All righty, great. Thanks very much, everyone, for joining us for our next session with Vertex. My name is Dave Risinger. For those of you who do not know me, I cover diversified biopharmaceuticals.
It is my pleasure to welcome Charlie Wagner, who is CFO and was recently appointed COO as well, and David Altshuler, who is the company's Chief Scientific Officer, to be with us today. I thought we could start off by turning it over to you, Charlie, to kick us off with some opening comments.
Yeah, thank you, David. And thanks for everyone who's here. Listen, we're not that far removed from 2024, a year in which Vertex saw exceptional growth in financial performance, regulatory approvals, and the important acquisition of Alpine Immune Sciences.
Now, squarely in 2025, we continue to extend our leadership in CF, notably with the recent approval and ongoing launch of ALYFTREK. We are continuing to build momentum with CASGEVY, our gene editing therapy for sickle cell disease and beta thalassemia, executing that launch.
Importantly, now kicking off the growth of our franchise in acute pain with the launch of JOURNAVX. Very, very busy start to the year. We've also got four programs in phase III that will have significant milestones during the year, so something for folks to look forward to there.
I guess I would just say, in a period of time when it seems like a lot of people are feeling very uncertain and focused on turbulence, we continue to execute very consistently and are really excited for the year and happy to take your questions today.
Excellent. Could you comment on your sort of key areas of focus in your new role for Vertex in coming years?
Yeah, I think, listen, my areas of focus are the same for the entire executive team. I alluded to it in the opening remarks. We have a business now that is very healthy, very growing, diversifying in many ways.
Certainly, a lot of our focus in 2025 is on the launches, the launch of ALYFTREK, the launch of CASGEVY, the launch of JOURNAVX. All attention on making sure that we are building momentum, that patients and physicians are having a great experience in the early days of these launches.
For those that are in pain, for example, ensuring that we are contracting and pricing in a way that responsibly balances access, but also preserves value for Vertex for the long term. A lot of attention there.
As I mentioned, with four programs in phase III, David and our colleagues in clinical and Reshma, our CEO, are very focused on making sure that those are shepherded through the process. As I mentioned, we will achieve a number of milestones in those programs this year, some of which will produce data this year, others producing data next year.
That really does set us up for a whole nother wave of diversification, not in the distant future, but in the next couple of years, something that requires a lot of our attention these days.
Excellent, excellent. How would you paint the picture of where you are with respect to garnering attractive insurance access for JOURNAVX?
For JOURNAVX, yeah. So yeah, keep in mind with JOURNAVX, the approval was January 30th. We are just over a month in. I know people expect great things from us. We are moving as fast as we can. Honestly, we had as many sort of appropriate pre-approval conversations as we could have with IDNs and payers.
Obviously, that has kicked into high gear since the approval. We are really encouraged by the conversations. Whether they are currently now conversations with physicians, with hospitals, with IDNs, with payers, with GPOs, there is very, very clearly an unmet need for an alternative to opioids.
JOURNAVX fills that need very nicely. There is a lot of interest in procuring coverage for this medicine. That takes some time. We have said all along that going through P&T committees, going through the contracting process would take some time, and it will.
We have already seen signs of progress. There was some news in the press last week about ongoing conversations we have with Optum, not complete yet, but I think positive that these are occurring so rapidly. There are two states, New York and Arkansas, that have already provided coverage for JOURNAVX. We have a lot to go, but the early signs are really encouraging.
I think, in particular, some of the conversations that are going on right now indicate that coverage, in many cases, will be sooner rather than later. Again, we are going to balance that responsibly.
Excellent. Yeah, I think you actually understated the two states providing coverage. When I say that, my understanding is that it's fully open access, no prior authorizations, no step edits, which is quite extraordinary for states that are not in the best of financial health in particular, right? New York and Arkansas were the ones that provided that access. Could you add a little more follow-up?
Yeah, no, you're right about that. Obviously, our goal is to provide access for patients without any prior authorization or step edits. That is, in fact, what we've achieved in those two states. I think it speaks to the compelling proposition, if you will, including the economic proposition for JOURNAVX.
These are states that understand the cost of the opioid epidemic, understand the role that an alternative to opioids can provide in this case. The fact that they've provided broad coverage quickly, I think, again, is very telling.
Excellent. Hopefully, the rest of the states follow.
Hopefully. Forty-eight to go. Forty-nine, maybe.
