Good evening. Welcome to the Vertex Full Year And Fourth Quarter 2019 Financial Results Conference Call. This is Michael Partridge, Senior Vice President of Investor Relations for Vertex. Making prepared remarks on the call tonight, We have Doctor. Jeff Leiden, Chairman and CEO, Doctor Reshma Kewalramani, Chief Medical Officer, Stuart Arbuckle, Chief Commercial Officer and Charlie Wagner, Chief Financial Officer.
We recommend that you access the webcast slides on our website as you listen to this call. This conference 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 our filings with the Securities And Exchange Commission. These statements, including, without limitation, those regarding Vertex's marketed CF medicines, our pipeline, and Vertex's future financial performance are based on management's current assumptions. Actual outcomes and events could differ materially.
I will now turn the call over to Doctor. Jeff Leiden. Thanks, Michael. Good evening, everyone. We saw many investors and analysts at the JP Morgan Conference 2 weeks ago, so I'll spend just a few moments highlighting our 2019 Achieve in what we believe sets vertex apart for the future.
2019 was a truly remarkable year for vertex. All parts of our business met or exceeded the goals we set at the start of the year. And as a result, we are very well positioned to bring our CF medicines to many more people and to advance our broad pipeline approval of tricafida for patients twelve and older in October 5 months ahead of our PDUFA date was the most significant milestone to date in our efforts to bring new CF medicines to all people with this disease. Tricapha is a remarkable medicine that holds the potential to treat up to 9 percent of This clear interest in tricapha across all groups of eligible patients, and the early feedback from both patients and doctors is highly positive. Outside the US in 2019, we reached a number of key reimbursement agreements for our CF medicines that will allow many thousands of new patients to begin treatment with our CFTR modulators in countries, including England, France, Spain, Australia, and many others throughout 2020.
We are also making excellent progress advancing and broadening our pipeline beyond CF. As we enter 2020, we are now in the clinic with multiple new medicines and 5 diseases outside of CF. We continue to implement our strategy of advancing a portfolio of medicines into clinical development for each of the disease areas. Key programs include alpha-one antitrypsin deficiency. Our AAT program where we have multiple small molecule correctors in the clinic aimed at addressing the underlying cause of disease in both the liver and the lung.
Betathalassemia and sickle cell disease where we announced clinical data for 2 patients treated with CTX001, a one time CRISPR Cas9 ex vivo gene editing therapy, which suggests that we may be able to functionally cure these diseases. FSGS where our first small molecule aimed at halting the progression of the disease will move into phase 2 development in 2020. And type 1 diabetes where we are developing an autologous islet transplantation therapy with cells alone, and a second with a combination of cells and a device to correct I would cell function and potentially transform the treatment of this disease. Importantly, these pipeline programs now span multiple modalities, including small molecules where Vertex has excelled in the past, but also new approaches parties to manufacture and deliver transformational therapies for diseases that fit our strategy. We completed more transactions in 2019 than in the 4 prior years, including our acquisitions of Sema, with a leading cell therapy approach for Type 1 diabetes, and Axonics, the leader in gene editing for DMD And DM1.
In summary, 2019 was the culmination of almost a decade of focused execution against our strategy of discovering and developing transformative medicines for serious diseases in specialty areas, by focusing on validated targets and predictive biomarkers that will improve the probability of clinical Our strategy is playing out the company has never been stronger or better positioned for future success in CF and beyond. Let me now turn the call over to Reshma, who will talk in more detail about the year ahead.
Thanks, Jeff. Our 2019 progress has positioned us for continued growth in 2020. And for many years to come. We are focused on bringing our CF medicines to more people, advancing our pipeline and building financial strength to support continued investment in internal and external innovation. In 2020, we expect to gain approval for the triple combination in Europe in patients 12 years and older and to submit TRICAFTER for approval in the US for children ages six to eleven.
