our non-viral ex vivo gene editing therapy designed as a one-time curative approach for sickle-cell disease and beta-thalassemia. It stands out as a clear example of how we have accelerated our pipeline in 2021. CTX001 is our most advanced program outside of CF and continues to have strong momentum. We've now fully enrolled the target number of patients in both the sickle-cell disease and beta-thalassemia clinical studies. Based on the clinical data we've presented to date, physician and patient interest in these trials has been high. We have additional patients beyond the target 45 in each trial who are now completing eligibility assessments and will be enrolled this month. We anticipate closing out our regulatory discussions in the near term and submitting regulatory filings for approval of CTX001 by year-end 2022, based on these clinical results. We have high confidence that CTX001 will be our next launched medicine. Stuart will comment on the progress of our commercial preparedness in his remarks. Onto VX-147, where we will have results from the Phase 2 proof-of-concept study this quarter. This Phase 2 study VX-147 is fully enrolled and focuses on patients with a form of FSGS mediated by APOL1. Our goal is to establish APOL1 inhibition as a new mechanism that can be used more broadly beyond FSGS in APOL1-mediated non-diabetic kidney disease. Based on the human genetics as a strongly validated target and the performance of VX-147 across a number of in vitro and in vivo assays, we see our APOL1-mediated kidney disease or AMKD program as having a high probability of success. Some of the preclinical data from this program are the subject of a presentation at the American Society of Nephrology meeting taking place later this week. In this Phase 2 study, we're assessing the safety of VX-147, and the key efficacy marker is the reduction of proteinuria. Proteinuria is the clinically relevant endpoint and one that regulators have expressed openness to accepting in a homogenous proteinuric kidney disease population. If our Phase 2 study in APOL1-mediated FSGS is successful, it would represent a first-in-class demonstration of proof-of-concept for an APOL1-mediated kidney disease and would propel us into pivotal development in the AMKD population, which includes but is not limited to FSGS. In total, this represents approximately 100,000 people with AMKD. I'll conclude the pipeline discussion with a few words on our pain program. We have high confidence in the NaV1.8 target for three main reasons: 1. NaV1.8 is genetically validated. 2. NaV1.8 is pharmacologically validated with our very own three positive Phase 2 proof-of-concept studies in acute, neuropathic, and musculoskeletal pain. And third, our lead molecule in the program, VX-548, has the key drug-like properties that we're looking for including high selectivity and potency. The two Phase 2 dose-ranging studies in acute pain, bunionectomy and abdominoplasty, with VX-548 are well underway. Based on enrollment progress, we currently expect data from these studies in Q1 of 2022. With that, I'll now turn it over to Stuart to review the commercial progress.

