Hi. Welcome to the first morning of the B of A Healthcare Conference. I'm Geoff Meacham. I'm a senior biopharma analyst here. We're thrilled to have Vertex Pharmaceuticals in the big room. Hopefully no protesting this year. On behalf of Vertex, we have Charlie Wagner, Executive VP and CFO, and David Altshuler, who is CSO and EVP Global Research. Guys, welcome.
Thank you for having us.
Yeah, Geoff, thank you. Thanks for hosting.
Charlie, you wanna just post the quarter, just give us a little bit of a high level, and then we'll get into some questions?
Yeah. Yeah, listen, the 2023 is off to a fantastic start for us. We continue to reach more and more CF patients with our medicines. We commented in the first quarter, we continue to execute on launches in countries where we received reimbursements late last year. We've added some incremental new reimbursements, and we continue to move into younger age groups, notably, with the approval of TRIKAFTA in the two to five age group. With that strong and steady and consistent performance, we've reaffirmed our revenue guidance for the year of $9.55 billion-$9.7 billion, and the year's off to a great start. It's also a year that will have a number of milestones that'll mark the advancement and progress of our pipeline.
We commented that we'd recently completed our rolling submission for the BLA for exa-cel and beta-thal and sickle cell in the U.S. We have commented that we will have updates, data on the Type 1 diabetes program around midyear. We expect to complete our Vanza triple phase III trial later this year, and we expect to complete our phase III trial in acute pain later this year or early next year. A steady cadence of data and information throughout the year, and we're really proud of being able to show progress in the pipeline. You know, again, everything's off to a great start, and we're happy to be here.
Perfect. Well, let's go, let's start off with that, so the Vanzacaftor. When you think about what's left with TRIKAFTA, how should we imagine this product, you know, commercially? Clinically, you know, what are some of the opportunities that you see to differentiate aside from the dosing?
Do you wanna talk clinically and,
Sure. Obviously, TRIKAFTA is a great medicine. We've seen not only the short-term benefits that we saw in the original clinical trials, but also the long-term benefits have now been defined, including, as we described last year, 75%+ reductions in mortality, in hospitalizations, in transplant with TRIKAFTA. Beating that is certainly gonna be very difficult. We've got a lot of confidence in the Vanzacaftor triple because one thing we've learned and the field has learned is that the best predictor of long-term outcomes is the level of CFTR function. We know that because the disease is caused by CFTR mutations. We know that because people who have mutations that have different levels of function have different outcomes, but if you have a carrier who has one normal copy, you have no disease whatsoever.
Our goal is to get everyone to carrier levels. Finally, we know from our clinical trials that when we've analyzed the data and divided it and said, "People who have more normal levels of CFTR function closer to carrier versus ones who are not, the ones with higher levels of CFTR function do better." All of those scientific and medical things tell us that getting patients to higher levels of CFTR function towards carrier is the goal. We know with TRIKAFTA, only a minority of people are at carrier levels. Finally, we know that the vanza triple can drive higher levels of CFTR function. We know that in vitro, in our HbF assays that have predicted outcome time after time, and also based on the clinical data in phase two.
From all of that data, we believe, and we see the field believing, that getting patients to carrier level should be the goal. If the outcome of the phase three trial is that we can achieve what we predict, which is higher levels of CFTR function and a profile supportive of those greater benefits, then patients will have a good new option that may really do well for them.
Maybe just commercially too, we think Vanza can be a key part of the company's growth story over the next several years. You know, we commented, we recently updated our estimate of patients in North America, Europe, and Australia to 88,000, roughly 5,000 of whom are waiting for an mRNA therapy.
Of the remaining 83,000, we had about 20,000 left to reach with the medicine as of the beginning of the year. Highly confident in our ability to reach them for the reasons I outlined about the first quarter performance. It's executing on launches, new reimbursements, moving to younger age groups. With Vanza, there's the opportunity for patients to, we believe, switch to an even superior medicine. There's also, within that subset of patients we're not treating today with CFTR modulators, there are 6,000 or so who have discontinued from previous Vertex medicines who would have the opportunity to come back on medicine. That's a driver of growth, and as I mentioned, the mRNA therapy. Whether it's 2023 or beyond, we see a meaningful opportunity to continue to grow in CF.