Beyond Cia, we are advancing multiple molecules in our pipeline through late preclinical and early clinical development and are now entering a period With our AAT program, we recently initiated a phase 2 proof of concept study of the small molecule corrector VX-eight fourteen in patients with 2 copies of the Z mutation and expect data from the study in 2020. In APOL-one mediated FSGS, we completed a phase 1 study of VX-one hundred and forty seven in late 2019 and expect to initiate an open label phase 2 proof of concept study in 2020. To evaluate the reduction Having established proof of concept data from NaV1.8 inhibition with VX-one hundred and fifty in multiple phase 2 studies, Our focus is now to find into clinical development and will be advancing an additional molecule into phase 1 development in the first half of twenty twenty. We have discontinued phase 1 development of VX-nine sixty one because it did not display an optimal PK and tolerability profile. Beyond our small molecule programs, we've made significant progress in building and progressing a portfolio of cell and genetic therapies in line with our research strategy, primarily through our business development activities.
We are highly encouraged by our recent clinical data for our CRISPR Cas9, ex vivo gene editing treatment, CTX001 for beta thalassemia and sickle cell disease. Both studies continue to enroll and we expect to provide additional data for this program in 2020. I'd also like to highlight our cell therapy approach for type 1 diabetes This program comes to us from our acquisition of Sema Therapeutics in October of 2019. The team of scientists at Sema have cracked the biology on both the production and scale up of fully mature islet cells and has developed a novel implantable device to protect these cells clinical development in late 2020 or early 2021. In summary, we've made outstanding progress in CF and multiple other diseases in 2019.
And I look forward to updating you on our progress over the coming months and years. I'll now turn the call over to Stewart.
Thanks, Reshma. I am pleased to review with you this evening our strong commercial performance for 2019. Our full year 2019 CF revenues were $4,000,000,000, up from $3,000,000,000 in 2018, which represents year over year growth of 32 percent. This growth in total revenues was driven primarily by the full year impact of the SYMDEKO launch in the US and Germany, label expansions for our CF medicines globally, and the early approval and launch of TRICAFTA in the US. The launch of TRICAFTA is off to a very strong start.
Our 4th quarter total CF product revenues were approximately $1,250,000,000, including TRICAFTA revenues of $420,000,000, making Tricafter already our top selling medicine. I would note that our 4th quarter revenues include, as expected, launch related stocking of approximately $100,000,000. Approximately 18,000 patients are eligible for TRICAFTER in the U. S. Which represents the largest patient population eligible for 1 of our CF medicines For 6000 of these people, this is the first time they have had a medicine to treat the underlying cause of their CF.
We are seeing strong interest from all groups of eligible patients, including new initiations as well as patients transitioning from our other CFTR moderators. Our commercial supply, market access, patient support, marketing, and field teams were ready for an early approval. And since October, these teams have been doing a phenomenal job with CF Centers and commercial and government payers. The centers and their multidisciplinary teams have done a remarkable job responding to the high patient demand. And while still early in the launch, we are on track to obtain broad reimbursement for Tricafeter in the US similar to what we have seen for our other CF medicines.
Together, these factors multiple reimbursement agreements in 2019 in key countries, which will enable many thousands of patients to initiate treatment with certain vertex medicines for the first time. While Tricafter will be the main driver of Vertex's revenue growth in 2020, we also expect an increase in international revenues based on more patients initiating treatment with our medicines outside the US. In summary, I am pleased that we are bringing our medicines to many more patients around the globe. And with that, I'll now turn the call over to Charlie. Thanks, Stewart.
I will provide additional remarks this evening regarding our 2019 financial results, and I will also discuss our 2020 financial guidance. All of the results and guidance I will discuss are non GAAP. As Stuart mentioned, we had 4th quarter total CF product revenues of approximately one point $25,000,000,000, a 45% increase compared to 2018. Our 4th quarter 2019 combined R and D and SG and A expenses were $496,000,000, including the operating expenses of Exonics And Sema, compared to $400,000,000 in the fourth quarter of 2018. The significant growth in revenues and disciplined spending in the fourth quarter resulted in operating income of $593,000,000, a 70% increase compared to the fourth quarter of 2018.
Net income for the fourth quarter of 2019 was $444,000,000 compared to 3 quarter of 2018. Our full year financial results reflect a similar story of strong revenue growth and disciplined spending resulting in exceptional operating income a 32% increase over full year 2018. Our 2019 combined R and D and SG and A expenses were 1,690,000,000, compared to $1,530,000,000 for 2018. Our full year operating income was $1,790,000,000 for 2019, compared to $1,110,000,000 for 2018, a year over year increase of more than 60%. As our profitability and cash internal innovation to create future medicines.