Thanks, Reshma. I'll begin by reviewing the Q3 revenue performance of our CF medicines, which reached nearly $2 billion in Q3. U.S. revenues were $1.38 billion, an increase of 13% compared to the prior year, driven by the performance of TRIKAFTA, including the launch in the 6- to 11-year-old population. The launch in the 6- to 11-year-old population is progressing rapidly, which is not surprising given the profile of the medicine and the recognition of the importance of early treatment of this relentlessly progressive disease. Outside the U.S., revenues were $601 million, an increase of more than 90% over the third quarter last year, driven by the ongoing launch of KAFTRIO in the 12+ population. In particular, KAFTRIO is off to a strong start in France and Italy, two major markets where we achieved reimbursement in June of this year. We also signed a letter of intent for public reimbursement of TRIKAFTA in patients 12 and over in Canada. Since then, we've achieved multiple provincial reimbursement agreements and some 90% of patients covered by government insurance now have reimbursement access to TRIKAFTA. We have achieved reimbursement agreements for KAFTRIO and TRIKAFTA in more than 20 countries outside the U.S. just over 1 year since approval. Importantly, we've continued to achieve reimbursement at levels that reflect the high value of the triple-combination regimen. As Reshma mentioned earlier, the profile of our CF medicines continues to be enhanced by long-term data. The North American CF Conference is tonight, and amongst several important abstracts, data from the ongoing, 192-week open-label extension study of TRIKAFTA will show there has been no loss of lung function during long-term follow-up. This is a first for any CFTR modulator to date, an important milestone for the field. All previous long-term data for our other medicines showed a slowing of lung function decline. In contrast, these data show no loss of lung function for patients on TRIKAFTA after 96 weeks of follow-up. Real-world data also being presented at the conference on KALYDECO show that with an average of 6 years of follow-up, there has been a 78% reduction in the mortality rate and an 89% reduction in the rate of lung transplantation compared to patients who were not eligible for the treatment. These data are very important for patients and the medical community because they more fully illustrate how our medicines address the long-term progression and complications of the disease. These data also have important implications for the future competitive landscape as they raise the bar in terms of what will be required to compete effectively. Now, turning to some of the other opportunities in our pipeline beyond CF. Our commercial experience in CF provides foundational capabilities which we will be able to leverage to commercialize our next wave of transformative medicines. As Reshma mentioned, regulatory submissions for CTX001 are planned for the end of 2022. Our launch preparation activities are well underway to ensure we are able to bring this potential medicine to patients globally immediately upon approval. We see CTX001 as a potential one-time curative approach for the approximately 32,000 patients with severe sickle-cell disease or transfusion-dependent beta thalassemia in the U.S. and Europe. We've developed a deep understanding of the sickle-cell and beta thalassemia markets, including where patients with these diseases are, and the role that key referral and treatment centers will play to facilitate the treatment journey for patients. Consistent with our internal market research, published physician surveys in the U.S. consistently indicate that they would expect a quarter to a third of their patients with sickle-cell disease to be good candidates for a one-time curative approach using the current conditioning regimen, which is in line with estimates of the number of patients with severe disease, approximately 25 thousand sickle-cell disease patients. We are focused on three key areas of launch preparation for CTX001. First, people. We've hired many of the key people who will support the launch. Second, manufacturing. This is an area we have focused on from the earliest days of our work on CTX001 to ensure we can supply our consistent and high-quality product to the large number of patients we believe will benefit from the medicine on day 1 of the launch. Importantly, we are using the same manufacturing sites and processes for commercialization that we are using for our clinical trials. And third, patients - making sure we really listen, understand them and their experience, so we can provide them at launch with the information, resources, and support they need as they consider treatment with CTX001. Now turning to pain. With our acute pain studies well underway, I thought I would remind you of the large market opportunity there. Acute pain accounts for 1.8 billion treatment days a year in the U.S. alone. And despite more than 90% of prescriptions being generic, this is still today a $4 billion market. That's typical branded pain medicine pricing of approximately $10 a day, and a new medicine that captures even a portion of the current treatment days has multi-billion-dollar potential. In light of the unprecedented data for VX-880, it's also worth highlighting the market opportunity in type 1 diabetes, which is very large. Type 1 diabetes is a disease affecting more than 2.5 million people in the U.S. and Europe alone. It is a severely debilitating and life-shortening disease in which, due to autoimmune destruction of pancreatic islet cells, the body produces little to no insulin. There are two patient populations to consider. First, those with severe enough diabetes for whom the benefit-risk profile is positive for the sales alone plus standard immunosuppressive therapy. And secondly, the broader population, who would be candidates for the cells encapsulated in our proprietary device or hyper-immune cells where immunosuppression would not be needed. There are at least 60,000 patients with type 1 diabetes in the U.S. and Europe who are potential candidates for the first approach with VX-880. This group is made up of people who have severe, difficult-to-control forms of type 1 diabetes, characterized by impaired awareness of hypoglycemia and severe hypoglycemic events that can be life-threatening. There are approximately 45,000 patients in this category. Then there are people with type 1 diabetes who have had previous organ transplants, primarily kidney, and thus are already on immunosuppression. There are about 15,000 patients in this category. Cadaveric islet and whole pancreas transplants are already performed, albeit in small numbers of these patients and give some sense of the value of this type of intervention in a patient with severe disease. For illustrative purposes, if you use the benchmark price in the U.S. for a pancreatic transplant of approximately $400,000 per patient, treating even a minority of the eligible patients would represent a multi-billion-dollar opportunity. Beyond VX-880, the cells plus the device program, which encapsulates the same cells for which we recently reported the unprecedented clinical data into our proprietary device that protects these cells from the immune system, could address the broader type 1 diabetes population of 2.6 million patients in the U.S. and Europe. In summary, I'm pleased with our continued progress in bringing our CF medicines to more patients around the world and excited about the many opportunities in our pipeline. And with that, I'll turn it over to Charlie.