Excellent. Maybe we could just then pivot to thinking about how the inpatient setting is quite different from the outpatient setting. Clearly, broad access without constraints by PBMs is important. Also, within IDNs, it is quite complicated. How would you paint that picture?
Yeah, I mean, I think we've talked about the fact that annually in the U.S., about 80 million people a year seek a prescription for moderate to severe acute pain. Importantly, about 60% of those prescriptions are written or influenced in an institutional setting, in a hospital or a surgical center.
Some of those prescriptions, the medicine is used in the institution. The majority, though, of the prescriptions, the medicine is filled at discharge or at retail and administered at home, essentially.
The largest part of the market is outside of the institution, but there is a lot of influence around the writing of prescriptions in the institutional setting. Therefore, our commercial efforts in the early days are concentrated on a couple of thousand hospitals that ladder up into a couple hundred IDNs that represent the majority of prescription writing.
Over time, we expect to reach the rest of the market, partly through efforts in our virtual or digital sales effort. We have kind of non-personal outreach to other aspects of the market, and that will grow over time. The greatest commercial leverage for us in the early days is in the institutional setting, where the greatest volumes of prescriptions are written.
Got it. Okay, excellent. Why don't we pivot to the pipeline a little bit? It'd be helpful, David, for you to talk about VX-993, your vision for it, and just color and perspective on that first follow-on agent.
Sure. Let me start just with sort of, excuse me, our long-term vision, and then I'll speak to the nearer term. We do believe that this is sort of JOURNAVX opening the door to what I think will, in the long run, prove to be a transformation of how pain is treated because the selective sodium channels to block peripheral nerve signaling, getting the pain basically the signals that take the pain from your tissues to your brain, has great potential ahead of us.
The reason for that is NaV1.8, JOURNAVX approved, and I'll come to 993 in a minute. There is also NaV1.7, which is another selective sodium channel that's expressed in the same neurons that partners with NaV1.8 and that NaV1.7 triggers, NaV1.8 propagates the signals. There is really tremendous potential in the future for this.
In the near term, as we do with all of our programs, we continue to out-innovate ourselves. With 993, I'd say there are three things that are particularly a focus with that molecule, which, as you know, is in phase II, both in acute pain and also in DPN.
The three things are, one, the ability to dose higher up the curve. We do not know what will happen when we do that because we have never done it before. No one else has either. We do not know if we are already at the ceiling or if there is more efficacy that can be had. 993 has the potential to go higher, considerably higher. The phase II studies will do that, so we will be able to answer that question.
The second thing is the potential for IV treatment because just the physical properties are such that it can be formulated for IV. We're in the clinic with that, which I think for the clinical in-hospital treatment, to be able to eliminate not only the oral opioids, but also potentially at least some uses of IV opioids would also be powerful. We're working on that.
The third is the potential for combo therapy, which is why I sort of started by mentioning NaV1.7. NaV1.7, NaV1.8 obviously works as a monotherapy. NaV1.7 hasn't yet gone to the clinic. The human genetics is that people who carry knockouts of both copies of NaV1.7 have something called congenital insensitivity to pain, which was first discovered in a family of Pakistani firewalkers who could walk on coals. They could feel the sharpness of the coal.
They could feel the pressure of the coal. They could feel the temperature of the coal. They were otherwise healthy. They just didn't feel any pain. That is lacking NaV1.7. We've cracked that as well. Although it's not in the clinic yet, we're moving forward aggressively on that.
The ability to be able to do combo therapy may be important in the future. I want to be clear, JOURNAVX could be used in combo therapy. There's no reason it couldn't be. Our team in San Diego, who discovered the CF medicines and also is leading this pain program, knows a lot about how you actually design molecules not just to work in a dish, but actually to work in combo therapy in a person.
We continue to optimize so that the best chance, not just for the next quarter or two or even the next year or two, but the transformation of the disease in the future. One thing I'll close with is I first became part of Vertex when I joined the board in 2012, and KALYDECO had just been launched.
One of the reasons that I was so compelled, I think Jeff Leiden was so compelled by the company when he became CEO that year, was because you had a target and you had a disease in CF that, of course, had serious unmet need and no transformative therapy.
You had human genetic target validation, in that case of CFTR, in this case of NaV1.7 and 1.8. You had a human cell model that you used. In the case of CF, it's HBEs.