Right. Yeah, let's talk about the mRNA, you know, platform. The nonsense mutations or premature stop mutation patients are the ones in CF that, you know, haven't really been able to benefit. You guys, you know, are in a, you know, phase I, you know, collaboration with Moderna. Maybe just give us the challenges historically, you know, in this patient population and then, you know, the LNP and the innovations that you guys have developed to try to tackle this population.
It's really very compelling when you talk to these patients because it's unusual. There's patients with CF, and 90% of them or so are now having their lives really improved by CFTR modulators, but there's the last 5,000 or so who can't respond 'cause they don't make any protein, and they're watching their friends and their loved ones, you know, from the clinics and the people they know get better, and they're not. We're very motivated to try and help them. The challenge we believe is that the bronchial epithelial cells, the cells you have to get to help patients, are designed to keep particles and viruses and things like that out of them.
They're the lining of the lung, you think every time you inhale, there's some particles and viruses you might inhale, and those cells are the guards. They're the defense that keeps them out. Maybe it's not surprising that no one for 30 years has been able to get into those cells. When we started with Moderna some 7 years ago, we took all of the LNPs people had published and tried, and none of them could get into those cells. Those cells, remember, the ones that have predicted reproducibly the success of our CFTR modulators. We set out to find a new LNP that could do that, and it was hard. It actually took us 5 years. For a long time, we weren't even sure we'd ever get there. We did, crack the problem a couple of years ago.
We were able to get high levels of CFTR function with this LNP mRNA we invented. Also then we went to small and large animals and safety studies. It had a really attractive profile. We think this is really the first time anyone has ever been able to go into the clinic with something that can treat the cells that matter, which is the bronchial epithelial cells. You'll even see that some of the others who have tried have published things saying, "We were able to do it in this cell or that cell, but not the human bronchial epithelial cell." We are able to do that at high levels. That's why we're optimistic. The study, as you said, is open. We cleared the IND late last year.
The study's open, and it's gonna be a single ascending dose because it's a new modality, a new agent. After that, you know, assuming everything looks good, which we're confident it will, we'll go to multiple ascending dose and fingers crossed, it'll help patients.
Gotcha. Well, let's switch gears 'cause you guys have a lot to talk about with respect to the pipeline. exa-cel, which is sickle cell and beta-thal, you know, submission filed. I guess we'll have to see whether the filing's accepted coming up. you know, give us a perspective on, you know, what investments you've made commercially and how you see the initial wave and, you know, potentially of this in the U.S., playing out with regard to the sickle cell opportunity.
Sure. Yeah, I mean, I think the headline is, you know, while we are of course waiting for our PDUFA date, we are not waiting to be fully prepared commercially. We will be fully prepared commercially this year. We've mentioned we see the opportunity roughly 160,000 patients worldwide across the two diseases, 20% or so of whom we think would be eligible candidates with existing therapy and existing conditioning regimens. 32,000. Of that, 25 in sickle cell, 7 in beta-thalassemia. The sickle cell patients largely concentrated in the U.S. In terms of commercial efforts, we've identified... I think in the U.S., it's basically 25 states is where you would find 80% of the sickle cell patients. In Europe, it's about 5 countries.
We think that with 50 authorized treatment centers in the US and 25 in Europe, we can get to the vast majority of patients who would be, who would be appropriate early on. As a result, we are building out our commercial capabilities. We're engaged with all of those centers already, working through details around contracting, logistics, et cetera. Aside from that, we're also engaging with the federal government, state governments, and private payers to ensure that reimbursement will be available for patients as soon as possible after approval. This is a disease area that has been underserved for a very long time, and we see strong tailwinds, at all levels for payers wanting to step up and ensure that these patients have access to the best therapy. We're super busy. We're meeting regularly on commercial readiness.
It takes up, quite a bit of our time, and the investment is reflected in our OPEX guidance for the year and will be reflected in our run rate as we exit 2023.