In 2019, we invested approximately $1,600,000,000 in external innovation through new acquisitions collaborations. Even with the significant BD activity, we ended the year with approximately $3,800,000,000 in cash and marketable securities. Compared to 3,200,000,000 at the end of 2018. As we look ahead to 2020 and beyond, we expect continued increases in cash flow to provide more flexibility Today, we're providing 2020 financial guidance for total CF product revenues as well as for combined non GAAP R and D and SG and A expenses and our anticipated effective have positioned Vertex for continued strong revenue growth in 2020. Our 2020 guidance for total CF product revenues is 5,100,000,000 to 5,300,000,000, which at the midpoint reflects approximately 30% growth over 2019.
I would note a few dynamics that are reflected in our 2020 guidance. As part of the strong launch of TRICAPTA that Stuart mentioned, We saw an expected launch related inventory build of approximately $100,000,000 in the 4th quarter that we do not expect to repeat in 2020. Also, as we move through 2020, as with all of our CFTR modulators, persistence and compliance dynamics will affect TRICAPTA revenues and therefore, our experience with our other CF medicines is factored into our guidance. Lastly, we expect gross to net adjustments of 13% to 14% for 2020. Focusing in on Q1 2020, we expect our revenues to be modestly higher than Q4 2019 revenues.
This reflects the impact of the 4th quarter inventory build as well as gross to net adjustments in the first quarter of each year that are generally higher relative to the previous quarter. We expect 2020 combined R and D and SG and A expenses of $1,950,000,000 to $2,000,000,000, The increase compared to 2019 is primarily driven by the launch of Tricapita globally and the expansion of our R and D pipeline into additional diseases. Our R and D expense growth includes increased investment to advance our programs in cell and genetic therapies, including type 1 diabetes and DMD. Now to tax guidance, where we expect our full year non GAAP tax rate to be 21% to 22%. The tax rate may fluctuate quarter to quarter with the highest rate occurring in the fourth quarter.
The vast majority of our tax provision will be non cash expense until we fully use our net operating losses. As Jeff noted, Vertex has a unique long term growth potential that is based on continued revenue growth in CF and an expanding pipeline. And with continued spending discipline, we expect operating margins, earnings and cash flow to continue to increase. Now back to Jeff for a few concluding comments.
Thanks, Charlie. As this is my last quarterly call as CEO, I hope you'll indulge me for a couple of minutes for some final comments. First, it has been a tremendous pleasure and honor to lead Vertex for the past 8 years. I always say that drug discovery and development is the ultimate team sport. None of our successes would have happened without several incredible teams.
First, I want to thank the entire Vertex team, including our senior leadership team, most of whom have been with me for the entire journey. I've never seen a stronger team in my 35 years in the industry, and I'm so proud and grateful for all of their work. The commitment of our outstanding senior leaders and employees to execute the Vertex strategy of serial innovation to deliver transformational medicines to patients and to grow the business is the driving force for our recent achievements and is also what will differentiate us and position us for long term success for the future. 2nd, I want to thank our Board of Directors and our investors for their constant support, encouragement, and advice. Even when I first became CEO and we were still losing several $100,000,000 a year, while trying to develop the 1st transformative CF medicines.
And finally, and most importantly, I want to thank the entire CF community, patients, families, and caregivers for their courage, their persistent encouragement and their enthusiastic participation in this amazing journey toward a cure for all patients with this devastating disease. I look forward to continuing to work with all of you as Executive Chairman to bring more transformative medicines to patients with serious diseases who are waiting. I will now
Our first question comes from Phil Nadeau with Cowen and Company. Your line is now open.
Good evening. Thanks for taking my question. Jeff, let me be the first congratulate you on all that you and the vertex team have achieved during your 8 years of, of the CEO tenure. It's really been quite something to watch. Then my question is just in terms of the numbers.