Thanks, Stuart. In the third quarter of 2021, Vertex's long-term track record of strong revenue growth continued. Total product revenues were $1.98 billion, a 29% increase compared to the third quarter of 2020. Notably, TRIKAFTA represented nearly 80% of third quarter revenues as most eligible patients have switched to TRIKAFTA. Our third quarter revenues included $1.38 billion in the U.S. and $601 million outside the U.S. Ex-U.S. revenues for the quarter grew 92% over the prior year, driven by continued strong uptake for KAFTRIO. Our third quarter combined R&D and SG&A expenses were $561 million compared to $497 million for the third quarter of 2020, driven largely by investment in our clinical stage programs and our research pipeline. We expect our R&D investments will continue to be substantial as we advance our mid and late-stage programs and make further clinical and regulatory progress across the pipeline. Our continued growth in revenues combined with disciplined growth in OpEx translates to a year-to-date operating margin of 59%. And with our strong revenue and profitability, we ended the second quarter with $7 billion in cash. Now to guidance. We are again revising our 2021 guidance upward for total product revenues in the range of $7.4 billion to $7.5 billion. This increase reflects continued out-performance as well as the rapid uptake we have seen with new launches. Year-over-year, this guidance represents a 20% growth at the midpoint. As Stuart highlighted, the 6 to 11 launches in the U.S. and the uptake in France and Italy are proceeding very rapidly. Even with the outstanding growth in the number of patients treated this year, we have approximately 30,000 patients left to treat with our CFTR modulators. Given our proven track record of securing new reimbursement agreements in additional markets, executing successful launches, and expanding access to younger age groups, we are confident that we will be able to reach the vast majority of these patients with our medicines. We are maintaining our non-GAAP OpEx guidance for full-year 2021 at $2.25 to $2.3 billion. And for our non-GAAP tax rate, we continue to guide to a range of 21% to 22% this year. In conclusion, 2021 will be another year of rapid growth for Vertex and we're confident in our continued growth trajectory in CF and our ability to lead in this therapeutic area over the long term. TRIKAFTA is an exceptional medicine that sets a very high bar for efficacy and safety with IP that extends to the late 2030s. With the emerging profile of our next regimens beyond TRIKAFTA, as well as the progress we're making in genetic therapies for CF, we are well on our way to fulfilling our vision for achieving carrier levels in all CF patients. The VX-121, tezacaftor, and VX-561 regimen is the only regimen with clinical data that shows the potential to meet or exceed the performance of TRIKAFTA and is years ahead of any other regimens in development. Our pipeline beyond CF is both advancing and delivering. Progress with CTX001, and more recently, VX-880 continues to demonstrate the value we can create by investing in external innovation. We look forward to sharing additional data with you as ongoing trials come to completion in the coming months. We anticipate Phase 2 data for VX-147 in APOL1-mediated FSGS and Phase 2 data for VX-548 in acute pain in the near-term. With growing revenues and margins at the top of our peer group, we will deliver strong cash flows as we continue to reinvest in internal and external innovation to drive future growth. We're confident that the execution of our business strategy will continue to drive exceptional results for patients and the medical community, as well as for our shareholders. We will now open up the call to questions.

Good afternoon. Thanks for taking my questions. Two on the pipeline here. With regard to your collaboration with Moderna, I recognize that you're moving forward nicely with delivering mRNA via LNPs; could you just talk about where you stand with mRNA to explore the use of gene editing in lung cells? And then secondly, on the development plan in Type 1 diabetes, maybe you could touch base on the expanded collaboration with Arbor and how that fits into that outlook here.