Gotcha. Okay. That's helpful. Bigger picture, though, when you look at the, you know, the therapy itself, gene editing, broadly gene therapy, cell therapy, there have been some, you know, some bumps along the road with respect to a number of companies by regulatory uncertainty. Give us your confidence level and the data set that you have and the, you know, the seamless sort of path to potentially approve.
Yeah, we feel extremely confident in the package we have. The reasons for that are multiple. First, the clinical profile that we've seen and we presented last year at EHA is remarkable. With, as you know, 77 patients treated at that time, 33 patients with sickle cell, all of whom had had two or more pain crises a year. There were, at that time, no pain crises in the follow-up since the 33 patients were treated. The transfusion-dependent thalassemia patients, all of whom had multiple transfusions a year to stay alive. Of the 44, 42 were transfusion-free since treatment, and the other two had, like, a 80% or more reduction in transfusion frequency. It's a remarkable profile. I think that it's also a large data set compared to what some other companies have done.
The other thing that companies have run into, perhaps, that we are sure, very confident will not happen for us is they either didn't engage with the regulators along the way, we did from the very beginning. As you'll know, last year, you'll remember we were saying, "Well, we can't tell you exactly when we'll file 'cause we've gotta work out the last things with the FDA." We successfully reached alignment with them. So we're confident the package we've put into the US, the UK, and EU are consistent with what they're looking for in terms of a package. Finally, the last thing is manufacturing.
I think the thing that really challenged many of the smaller companies that were sort of moving very rapidly from academia to a couple of patient proof of concept was they didn't develop their manufacturing, their analytical development, all of their methods for commercialization. They developed it to get to a so-called value inflection. Then when they got to that place and others took over the program, they had to start again. In 2015 when we did the deal with CRISPR, during that period, the first few years, I ran it directly with my colleagues and Sam and other people at CRISPR. Like, we would sit there right at the beginning, and it was... I give CRISPR a lot of credit.
It was like, "What are we going to do today that will allow us to use a pivotal process that we can commercialize?" I think that experience of together thinking in 2015, 2016, and 2017 has meant we haven't had to change our process. You see other companies having to do that. Those are all the reasons I feel like it goes to planning, it goes to preparation, and I think the plan from the beginning to get to commercialization, not just to get to a value inflection.
You guys have made some investments with respect to improving the conditioning regimen. Talk a little bit about that and how important that is strategically to the kind of the long-term value of exa-cel?
The initial patients we're focused on, as Charlie was saying, is there's 32,000 patients, 25,000 in the U.S. who have severe sickle cell or beta-thal. Those patients, just to give you a sense of how much they are suffering and how actively they engage with the healthcare system, it's been estimated that their lifetime burden is $4 million-$6 million for each of those patients. They're very frequent users of the healthcare system and suffering a lot. With regard to those patients, we think busulfan conditioning, which is the exa-cel approach for launch, is appropriate and has a favorable benefit risk.
Clearly, it is a substantial commitment on the part of the patient, and it would obviously be desirable to not have to deal with chemotherapy, you know, the busulfan, and that would also open up the opportunity, presumably, for the rest of the 150,000 patients who might not choose busulfan. We have a internal research effort, bolstered by business development, you know, where we get assets, technologies, capabilities, and we are moving forward very aggressively to bring one or possibly multiple shots on goal, if you will, to have better conditioning. We don't think That's not today, and we don't think the absence of it will stand in the way for those 32,000 people who are suffering so much today. To get to the larger opportunity is gonna be important, and we're forging ahead.
Right. You mentioned the economic cost. Are there investments that you think you could make going forward that could, you know, further delineate the cost benefit of this program? You know, is it going to be obvious once you get the label for the drug and it starts to roll out commercially as you're talking to payers?
Yeah, I mean, the label's important, but as with all of our medicines, we are shooting for a transformative benefit in people with really, really serious diseases. Part of that, of course, is the label, but we invest a ton of time in working with key opinion leaders, working with payers, working with governments, doing our own health economic research, and really driving understanding not only of the benefit to the patient, but the ancillary benefits to the healthcare system. Those investments are in fact happening today. We take a kind of a multi-channel approach and really surround the disease with as much information as we can.