1st, Stuart, you mentioned really 3 buckets of TRIC AAFTA patients those transitioning from ORKAMBI and SYMDEKO new patients being added to therapy who had no option prior. And the new initiations may be among the whole lot hold outs of dropouts in other populations. Could you give us some sense of the dynamics in those 3 markets and of the $300,000,000 in end user demand? Where did that come from? Then second, just on the inventory, it seems like $100,000,000 of inventory is really just 2 to 3 weeks of inventory given the current run rate So to be clear in your comments, it's not that you expected inventory to come out of the channel during Q1.
It's just that there's no subsequent inventory build given that you're already at a kind of, average run rate for inventory in the channel? Thanks.
Yes, great. Phil, I'll take the question try capture uptake and then Charlie can talk to the inventory. So, as you know, we had a very strong launch there are a number of eligible patient populations. As you might tell from the strong launch, we have had a high level of interest from all patient groups and we've seen uptake in all of those patient groups, and we expect that to continue into 2020. And so to have the inventory question, I'll throw that over to Charlie.
Yes, Phil, to your question, the first of all, the inventory build in the 4th quarter was expected. And I'd say the magnitude of the build is probably even a little bit less than what you mentioned. But therefore, I think it's fair to say that that is a we commented that that's a build that won't repeat nor do we expect it to get drawn down significantly. Inventory around a couple of a day to a day or 2 on any given quarter, but that's about the right level.
That's very helpful. Thanks for my questions and congrats on the performance.
Our next question comes from Michael Yee with Jefferies. Your line is now open.
Thanks for the question. And again, congrats on a great result. And obviously, Jeff, you are moving and leaving them with a great position. I guess I just wanted to ask, Stu, you made some comments just now on where the buckets were. But maybe you could just characterize how you think about the swapping dynamic and was there parts of that number of swapping and how do you think what percent of swapping could happen throughout 2020, just so we can think about that?
And then maybe a question for Reshma. I mean, I know that there'll be a lot of focus on AAT next. I know you're giving a broad guidance on 2020. Can you just talk about the speed of that study? It's a short study.
What you're doing there and how fast we could get that data seems like a very broad timeline for 2020 data? Thank you so much.
Take of TRICAVR. As I said, we've seen interest across all of the patient groups and that includes those who are currently being treated with one of our existing CFTR modulators Over time, where we have overlapping labels given the superiority of the TRICAFSA profile, we expect the vast majority of patients who are eligible for TRICAFTA are going to switch to TRICAFTA. Exactly how long that process will take is hard to tell. Obviously, we're early in the launch. But in terms of the destination, the vast majority of those patients are going to transition to TRICAFTA.
Hi, Mike. With regard to the Alpha-one antitrypsin deficiency program. I think the one you're referring to is VX-eight fourteen. That's the one that's furthest ahead. It's the one we started, phase 2 proof of concept dose ranging, towards the very tail end of 2019.
So actually it's really very early days. We're just getting going with that study. I am expecting, that we'll have results from, the program in 2020, but it's just way too early to give you more color around that.
Okay. Thank you.
Our next question comes from Salveen Richter with Goldman Sachs. Your line is now open.
Thanks for taking my question. And then, Geoff, congrats on all that you've achieved at Firdapse. So firstly, could you just comment on how the 2019 Tricafka launch holding form the cadence of uptake during 2020. And then secondly, as we look to the pipeline, you know, any new thoughts around the requirements, for the regulatory pathway for alpha-one antitrypsin here, regarding the need for liver biopsy or not. And then secondly, with type 1 diabetes, what does a proof of concepts that you look like here?
Yes, Salveen, it's Stuart. I'll take the question on the, 2019 and impact on 2020. So obviously, given the results we've announced today off to a very, very strong start. Having said that, there are many patients we continue to need to get onto TRICAFTA. So we are expecting continued growth through 2020 in terms of adding patients.
And that's built into our guidance of $5,100,000,000 to $5,300,000,000. As Charlie said, one other factor to take into account, as you think about the cadence or the shape of those revenue is the impact of persistence and compliance and how that will impact revenues. It does have an impact, although as we seen with our other CFTR modulators, our expectation is that the levels of persistence and compliance will be high with TRICAFTA, particularly given the strong clinical profile. And then I think on the AAT and type 1, I think restaurant will take those. Sure.