In the case of pain, we use human dorsal root ganglion cells. You had multiple mechanisms of action and multiple scaffolds that had already been proven their translatability. In the case of KALYDECO, that was proving you could translate the target and the cells to a human being. In the case of JOURNAVX, now we've done that with pain. It's not like we're speculating.
We might have other molecules and scaffolds. It's not like we're speculating. There might be another target and that they might work in combo like they did in CF. It's all reality. The question is just sort of, as we thought in 2012, how do you execute that? In that case, it took seven years to get in 2012 to TRIKAFTA. I'm not saying it'll happen that fast. Nonetheless, we did move quickly.
I think in this case, it feels just like 2012 to me.
Excellent.
Pain 2012, CF 2020. Pain 2025, CF 2012, in case you wonder what I meant.
Excellent. Going back to NaV1.7, could you tell us a little bit about how you've cracked the code there and what to watch going forward?
Yes. In terms of how we did it, I'll give some answers. Obviously, especially with the approval of JOURNAVX, this is becoming, I'm sure, a more competitive area. I am not going to give any enabling comments. What I'll say is that people have worked on NaV1.8 and NaV1.7 for two decades. We are the first to ever get to phase III, let alone approval.
The reason for that is selective sodium channel inhibition. There are nine sodium channels in the human genome, and they have different functions. NaV1.1, for example, is the gene mutated in Dravet syndrome. If you have 50% less or 50% more, you have inherited epilepsy. That is not a target you want to touch. NaV1.5 is involved in the heart, et cetera.
It has been known from the human genetics that if you can modulate 1.8 or 1.7, you can have effects on pain without other effects. The question is, could you make a molecule that only did that?
If you wanted, before we started, clinical evidence, it is not just JOURNAVX. It is lidocaine, Novocain. Everyone who has had dental work or had stitches knows that if you put lidocaine or Novocain, which is a non-selective sodium channel blocker, you can block all pain.
You say, why is that used locally and not systemically? It is because it blocks the other sodium channels. In the case of NaV1.8, our New England Journal paper a couple of years ago showed 30,000-fold selectivity of 1.8 over the others, as well as having screened hundreds of other targets and seen nothing.
With NaV1.7, the whole community was working for 20 years on a particular target approach. We decided a number of years ago, technology had changed so much that people were sort of like following the thread that had been laid decades earlier.
We said, there are so many new technologies. We are not a platform company. We use all the technologies, whether it is DNA encoded libraries, cryo-EM, AI, 10 years of structure activity relationships, our in vivo human assays.
We decided to start again. We said, let's pretend no one had ever done anything. Let's try and discover it afresh. In fact, we did discover something new that is not in the literature that anyone else knows about that has now moved forward rapidly towards the clinic. It is not yet ready for the clinic. I am confident, based on where we are, that we will get there.
It's actually something that's not knowable for others because we decided, let's start afresh with all the new technology rather than following something that was discovered with technology from 2015, 20 years ago.
Excellent. That's very impressive. Thank you. Maybe we can pivot to CF. It seems to me that many CF patients would likely want to switch to ALYFTREK. Obviously, you're not providing targets. Could you talk a little bit about your connectivity to patients, both through your specialty pharmacies and Vertex Direct, and how you can pretty rapidly educate the existing users about ALYFTREK's availability?
Sure, absolutely. I would say the CF community is sort of among the most well-educated patient communities, I think, of any disease area. That is particularly true in the U.S., but increasingly so in countries outside the U.S. Whether you are talking about patients or the treating physicians, there is very little chance that they do not know about the availability of ALYFTREK at this point.
We have said all along that ALYFTREK, TRIKAFTA is a fantastic medicine. Many patients do extraordinarily well on TRIKAFTA. There is the opportunity to do better. We think ALYFTREK is the medicine that provides that next level of benefit for patients and a great profile all around, including once-a-day dosing, which obviously is convenient. We think that over time, the majority of CF patients who are currently on TRIKAFTA or other medicines will switch to ALYFTREK.
We are not sort of actively driving switching because we think it's a very important choice for patients and their physicians to make. We will support that as it occurs. Again, we do think the majority will switch over time. We're not that focused on how many, per se, make the switch in this calendar year. We will be reporting out in our quarterly revenues. People will have a sense of ALYFTREK revenues and therefore a sense of uptake.
Got it. Could you comment on ex-US prospects for ALYFTREK as well?
Yeah. Again, I think there's a significant opportunity. I think the experience with TRIKAFTA has been one where we secured, I forget the number at this point, something like 50 reimbursement agreements in relatively short order, which I think shows the power of the profile of TRIKAFTA.