Is there a compare or contrast with OUS markets, for this when you think about the opportunity? I know that's probably not the first wave, but, you know, typically, though, you know, in Europe, for example, you still have infusion centers, you still have patients. You mentioned there's less patients that you've identified, you know, globally that are, you know, that are in Europe, for example, but it's still part of the launch, though.
Absolutely. As I mentioned, there are 4 or 5 countries in Europe where we see 80% of the opportunity that will absolutely be part of our kind of first wave launch.
Yeah.
Sickle cell is very much is more common in the U.S. It's about 100,000 people, so like three times as many people as CF with similar levels of severity in terms of shortened life and time in the hospital and all that. Again, just to give you a sense, the severe form of beta-thalassemia, you don't make any red cells. If you don't have transfusions, you die because you don't have red cells. That just gives you a sense of what these people are living with. A medicine that could mean instead of a lifetime of getting the blood transfusions, then getting iron overload, which is caused called hemochromatosis, 'cause your body doesn't have any way to excrete iron.
If you get blood transfusions all the time, you end up with another disease called hemochromatosis because you have iron overload. One time treatment that could eliminate all that, I think its value is pretty clear.
Right
even to people all around the world.
We get a lot of questions on compare and contrast with one of, your competitors, Lovo-cel. Maybe just give us, you know, the puts and takes of the dynamic there.
Yeah, I mean, the way we think about it is that, first of all, obviously, the clinical profile matters a lot, and we think that our benefit, risk, and safety tolerability is very, very strong. The other is, if you think about what you'd like to do, if you're doing a genetic therapy or a gene editing therapy is you'd like to make whatever precise change you desire in order to help the patient, and you don't wanna do anything else because anything else you do might lead to undesired consequences. The thing about CRISPR is, and the reason it sort of took the world by storm, is that it's a method that if you do it right and you pick the right guide that's very unique in the genome, it's highly effective, but it's also highly precise and specific.
With exa-cel, we see high rates of editing at the exact place in the genome defined by naturally occurring human genetic mutations is where you wanna edit, and no other editing anywhere else has ever been detected. I contrast that just with other approaches that lead to random insertional mutagenesis in every cell. That is a mutagenic process, and it's just I think patients and doctors they'll have their choice, potentially. I think that a precise approach that doesn't have any of those undesired insertions probably would be preferable. We see that in some of the research we've done.
The research you've done. Yeah.
In the end, you know, Vertex if there's multiple options for patients and they're good for patients, then patients have choices. We just think that they'll likely make the choice to go with.
Right
with our profile.
Right. You guys have been working with CRISPR for a while, so, give us a perspective on how, you know, how much of a strategic priority is it for Vertex to be one of the leaders in the gene editing cell therapy space? What other, you know, diseases, you know, look attractive to you at this point?
Well, the key thing is the Vertex strategy is really disease-based more than platform-based.
Yeah.
We start with unmet need. We actually look at, you know, where there's gaps in the treatment algorithm, patients are suffering. We look at where we think that we could make a transformative benefit. Both the target has to be human-validated, so we're trying to avoid all that attrition that happens when you don't go after a human-validated target, but also find the right modality. Of course, it has to be a specialty market, so it fits our business model. When you do all that, you end up finding opportunities like sickle cell or Type 1 diabetes that are really very large opportunities if we can, not just with exa-cel or VX-880, but through serial innovation, as we did in CF, going from KALYDECO or ORKAMBI, SYMDEKO, TRIKAFTA over a decade.
If we can get from the first patients treated to large numbers, those opportunities are really quite large for Vertex in the world. That's more our approach than saying we wanna be a gene-editing company, then we have to look for other opportunities. Having said that, obviously, if you have small molecule expertise, there are projects you can do no one else can. If we can, and I think we will, commercialize the first CRISPR therapy with exa-cel and commercialize, hopefully down the road, the first fully differentiated stem cell therapy with Type 1, that will certainly give us a foundation. There are other diseases you can imagine, some of which we're working on already. You know that we have a DMD program using gene editing. We bought the company Exonics, there are other diseases you can think of for cell therapy.
We'll look for those opportunities. We think the most important thing for Vertex and for our patients and probably for our shareholders is that we really succeed in Type 1 and sickle cell and get to those large numbers of patients and build the foundation on which other opportunities could eventually be added.