So I mean, let me tell the diabetes question first and I'll take AATD second. So with regard to the diabetes program, that's the cell therapy program that we acquired through the Sema acquisition. So I mean the proof of concept I imagine to be something you can think And what I mean by that is we are going to be able to go into the clinic right into patients. It's not going to have a healthy volunteer step. And whether we I think the kind of endpoints you could expect are fairly straightforward ones, glucose levels hemoglobina1c.
Clearly hypoglycemic episodes on the safety side will be something that we're watching. But I think that kind of gives you a good sense for what we're going to be watching for. The other thing to mention is I think that you can, again, similar to beta cell and sickle cell, I anticipate that the proof of concept studies are going to be a reasonable size and a very reasonable duration. With regard to the AATD program, we have not had further regulatory interactions. And so, as I commented on before, I was impressed with the October 2019 FDA conference, what the agency indicated was that, they would work with each sponsor depending on their approach.
For what the regulatory enabling endpoint would be. And I anticipate that the key points that we would be looking for from this program that's ongoing is functional serum AAT levels. And as we think forward beyond that, we just need to get through the regulatory interactions. I will remind you, that the augmentation companies receive their approval based on AAT levels. That's just a data point to look at.
And the last thing I'll say is our approach is obviously very different than those, out there in that the small molecule corrector approach holds the opportunity to treat both the liver and lung manifestations. And so obviously we're going to be talking through what those liver manifestations and what those endpoints would look like as well.
Great. Thank you.
Thank you. Our next question comes from Paul Matteis with Stifel. Your line is now open.
Just one quick question on guidance. Even with considering inventories, when we just take your comments on 1Q, looks like you're already pretty close to annualizing at the full year number you outlined. And so we just wanted to get a better understanding of the dynamics that go into your guidance. Are you just being conservative or is there a reason that uptake is slow? And then just second quickly on the cell therapy program in diabetes, I was just curious how do you think about a realistic clinical goal for that program?
And do you feel like the bar for true commercial success is insulin independence or are there other ways we should think about a potential benefit Thanks so much.
Paul, this is Troy. I'll take the first question on guidance. And I would not characterize the guidance as conservative. I think it's it's appropriate given what we know about the TRICAPTA launch so far as well as the reimbursement agreements that we signed in the fourth quarter. Again, just to touch back on the inventory topic, it's tempting to look at the Q4 run rate and want to extrapolate from But if you take the $1,250,000,000 back out $100,000,000 for the inventory build, you're at $1,150,000,000 and so the guidance obviously implies significant growth over that.
And then again, as we touched on in the remarks, the impact of persistence and compliance is meaningful and will come into the revenues over the course of 2020. So once you factor those things in, we think that the guidance is absolutely appropriate. And candidly, when you think about the $5,200,000,000 number at the midpoint, so $1,200,000,000 increase year over year, a 30% growth rate it sets us up for another very strong year.
Paul, I'll take the question on the cell therapies program and type 1 diabetes. So if you think about the current approach to type 1 diabetes and whether you think about insulin just injection or you think about closed loop systems or you think about really anything that's available there what you realize is in these over 1,000,000 people who have this disease, neither is the glucose control particularly good whether you look at glucose or hemoglobin A1C, nor is it particularly safe on the other side. And that's the to speak to the hypoglycemic episodes. Then if you look at cadaveric transplants, that actually shows that people who have cadaveric transplants, islet cell transplants, they do very well in terms of glucose control and don't have the deficiencies with hypoglycemia. Now the problem there, of course, is that just plain are enough islets that there are not enough cadavers for transplant.
And then there is the issue of immunosuppression. So the real beauty in this approach and why we're so very excited about this is Doug Melton and the semi group have come up with a way to not only produce but to scale these islet cells. And that holds the potential for really cell and glucose control like the cataveric transplants without the hypoglycemic episode. So that's what the real goal here is.
Great. Thanks for the color. I appreciate it.
Thank you. Our next question comes from Alethia Young with Cantor Fitzgerald. Your line is now open.
Hey guys, thanks for taking my question. Congrats on the quarter. And, Jeff, certainly you will be missed in the CEO, see, incredible run. I think we call that CEO, Mike Drop. So my two questions are, I guess, when you're thinking about in the field, What have been kind of the biggest surprises?