Yes. Hey Salveen, this is Reshma. Two questions in there. One about the mRNA program with Moderna and another question, I think on type 1 diabetes, but specifically with regard to our collaboration with Arbor and how we're thinking about the hypo-immune cell programs. Let me break it up into two parts. And maybe I'll expand a little bit on type 1 diabetes even beyond the collaboration with Arbor. Let's start with Moderna. We are very excited about the recent breakthrough we made that I shared in my prepared remarks on the mRNA program for the last 10% of patients with CF who simply don't make any CFTR protein. When you step back and think about what you really need to do to make a breakthrough here, it's really about three things: it's about the HBE cells, it's about mRNA construct cells, and then for sure it's about delivery. And it's this last one, delivery, that's been a vexing problem for us in the field as a whole and that's really the exciting news for today. With regard to the HBE cells, these have been the workhorse for the four medicines that we have brought forward already. I say that because they're the only model that translates from the bench to the bedside. And it's not only qualitatively so but quantitatively so; it's these HBE cells that have also been the workhorse for the program with Moderna. The second is the mRNA construct itself; a number of years ago, we struck up a partnership with Moderna, arguably the best company in this space of mRNA. In all honesty, we have for some time been able to express full-length CFTR mRNA, the protein, and demonstrate its functionality. We've been able to do all that in vitro and in HBE. Over the last several months, what we have now been able to do is demonstrate that we can deliver, using nebulized LNPs, to the appropriate cells. So that is to say to bronchial epithelial cells and we've done this in small animals and large. We can see that we've delivered the mRNA construct to the bronchial epithelial cells. No one else has claimed to do this, and certainly, no one else has been able to do this. So that's the big advancement that allows us to go and start our GLP-enabling studies. Those are already underway and I do expect the IND to go in next year. On type 1 diabetes, Salveen, there are the cells themselves and then there are the mechanisms to cloak the cells. In the first program with VX-880, we use simple off-the-shelf pharmacologic immunosuppressants. In the second program itself, plus device, those IND studies are already underway; IND is next year. The third program is using these same cells, and for the cloaking, we use or plan to use gene editing, for example, to make hypo-immune cells. I'm going to ask Bastiano to comment just a little bit more on the hypo-immune program. Bastiano?

Absolutely. Thanks, Reshma. Thanks, Salveen for the question. As Reshma has said, the problem is actually the cell, the fully differentiated allogeneic beta cells. Healthy cells need to be cloaked from the immune system, which is a complex sensitive challenge in general, specifically to type 1 diabetes as it presents a higher complication because the type 1 diabetes is an autoimmune disease. So we have to cloak the cells from the general allogeneic attacks and from the autoimmunity. And, of course, it's fairly obvious that allogeneic rejection is something that has been worked on in the past two decades. And of course, knocking out MHC Class 1 and 2 is the usual place where most people will go, and we're doing that internally. All the mechanisms are being explored internally and through collaboration to ensure that we take care of both types of immunity: the allogeneic rejection and autoimmunity.

Great, thank you.

Hi, good morning or good afternoon. I have two questions. The first is regarding your announcement this quarter about moving your new CF program into Phase 3. I would like your comments on how distinctly it stands apart from Trikafta, especially considering there is a competitor with data coming out. How should we interpret your data presented in the press release? The second question relates to your earlier comments about M&A this year. Specifically, Rush Med mentioned opportunities in areas like Huntington's, and I would like you to revisit that perspective since you haven't addressed it as much in recent times as you did earlier this year and in prior quarters. Thank you.

Sure. Hey, Michael, good afternoon. Let's do the question first and then I'll come to capital allocation and M&A. We have obviously established ourselves as a leader in CF over the last decade plus. Over the recent few years, we've expanded that leadership first with TRIKAFTA that can serve up to 90% of people with CF. Then with the specific program that you're asking about VX-121/VX-561 Tez, which preclinically in these HBE cells, a model that translates from bench to bedside, have demonstrated the potential to have even better efficacy than TRIKAFTA. In the clinical program from the Phase 2 results that we shared earlier in the year, it looks like 121-561 Tez has the ability to provide even more benefit than TRIKAFTA. Make no mistake about it, TRIKAFTA set an incredibly high bar. It's an extraordinary medicine with a very high benefit-risk profile, but 121, frankly, is the competitor to TRIKAFTA. It's years ahead of anything else in the field. If I just stand back and look at this, Mike, we have the best medicine for CF today in the form of TRIKAFTA. We have the best medicine for CF tomorrow in the form of VX-121/VX-561 Tezacaftor. As I look long-term, when you really think about CF, it's a chronic disease; children are born with this disease. They're going to take medicine for a lifetime. Chronically, we are going to need long-term data. The kind of data that Stuart talked about in his prepared remarks. Mortality, lung transplantation, the rate of decline; and to be clear, the only company that has the short-term and the long-term data is Vertex. Regarding capital allocation, Charlie, I'll ask you to comment on that one.