Right. Let's switch gears to Type 1 diabetes. You guys have had some data on a few patients. I wanted to, you know, ask you, like, what should we expect in terms of more patients, longer follow-up? You know, what's sort of the?
Awesome.
The next, say, 12 months look like for that program?
Yeah. As I mentioned, in the opening remarks, we will release more data on the program around the middle of this year. I think it's important to understand the structure of the trial. Obviously, it's a program that we're very excited about. It's a new modality. The trial is conducted in three parts: part A, part B, part C. Part A was two patients at half dose to establish safety, and those patients had to be staggered apart. Dose one, patient, wait. Dose one patient, wait. Once that was completed, we were able to move into part B. Part B is five patients at full dose but also staggered, that explains the time since we last reported data on the program. You dose, you wait, you dose, you wait.
We will expect to move into part C this year. In terms of data to expect around the middle of the year, we will publish data on the patients in part A and part B, so it'll be more patients than we've previously reported on and longer duration for a number of those patients.
Gotcha. From the technology perspective, you know, it's a bit of a unique approach in Type 1 diabetes. What have been some of the, you know, challenges? Looking forward, are there, you know, sort of edits to this platform, you know, technology that you guys could make to further, you know, address.
Yeah.
address this?
It's a great question. Let me start saying my background clinically, I'm a physician and I'm a diabetes doctor. Doug Melton and I started talking about, he did all the work, but we started talking about this idea, 30 years ago when his son Sam was diagnosed with Type 1 diabetes. I was an MD-PhD student at the time. It's been clear for decades that, you know, it's been clear for a century that this disease is a pure absence of the beta, the insulin-producing islets of the pancreas. There's no other problem. It's been clear since for the last 20 years that you can cure the disease by transplanting islets, cadaveric islets, and cure the disease.
You have to compare that to what people do otherwise, which is they have to measure their blood sugar constantly throughout the day. They have to either inject themselves 4 times a day or they have to take a continuous infusion of insulin. If they ever stop insulin, within 3 days you'll be in an emergency room. Within 2 days after that, you'll be in an ICU, and the life expectancy without any insulin treatment is weeks. Finally, the average American patient, despite all of the good advances we've had in insulin care, is actually not anywhere near the control that is the goal, which is a hemoglobin A1F of 7%. The average in America is much higher than that. All of this speaks to a huge unmet need in Type 1 diabetes. The key challenge was making the cells.
The reason I say that is the transplant of cadaveric islets or pancreas does work, but it's only done very rarely. You might ask, "Well, if it works, why isn't it done?" The reason is there's no supply. The reason is because when someone passes away, the pancreas is in the middle of the body, and it's a bag of digestive enzymes, and it starts to auto-digest, and it's very difficult to get islets out of the pancreas. You usually need, like, multiple donors, and it's just not possible. The key advance was Doug Melton spending 25 years after his son and daughter were diagnosed with Type 1, figuring out how to make stem cells into fully differentiated islets that in every way we can measure are indistinguishable from the islets inside of our own bodies.
That's like measuring them with every sequence, the RNA of every cell, and see the profile of RNAs. They look just like islets taken from the body. You can put them in a dish and expose them to different stimuli. They make insulin. You can put them in animals. They will cure the disease. Now you've seen the first patient we treated with a half safety dose. Off insulin with you know, with normal glucose control, you know, based on initial reports. It's really a remarkable story. The key thing other than just treating more patients, as Charlie described, and obviously it's gonna take a little while with the stagger to get more experience, is protecting those cells from the immune system. There are three shots on goal 'cause they're an allo product. It's off the shelf.
It's not like our sickle cell program, which is each patient for themselves, and these patients have autoimmunity. That's what caused their disease in the first place. The first approach we're taking VX-880 is with immunosuppression that is a clinical standard. When people have the islet transplants, they use this, and we're using it too, so the number of variables is the fewest. We have the device which protects the cells, that's VX-264, and that trial's open in, you know, we have the open regulatory, the IND and CTA in U.S. and Canada. We are also working on editing the cells, as you said, hypoimmune, to try and figure out ways to make them less visible to the immune system. I think the key thing is the cells are actually the transformative advance. There are many...