I know you guys talked about bottlenecks and maybe potentially with, you know, just so much demand. Have you seen that to be the case or has it been a little better? And then my second question is it might be a little early, but do you think that compliance and persistence are trending more like a KALYDECO, or kind of where are the intakes that you think about that as a dynamic in 2020? Thanks.
Yes, Alethia, thanks very much for the question. You're right. Prior to the launch, there was a couple of potential bottlenecks as you described and that we were concerned about. One was concerns that CF centers had raised with us about the capacity constraints they felt they might have given 18,000 patients who are going to be eligible for TRICAFTER. I have to say they have tacular job in responding to the high level of patient demand.
And whilst there have certainly been some bottlenecks at some centers in general, the multidisciplinary teams jump just an amazing job working to get patients initiated on the medicine. The other potential bottleneck as always with a new product launch is whether we are going to get support from payers. And again, our teams have done a great job working with both government and commercial payers and clearly we wouldn't have been able to deliver the results we have in the fourth quarter without very significant access. So both of those bottlenecks eventually, we've been pleasantly surprised with how well those have turned out in Q4 and I expect that to continue in 2020. In terms of compliance and persistence, really it's just too early to say in the real world exactly what that is going to look like.
We do expect it be high. We do expect it to be in the range of our other CFTR modulators, which you know, is very high for both of those aspects certainly given the profile, we'd expect it to be similar with Tricapha, it has been for our other medicines, but really too early to tell exactly what it's going to be like for this medicine in the real world.
Our next question comes from Whitney Ijem with Guggenheim. Your line is now open.
Hey, guys. Thanks very much for the question. I wanted to follow-up on type on type 1 diabetes. It sounded like it wasn't clear whether or not you'd be moving forward into the clinic with the naked cells or the encapsulation And I'm wondering if you can give us any more color on what the exact encapsulation technology or devices at this point?
Sure. Thanks so much for the question. It's really one of my favorite, late preclinical development programs talk about, for a few reasons. But with regard to your specific question, you're right. We have 2 shots on goal here, so to speak.
One development pathway involves the cells alone. And for example, that is, attractive in couple of different, potential areas. One of them would be patients who are renal transplant recipients as an example who are immunosuppressive therapy anyway and they have their renal transplant because of type 1 diabetes. So the naked cell approach or the cell alone approach there could be a nice pathway. The encapsulation is a device the summer group has not only done amazing work with regard to the development and the maturation of cells and the industrial scale up, but they've done a really nice job with the device.
The device has to be particular and you know others have tried this in the past and it's a tough problem to solve. The device is, different and, I think is really has the opportunity to succeed here for a few different reasons. It has to do with the geometry It has to do with the material. It needs to allow glucose and insulin to free flow, but to keep the cells in their in their state. And it also has to do with, ensuring that the device and the cells get sufficient oxygenation and that there is in fibrosis.
And the data that we have seen to date including in large animals tells us that that's so. Got it. And just a quick follow-up. So will we be
moving the encapsulation program forward into the clinic first? And you sort of abandoned the naked cell approach or is it still up in the air to which we'll go first? Thanks.
Yeah. You can think of it in terms of having 2 shots on goal. And it's just a matter of which one goes first, but you can think of it as 2 programs. Our next
question comes from Robin Karnauskas with SunTrust Robinson. In Humphreys. Your line is now open.
Hi. Thank you for taking my question. And thanks, Jeff, for all the hard work you've put in. It's been great. So two questions, one for Charlie.
1st, U. S. Cash that's accumulating like the studies that you're about to do may not be that expensive. They're very tight and they may be small at least for the next few years. So how are you thinking about best maximizing cash without winning the risk of having lazy balance sheet?
And then for us, for pain, you just continued one program. What are you looking for versus the original VX-one hundred and fifty? Thanks.
Sure, Robin. Thanks for the question. As you point out, the business model is running very well right now when we are generating cash, which gives us flexibility. We continue to feel that the best use of our cash is to reinvest in the business, both in terms of internal innovation and also external innovation. Again, you saw us have a very active year in 2019 with $1,600,000,000 on a number of deals that got us access to some great enabling technology and some programs that are a perfect fit with our research strategy.