Again, ALYFTREK with an even better profile, we think, is significant. We've recently received approvals. I think we just announced on Friday an approval for ALYFTREK outside the U.S. Great momentum there. In terms of uptake, it will require reimbursement discussions. The approval alone isn't enough. We'll have reimbursement discussions that will be ongoing outside the U.S. throughout the year.
Got it. Maybe we could pivot back to the pipeline. David, if you could paint the picture for Type 1 diabetes in terms of the opportunity as you see it, the data sets that we should be watching for, and also comment on the scalability of the manufacturing.
No, absolutely. It is a super exciting program. I should say I trained as a diabetes physician and was a diabetes doctor Mass General for a number of years before I focused entirely on science.
One of the things I learned clinically a long time ago is there is no patient I have ever met with Type 1 diabetes who does not consider the current state to be an overwhelming life experience and not in a good way. The reason for that is because you have to monitor your blood sugar like every minute of every day.
In the old days, you had to inject yourself. Now you have a device that pumps and monitors. You have to think about every meal you eat and what it is going to do.
Probably the most concerning thing is that if you have any excess insulin, you could have hypoglycemia and pass away.
In fact, like I was talking to a young woman the other day who's in college, and her mother has her monitor tied to her mother's phone so that if she has hypoglycemia, which she has and doesn't wake up, her mother's phone at home rings, and she calls the front desk of the dormitory, and they send someone up to try and save her life. That's what it's like to have Type 1 diabetes.
The idea that you could have a therapy that's a one-time therapy, perhaps, where you can be off insulin and have normal blood sugar is like a dream that people had. What's remarkable is we bought Semma five years ago.
Doug Melton, who was one of 14 university professors at Harvard, moved full-time to Vertex a few years ago because he was so excited about it. He spent 25 years developing this because his kids both have Type 1 diabetes.
The current data for VX-880, as you know, which is in pivotal development, is that approximately 3/4 of the patients who we described and will be updating at a clinical meeting this year at ADA were off insulin with normal blood sugars.
They all had severe hypoglycemic events, and they hadn't had any since the treatment. The others all had substantial reductions in insulin use, although they weren't off insulin. That led to the conversion of that phase I/II trial to a pivotal trial, which will have 50 people that agreed to with the regulators, 50 people. We will complete dosing this year.
The endpoint has changed from removing hypoglycemic episodes to actually being off insulin and blood sugar, then with elimination of hypoglycemic events as secondary. That is remarkable sort of progress in the field, in the program. We really could not be more excited about that.
You asked about how would that be scaled. I think that it is obviously the case that manufacturing cell and gene therapies is no trivial thing. We have been working on it for years.
There are sort of three ways that we work on it. The most near term, obviously, is we have just been working our manufacturing group to scale the current process, make it more efficient. Also, we have a site in New Hampshire that is being developed, a factory, basically, to build it with Lonza.
In addition, we already have an existing site, I should say, in Boston for manufacturing that already exists. We're building all that. The other thing we're doing, which I think in the long run will have a lot of value, is Doug and the rest of the science team is actually going through and saying, can we fundamentally improve the process?
The sort of scaling of the existing process is the current focus for the launch of 880. You can imagine by dissecting every aspect of this process, we believe we'll be able to substantially sort of make it more scalable, which will also, of course, be a competitive advantage if we've discovered things others don't know. Our goal, it's not going to happen in a year or two, is to treat a million people.
There's 3 million people in the U.S. and Europe with Type 1. I can't imagine one of them who, if it was effective and safe enough, would choose to be treated with insulin treatment if they could be cured.
Excellent. That's a great framework. We will look forward to the progress. The next data readouts?
We'll be describing data for VX-880. There'll be an update at ADA. And then we also have VX-264. One thing I didn't mention is, obviously, I focused on the cells. And that's in the last answer because the cells are the key. If you can't make islets off the shelf and you can manufacture them at scale, there's lots of ways to figure out how to deliver them to patients.
Obviously, a critical issue, since they're allogeneic, they're not the person's own cells, is how do you modulate the immune system? In the case of VX-880, it's traditional transplant immunosuppression. The reason we did that was we wanted to limit the number of variables in the first clinical trial. That approach to immunosuppression had been used with cadaveric islets. We knew that if we held that constant, we could see how our islets did.