Multiple ways to protect them from the immune system, we will test each one, learn in the clinic. If one of them turns out to have, as I think it will, favorable profile, it may hopefully get approved and be something for patients. We'll also keep iterating, as Vertex always does. Our goal, very clearly, is to get to the 2.5 million people in the U.S. and Europe, and then eventually more around the world with this disease.
Just to close as on this point, as a diabetologist, I've never met a patient with diabetes type one who wants to inject themself with insulin all the time, who wants to have to go through every day always thinking about their diet, measuring their blood sugar, and knows that if they take too much insulin, they will lose consciousness, and if they take too little, they run the risk of all these complications. I think that, like, if we can get there, and I believe we will, it's like. It's transformative.
Right. Well, in the last few minutes, let's talk about the pain program. You guys are in, you know, phase three development on acute pain and phase two neuropathic pain. I guess, Charlie, from a commercial perspective, you know, what work have you guys done and what work is left to do on helping to, you know, set the stage for having, you know, to state and local governments like a non-opioid alternative? How valuable do you think that is, recognized, you know?
Yeah
by payers?
David can add on the target product profile, but, you know, our experience is that, and our view is that a medicine that is even equivalent to, but perhaps superior to an opioid in terms of efficacy, without the addictive potential and without all of the side effects is transformative, and there is incredible demand for that. You know, we've looked at the market opportunity today in acute pain. Right now, patients have a choice between NSAIDs and opioids, and the market is roughly a $4 billion market at 90% generic pricing. You know, our view is that a medicine with that transformative profile, with branded pricing, has an opportunity to make the market much larger.
Just think about from a patient perspective, if you're going in and having knee surgery or some sort of other procedure, that costs thousands of dollars, the actual cost of your pain treatment is tiny relative to the overall cost of the procedure. We think there's an incredible potential there. As you point out, you know, we're talking of course with hospital systems, but we're also talking with state governments, we're talking with the federal government. You know, all 50 states have restrictions on opioid prescriptions. Nearly 20 of them have actually requirement for physicians to look for non-opioid alternatives before they prescribe. Those are restrictions, if you will, but importantly, at the federal government level, the NOPAIN Act was passed recently, which stands for Non-Opioids Prevent Addiction in Our Nation.
Nice.
It's pretty good. It's a hard one to remember. What that creates is a separate Medicare payment for non-opioids in the outpatient setting. Not to say that that takes care of all of the reimbursement needs, but we think it's a really clear indication of the top-down kind of policy support for non-opioids. We expect there to be additional developments in that front going forward. We're sort of attacking it at all levels. David, you know, of course, and the kind of the science folks and the clinicians within our company are doing their best to drive the program forward. On the commercial side, we're readying as well. Again, that investment is ramping up throughout the year.
Yeah.
Just three quick points. One is, the trials are going well. We're on track to complete the phase III program and the phase II neuropathic pain program end of the year or early next. Second, we do, as Vertex always does, have follow-ons and they could be potentially superior both with NAV18. We've also taken what we learned in NAV18, and we think we've cracked in the labs NaV17. This is not, again, the last medicine Vertex will ever make in pain. This is the start of what I think will be a true revolution in pain treatment. The third thing I'd just say is my 35 seconds. My wife had shoulder surgery a couple of months ago, and like everybody, I don't know how many people in the audience have had surgery recently.
She was sent home with two days of opioids. She's still in pain two and a half months later. Tylenol and Advil don't really do it. You know, if you realize not just the cost, I think what I hear people talk about, they talk about what are the pain medicine cost. You have to think about, as Charlie said, the hospitalization, the surgery, the months of recovery, the PT, all the things that go into this, and the amount of money that we're talking about, whatever it might be, for improved pain control is trivial compared to the suffering and also the impact on the healthcare system. How many times do people go back to the doctor because I'm still in pain? That might not happen.
I think people are thinking sort of narrowly rather than at an enterprise level about what this could mean to the healthcare system and most importantly, patients.
Right. Cool. Well, thank you guys. We're out of time, so appreciate the time.
Yeah. Thank you.
Thank you.
Thanks for having us.