So going forward, we'll continue to be active in business development, to the extent that we have, additional cash flow in 2020. That's where the priority will be. I'm not going to say that we're committing to a certain number of deals or a certain volume of cash flow. Everything needs to be governed by the research strategy and the corporate strategy will stay disciplined. But you'll continue to see us be active in
2020. Robin, this is Reshmael. I'll take the question about pain. So Robin, I would think about pain just like, CF and, and frankly, all of our programs. The approach here in Vertex speak is first crack the biology then pour on the chemistry.
And where we are with the train program is we've cracked the biology. Sheet. And I feel confident saying that because of the VX-one hundred and fifty results that we saw in 3 Phase 2 studies, right, in acute pain in neuropath pain and in osteoporosis. So what we're really doing now is part 2, which is pour on the chemistry. And this is about finding, let me call it the ideal molecule, particularly in this disease state.
Safety and efficacy, of course, table stakes. But what we're really looking for is a molecule with the perfect PK. Something that can be dosed once or twice a day given that we're talking about a pain condition, in this instance We need to ensure that this medicine can be taken with food or without food if you're talking about acute pain immediately post surgery being able to take it without food is going to be really important. We're also thinking about DDIs and COGS. And so really, I guess I would describe it to you as we're at the stage of pouring on the chemistry.
And this is our search for the ideal molecules of this pain condition. Or I should actually describe as conditions. You know, we think about it as 3 distinct groups in there. All right. Thank you.
Thank you. Our next question comes from Cory Kasimov with JP Morgan. Your line is now open.
Conference a little more exciting this year. But I guess first question I have for you is regarding AAT. As clinical work ramps, are you seeing any broader based efforts to help with the diagnosis rate and what kind of education can you do there to facilitate the process while in development?
Yeah. Corey, let's take this in two parts. If you wouldn't mind, this is Reshma. I'll make a few comments and then, I'm going to turn it over to tell us a little bit more about the market opportunity and such. Corey, as we, start our clinical trials and really start to engage with the community, which we've already started to do.
What you're realizing what you're alluding to is absolutely true unlike this is a disease where there isn't newborn screening and there isn't, a 100% diagnosis and while there is a, 510 cleared CE marked assay for, antigenic levels, the diagnosis is not done that frequently. We are working with the community. We are engaged with the Alpha 1 foundation. And I do see that group providing a real good amount of education and I see an opportunity to do even more. Let me ask Stuart to comment, from his vantage point.
Yeah, Corey. So in terms of what we know about the the market today, there's estimated to be about 100,000 people with the ZZ genotype in the U. S. And the EU. Almost definitely that's an underestimate, but let's just take that as a starting point.
Only a fraction of those patients are currently diagnosed to your point. And only a fraction of those that are diagnosed are actually actively treated with the current standard of care, which is the IV augmentation therapy. So if we are able to bring to the market a product which treats the underlying cause of the disease, which has impact on both the lung and the liver and is an oral small molecule, we think there's multiple opportunities here. 1 is clearly potentially to replace some of the IV augmentation therapies Another opportunity would be to increase the treatment rate in those patients already diagnosed, but we also do think there is a significant opportunity to increase the diagnosis rate. The diagnosis is not difficult to do.
It's a simple blood test. It's currently included within treatment guidelines that that should be done for patients diagnosed with COPD. But I think so often the case where you don't have a solution, people don't go looking for the problem. And so we do anticipate there could be an increase in those diagnosis rates if we are able to bring a better solution to the market. Great.
Thanks guys. Appreciate you for taking the questions.
Thank you. Our next question comes from Matthew Harrison with Morgan Stanley. Your line is now open.
Hello. This is Costa Son for Matthew. Congratulations on the quarter. Two questions from me. The first one is, can you give us some sense for how to think about the dynamics of European revenues in 2020, please?
Yes, so I'll take that. Were able to finalize reimbursement agreements in a number of major European countries towards the back end of 2019. And as we anticipated, we did not see much of a contribution of those reimburse agreements in 2019 because even having secured those agreements, you have to work through the administrative process before patients can be initiated. We are expecting our European revenues to grow in 2020 as more patients are able to access our CFTR modulators and that's incorporated in the $5,100,000,000 to $5,300,000,000 guidance that Charlie talked to earlier on the call.