Thanks, Reshma, and Mike, thanks for the question. Listen, it's very clear to us that innovation is the greatest driver of value in this industry. We have shown that in CF; that innovation leads to transformative medicines for serious diseases creates tremendous value for both patients and shareholders. We hope to do that in a number of other disease areas represented across our broad pipeline. When it comes to capital allocation, our primary focus is on reinvestment in innovation, both internally and externally. You can see in the numbers we've never invested more internally than we are today. You can also see in the pipeline the benefit of some of the smart external investments that we've made over the last couple of years. I would call out CRISPR and Semma specifically but there are many others. From a capital allocation standpoint, that reinvestment in innovation will continue to be the top priority. We have not commented specifically on types of deals because we're not looking for a certain type of deal. We are looking for tools, technologies, and assets that fit and are well-aligned with our research strategy, and as we identify those, you can expect that we'll continue to be disciplined and move quickly when we see an opportunity.

Thanks, guys.

Good evening. Thanks for taking our questions. Two from us, if that's okay. One commercial, one pipeline. On the commercial side, the growth quarter-over-quarter was pretty impressive. Could you give us some sense of where you think you are penetrating the 6- to 11-year-old in the U.S., and then those XUS markets that you highlighted like France, Italy, and Canada, and whether the type of growth that we've seen this quarter could continue into future quarters? Second on the pipeline and FSGS, as the date approaches, we're just curious to hear your most recent thoughts on what would be proof-of-concept for the molecule and what gives you confidence to go from the narrow FSGS population to the broader APOL1-mediated kidney disease population based on this initial data. Thank you.

Yeah. Hey, good afternoon, Phil. I'm going to ask Stuart to comment on the question around CF and how we see growth. And then I'll come back and tell you a little bit more about the FSGS program. Stuart?

Hey, Phil. Yes, thanks very much for the question. I'm enormously proud of our execution in this third quarter that led to the results you commented on and led us to increasing our revenue guidance today. It's hard to comment specifically on kind of quarter-on-quarter what our growth rates are going to be, but I'll give you a sense of where we are in our overall growth trajectory. As you said, we got the approval for the 6- to 11-year-old for TRIKAFTA in June, just prior to this quarter starting. We also secured new reimbursement agreements in important markets like Italy and France, and most recently Canada. The launches there are underway. What I can tell you is that the level of enthusiasm for the 6- to 11-year-old TRIKAFTA, here in the U.S. and overseas, KAFTRIO is exceptionally high in line with that. We've seen in every other market where we've launched TRIKAFTA, KAFTRIO. So, these launches are off to a strong start. We're still only treating about half of all the patients with CF who could benefit from medicines overall. Specifically, to CFTR modulators, there are about 30,000 patients yet to go in terms of patients who could benefit from our medicines. Now, you might ask yourself who are those patients? Well, those patients are patients in countries where we have reimbursement, where we're early in the launch sequence. Some of the markets I just described, there are countries where we have regulatory approvals but where we have yet to secure reimbursement agreements and they are in younger age groups, obviously 6- to 11-year-old. Outside the U.S., we don't yet have the approval and we're going to pursue approvals for TRIKAFTA KAFTRIO down to even younger age groups as we've done with KALYDECO and ORKAMBI. Given our track record in securing approvals, getting reimbursement, and successfully launching, I have no doubt that we're going to get to the vast majority of those 30,000 patients over the coming years, and I see substantial growth for our CF franchise between now and the middle of the next decade. As we announced today, we also made great progress with our mRNA program, which has the prospect of developing a medicine for the 10% of patients who don't respond to CFTR modulators. So, I think we've got substantial growth runway in CF.

Regarding the VX-147 program, I am very confident in the Phase 2 proof-of-concept study for three main reasons. Firstly, the human genetics related to APOL1-mediated kidney disease are robust. Patients suffering from kidney disease with proteinuria who possess two APOL1 alleles consistently experience poor outcomes, validating our target. Secondly, our in vitro and in vivo studies provide a strong portfolio of evidence, showing good potency, selectivity, and significant reductions in proteinuria. Thirdly, VX-147 possesses all the desirable drug-like properties we aim for. As a nephrologist, I find this opportunity exciting because in Phase 2, we are investigating APOL1-mediated FSGS, a particularly aggressive form of kidney disease affecting about 10,000 individuals. Additionally, there are around 100,000 people with APOL1-mediated primary proteinuric kidney disease. If the Phase 2 study shows positive results for FSGS, it would indicate that we have identified a small molecule that targets APOL1 and could serve as a therapy for the broader FSGS and AMKD market. For our success criteria, the Phase 2 studies focus on a very severe patient population suffering from APOL1-mediated FSGS with significant proteinuria, allowing stable dosages of standard care therapies. These patients are already being treated with ACE inhibitors, ARBs, immunosuppressives, and steroids. In such a patient group, achieving double-digit improvements in proteinuria would be remarkable, and while higher improvements are certainly preferable, even modest reductions would represent unprecedented progress.