They've done very well. There are three ways we're working to improve that because that certainly has some properties that you could improve upon. One is the device that is now called VX-264, where the cells are put inside of a device. That device is then put inside of the patient.
The device was invented by our team, who was at Semma and now at Vertex, and they are still all there, as the device has novel material and novel design to try and keep the cells healthy and alive with the glucose going in, the insulin coming out, and not have the kind of responses others have had.
There are two other approaches in parallel. That data, I should say, VX-264, will be reading out this year. We'll read out some data on that. That's, as you know, in phase part B of the trial.
The other thing I should say is there's two other approaches. One is hypoimmune gene editing. That's conceptually very appealing. We're the only company that has a CRISPR medicine approved. We're good at gene editing.
Nonetheless, it's picking the targets you need to edit. I think it's going to be a little bit more, I don't want to overpromise. I think anyone who claims you can knock out one thing, suppress one thing, and evade the entire immune system is oversimplifying the efficacy of the human immune system after 100 million years of evolution.
We're working on it. We, in fact, are investing the time and money to discover those targets, not just sort of moving forward. Finally, as you all know, immunomodulators are now a very hot area of development.
There are actually immunomodulators we might be able to use in place of the standard immunosuppression that might already exist. We do not have to invent them or develop them. That is another way to try and improve the profile for patients. It is de-risked in terms of the cells. Obviously, a huge amount to do. Also, there are multiple ways that we can get to modulate the immune system so even more patients can benefit.
Excellent. Thank you. Why don't we pause for a minute? I just wanted to see if anybody from the audience has any questions.
We haven't said exactly.
So, the question is.
I'm sorry. The question was, how big is the device for Type 1 diabetes? We haven't said exactly, but it's of a scale that it could be straightforwardly put in patients and they would live a normal life.
Any other questions from the audience? Okay. Maybe we could pivot back to a few financial questions. Obviously, you've described the fact that volumes are going to dramatically outpace revenue initially for JOURNAVX. Could you just discuss that a little bit more and what we should expect you to comment on with respect to painting that picture when you report quarterly results?
Yeah. I think it's fairly straightforward. JOURNAVX is included within our revenue guidance for the year, range of $11.75 billion-$12 billion. We have said that we expect the contribution to really show up in the second half of the year. The reason for that is that we do not have broad coverage right immediately after approval.
While we are working urgently to gain coverage, we would like patients and physicians to have access to the medicine. We'd like them to have a seamless, clean experience. We have financial assistance programs in place that will allow patients to access the medicine even ahead of payer coverage. That's why volumes will ramp ahead of revenues. As payers provide coverage for generics, those assistance programs will fall away. They're temporary.
As those fall away, we will achieve a kind of a more normalized gross-to-net revenue run rate in the second half of the year. As I mentioned, in our quarterly results, when the numbers are big enough, we will report out on JOURNAVX revenues.
What about payer coverage? Is that something you'll be able to speak to?
Yeah. I think in the early days of the launch, just so that folks have a sense of progress, we will provide data on prescriptions, and we'll provide data on payer coverage.
Excellent. Maybe looking beyond this year, and I know that you do not provide long-term financial guidance, how should we think about the company's margin prospects? Gross margin would seem to have some upward pressure given, obviously, what is happening with ALYFTREK and that uptake, but also CASGEVY drives some downward pressure, although very modest at this point. Could you just contextualize that for us?
Yeah. I mean, the good news is I think the strategy of the company lends itself to a really attractive financial profile, both top and bottom line. As we work to transform these disease areas with transformative therapies, that equates to tremendous value for patients, values for health systems, but also values for Vertex if we price responsibly.
Each of our disease areas that we select, we think, can provide significant top-line growth and attractive margins. In the shorter term, I think it's natural when you are in the early days of a launch of a product, there are fixed costs that you've put in place either with a sales organization or manufacturing capacity that have to get absorbed as volume grows.
To your point, if you look at the dynamics for 2025, the margin profile for ALYFTREK is better than the margin profile for TRIKAFTA because of lower royalties. The amount of the benefit to Vertex will depend on the rate of ALYFTREK growth and switching during the year.
Offsetting that is margin pressure from CASGEVY, which is very early in its launch, and from generics, which is very early in its launch. We see a balancing, if you will, in 2025. Over time, we think each of these disease areas is going to carry attractive margins that are going to allow us to continue to grow and reinvest in the business.
Excellent. We are out of time. Thank you so much both for being here with us today. Really appreciate it.