Thank you. And my second question is on APO L1 mediated kidney disease program. You have mentioned that you are planning to use the proteinuria as a clinical market. I was wondering whether you need more key efficacy endpoints or these would guys.
Sure. Thanks, Kasas. This is Reshma. I'll take that one. So, for those who may not be as familiar with this one.
This is the VX-one hundred and forty seven program, and this is going into patients, into the clinic in Phase to, now actually, this is for APO L1 mediated FSGS. So, Casas, as you may know, the renal community along with regulatory agencies have for the past many years, thought and, discussed what the appropriate regulatory enabling endpoint might be for a homogeneous Prochineuric kidney disease. That's a mouthful, but basically what I'm saying is that there's a lot of, support and, what the idea here would be is to measure protein in the urine. That's a fairly simple thing to do. And when you have a disease that's a homogeneous protein leaking disease, that most, people believe and this has been discussed extensively in the community that protein in the urine is the right measure for one to evaluate.
So that's what we're going to be evaluating in this phase 2 study. And that's the study that is now getting underway.
Thank you very much and congratulations again.
Thank you. Our next question comes from Lisa Baker with JMP Securities. Your line is now open.
Hi. I wanted to also wish, congratulations to the team and during the transition. Wanted to ask about the European rollout. Can you just get into a little more specifics on, on sort of timing of different countries and what you think that the on ramping could look like given that, this is, you know, serve a new therapy that's available in some countries meaning they haven't had access to CFTR modulators in the past? Thanks.
Yes, I think there's really 2 aspects to that question, Lisa. One is the timing in different countries and the uptake of our current medicines, which are approved in Europe. And clearly, we expect that as I mentioned earlier to begin now that we have reimbursement agreements in some of the major country is UK, Spain, France, etcetera for our existing CFTR modulators. In terms of how that might play out for the triple combination. Clearly, we have that submission in with the regulatory authorities.
Our expectation is for an approval in Q4 of this year. And as you know, the regulatory approval is really the trigger to the beginning of reimbursement discussions.
And
so within our guidance for 2020, there is minimal triple combination regimen revenues included within that guidance.
Okay. Operator, we have time for one more question.
Our final question comes from Brian Abrahams with RBC Capital Markets. Your line is now open.
Hi there. Thanks for taking my questions and congratulations on the quarter and congratulations, Jeff, too, on all your accomplishments. What's been your feedback on real world experience with TRICAPTA efficacy and safety. To what degree that's been aligning with the clinical trial experiences, anything unexpected or different there. And then secondarily, can you remind us of your plan to collect longer term outcomes data with TRICAPTA, things like exacerbations, a timeline for updating that and how important you think that will be for full market penetration in the U.
S. As well as European access. Thanks.
So in terms of the real world experience, I would say has been very similar to what we saw in the the phase 3 program, Brian. The feedback we've had from physicians and patients has been almost universally positive And when I say positive that their experience of the level of efficacy and the impact it's having on their lives is really inspiring. Obviously, safety is something which needs to play out over time, but certainly we haven't seen anything in the real world that are surprised us that has been different from what we saw in the Phase III programs. And as you know, those studies demonstrated are very, very strong benefit risk profile. In terms of outcomes data and what data we're going to be collecting, I'll hand that over to Reshma.
Sure. So, Brian, you know that we in the phase 3 program for the FMS patients that was the program with about 400 patients, that went out to 24 weeks. We already reported on pulmonary exacerbation and it was a really large reduction of 63%. We are continuing to collect data, so pay in both the FS study and the FMS study rolled over into an open label extension that goes out through 96 weeks. And in addition to that, we have additional, studies that we're doing collecting data from various registries not only here in the U S, but as we've done with our other CFTR modulators around the globe as well.
So We have, more data to look forward to not only from the clinical trials program and the open label extension, but also registry data that we're Okay.
On behalf of everyone here, thanks everybody for listening to tonight's call. Thanks also for all kind words. We know that there are other earnings calls tonight, so we'll let you get to them. And at the
conference call. Thank you for participating. You may now disconnect.