That's perfect. Thanks for taking our questions.

Yes.

Hi guys, congrats on the quarter and thanks for taking my questions. We'd love to learn more about the mRNA program. I'm curious how translatable non-human primate lungs are to human CF lungs, especially given the mucus layer. Do you have any sense of what the half-life for the resonant time in the lung would be in terms of what type of frequency of administration one might look at a general range? And might you see any opportunity down the line for this to be usable, perhaps in combination for the other 90% of patients who don't have nonsense mutations, but with CF?

Brian, really important questions on the mRNA program and there's a few different questions in there, so let me parse it out. There's a question in there about the dose targeting it to the right cells and how translatable the model is and then there's another question in there about how do we think about the 90%? Okay. I'm going to be circumspect with my comments; the insights are commercially sensitive. But here's what I can tell you: we have been very, very diligent and deliberate about dosage and making sure that the mRNA, transcript, and protein expression are in the right cells. I would say that in drug development in this area, that's the most important part that many others have not gotten right and that's specifically why I talked about the HBE assays in vitro and the small and large animal studies and the targeting of the mRNA construct to the relevant cells, which are the bronchial epithelial cells. I feel very good about the dose selection, about the schedule of dosing, and about targeting these appropriate cells. Now, regarding the question about down the line, do we think this could be extended to the other 90%? I would actually look at it the other way, CF is a systemic disease; it's not only a lung disease. The real value of small molecule correction of the CFTR protein is that you get systemic benefit. In the setting of the last 10%, what I would contemplate is, if we are successful with our mRNA program when we are in the clinic next year, it's combining the mRNA with a small molecule. We are obviously the only ones who could do that, and I think the opportunity to bring benefit to the last 10% is therefore tremendous.

Thank you and good afternoon everyone. I wanted to follow up regarding CTX001 and build on the recent filing. I know we expect to gain more clarity in the upcoming months, but could you share your level of comfort with the regulatory aspects, particularly concerning any CMC requirements? We often encounter delays with cell and gene therapies in this area. Additionally, you mentioned having access to 32,000 patients across the U.S. and Europe. I’m curious about your confidence in the European market, especially since we recently saw Bluebird withdraw LentiGlobin for beta-thalassemia due to pricing disagreements. How confident are you in navigating this situation?

Cory, I'll start by providing more details about the regulatory process and address your specific question about factoring. We have the opportunity to lead with our CTX001 for both beta-thalassemia and sickle-cell disease, not only in Europe but also in other regions. Concerning the regulatory filings, we've benefited from multiple discussions with the agency due to these designations, which has allowed us to clarify several of their questions. We are finalizing discussions on two clinical points: the size of the database and the duration of follow-up. I anticipate we will conclude these discussions in the next couple of months, and I expect the filing to take place towards the end of next year.

Yeah. Cory, thanks for the question. I feel very confident in the team that we have on the ground in Europe and their ability to secure reimbursement and access for patients who have rare diseases. The transformative medicines, likely, I think may go to demonstrate the capability to capture and describe the unmet need in these types of conditions to gather and generate evidence on the both economic and clinical benefits of our medicines and translate those into value propositions that make sense to payers. We'll work creatively with payers to develop bespoke solutions country-by-country to secure reimbursement and access for our medicines. I think we've demonstrated that very, very successfully in CF and I'm looking forward to us being able to use those same capabilities to get access for patients with sickle cell disease and beta thalassemia in Europe.

Hi. Thanks for taking the question. I wanted to ask about CTX001. So, when you file at the end of next year, can you talk about for how much data and follow-up data you'll have on how many patients? And then I also want to ask just a commercial question as you're doing a lot of your commercial craft. Can you maybe describe how many patients per year can be treated in the U.S. kind of given the hospital environments and all that kind of stuff? So how should we think about what that will look like at the time of launch and how that may evolve over time?

Yes, sure thing. Let me ask Stuart to comment on how we see the CTX001 launch and the launch dynamics. Taking into account the question specifically about whether there are capacity constraints and such. I'll come back and tell you a little bit more about how we see the filings.

Yes. Thanks, Lisa, for the question. We see the highest level with the overall opportunity, and then I'll get to your question about the launch dynamics or our views on them at this early stage. In terms of people who have severe sickle-cell disease and beta-thalassemia, between the U.S. and the EU, we think there's about 32,000 patients who have severe disease in both those combined populations of sickle-cell and beta-thalassemia. In sickle-cell, it's about 25,000. Because of the nature of the disease, the vast majority of those are in the United States. That number is going to be validated by external physician surveys which would indicate that they think they would treat between 25% to a third of all of their sickle cell disease patients with a one-time curative approach with the existing conditioning regimen. So, we think that's about the order of magnitude of patients who might be eligible for this initial phase of a gene-editing curative treatment. In terms of launch dynamics, it's really going to be a function of probably four things. The first one is physician and patient interest in the technology. Based on the results that we've seen to-date and the enthusiasm we've seen in the field, particularly as it translates into interest in our clinical trials, we expect the enthusiasm from the community to be high. The second one is going to be our ability to manufacture. As you can imagine, we're working diligently on our manufacturing processes to make sure that we have capacity to treat patients. But the bottleneck will likely be in treatment centers. As you know, the treatment will be administered in transplant centers, which have a limited number in the U.S. and they also have competing priorities with malignant hematology conditions. This is likely to be the right limiting step. We are obviously in the initial throws of evaluating those treatment centers and working with them. We do think that demand will be very, very substantial amongst those 32,000 patients, given the unmet need and the results we've seen.

Regarding our filing and the dataset size, I want to remind you that we have received almost every regulatory designation available both in the U.S. and the EU, including ARMA, Orphan, and Prime. This has enabled us to engage with the agency and address many of their questions. We are nearing the end of those discussions, focusing on two main points: the required sample size and the duration of follow-up. I anticipate concluding these discussions in the next few months, and I expect to submit the filing towards the end of next year.

Hi guys, this is Olivia Brokaw on for Geoff. Thanks for the questions. I have got two follow-ups on the next-gen triplet program. First is, can you give us a better sense for when we might start to see those Phase 3 data on that, now that both of those trials are up and running, and whether there could be an opportunity for an earlier look at either or maybe both of those trials as we get into next year? I know you guys have talked about moving forward even more next-gen triplets at some point. So, are there specific areas where you're maybe more focused on when you think about the optimization or differentiation of those newer assets? Just as a follow-up to that, could there be some potential ways to accelerate development timelines once those agents move into the clinic?

Yeah. Hey, good afternoon. With regard to your questions, which really center around the next wave, whether it's VX-121, VX-561 Tezacaftor which is already in the clinic in Phase 3 clinical trials, or the molecules that we've identified in San Diego that are going to be coming into the clinic. How are we thinking about this? How quickly can we go? What's the overall goal? To be clear, the goal here is to bring all patients with cystic fibrosis to carrier levels of sweat chloride. That is our long-stated goal, and that is what we are aiming for. I feel really good about where we are with 121/561 Tez based on the pre-clinical results that I shared and the Phase 2 results that we shared earlier this year. The next wave of molecules looks like they can even be better. We are well on our path to bringing forward therapies that can bring all CF patients to carrier levels of sweat chloride. With regard to speed and how fast we can go, I don't think that anyone can go faster than us in cystic fibrosis for a couple of reasons. 1. We've demonstrated that we can do this very quickly. In TRIKAFTA, we went from the bench, from the first synthesis of the molecule to U.S. approval in less than four years. Outside of oncology, it's one of the fastest drug development programs ever. The second reason I say that we can move fast is we have a lot of experience in this; we've already done it with four medicines on the market, the fifth one being the 121, and VX-561. With regard to where we should expect results, the trials for TRIKAFTA, we enrolled in about six months. That's a benchmark for the last set of clinical trials we did. I expect this to continue to use what we know in our experience to move fast with the 121, VX-561 Tez approach and the molecules behind that.